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Dachowitz slams ‘sneaky’ NPS, proposes $8 million Rainy Day drawdown

Norwalk Chief Financial Officer Henry Dachowitz presents the 2020-21 recommended operating budget, Monday in City Hall.

Updated, 1:55 p.m.: Statement from Norwalk Superintendent of Schools Steven Adamowski.

NORWALK, Conn. — Mayor Harry Rilling and his Chief Financial Officer say they are offering Norwalk Public Schools its largest budget increase in six years, possibly ever.

Yet the offer of $9.9 million increase – made possible by using $8 million of Rainy Day Funds – is still short of the $17.8 million they say Norwalk Public Schools requested for an increase.

There’s been some confusion on that front: Norwalk Public Schools Chief Financial Officer Thomas Hamilton has asserted that NPS is looking for a $14 million increase. That’s “sneaky and deceptive,” said Norwalk CFO Henry Dachowitz to Board of Estimate and Taxation members Monday, in presenting a budget proposal he developed with Rilling.

The proposal would increase tax bills in the Fourth Taxing District by 3.81 percent, an average $245.

recommended operating budget 20-0210

“The presentation was disappointing in its lack of accuracy and  professionalism, reflecting the national diminution of civility and respect in public discourse where attribution of motive and criticism of those one disagrees with is used to justify a difficult decision,” Norwalk Superintendent of Schools Steven Adamowski said in a statement released Tuesday.

 

‘It’s very difficult’

“This perhaps was the most difficult budget season that I’ve experienced in my short time as Mayor, and I think probably even while I was the police chief. It was very challenging to maintain the balance of providing for the city operating needs, as well as the Board of Ed operating needs,” Rilling said Monday evening.

City-side leaders, including Rilling, BET Chairman Ed Camacho and Finance Committee Chairman Greg Burnett (D-At Large), met Saturday morning and cut $2.2 million from the City budget, Rilling said.

“I made it very clear to my staff and my department heads that in order to get new positions, they would need to justify those positions,” Rilling explained. “I had a request for eight new positions. I looked at the justifications and I didn’t see any that showed I can’t do my job without this person. And it was more things that they would like to do to give better services to the city.”

Those positions would have added $855,000, according to the Mayor.

“It’s very difficult” because the recent administrative reorganization has led to the hiring of “some very professional individuals” who want to improve city services but “we have to make sure that we put together a budget that’s not going to be unfair in taxing people who are already, because of the state law regarding taxation, already paying more taxes than the surrounding states,” he said.

 

‘Confusing and misleading’

The “challenges” include the state mandated minimum budget requirement, which means the school budget cannot be cut, Dachowitz said. For instance, if NPS wants to fund a superintendent search, that money stays in the budget next year.

“You never see the public school budgets go down. I’ve never seen anything like that. I’ve been in corporate. I’ve been in nonprofits. I’ve even seen education. I’ve never seen it. It’s a very big handicap,” said Dachowitz, who came to work for Norwalk in April.

Dachowitz went on to paint a detailed picture of a budget that has over the past years shifted significantly toward education spending, including agreements to fund new school construction.

The city-side operating budget grew 10.4 percent from 2014-15, Rilling’s first budget, to 2020-21, he said. The NPS-side grew 25.2 percent from 2015-16, Adamowski’s first year, to 2020-21.

From left, Norwalk Board of Estimate and Taxation member Artie Kassimis and Chief Financial Officer Henry Dachowitz, Monday in City Hall. Kassimis, a former Board of Education member, said nothing during the meeting.

“There are many expenses on behalf of the public school children that are run through the city’s books. And historically, it’s been included in our budget, never separated. We feel that’s improper, we feel it should be deducted from the city side and added back to the public school side to give a fair representation of what the expenditures are really,” he said.

“The public school presents information in confusing ways that are sometimes misleading,” he said.

His PowerPoint explains:

  • “NPS Ignores In-kind Services
  • “NPS Ignores their Share of Debt Service
  • “NPS Ignores Revenue from State Grants”
  • NPS “Understates TOTAL SPENDING”
  • NPS “Understates Expenditures /Pupil”
  • NPS “Reduces the Percentage of TOTAL CITY Financial Resources Spent on Norwalk Public Schools”

 

The schools budget at the beginning of Fiscal Year 20 was $198.5 million and Norwalk subsequently funded $1 million for English Language Learners and $3 million “related to rollovers,” Dachowitz said.

