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School Board Tells Charter Panel To Dump Finance Board

By John Voket

Apparently Board of Education member Andrew Buzzi felt so strongly about eliminating the Board of Finance that he chose to skip listening to constituents’ input on the high school Tuesday in order to be sure Newtown’s Charter Revision Commission (CRC) got the message.

Mr Buzzi spent two hours listening to a presentation by finance board Chairman John Kortze, who was invited to speak to the CRC this week, while a few miles away, the rest of the school board was hearing ideas and concerns from residents about a proposed $47 million high school expansion.

Once Mr Kortze had completed his presentation, Mr Buzzi, said he was speaking as a taxpayer and not as a member of the school board, reiterated a preliminary idea that was floated the week before, when several other members of the school board were invited to discuss possible changes with the charter commissioners.

The idea involves a charter revision eliminating the Board of Finance and creating a special finance subcommittee of the Legislative Council, which would be elected separately and staffed by candidates who run for the seats because of their specific financial expertise. The proposal would mean increasing the size of the Legislative Council to 18 members from its current 12, effectively rolling the seats currently occupied by six finance board members into the larger policy-making council.

While Mr Buzzi pitched the idea as a logical alternative, giving elected financial experts the power to affect decisions instead of the current Board of Finance, which only acts in an oversight and advisory capacity, the proposal would effectively dilute the influence of the finance panel.

Instead of the current six Board of Finance members who typically vote unanimously in their advisory decisions, and whose decisions are typically adopted by the council, Mr Buzzi’s proposal would place six finance subcommittee members into a larger voting pool including the balance of 12 council members in the more politicized context of the town’s powerful legislative branch.

Although the charter commissioners entertained Mr Buzzi’s suggestion for the second time in two weeks, charter commissioner Joseph Hemingway pointed out that the move would actually be a step backward, and would virtually return the Legislative Council to a position it was in several years ago when the last charter revision and subsequent referendum created the Board of Finance and took most of the town’s financial oversight and analysis away from the council’s finance subcommittee.

During his presentation this week, Mr Kortze pointed out that the town, which is in effect a $100 million business, requires the dedicated expertise of its Board of Finance. Those elected finance board officials work closely with the Board of Selectmen, the council, and the municipal finance director monitoring the current budget, the status of dozens of bond initiatives, advising on proposed future budgets, conducting independent budget hearings, prioritizing and blending the town and school system’s Capital Improvement Plans and ensuring the town does everything possible to follow bond service industry’s best practices.

Mr Kortze reiterated information that municipal Finance Director Benjamin Spragg presented to the CRC several weeks ago about a current charter provision that might be preventing the town from receiving an upgrade in its bond rating from Moody’s Investors Service. That provision, which is cited in several recent rating review memos from Moody’s, involved the town’s lack of flexibility in managing its fund balance.

While Newtown currently enjoys an unprecedented AA2 bond rating, the current charter demands that any annual budget surpluses be returned to the town to offset tax increases in the next subsequent budget cycle. Moody’s representatives and municipal bond banking consultants have both suggested that if that provision was removed, the town might receive a rating upgrade to AA1.

Charter commissioner Carolyn Signorelli asked Mr Kortze to clarify why such an issue would be so critical to Moody’s considering the town maintained a capital nonrecurring “rainy day” fund as a permitted alternative to freely managing budget surpluses.

Mr Kortze answered that while bond rating downgrades, like the one that recently occurred in neighboring Monroe, usually come from a combination of factors, Moody’s considers this a core issue affecting Newtown’s future bond rating status.

“Moody’s has core issues with every municipality — and some of these items come in and out of vogue,” Mr Kortze said. “But they don’t like a lack of flexibility. Monroe was cited and downgraded and this was one of the reasons that was given.”

That prompted charter commissioner Joan Plouffe to ask about the difference one step up or down might make in actual taxpayer dollars.

Mr Kortze said that since most of the double-A rated bonds Newtown carries are quite sizable, one step up or down in the town’s bond rating could have significant impact on taxpayers. He used the current $47 million high school expansion proposal as an example, equating an increase in the bond rating to one-half a point on the full bond initiative.

“A half-a-point on a $47 million bond initiative adds up to a $450,000 savings in debt, annually for the next 20 years, on that single project,” Mr Kortze said. “It’s important to remember that once you bond something, you are living with that debt service for 20 years, and you cannot change it.”

As the meeting continued, Mr Kortze discussed the finance board’s role in administering the town and school board’s Capital Improvement Plans. Charter commissioner Joseph Hemingway, who also served on the town’s previous CRC, asked if the charter should be changed to direct failed budgets, defeated by voters in a referendum, back to the finance board first before adjustments are made by the Legislative Council, as is currently stipulated.

Mr Kortze said he believes the group that does the most concentrated amount of work — and the officials who know the budget most intimately — should be the ones making the first suggested adjustments in the event a budget referendum fails.

Ms Plouffe, who has emerged as a strong advocate for streamlining the budget procedures to make it easier for citizens to participate, took issue with adding more steps to the budget review, referencing the school board’s alternative proposal to eliminate the Board of Finance in favor of a larger council with a special finance subcommittee.

Mr Kortze said a dedicated and separate finance board is best equipped to analyze and advise the policy-making council on ways to better manage the town’s budget.

“The added burden of our debt expense is already getting close to [the self-imposed cap of] ten percent of our budget. We need to have our debt and spending in clear focus,” Mr Kortze said.

“But wouldn’t absorbing the Board of Finance into the Legislative Council streamline the process?” Ms Plouffe asked.

“What board has the most time to spend on these big issues?” Mr Kortze countered.

Ms Signorelli then asserted that finance board members run for office and are elected based on their financial expertise. Then, Mr Hemingway pointed out that returning sole financial control to the Legislative Council would effectively put the town in the same situation it was in before the last charter revision.