Budget season begins with frank talk at joint meeting

NORWALK, Conn. — Like holiday decorations that pop up earlier every year, Norwalk’s public budget discussions have already begun.  Public school funding sits at the head of the Common Council’’s Thanksgiving table, against the background of a dismal national economic forecast.

“It’s great that we’re starting this process a little earlier than we have in the past,” then-Board of Education Chairman Colin Hosten said Thursday at a joint meeting of the Common Council and BoE Finance Committees. It was an “opportunity to share information and continue the dialogue,” said Council Finance Committee Chairman Greg Burnett (D-At Large).

Norwalk Public Schools Chief Financial Officer Lunda Asmani laid out BoE operating budget priorities, what Hosten called “macro factors” that will drive the eventual budget request, and Norwalk Chief Financial Officer Henry Dachowitz covered the City’s operating budget guidelines, “high inflation plus an economic recession.”

Asmani promised a maintenance budget, meant to simply maintain the programs the school district has underway, but there’s a catch – some of the programs are paid for by federal COVID-19 relief funds and those funds are drying up. Also, NPS funded a South Norwalk incubator school with carryover funds from Fiscal Year 22, so that’s an existing program that needs to be maintained although the funding wasn’t part of the amount the Council authorized in last year’s budget cap.

“We are not including any new initiatives in the current year. So it’s basically maintaining initiatives that we have as of today and trying to get adequate funding to maintain those services and to provide that level of service to our children,” Asmani said.

Rising health insurance rates are a challenge that NPS met in this year’s budget due to savings incurred via “huge vacancy rates” during the pandemic, but the plan for Fiscal Year 24 is to pay them entirely through the operating budget, he said.

Additionally, NPS has depleted the reserves it had due to surpluses in the worker’s compensation account and the liability account, Asmani said.

“We would like to have a conversation about funding those accounts,” he said. “Last couple of years, these have been funded on the City side, not on the Board of Ed side. However, because of those choices, neither the City nor the Board of Ed has had to contribute into those accounts…. we need to resume contribution to those accounts.”

NPS is looking to find savings by implementing more recommendations made in the efficiency study, Asmani said. The district already slashed its communications budget but “there are quite a number of recommendations that require conversations with unions and collective bargaining as they relate to stipend pay. And I think that’s what we’re going to see most of the savings.”

Asmani explained that the federal Elementary and Secondary School Emergency Relief Fund (ESSER) grants came in three tranches, each with its own expiration date. ESSER I funds expire this September while ESSER II funds have a September 2023 end date and ESSER III funds are good through September 2024.

“However, many of the projects and the programs that we use our ESSER funds will have been depleted by the end of this fiscal year, by June 30,” Asmani said.

Then-Chief Financial Officer Thomas Hamilton repeatedly warned of a funding “cliff” due to the planned use of ESSER funds, in budget discussions held before he retired Dec. 31. In April 2021, Norwalk Superintendent of Schools Alexandra Estrella and Hosten said the “fiscally irresponsible” use of ESSER funds to offset a zero increase for the 2021-22 school year might result in “drastic budget cuts across the board” down the road.

Asmani said Thursday that, “We had social workers, counselors and summer programs, who would have been traditionally funded in the local budget. These were existing positions, existing programs. And we applied ESSER funds, funding these programs in lieu of tax increases” for citizens.

“It is time to put those back in the local budget,” he said, while also highlighting one time expenses that were paid by ESSER funds, including protective equipment.

The ESSER funds enhanced educational services to address learning losses, he said. “Now as these ESSER funds are depleting, we will be looking at how can we continue some of these programs, I’m understanding that it will be a challenge. But the need remains.”

“We are entering a phase where ESSER funds will be depleted, yet the need for additional support and intervention continue to exist and won’t cease anytime soon, given the learning loss that has taken place throughout the pandemic,” Estrella said. “So we’re looking forward to a collaborative dialogue.”

The South Norwalk incubator school, which establishes an administrative hierarchy and a school culture as children learn together ahead of a new building being constructed, doesn’t have an incremental cost as the children are diverted from other schools to attend the new classes, but there are overhead expenses that are additional to the district’s budget, Asmani said.

Asmani said the Norwalk Federation of Teachers during this year’s contract negotiations sought to partner with the Board of Education to seek lower health insurance costs. “We’re probably really low where we are today. But anyway, in any event, we’re going to explore and to see if there are potential savings in that area. If we do see savings, we will go back to the unions, we do need all the unions to agree.”

As of Nov. 1, NPS had 11,611 students, Hosten said. Asmani added that demographic projections are a challenge given abnormal conditions under COVID-19 but it’s thought that the district will be educating an additional 100 students next fall.

“This is not a year in which NPS is deciding to invest in in a bunch of new priorities,” Hosten said. “This is where we are sort of recommitting our dedication to making sure that we are delivering the basics to our to our students and building upon the priorities that that we have started in the last two or three years under Dr. Estrella.”

Dachowitz laid out economic warnings, more dour even than previous years.

“Inflation in September was recorded at 8.2% per annum recession. We already had two quarters of negative GDP growth in the first two quarters of this year, which is the traditional measure of recession,” he said. “The third quarter came in positive, but economists are expecting some future quarters of negative growth.”

Interest rates have gone up and “the housing market is starting to falter” while the stock markets “are officially in a bear market,” Dachowitz said. The U.S. interest rate is pressuring foreign currencies and this may cause unexpected economic turmoil and civil unrest in developing countries.

“National firms have announced layoffs ranging in many industries” and in the Nutmeg State, “the Wall Street Journal reported that Stanley Black and Decker headquartered in Connecticut reported 1000 layoffs. The company recently stated that that number is inaccurate but that they did not give a replacement number.”

Dachowitz said, “We’re seeing challenges, there’s uncertainty going forward. We’re not sure what’s going to happen, but we’re seeing clouds and negative indications which cause us some concern.”

The City expects some fixed budget items to have higher increases and plans to use American Rescue Plan Act (ARPA) funds, if possible, and draw down Rainy Day Funds, “so that ultimately, the amount of tax increase would be as low as we could possibly get it,” Dachowitz said.

Mayor Harry Rilling said, “We know that we have to provide a world class education for our children. We also know that we have to be fair and reasonable when it comes to taxing our residents. So it is a big challenge, especially now when times are difficult.”

Council member Jenn McMurrer (D-District C) thanked Burnett for “starting the conversation early.” She, liked others, wanted more information; Council member David Heuvelman (D-District A) asked for a historical review of NPS surplus rollovers from one budget to the next.

“I very much want to invest in our schools,” said Council member Nora Niedzielski-Eichner (D-At Large). “… But I also really take to heart the need not to drive out of the city, the very students that we are attempting to assist and strengthen in our schools. So it is going to be a balancing act.”

Burnett said, “The actual budget requests are being formulated as we speak within the city departments and grant agencies as they prepare to submit those budgets to the Finance Department in November and go through budget reviews in the month of December. Our proposed plan is to hold another joint meeting of the Finance Committees in January of 2023.”

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