MINUTES
BOARD OF FINANCE
April 23, 2014
A SPECIAL MEETING of the Board of Finance was held in the City Hall Auditorium on Wednesday,
April 23, 2014.
Present were Mayor Elinor Carbone, Corporation Counsel Raymond Rigat, and Board of Finance members Thomas Scoville, Frank Rubino, Joshua Ferreira, Bill Lamoin, Mark Bushka and Laurene Pesce. Also present were Comptroller Alice Proulx, Deputy Comptroller Gina Casper, Superintendent of Schools Cheryl Kloczko, Director of Business Services Danielle Batchelder, and Members of the Board of Education Kenneth Traub, Ellen Hoehne and Daniel Thibault.
Mayor Carbone called the meeting to order at 5:04 p.m.
BUDGET OVERRUN – BRD. OF EDUC.
Mrs. Kloczko explained that this year’s budget was overrun by drastic changes in the special education population with multiple students entering the district after the budget was accepted.
Chairman Traub said that historically the Board of Education would come to the Board of Finance at the end of every year that they were short of funds. Ninety-nine percent of their shortfalls are due to special education, he said, explaining that projections for enrollment, tuition and special education transportation were carried as contingency in those individual line items. He said that last year, Former Mayor Bingham requested the Board of Education remove all of those contingency line items, totaling $882,000. Mr. Traub said that unfortunately, this has come back to get us.
Mrs. Kloczko added that it’s not just special education but also school choice that is impacting their budget, including tuition payments and transportation for students who choose to attend a magnet school, Wamogo and Region 7.
Ms. Batchelder described a listing of every out of district student placement, highlighting all the additional students as of May 2013 when the budget was passed. She said the total projected tuition for magnet tuitions for Fiscal Year 2013-2014 was $6,500,000, and only $5,800,000 was budgeted. This leaves a deficit of $856,000 in tuition alone and $278,000 in transportation, due to the students added this school year, she said. Ms. Batchelder said a million dollar’s worth of students were not budgeted for last spring, along with a deficit of about $26,000 year end from $58,000 worth of legal bills.
Mr. Traub said that number includes all the actions he’s taken as of two weeks ago, such as having frozen all spending in all the buildings, stopped an IT subcontract with an outside source, and frozen field trips and any expense other than food. He said the Board of Education has a grant of $748,000 for technology that will have to be returned because they can’t hire the technicians to do it, as a cost of $50,000.
Ms. Batchelder added that Mr. Bascetta is holding $100,000 worth of facility maintenance projects.
Mayor Carbone asked if the projected deficit of $100,000 as the result of all those implemented freezes, and the $80,000 needed to implement the technology grant, includes all the accounts where there may be funds such as that building use account.
Ms. Batchelder said this doesn’t include any of their three revenue accounts – the Facility Use, School Food Service and Medicaid accounts. Those accounts have never been used for anything other than those three items, she said, and strongly urged that the Facility Use, be left untouched because it’s used for opening emergency shelters. She said the Board of Education budget had to absorb all the cost for opening our schools as shelters and never received any of that money back from FEMA because it went to the City. She said that’s why this account just sits there, in case of an emergency.
Mayor Carbone said this is a revenue account for facility use rent charged for the increased need for custodians and asked how much is in that account. Ms. Batchelder said she didn’t know because their accountant takes care of that and the last time she checked, it was between $85,000 and $89,000.
Mr. Rubino questioned the State reimbursements and Ms. Batchelder said they go directly to the City as revenue, and she is anticipating $1,400,000. Mr. Rubino pointed out the deficits shown in the performance reports and asked for an explanation. Ms. Batchelder said they wanted to break the tuition down to as finite a number as possible. Mr. Traub added that the Budget Committee asked Ms. Batchelder to track individual budget classifications but they are not identified in the lump sum budget. He said several items can be seen for the last five years that have a zero balance because they didn’t exist. We made it more detailed, he said.
Mrs. Pesce asked what the bottom line is and Mayor Carbone explained that she asked the Board of Education to meet with the Board of Finance when Chairman Traub informed her that there was a grave concern specifically with regard to the grant. She said that even through their efforts of freezing
their spending, they are still projecting a $100,000 deficit and urged the Board of Education to look at that Building Use fund.
Ms. Batchelder explained the Medicaid revenue fund saying it is used for a secretary’s pay and any additional special education needs that may occur. She noted that Medicaid has not reimbursed them for about three years, while they used to receive about $100,000 per year. Ms. Batchelder said the Budget Committee will discuss offsetting special education at their next meeting because that is what that money can be used for.
