Finance Bd. Moves Budget To Council With Few Changes

By John Voket

There was a lot of talk about collaboration throughout the middle phase of the 2011-12 budget process, which involved five Board of Finance sessions examining and finally passing requests from the school district and town leadership onward to the Legislative Council.

And that new sense of candor, as finance board Chairman John Kortze described it, may have been a major reason behind why his board narrowly approved moving the proposals on to the council virtually as submitted.

In separate 3-2 votes with Michael Portnoy and Joseph Kearney opposing in both cases, the finance board moved a town request for $37,922,648 and a school district request for $68,703,427 on to the final phase of deliberation by the Legislative Council before voters have their say in a referendum set for the final Tuesday in April. Mr Kortze, Harrison Waterbury, and James Gaston supported both measures.

The only changes to the school district request amounted to a $497,590 reduction to account for health insurance savings, a slight increase in fuel costs, and a $70,000 increase for a district organizational study.

On the town side, a reduction of about $274,000 similarly adjusted health coverage totals; added $5,000 for other increased benefit costs; provided $5,000 to the Labor Day Parade Committee; added $50,572 for equipment fuel, $37,830 in borrowing interest, and $4,500 to underwrite services provided to town residents by Ability Beyond Disability, a regional human services agency.

If endorsed by the council without change and approved by voters in a referendum vote, the proposed budget as it stands would generate a 2.68 percent tax increase next fiscal year, and an increase in the tax rate from 24.00 to 24.64 mills.

A mill represents $1 in taxes for every $1,000 in taxable property.

Ahead of the final votes, Mr Kearney provided detailed analysis outlining how the local budget has swelled in recent years, and incorporating how state and national economic trends will likely impact local residents in relation to proposed local property tax increases next fiscal year.

Based on his analysis, Mr Kearney said since 2002, the average Newtown household has experienced an overall budget increase of 38 percent, while the school budget has grown 50 percent — from about $46 million to $69 million. At the same time, the finance official said Newtown families have only seen the rate of inflation — tied to average household earning — increase by 21.2 percent.

He pointed out that during the same period, the town population has only increased ten percent, and currently appears to be flat or falling. And since 2002, the unemployment rate has rocketed up to more than nine percent, negatively affecting between 900 and 1,800 Newtown households, he estimated.

“We’re probably as typical a town as any in that area,” Mr Kearney said of the unemployment estimate. And while the town side rate of budget inflation has virtually matched the national rate at 21 percent since 2002, he said the school district budget increases have more than doubled that pace.

In that time, the finance official said school district staffing has increased from 673 full-time “equivalents” to 721, or seven percent. At the same time, the overall student population has increased two percent — although in previous discussions the finance board acknowledged there were sudden and disproportionate spikes in that population trending that affected increased staffing needs.

Since 2002, school salaries increased by 43 percent, twice the rate of inflation, and benefits — not including pension contributions — have increased 89 percent. And all other nonpersonnel-related school expenses in Newtown have increased by 47 percent, also more than twice the inflation rate.

Mr Kearney said he recognized that state and federal unfunded mandates have contributed to some of the forced increases in costs, but countered that “directionally, state and local budgets are unsustainable.”

Calculating from Governor Dannel Malloy’s proposed budget, Mr Kearney estimated the average Newtowner would pay $1,400 more to the state next year, while countering federal deductions would be insignificant by comparison.

“I’m not sure how much the Newtown homeowner will bear,” he added, saying that this was the year the town should begin working to correct structural deficiencies in overall personnel and financial practices.

Mr Gaston said that while he thought Mr Kearney should have used regional figures instead of national inflation stats to base his calculations, he agreed that fixed costs resulted in forcing the town and school district to maintain a “treading water effect.”

Mr Gaston said that factoring the regional rate of inflation, the local per student cost increases averaged 4.5 percent against an average three percent rate of inflation.

Mr Portnoy then noted how towns and school districts fell “way behind private industry” in taking control and reacting to declining economic trends by reducing head counts and “cleaning up their balance sheets.” Mr Portnoy said that while he was loathe to “kick the can down the road” in regard to addressing structural deficiencies noted by Mr Kearney, the finance board could not do as good a job as Board of Education Chairman William Hart and First Selectman Pat Llodra who are working on the front lines of day-to-day school and municipal operations.

Mr Waterbury said that after ten years, he has seen a change in the level of information provided by the school district, adding that he took it personally when criticized over not providing as much scrutiny to the town side of the budget request than the school side.

Mr Waterbury said that in past years, the selectmen had made cuts and done their due diligence on the town side requests before coming before the finance board, where in the case of the school budget proposals, much of the discovery was happening during the final process of deliberations.

This year, he said, “I think the Board of Ed did a good job.”

Mr Kortze agreed with his colleague, saying, “The collaboration has been great,” and specifically praised Mr Hart. “You’ve spent a tremendous amount of time getting your arms around things.”

The finance chairman disagreed with individuals in the community, however, criticizing those who touted Newtown’s comparative rate of per-pupil spending.

“When are we going to stop talking in a one-dimensional tone when we need to talk about what [spending] more will get us?” Mr Kortze commented. “If we added $500 per pupil it would cost us $2.5 million, it would move us up the chart, but stop the nonsense — it’s a piece of information, but the way it is wielded is wrong.”

As the initial motions were tendered for the town and school requests, Mr Kearney requested amendments to adjust each proposal based on his earlier calculations, first pitching a $55,000 reduction to the town and a $650,000 reduction to the school plan. Both amendments only received concurring support from Mr Portnoy, and failed on 3-2 votes.

Mr Portnoy then suggested a $280,299 reduction to the school request, citing his anticipation that the town would receive more Education Cost Sharing grants from the state than budgeted as revenue. And while the finance board has no line item influence on the school distinct, he suggested the balance of his proposed reduction be applied to reducing the elementary full-time teacher roll by four.

That amendment also failed 3-2 along the same lines.

Finance board member Martin Gersten was absent from the entire budget process, according to Mr Kortze, because of an extended work assignment in the Far East which kept him out of town for more than a month longer than Mr Gersten had originally anticipated.

Following the vote, Town Finance Director Robert Tait said he would make any final adjustments required, as well as applying any revenue changes based on the final local grand list, and adjustments in state grants telegraphed as lawmakers continue deliberating on Gov Malloy’s statewide proposal.

“Typically I can apply some of that fine tuning to the positive or negative while the council is still deliberating,” Mr Tate said. “But ultimately we usually complete our budget process before the state finalizes its budget.”