Selectmen Shift $400K To Schools As Council Discusses Non-Lapsing Account
The Board of Selectmen unanimously voted September 21 to appropriate $400,000 from its fund balance, and shift that money to a line in the current municipal budget designated for the Board of Education to tap, if needed, for COVID-related expenses.
The move came one week after a Board of Finance vote tied, resulting in a failed motion to shift $1.3 million in surplus school budget funds to the district’s non-lapsing account. Per the selectmen’s motion, the $400,000 earmarked for the school district will be held in the municipal capital and non-recurring account.
As a result, Finance Director Robert Tait said once that special appropriation is endorsed by the Board of Finance and Legislative Council, he would be authorized to distribute any or all of it as long as the district presented documentation on how the money would be, or was already spent.
Noting that the finance board vote on a $1.3 million transfer failed because of a 3-3 tie and not because a majority of members were against it, First Selectman Dan Rosenthal said the proposed $400,000 allocation would serve as “a down payment on collaborative support” of the school district in view of the many unknowns the coronavirus could bring in the coming months.
Rosenthal briefly reviewed the outcome of the finance board meeting with Selectmen Jeff Capeci and Maureen Crick Owen, and explained that there was already an expectation that unanticipated COVID-related expenses would strain the district budget, which was finalized before the full impact of the virus hit the state and community.
The first selectman went as far as to suggest that even more funds might be needed before the end of the current district fiscal cycle next June, and defended his proposed transfer saying it was “the right thing to do,” since both finance board and council members had already indicated they wanted to work together with school officials to ensure the district had any funds required to address virus-related expenditures.
Defining Council’s Role
That desire for collaborative support, along with clean, defined policies on the role of the council in proposed school budget surplus allocations to the district non-lapsing account was also the subject of extensive discussion when its members met September 16. Prior to the finance board vote, Councilman Dan Wiedemann had already asked to have one or more discussions about the non-lapsing account and related budget surpluses — and what role the council should play in overseeing and/or authorizing surplus transfers into it.
During the council’s discussion, which included Rosenthal, several school board members, and Superintendent Lorrie Rodrigue, a proposal to involve legal counsel to help define the various elected board roles was suggested and well received, according to meeting transcripts. Several years ago, to help state school districts save funds for specific out of budget expenses like unanticipated increases in special education student costs or emergency capital projects, the legislature approved districts establishing non-lapsing accounts with a cap of two percent of districts’ overall budgets in any given year.
At the time, the legislation provided for oversight of both the initial surplus transfer, and any subsequent expenditures from the account from either municipal boards of finance or boards serving as the finance authority. That legislation was subsequently amended, leaving the finance board with oversight on the initial surplus transfer, but removing any further involvement by municipal finance officials once the money was transferred into the non-lapsing account.
Because of the hybrid nature of Newtown’s Board of Finance and Legislative Council — with each having specific financial responsibilities that would normally all accrue to one panel or the other — some members believe the council should have a defined role in the school surplus transfer process. During the council discussion September 16, it was also asserted by Vice Chair Judit DeStefano that the desire to create such definition was because this year’s district surplus was so high.
According to Council Chair Paul Lundquist, Wiedemann was also concerned about a situation where the non-lapsing fund balance exceeded $1.5 million. By charter, the maximum single appropriation the council could authorize is $1.5 million — anything more must go to referendum, which could significantly delay delivering the appropriation or scuttle it if it was voted down by taxpayers.
Joint Policy Proposed
Councilman Ryan Knapp suggested that there is a need for a joint policy involving the council and the school and finance boards. Lundquist countered that the process by which school budget surplus funds shift into the non-lapsing account would be a narrow use of policy, and it did not necessarily have to mirror the system by which municipal surpluses and other revenues shift into the municipal fund balance or capital and non-recurring account.
Knapp said there should be a mechanism beyond the non-lapsing account to facilitate transferring funds to the school district if or when there is a budget shortfall. Wiedemann added that as the fiscal authority for the town, it is appropriate for the council to have a place in the process of moving taxpayer-approved budget funds into an account where the district could spend the money if and when needed, with no outside oversight or approval.
However, it was previously noted to the finance board following the failed vote September 14 that any expenditure from the non-lapsing account is subject to finance board authorization under the school board’s administrative regulations.
Council member Alison Plante said she saw the issue involving the way town government and its charter stipulations correspond with state statute, and agreed that bringing in legal counsel for guidance would be appropriate.
Dan Delia, the school board’s CIP committee chair was on hand for the discussion and eventually spoke up, stating that the added processes involved in accessing funds and appropriations outside the approved district budget is “exhausting,” and agreed that a clear, clean, and mutually accepted process is necessary.
Councilman Andrew Clure, a former school board member, expressed some concern that the conversation was even occurring. Clure said the council should fully support any and all pandemic-related expenses requested by the district and concurred that an attorney should be involved, possibly in concert with a special committee dedicated to addressing the related issues and policies.
Councilman Chris Eide pointed out that the issue may not be the process, but an issue requiring better definition about why the non-lapsing fund exists in the first place. School Board Chair Michelle Embree Ku said she was unsure whether involving more boards in the oversight and approval process would be productive, and also backed the idea of bringing in legal counsel for guidance.
Rodrigue noted there is already a process, and with all the added responsibilities and burdens this year resulting from the pandemic, she would prefer to address all the issues being discussed next year.
Wiedemann steered the discussion toward closure for the moment, stating that if the district was faced with any emergency needs or budget shortfalls as a result of the virus, they could count on his support. His ultimate goal in introducing the discussion was to initiate steps toward finalizing an appropriate and clear process involving the council’s oversight in school budget surplus transfers.