Mayor Carbone noted that on the city side, our contingency fund has been tapped, our salt line item was overrun exponentially, as was our overtime. This is going to be a very difficult fiscal year to close out, she said, and asked if the Board of Finance has any recommendations they could share with the Board of Education.
Mrs. Pesce asked if the $50,000 needed to implement the grant has to be paid now. Mr. Traub said he’s working on it, and the grant has to be spent by June 30th with the unspent portion returned.
Mr. Ferriera asked if the Board of Education has any guidance for the Board of Finance. Mr. Traub replied that they have exhausted everything they could possibly exhaust right now, and are talking
to the contractors to see if there’s a way to get an extended payment plan.
Mayor Carbone stated that if the Board of Education ends the year with a deficit, it would have to be covered. She said it would be quite detrimental to use the general fund balance to do so, in light of upcoming bonding needs. She stressed that while the Board of Education seems to be reticent to look at the other revenue accounts, these are extraordinary circumstances where, in light of the fact that the rents have been received and custodial overtime has been paid out of the operating budget, they could justify accessing that Facility Use fund. Mayor Carbone said she understands the Board of Education’s concerns, and appreciates their efforts in trying to get the contractor to accept a delayed payment. All the steps you’ve taken are the right steps, she said.
Mr. Traub said the Facility Use fund would cover implementation of the grant but still leave them a deficit of $100,000 or more, because of the special education. The implementation of the grant would be an additional $80,000, he said, so implementing the grant and covering costs would create a deficit of $200,000.
Mr. Lamoin said that from a bonding point of view, we want to be as well-positioned as possible.
Mrs. Pesce asked if we are expecting any funds to come back to the City from any of the storms. Mayor Carbone replied that no, this year’s storms didn’t qualify for FEMA reimbursement.
Mr. Ferreira asked what the timeline was. Mr. Traub replied that 8.5 to 9 weeks are needed to implement the technology grant that has to be completed within 9 weeks.
Mrs. Pesce asked if there is anything in the capital budget that hasn’t been completed yet and Ms. Batchelder said that was included in their numbers and will be used to cover some of the shortage.
Mayor Carbone recommended the use of furloughs be looked into.
Mr. Ferreira asked if the Board of Education can close out the budget with a deficit. Mayor Carbone explained that if there is a deficit at the end of the fiscal year, the taxpayers have to cover that by using the general fund balance which will negatively impact our bond rating.
Mr. Bushka wondered if $100,000 more could be received from the State on the Excess Cost Grant.
Mr. Traub said they are going to propose a budget for FY2014-2015 under the exact same format as last year, with zero contingency, and asked how the Board wants to plan for next year.
Mr. Lamoin said they have to think hard about how to restructure to better operate with that loss of revenue. From a long term point of view, he said they should find ways to operate at a lower cost, and consider removing some administrative costs they might not be able to afford.
Mayor Carbone asked if last year’s surplus was returned to the City at the end of the year. Mr. Traub said they lowered their capital projects. Mayor Carbone said in other words, they spent it down. Mr. Traub agreed.
Mayor Carbone said that since the State has created a statute allowing Boards of Education to place their surplus in a fund, it would be prudent for us to investigate that avenue going forward, to be able to access it in situations like this one.
Mrs. Pesce noted that our legislature is the problem and Torrington carries an unfair burden in the Northwest corner.
Mr. Traub said that the State is bouncing students around so that no district reaches the 4 ½ % where reimbursements would be attained. You can see students getting moved from location to location and it’s not a coincidence, he said. Mr. Traub said that he and the Mayor will meet with the State Board of Education and the Department of Mental Health to find out why Torrington receives an inordinate amount of special education students, more than anyone else.
Mr. Bushka asked how soon the Board needed to decide whether or not to implement the technology grant and added that he just hates to lose that money. Mr. Traub said he’s looking to the Board of Finance for guidance on spending money on something new when they already have a shortage. Mr. Bushka said they are spending $80,000 to save over $700,000.
Mayor Carbone said the Board of Education is looking for a nod to approvefa the expense of $83,000 from the facilities account to protect the grant funds, while continuing to look for economies going forward.
Mrs. Pesce asked if that should be in the form of a motion and Mayor Carbone said that’s not necessary. Mr. Rubino explained that the Board of Education doesn’t need the Board of Finance’s permission. Mayor Carbone said that since discretion is the better part of valor, in this case, discretion says you need to spend that.
ADJOURNMENT
On a motion by Mr. Lamoin, seconded by Mr. Bushka, the Board voted unanimously to adjourn at 5:57 p.m.
ATTEST: JOSEPH L. QUARTIERO, CMC
CITY CLERK
Respectfully Submitted,
Carol L. Anderson, CMC
Asst. City Clerk
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