NORWALK, Conn. – There’s something missing from Norwalk Board of Education’s proposed operating budget for the next school year: a repayment to the city.
Although the board was originally expected to repay the city $900,000 out of its 2013-2014 operating budget following last spring’s dramatic and devastating budget shortfall, there is no dollar figure for that amount included in the $165 million budget request. BOE Chief Operating Officer Elio Longo said he was told by Norwalk Finance Director Thomas Hamilton not to include it.
The board also was expected to repay the city $2.2 million in 2014-2015. Longo says it may not be a problem.
Longo explained the history of the financial obligation, revisiting what happened last year: When a projected $4 million shortfall in the BOE’s insurance fund was discovered last spring, the BOE was looking at $10 million in cuts to then-Superintendent Susan Marks’ initial budget request. The city lowered the amount of the cuts necessary by allowing the board to underfund the 2012-2013 insurance fund by $2.2 million. The city then gave the board two restorations to its budget, one for $466,000, the other for $433,000.
That is a total of $3.1 million owed to the city. The replenishment plan was for $900,000 in 2013-2014, and $2.2 million in 2014-2015.
Yet Longo informed Common Council members Monday night that the money is not in the budget, on Hamilton’s recommendation. “I asked repeatedly whether or not I had to build it into the budget,” he said. “We were told not to include it.”
Councilman Bruce Kimmel (D-District A) responded, “I’ve got to say regarding what happened last spring, and what I just heard, I’m not surprised. I had no idea of how it was going to happen, forgiving your debt or whatever it’s called. I’m glad it happened the way you described it. It’s all behind us.”
The discussion moved on without further explanation.
What happened?
On Thursday, Longo said the board had taken a $700,000 end-of-2011-2012 surplus and applied it to the insurance fund. “We took the prudent fiscal approach, during late June of 2012, to apply any line item surpluses to the insurance fund, as of June 30, almost as a prepayment against future debt obligations,” he said.
In essence, it was applied to the $900,000. That would leave $200,000, but Longo said the notorious $4 million shortfall was an estimate. It worked out to be less than that.
Hamilton did not return an afternoon email looking for the exact dollar figure, but Longo said, “Hypothetically speaking, that number, $700,000 covered most – if not all – of the obligation.”
Longo said it is possible that a contribution may show up in the city’s ledger rather than the board’s ledger. That is because state law mandates that municipalities cannot drop the amount of money they allocate to a board of education from one year to another.
“At no time can a municipality fund the local school district below the prior year’s appropriation,” he said.
So if the board included a one-time expense on its budget, it would, in essence, inflate its budget. The city would then be obligated to maintain that amount.
Theoretically, the board is still expected to repay the city $2.2 million in its 2014-2015 budget, but, as Longo understands it, Hamilton is working on the problem.
“At this time, as I understand it, Mr. Hamilton is looking, or devising a plan, to address all city-wide insurance obligations,” he said. “City-wide would be inclusive of the Board of Education’s responsibility, not only health insurance but worker’s compensation as well. … He is looking at it not only for the upcoming year, 13-14, he’s looking at it over the course of next couple of years, which would capture the BOE’s obligation for 13-14, 14-15.”
He doesn’t know what will happen.
“I haven’t been given a definitive answer to the question of what becomes of it in 14-15 as of yet,” he said.
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