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NORWALK, Conn. – Norwalk’s proposed spending plan for the next fiscal year includes about $1.7 million to help pay for a portion of the education budget shortfall that was discovered last year, members of the Common Council learned Tuesday night.
The city hopes to pay the debt incurred by the education insurance payments deficit in two years, according to Finance Director Tom Hamilton, an amount that has been reallocated from the schools district's spending plan to the city’s for accounting reasons.
“I don’t want to say that we’ve forgiven the debt,” Hamilton told the council’s Finance and Claims Committee. “But we’ve told the Board of Education to budget as they would and the city will handle the repayment.”
After the 2014-15 fiscal year, the debt, which amounts to about $4 million, will have been paid, Hamilton said. But, he added, the Board of Education is essentially paying for the shortfall – even though the money is technically coming out of the city’s spending plan – in part because the school district is not recommended to receive its total monetary request for next year.
“The board requested more than I’m recommending,” said Hamilton of the roughly $164 million he is recommending for the school spending. “That’s money that could have gone toward instruction.”
Thursday night, the committee will hold a public hearing in the Common Council Chamber of City Hall to listen to residents’ suggestions on the spending plan. The hearing is scheduled to begin at 7:30 p.m.
The council sets the city’s overall spending cap at its Feb. 26 meeting, and over the ensuing weeks the Board of Estimate & Taxation works with departments – and holds its own public hearing on March 20 – to set the spending plan within that cap.
“The council’s role on the operating budget is more limited,” Hamilton said. “It’s to set the cap. It doesn’t set how much goes to one department or the other.”
Comments (11)
It is important to note that City finance officials are providing their honest professional opinions of what the taxpayers can afford to pay. There is nothing nefarious (as my friend, Mr. McCarthy noted) when professionals do their jobs and provide the opinions to those city officials who must make some very tough decisions.
My concern is that questions have been raised regarding the past Board of Education budget process (which has been dramatically improved over the past three years) which could color how one assesses the current financial needs of the school district. Over the past three years, line items have been scrutinized, redundant expenses eliminated and department heads have been held to defend their requests and justify spending decisions. The budget recommendation of Interim Supt. Daddona and approved by the Board of Education is an honest assessment of the true needs to educate our students.
There is one city, Norwalk, and there is one source of funds, the taxpayers
When city carting insists on $200 dollar trash buckets Dave can remind us all his district doesn't use city carting and they really don't care what it costs.
Can't treat Norwalk as a team unless all the players suffer the same.
When councilors start professing how our city should be run when its conveniant and not play by the rules maybe its time to go.
Two weak minds who think they can help us all out can leave anytime reasons that are passed to us makes as much sense as this post.
To your remark about where Mr. Mc Carthy lives and city carting. The 6th tax district has been not getting city picking up its trash since the late 70's. The reason was they voted to leave Norwalk at a time where they where 5% of population and 15% of revenue.(I might be mistaking with the 15%) So to keep them part of the city City Hall thats right city hall said will give you a the money to run your own trash pick up and other means to run your district.
So Please stay on topic about the BofE and why are taxes are going up due to bad MANAGEMENT BY THE BofE 3 years ago. I moved here 15 years ago and my taxes have gone up over 150% percent since then. All for the teachers,city workers and their union. Which are still crying for more money to improve the education system while local area schools pay less in property taxes and have a better school system than we do.
WHY???
Funny thing, we are talking about 1.7 million right? then why on earth did we just GIVE AWAY a 2 million dollar parcel for $1?
The mayor, and others, called it a loan at the time, and that was ridiculous. Now they are claiming the so-called loan that was not a loan is being repaid by shorting the BoE in their next couple of budgets. The loan re-payment is not being shown on the BoE budget to get around a law prohibiting reducing a BoE budget.. What ????
Why not just admit mistakes were made that required a special appropriation to the BoE budget last year, and will require some amount budgeted each year and move on ?
OLD TIMER you complain about this mayor more than anyone. Why don't you step up and run for MAYOR this fall! You sound like you are the best thing in city politics so run. STEP UP!
Old Timer
Do you actually expect this administration to ever admit a mistake. The arrogance would not allow it
Lisa, your comment seems a little out of place. While it is true that the city did not find the error, it is not the city's business to review/audit every line in the BoE budget or results, and in fact, if they did, there would probably be a lot of phone calls made to Hartford complaining about it. The COO of the BoE found the error, and steps have been taken so that it does not recur.
The error was a fairly simple two step error on the part of the BoE worker, first they segregated the retirees portion (which was appropriate) and then they took it out of the budget rather than keeping it in (which was not).
I am also a little surprised at the attempts by others to cast Mr. Hamilton's extremely sensible steps to solve this problem as something nefarious. Perhaps this is where your comment comes from and if so, I apologize.
There is one city, Norwalk, and there is one source of funds, the taxpayers. There were no loans made, so there are no loans to be forgiven. In 2012/3 there was a shortfall because the amount was not budgeted and could not be conjured out of thin air, and so there were consequences.
Now, in 2013/4 the amount is recognized, budgeted for and accounted for, quite sensibly on the city's books and not on the BoE's due to minimum funding requirements that would kick in going forward.
Let's not rewrite history. The outside auditing firm found the city also complicit in its ignorance (ignoring) of a huge line item that moved between the city and BOE side of the post retirements ledger.
Lisa, that's not exactly accurate, although a case might be made if the city had more advanced and more expensive software in its accounting system, the error might have been flagged earlier. (The Council has recently voted to fund the necessary upgrade, and both the BOE and the city will be using it in the future.) The auditors found that the BOE's insurance projections, done by a consultant, were sufficient to cover claims the last three years. However, the BOE, for rather fuzzy reasons, never budgeted the full amount (believing, erroneously, that the city would cover part of the OPEB contributions to the fund. Because of this, the BOE insurance reserve, which at the time was too high -- pushing $6 million -- began to be drawn down each year. The city knew this, but had earlier been pushing the BOE to begin drawing it down. When the reserve was deleted, the deficit emerged, and Longo realized what was happening. One might argue that the city should have noticed the depletion of the reserve, but that's really the responsibility of the BOE.
Some questions have been raised as to how the Board of Education could not have had a better understanding in the past of the full costs of retiree health benefits (the so-called “OPEB” expenses). First the presence of a “reserve” account from which certain expenses were being deducted was never disclosed in any of the Board of Education budgets; therefore, those of us reviewing the insurance consultants’ calculations for the cost of insurance that needed to be budgeted were never advised that we were, in effect, evaluating a net value for those needs. Secondly, those of us who attended BET and Common Council meetings reviewed the materials that were submitted and read that the retiree health benefits would come from the City-side of the budget (it was only at a meeting last May when we were advised that there were different types of retiree OPEB expenses which were apportioned among City-side and school budgets). But in the Finance Director’s March 2012 report to the BET regarding the 2012-2013 budget (which can be found on page 3 of that report) it is written: “The proposed tentative budget for FY 2012-13 for the Board of Education is $159.5 million, a $4.7 million increase over FY 2011-12’s budget. Direct education funding represents 53.7% of the proposed budget. Additionally, approximately $22.0 million of expenses are contained in the City budget that directly supports the Board of Education. Specifically, debt service for Board of Education capital projects, pension contributions for non-certified Board of Education staff; workers’ compensation, general liability, and property insurance costs; OPEB expenses related to retiree benefit obligations, and City departmental support of Board of Education operations.” http://www.norwalkct.org/DocumentView.aspx?DID=2218