Updated, 6: 40 a.m.: More information.
NORWALK, Conn. – If the Norwalk Board of Education wants a chance at additional $1.5 million in its 2018-19 operating budget, it will have to agree to cough up $550,000 from its own coffers.
The Board of Education on Monday morning requested a $1.5 million funding increase without any requirement for spending its insurance reserve fund. The Board of Estimate and Taxation (BET) on Monday evening declined this request. The approved tentative 2018-19 budget includes a $5.5 million increase for the Board of Education, not the $7 million increase the BoE has recently been pressing for.
Norwalk Superintendent of Schools Steven Adamowksi on March 20 informed BoE members that Mayor Harry Rilling had offered $950,000 from the city’s “Rainy Day Fund” if the BoE also contributed $550,000 from its health insurance reserve. Adamowski cautioned BoE members about the ramifications, warning that the insurance reserve wouldn’t be available the following year.
Rilling on Monday told BET members that he felt that he had been in a card game with Adamowski and, “I am very disappointed.”
“We have always shown the willingness to work with the Board of Education and not have an adversarial relationship,” Rilling said “I know that at least one person on the Board of Ed was very upset when my initial offer was rejected because that brought them back up to the $1.5 million that they needed. So there was a disappointment there that was stated very clearly. I have done what I could do to move this forward.
Board of Education Chairman Mike Barbis and NPS Chief Financial Officer Thomas Hamilton left the BET meeting without comment after the unanimous BET vote, rebuffing Monday’s BoE request for $1.5 million with no strings attached.
Barbis did not reply to a follow up email from NancyOnNorwalk.
“We’re not asking for the city to micromanage our fund balances however tiny they are,” BoE Finance Committee Chairman Bryan Meek wrote in an email. “What we are asking for is a reasonable allocation of the $51000000 that the mayor is hoarding, of which half should already be allocated for Education without us having to beg for it to cover population increases and the contractual increases that are protected by collective bargaining laws.”
The city has $51.2 million in its Rainy Day Fund, which will drop to $49.2 million under the tentative budget, Barron said.
Parents turned out in force last week for a BET public hearing on the budget, urging that the Rainy Day Fund, also called the fund balance, be used to fund the BoE’s operating budget.
The BoE in January requested a $9.9 million increase to its operating budget.
The Common Council in February authorized a spending cap that allowed for a $5.5 million increase in the Board of Education’s operating budget, with Board members saying that just wanted $1.5 million more to be able to enact parts of their strategic operating plan. The Council’s vote authorized a 3.7 percent mill rate increase, the largest increase in years.
Hamilton on Sunday issued an opinion piece to the press, arguing that Norwalk’s fund balance has grown from $29.7 million in 2012-13 to $51.2 million in 2016-17 and $1.4 million could be withdrawn from the contingency fund without harm to the city.
Commentary at Monday’s BET meeting included an accounting of BoE budget increases over the last two years and assertions that municipalities are being urged to build up their fund balances.
The Triple A bond rating could easily be lost if too much money is drawn down and that credit rating is important given that the city has committed to $200 million in borrowing over the next four years to build two new schools, renovate two existing schools and make repairs in other buildings, Finance Director Bob Barron said.
Hamilton and other say increased spending is necessary to continue the BoE’s momentum in improved school achievement; Barron pointed out Monday that the test results NPS is touting are from 2016-17 and the investment in continuing the success has already been made, as NPS received $7.9 million more for 2017-18.
The Board of Education received a $5.1 million increase two years ago, and “had all of these accomplishments,” and the proposed increase for 2018-19 is the same amount “of the year where they had all the accomplishments,” Barron said.
“We have to make a lot of tough decisions in this budget. Seeing that increase, I think we are being very generous to the Board,” BET member Troy Jellerette said.
Jellerette said he was “very surprised and disappointed” to get Adamowski’s Monday letter; BET Chairman Ed Camacho said Adamowski had mischaracterized the offer of $950,000 by referring to it as a “commitment,” asserting that the $950,000 was contingent on the BoE drawing down its $550,000.
“It’s a two-party agreement, one party has withdrawn,” Barron said.
Rilling referred it as “a deal I thought we had,” and said, “Dr. Adamowski seemed to think it was a good deal.”
There had been another proposal before that but it was “summarily rejected,” he said.
If the Board of Education is willing to withdraw $550,000 from its insurance fund, the BET can hold a special meeting to vote to request the Common Council raise the cap. The Council would need two-thirds approval to raise the cap, or 10 votes out of 15.
Regarding the Rainy Day Fund, “There is a big push for municipalities in Connecticut to be increasing their fund balance and there’s a lot of reasons behind that,” Barron said, highlighting a comment he said came from a consultant warning that with the state’s fiscal troubles, municipalities need to increase their reserves or experience downward rating pressure.
Barron said the fund balance will likely stay at $49 million in the next few years but the budgets will increase, meaning that the fund balance will become a lower percentage of overall spending. It was 13.6 percent of the budget this year but will be 12.7 percent of the budget next year, he said.
“If you draw down a significant amount from your fund balance for recurring expenses you are putting yourself in a dangerous situation,” Rilling said. “That is how the state of Connecticut got where they are. Now it probably wouldn’t make a difference in the next year or two, or even three years. None of us may be here, so the easy thing to do would be, ‘OK, let’s draw down and give them the money.’ But that is a recipe for disaster in the future.”