Hamilton’s budget request said the approved 2020-21 operating budget was $202,204,108. Asked about that last month, Hamilton said it was the “revised budget,” including “the carryover funds from the prior year that were approved to be carried forward to the new fiscal year by the Board of Estimate and Taxation.”

Not a carryover, but, “We gave them the money,” Dachowitz said Monday.

The difference? Hamilton characterizes the request as a 7 percent increase. Dachowitz says it’s a requested 9 percent increase.

“They never talk about the missing $4 million. I find that sneaky and deceptive,” Dachowitz said. “The 7 percent increase claim is misleading, designed to reduce the perception of the size of this year’s increase. Not nice.”

 

 

‘Dangerous’ Rainy Day drawdowns

“Despite all these challenges, and despite their promises last year to request the core 3 percent increase and a maximum total increase of 4.88. … We are recommending an increase of $9.9 million, 5 percent over last year’s approved amount of ($198.5 million). It’s the largest increase in the six years. And the Mayor, who’s been here a while, has said it’s possibly the largest increase ever,” Dachowitz said.

The annual audit shows a $69 million fund balance, or Rainy Day Fund, Rilling said. That doesn’t include the planned drawdown of $6 million this year.

That whopping $69 million equates to 20 percent of the FY19 operating budget and if Norwalk reduces its fund balance by $6 million, as planned, it would go down to 17.3 percent, Dachowitz explained.

An $8 million drawdown in FY 21 would take Norwalk to a $55 million fund balance, or 14.5 percent of the operating budget.

Dachowitz said any fund balance over 7.5 percent is “healthy,” 15 percent is “great” and the current 20 percent is “bulletproof.”

“It still is a three-year decline,” BET member Ed Abrams replied.

It isn’t, Dachowitz asserted and BET member Troy Jellerette advised that Norwalk needs to compare itself to the other Triple A bond rated Connecticut communities. “I think we need to see the other key ratios,” he said.

“Stamford has a lower fund balance than we do and they have a larger budget,” Rilling said.

Ratings agencies aren’t looking just at percentages, “they see that we’re investing heavily in infrastructure and other long-term investments and we have a process by which we’re going to pay down that debt and get back to an acceptable percentage. They’ll go along with that.”

Dachowitz consults with advisors regularly and, “Wait till next year,” Rilling said, advising that Norwalk has benefitted from building permits, including from The SoNo Collection, “and a lot of people investing in Norwalk as you can see, but that’s perhaps not always going to be the situation.”

Camacho, Abrams and Jellerette pushed back.

“We’re on a dangerous trend of spending more than our revenues are,” Abrams said.

Rilling recounted a Friday conversation with Hamilton, former Norwalk Finance Director, in which he reminded Hamilton that “When you were working on the city side, you were vehemently opposed to using the fund balance for recurring expenses constantly. And he said, ‘Well, at that time, our fund balance was only 35 million.’ So our budget was a lot lower then too. So we are still at the same percentage.”

“I’m not comfortable drawing down $8 million on our fund balance this year,” Rilling said. “But that’s the recommendation of our CFO. … So I have to go along with it in order to keep the levy down.”

Referring to Hamilton, Dachowitz said, “We told him that what he requested for the operating budget was unacceptable. So he said, ‘Well, how about a one-time transfer from the fund balance? I know it’s a bit of a budgeting gimmick.’ I said, ‘Tom, just stop. No. Answer is no.’”

“It’s just it’s two years of deficit spending. And that’s not a good way to move forward,” Abrams said.

 

NPS statement

A late evening statement from Norwalk Public Schools Communications Director Brenda Wilcox Williams also highlighted the $69.7 million fund balance. The “unprecedented increase in what is the largest unallocated fund balance in the State of Connecticut could be good news for families and schoolchildren throughout Norwalk,” it said.

“Even before this year’s increase, the rainy day fund has been more than sufficient to retain the city’s Aaa/AAA bond rating from the country’s three major rating agencies,” it said.

“We commend the Mayor and Common Council for actions they have taken to grow revenue and the city tax base,” BoE Finance Committee Chairwoman Barbara Meyer-Mitchell  is quoted as saying. “We are hopeful that the City will take advantage of this unique opportunity to help close the opportunity gap for Norwalk children.”

The statement continued:

“’A strategic portion of the education budget increase could be funded from the rainy day fund, without significant tax impact, if handled in a sustainable manner.  By paying for one-time costs in the budget from this fund, we can achieve our educational goals,’ said Dr. Steven Adamowski, superintendent of schools. ‘Norwalk spends $1,245 less per pupil than Stamford, and $2-3,000 less than our surrounding neighbors, yet more than 50% of Norwalk students are eligible for free and reduced lunch, and Norwalk also has a higher number of special needs students and English learners than all of these districts including Stamford. This is a unique opportunity to provide justice and equity for all Norwalk students, and to make up for the historic underfunding of Norwalk schools.’

