NORWALK, Conn. — Praise fell easily at Monday’s Board of Estimate and Taxation meeting in light of what Mayor Harry Rilling called “relatively good news” on the financial front.
- The budgeted $6 million withdrawal from the Rainy Day Fund is not necessary
- The Board of Education projects a $4.3 million surplus
- The BoE plans to repay last fall’s $1 million English Language Learner special appropriation
The tone was overall collaborative.
“I’m sure that working together, we can probably come up with some creative solutions to continue moving forward in providing that level of education that we know we have to provide for our children,” Rilling said to Norwalk Superintendent of Schools Alexandra Estrella, Norwalk Public Schools Chief Financial Officer Thomas Hamilton and Board of Education Finance Committee Chairwoman Barbara Meyer-Mitchell. “I know the Board of Estimate and Taxation understands challenges that the Board of Education is facing, and Norwalk Public Schools are facing.”
A ‘spirit of cooperation’
Hamilton defended NPS from what he called “misplaced concerns” of overbudgeting. The estimated $4.3 million surplus is equivalent to the City’s 2018-19 budget results, he said, describing spending 98.4 percent of the budget as akin to landing on an aircraft carrier.
Budget assumptions are made 18 months in advance of the fiscal year, he said.
“We don’t need anything other than to have a pandemic occur for us to realize that sometimes assumptions can change wildly over the course of 18 months. No one was anticipating we were going to be in a pandemic, when we were preparing the budget for last year, but here we are,” Hamilton said.
Hamilton’s estimate of a $4.3 million estimated comes with a “conservative” figure of $900,000 in outstanding liabilities but it may be “closer to $500,000,” he said.
So it’s a 2.1 percent surplus, compared to Norwalk’s 2.8 percent under budget in 2018-19, Hamilton said.
“I think that 2.1 percent number in light of all of the changes that has occurred during this, you know, COVID-19 situation is quite reasonable and will compare favorably I suspect with, you know, any kind of projections coming out of the city,” Hamilton said.
Looking back, he mentioned one COVID-19 expense.
“Although the district did not lay off any employees, we did experience an increase in unemployment expenses to the tune of about $130,000 just for the month of April alone, which was related to former employees who were able to collect because they their look-back period applied to when they were district employees,” Hamilton said.
Estrella asked the BET to consider COVID-19 expenses that will arise, “maybe allowing us to roll over some of those additional funds to address some of those added expenditures that we will have to deal with in the new academic year.”
Rilling called the report “encouraging” and thanked NPS for honoring the agreement to pay back the $1 million special appropriation.
But, he said, “I don’t know if the Governor or the Department of Administrative Services or anybody is going to allow the carryover of more than 1 percent of the budget.”
He noted “a spirit of cooperation and understanding and trying to work together” with Estrella and said, “I’m sure that working together, we can probably come up with some creative solutions to continue moving forward in providing that level of education that we know we have to provide for our children.”
Meyer-Mitchell and Hamilton countered that State law allows for a 2 percent carryover for Boards of Education, a change that passed in recent years.
Meyer-Mitchell also said NPS expects $2 million in federal CARES Act funding for COVID-19.
“We have a strategy to work with the city and work within our system to make the most of that funding. And then I think we’re all watching to see what will happen at the federal level.” Meyer-Mitchell said. “My hope is that parents across the country and teachers unions across the country will unite to push for a bill that’s entirely separate from the rest of the political mess that they’re arguing about and just move forward with funding for the schools. But at this point, the school funding is tied up in the back and forth over liability and all the other issues that are being argued in Congress, so I think we have no idea what we’ll get from either level yet.”
The education folks promised to be transparent and work with the BET. Estrella, Hamilton and Meyer-Mitchell said they’d attend the monthly BET meetings.
“Certainly there have been a couple of years where the relationship seems to have been more adversarial than it really is necessary,” Board of Estimate and Taxation Chairman Ed Camacho said, noting that Rilling has been advocating for a “continuing dialogue.”
“Many of the last couple of years, it’s really more question of misunderstanding that came from really a lack of communication,” he said.
“From the moment that I first spoke with Dr. Estrella, it was very, very clear that there was a desire to have a back and forth and a good working relationship, and a lot of openness,” Rilling said.
“We did budget a $6 million fund balance transfer,” Norwalk Director of Management and Budgets Angela Fogel said of the 2019-20 operating budget. “So there was expected a expenditure deficit over revenues. But because of the surpluses in the accounts there, it should be relatively flat. My forecast came in about $700,000 positive.”
She hasn’t gotten all the rollovers yet and doesn’t expect conclusive numbers until October, she said.
Norwalk is $1.1 million short of revenue estimates, BET member James Frayer said.
Investment money came in high, $1 million above budget, Chief Financial Officer Henry Dachowitz said.
“I think given what we’ve been through with investments and COVID this year, of course, we are restricted in our investments to very conservative investments,” Dachowitz said. “But we have worked at lengthening the ratio duration and taking long term paper earlier. So therefore, we were able to capture some of the higher interest rates before they went down.”
There’s a shortfall in Recreation and Parks due to fee loss, he said. But, “I think taxes are going to come in just fine, if not above the 98.6 percent and that makes sense with COVID.”
While fees are down because house inspections and other things aren’t happening, “For the whole year with a $350 million budget, we’re less than half a million dollars below budget,” he said. “…The key is that the expenses have come in lower …we will not have to draw down the $6 million.”
And, “given what we’ve gone through with COVID, very, very pleased,” Dachowitz said. “It enabled the city to not have to do furloughs and layoffs, which I’m very proud of.”
“It’s the conservative budgeting. It’s the good fiscal approach. It’s the rainy day fund. It’s everything coming together in a crisis,” Dachowitz said. “And as part of the budget for next year, we’ve socked away some monies for unanticipated either revenue shortfalls or higher expenses that we just can’t anticipate on a line. That depends on COVID whether we’ll be able to reopen, hopefully, God forbid, we don’t have a second wave or bad things happening and the economy starts to recover. So I think financially we’re doing okay.”