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Norwalk's Board of Education Studies Shortfall

This story was updated at 10:25 a.m.

NORWALK, Conn. – Numbers were bandied about Tuesday evening as Norwalk's Board of Education again grappled with a massive deficit in its current year's operating budget and the need to cut nearly $10 million from next year's budget.

About $1 million has been shaved from this year's deficit, according to Chief Operating Officer Elio Longo. But he recommended the city stick with its decision to set aside $4 million for the schools, because "we have other challenges to address from now until the end of the fiscal year."

The Board of Estimate and Taxation voted May 7 to reduce the board's 2012-13 budget by $4 million to make an allowance for a $4 million special appropriation to cover this year's deficit.

Longo and Steven Colarossi, chairman of the Board of Education's Finance Committee, said special education costs were likely to be higher than expected, hence the need to have a cushion, and maintain the $4 million appropriation.

There are about $830,000 in grant receipts that were not expected, Longo said, and about $250,000 from the food service program. That adds up to about $1.08 million.

The deficit stems from a systematic mistake in calculating insurance payments that has been going on for three or four years, Longo said.

"My estimate at this time is that the insurance deficit will likely not exceed $3 million, but the remaining $1 million as set aside by BET will go a long way in helping the board to address shortfalls in other areas," Longo said.

"It appears as if the insurance advisor thought there was a fund from which insurance payments for retirees were drawn," Colarossi said. "That fund was in the process of expiring, which led to a part of that overage."

Figures entered inaccurately into the city's accounting system, Munis, were also blamed.

"It does appear as if the numbers the Board of Education were given were off," Colarossi said. "When we approved our same services budget (in June 2011) there were some glaring errors."

The numbers added up but were in incorrect places.

"The amount of unemployment, if you look at our budget for last year, you'll see was $100,000," Colarossi said. "We took no deduction in that, we had no increase in that. Yet on Munis that number was shown in excess of $600,000.

"On the flip side, we had a $28 million figure for insurance even after the transfers out. We should have seen $27 million on the Munis ledger. Unfortunately, for some reason, our staff entered $25.6 million.

"Mr. Longo explained to us that he's been doing a lot of digging, and there doesn't seem to be a clear answer as to who authorized those numbers being entered in. All those changed numbers still came up to the 154 and change, the number that the city had allocated, an increase from the year before."

Colarossi expects that this year the staff will better coordinate with the board on the numbers.

Jack Chiaramonte, school board chairman, said the public is confused about the deficit, thinking it is at $10 million. But the $4 million deficit is being added to next year's budget. That budget was already about $5.8 million less than what Superintendent Susan Marks asked for in a same services budget.

Add those two figures together and it comes out to the $9.9 million the board needs to cut from the 2012-13 budget.

Colarossi said that figure requires a "more global perspective."

"As a committee we recognize there are no good cuts," he said. "The magnitude of what we need to find is substantial. We do appreciate that the departments within the Board of Education are all willing to roll up their sleeves and take a very detailed look at those items."

Years of cuts are part of the problem.

"Over the past couple of years we took a zero, and we cut a lot of fat out of the budget," Colarossi said. "Unfortunately, when we cut all the fat out, when we took all those positions that were always being funded but never filled, we lost our cushion for mistakes. Regrettably, we are now in a situation of looking to reconcile a net amount of approximately $9.9 million."

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