“Budget goals in the Board of Education’s budget request for 2019-20 include funding for salary and benefits increases included in collective bargaining agreements, an appropriation to accommodate growing student enrollment, and the expansion of choice programs, including an enhanced program at Kendall Elementary, the historically lowest performing school that serves the largest number of Norwalk’s high needs students. Funding is also included for after-school programming, increased transportation costs, the expansion of summer school for students who need academic support, the addition of a world language to help students meet new graduation requirements, and improvements to school counseling services and social emotional learning support.”

 

 

Adversarial?

It’s almost impossible to determine the NPS headcount, and while NPS states its salaries have gone up 9 percent, the “union contract” had a 2.3 percent increase, Dachowitz said in his presentation.

“They added 23 full time equivalents to that salary line,” Dachowitz said. “…I go back to Jimmy Carter, zero based budgeting. Justify your numbers every single year.”

BET member Sheri Brown asked if Dachowitz had queried Hamilton on the “misleading” budget request stats. Dachowitz said he hadn’t.

“We had a meeting with Mr. Hamilton and they did not refute that comment,” Rilling said.

“They didn’t deny that. My math is right,” Dachowitz said.

“We should be more collaborative,” Brown asserted. “…It’s a city versus Board of Ed. And I don’t want us to go into a budget session like that because the schools are part of the part of the city.”
She continued, “We talk about some of the numbers in terms of the percentages. The city has, how many employees, what do we have about 200 employees? I don’t know. The school district probably has about 1,500 employees, maybe. So it stands to reason that their expenditures are going to be a lot larger. Right?”

“What the question is, what are they spending their money on? We have no idea,” Dachowitz replied.

Three weeks ago, they had a meeting and “said that their budget request was unacceptable,” Dachowitz explained. Hamilton was asked to come back with a proposal for a phase-in budget but it didn’t come in until Friday morning, that’s why “my team worked all weekend, Saturday and Sunday.”

“I don’t like to wash dirty linen in public. But the reality is, they didn’t play fairly with us,” Dachowitz said.

In his first six budgets, the City worked amicably with the Board of Education to “reduce that adversarial optic,” Rilling said. “This time around, it seems as if they’re more looking to dig in.”

Dachowitz said that 17 years ago, he was treasurer of Nassau County, running “more money than Bill Clinton did in Arkansas.” He warned of a “political gimmick:” when you try to reduce spending, politicians “propose cuts, not of the waste, but of the things that are politically popular.” He predicted, “They will say it’s the biggest cut, because they asked for 16 million, and we only gave them 10.”

“The Board of Education and I look forward to further discussions with Mayor Rilling to modify Mr. Dachowitz’s recommendation,” Adamowski said in his statement. “We are most concerned that our students have an equitable, sustainable level of support that enables them to maintain the high level of achievement our schools have worked so hard to attain, while accommodating a historic enrollment increase in English language learners and other high need students, reflective of the  City’s growth.  Working together, in a respectful, mutually supportive manner, I’m confident that both governmental bodies, the Board of Ed and Common Council, can accomplish this.”

13 comments

Concerned February 11, 2020 at 6:27 am

Schools that were supposed to be funded by grant money are not as cut and dry. Kendall has all this money allocated for their Above the Bar and now there is only one funder that is “promising” money only if a partner jumps in and the district. If things changes and the money isn’t there then you don’t go through with it. Instead the city is being asked to put funds up for it even though teachers and families are not for it. Someone needs to wake up and see that people have agendas that aren’t in the best interest of the students, staff, or families.

Sue Haynie February 11, 2020 at 6:43 am

“You never see the public school budgets go down. I’ve never seen anything like that. I’ve been in corporate. I’ve been in nonprofits. I’ve even seen education. I’ve never seen it. It’s a very big handicap,” said Dachowitz” Thank the State of Connecticut, not allowing a PS budget to decrease from the previous year has been codified into law.

Speaking of deceptive, an ‘average’ 3.81% increase ($245/year) doesn’t really tell you how bad it will be. Multiply that ‘average’ by 4 for lots of homeowners in Rowayton, Cranbury, West Norwalk, East Norwalk. That’s a HUGE property tax increase. Homes aren’t selling now because Norwalk’s taxes are so awful.

