NORWALK, Conn. — The “cliff” feared by Norwalk Public Schools now has a dollar figure attached to it – 27 million.
If you assume the City continues its “0% increase” for school funding in the 2022-23 operating budget as it’s doing for 2021-22, then the “cliff,” the amount of schools’ increase that will result three years down the road when the federal COVID-19 funds dry up, could be 13%, Norwalk Public Schools Chief Financial Officer Thomas Hamilton said at Tuesday’s Common Council meeting.
The Council held a largely ceremonial review of the operating budget, affirming approval of the Board of Estimate and Taxation’s plan in the absence of any action needed by Council members. There will be no tax increase for Norwalk citizens due to the American Rescue Plan, passed by Congress after the Council set its cap, Finance Committee Chairman Greg Burnett (D-At Large) explained. City-side expenses will be offset by $12.9 million in federal funds and Norwalk’s expected $8 million drawdown from the Rainy Day Fund is off the table.
“This is obviously a welcomed assistance during the difficult economic times and impact of the COVID pandemic. However, the infusion of the American Rescue Plan funding will not appear each and every fiscal year, so we must move forward with caution and beginning to extrapolate our operating expenditures and more new posture, two and three years ahead,” Burnett said. “And I would say that also includes looking at the Board of Education to operating budget.”
The Council and Board of Education Finance Committees will meet quarterly, starting in June, Burnett said.
NPS will be getting $27.5 million from the American Rescue Plan, divided over two years, Norwalk Chief Financial Officer Henry Dachowitz has said. The City had planned to allocate a $4 million increase to the schools and now is planning to keep the funding flat.
“While we appreciate the importance of minimizing tax increases in this economically challenging time, (using federal funds to fill the gap) creates a fiscally irresponsible ‘cliff’ for Norwalk’s school budget in the years to come,” Norwalk Superintendent of Schools Alexandra Estrella and Board of Education Chairman Colin Hosten said in a recent oped.
It depends on what assumptions you use when you run projections, but in year three “it equates to something on the order of about a $27 million increase, that we would be looking at. So that is a big concern of ours,” Hamilton said Tuesday.
The joint Committee meetings and the efficiency audit that’s expected to begin soon should make the cliff “not as severe as it might appear,” Dachowitz said.
Council member Tom Livingston (D-District E) asked about restrictions on federal funds.
A government cannot use these funds to cut taxes, Dachowitz said. Also, “these funds should not be used for pension plans or OPEB funds which pay for post-retirement health costs.”
The schools “still do not have definitive guidance from the state of Connecticut,” Hamilton said. “All we have is the actual bill that the Congress had passed, but it’s unclear what restrictions, if any, the state of Connecticut is going to impose.”
Previous COVID relief funds did set parameters and, “we do expect that the new round of funding may have some similar types of restrictions or they may be more flexible, some indication that they may be more flexible,” Hamilton explained. It looks like at least 20% of the funds will need to be spent to address learning loss brought on by the pandemic and it’s yet to be determined how that’s defined.
“We may be able to take a certain percentage of our elementary school teacher salaries and suggest that you know that is being used to address learning loss,” Hamilton said. “So I don’t fundamentally disagree with Henry’s assessment that the funds can be probably can be used to cover what would really be a normal ordinary increase in our operating budget.”
But, Hamilton said, “Really our first preference would be to use those funds for those additional needs that our students are facing, so I do want to put that on the record.”