John ONeill February 11, 2020 at 6:44 am

It seems as if Henry Dachowitz knows his stuff. Maybe he can convince Hartford we need help educating our ELLers. Maybe, just maybe the Board of Ed and the Teacher’s Union will give us the straight scoop on the cost and effects of educating our new immigrants.

Bryan Meek February 11, 2020 at 8:15 am

So Sanctuary Harry rolls out the red carpet to refugees and now doesn’t want to pay for them.

And sanctuary Duff passed the laws that greased the skids for this and he’s up in New Hampshire stumping for South Bend Indiana’s mayor.

And the logical conclusion is to attack the BOE and make them look like villains for following state and federal laws that require we provide these children an education.

I give the new guy credit for examination of the numbers and wanting to provide a different basis for analysis, but he’s new to CT. Maybe they did it this way in Michigan, but he shouldn’t call this sneaky, They conform with GASB standards and are similar in nature to how every other town in the state does their budgeting process.

I think he is correct by the way, that all real revenues and expenditures should be made transparent, but this is how it is has been done since whenever and consistency is required. For example, we bury the fact of the contribution to teachers retirement funds, likely for the simple fact that it is a cash transaction that never hits our accounts, but nevertheless GASB does require it so we do report it. For years prior, the state was funding about $40 million a year and during that time it was considered to be one of the worst funded pension schemes in the country. This past year the state only put in $15 million because the state is broke. The city will be broke soon as well as none of this is sustainable.

Bridget P February 11, 2020 at 8:27 am

Finally a CFO that gets it! The BOE is out of touch with the sustainability of its budgets and must operate accordingly – Cut, cut, cut and be mindful these are taxpayer dollars and finite resources. I doubt the BOE manages their own household budgets in the same manner they are depleting taxpayer resources.

Kevin Kane February 11, 2020 at 8:56 am

I’ve heard of this no-cut mandate but want to learn more – the comment by Dachowitz is pure genius about the mandate absurdity:

The “challenges” include the state mandated minimum budget requirement, which means the school budget cannot be cut, Dachowitz said. For instance, if NPS wants to fund a superintendent search, that money stays in the budget next year.

“You never see the public school budgets go down. I’ve never seen anything like that. I’ve been in corporate. I’ve been in nonprofits. I’ve even seen education. I’ve never seen it. It’s a very big handicap,” said Dachowitz,

It would be interesting to know the history of this mandate here on Planet Connecticut. A future news story would be helpful perhaps.

Bryan Meek February 11, 2020 at 10:05 am

So, he doesn’t believe the enrollment numbers, but on the other hand he just put in $225 million for a larger HS? Which is it?

Tom Belmont February 11, 2020 at 10:20 am

As the city Progressives urge and lead the way to a more Progressive city the taxpayers foot the bill. Do the taxpayers know what is happening to them, can they keep up with the proposals, the motions, the onslaught of the Central Planners machinations to grow(spend) the budget at each fiscal cycle? I think not. How could they with their nose to the grind stone with their own personal pursuit of happiness, their own interests of growing, their own machinations that have NOTHING to do with the strange and separate growth of a city growing more into a city, with all the problems made of a city and find themselves, as I do, finding their government distant, unfriendly,and cold. And as the Central Planners plan and spend on their projects the sole reason for their existence (to serve the public; the taxpayer, the origin of their sustenance ) is nothing but a memory. Hence,the forgotten man…the forgotten taxpayer and the fitting government motto, “Serve them not and take all they got”
Citizens Unite. Take back your City, Your Town. Your life, liberty and happiness. Find people to Represent you.

Banks February 11, 2020 at 11:56 am

Wow, challenging leaders to be accountable, imagine that!

“the question is, what are they spending their money on? We have no idea,” Dachowitz replied.

Two years of deficit spending, here’s an idea, take a good look citywide at all the department heads and apply the same accountability challenge, look beyond the deception.

Thank you Mr. Dachowitz for airing out a harsh reality that needs questioned! The words confusing and misleading are used far too often here!

As a taxpayer, I don’t mind paying for the marching band’s request, as National Champs, they are a bright light in this mess! Imagine if funding was based on merit.

John ONeill February 11, 2020 at 2:09 pm

I’d like to know how to buy a Henry Dachowitz T-Shirt. He’s about to get hit from all sides, but he is my hero. Is it possible to clone him and send a bunch of his offspring to Hartford?

Scott February 12, 2020 at 8:36 am

Finally, someone who has the authority to bring to light, or at least question, what many of us in Norwalk have concerns about. It’s about time!

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