A Million-Dollar Surprise Hits Board of Finance During Mill Rate Discussions [CORRECTION]

Last week, the BOE made a surprise budget announcement just as the BOF was deliberating on a projected mill rate increase for FY2022

Wilton schools may have been closed last week, but the Board of Education made a surprise announcement that will have a big impact on all Wilton taxpayers.

During the April 6 Board of Finance meeting, the BOE notified BOF members that there’d be roughly one million dollars of an appropriation from the town’s coffers it wouldn’t need, and they’d be “giving it back”–something that could make next year’s taxes a bit less painful.

Back in January, town officials decided to set aside $1.5 million from the town reserves for FY’22 in case COVID costs for the schools exceeded what was budgeted. Now, as they’ve been able to refine next year’s needs, school officials will be able to make do with less of a supplemental appropriation–to the tune of $1 million.

That change will impact next year’s projected mill rate increase, which originally had been calculated at 2.33%, bringing it down to a 1.48% increase instead. That will be finalized by the BOF Tuesday evening, April 13.

Superintendent Kevin Smith explained to the BOF, “A year ago we didn’t know what was going to happen and what the needs were going to be related to COVID… we froze our budget, and back in August, the decision we made then was, as we were incurring these COVID costs, we were going to try to manage and cover as many as we could through our operating budget.”

Smith said he learned about the lower supplemental request after a final budget analysis by Anne Kelly-Lenz (who holds a unique position as CFO for both the town and BOE).

Kelly-Lenz explained that grant money from COVID relief programs was a major factor, along with significant savings in transportation costs; athletics; training and conferences; changes in insurance; repairs and maintenance; and operating and general supplies resulting from fewer students attending schools in person, on fewer days.

She emphasized that no expense was spared when it came to providing for quality education, health and safety. “All the educational needs… anything that was needed to directly affect the students, the teachers and the environment we made sure was fully funded, and then we held back everything else… We held on to those savings and with two months left in the year, we do feel we can cover [the anticipated costs],” she said.

BOF chair Jeffrey Rutishauser responded, “That’s very good news. That’s a real nice surprise, to reduce the mill rate even further from what we came into the meeting at.”

Mill Rate Changes

Before the BOE’s announcement, Rutishauser’s plan for the April 6 meeting had been to deliberate on a projected mill rate calculation of 28.1013 that was based on the approved budgets and estimates for the General Fund and Grand List.

But with the “return” of the $1 million to the General Fund, the new mill rate would be 27.8685. This represents a 1.48% increase over last year, but a 1.17% decrease versus FY2020, which Rutishauser and other town officials have said may be the more meaningful comparison.

Due to advance public notice requirements in the Town Charter, the BOF could not immediately vote on the new mill rate calculation. The BOF did, however, make its final assessment on all of the major components of the budget as inputs to the mill rate.

All of the board members had the opportunity to comment on the final BOS and BOE budget numbers, which have already been the subject of detailed review by the BOF as well as public hearings.

While noting his surprise at the lack of public input on this year’s budget, board member Kevin Gardner concluded the budget is “reasonable,” adding that “the most important thing is that we look at the average increase across two years given that last year was such an extraordinary year.”

Chris Stroup succinctly said, “I would like to acknowledge the terrific work by both the BOS and BOE. We’ve been given two well-constructed, well-conceived, well-documented budgets, which I believe deserve the support of the BOF and the town.”

Michael Kaelin summarized his thoughts, “In terms of the process and the role of the BOF, I think it’s our job to really look at every single line item in both budgets that have been presented to us and to ask tough questions of the BOS and BOE to satisfy ourselves that these expenses are really necessary, and to find out what we would lose if we didn’t fund them to the amounts they’ve requested. In my view, we’ve done that.”

Stewart Koenigsberg thanked the BOE and BOS for their “outstanding efforts” on the budget, but gave particular praise to the BOS for achieving a budget decrease versus the pre-COVID budget. “The entire town owes a debt of gratitude for their ingenuity, creativity and willingness to be exceptional and fair public servants,” he said.

While he added that a similar debt of gratitude was owed to the BOE for their efforts, along with the teachers and school staff, he also noted, “Substantial money was spent this year, and provided in next year’s budget, which hopefully will free up in future years with the pandemic in the rearview mirror.”

He went on to discuss his lingering concern with per-pupil spending, an issue he also raised with the BOE earlier in the budget talks. “I do have ongoing concerns as to whether [budget] increases are sustainable given the rate of decline in the student population… As a board, we need to spend more time on that subject and work collaboratively with the BOE in evaluating cost management opportunities in the declining enrollment environment. I would add, there’s data out there that look at trends that have been creeping up upon us.”

[Editor’s note: Koenigsberg referred to data from the Connecticut State Department of Education’s Office of Fiscal Services that suggest Wilton is spending more per student than some towns in Wilton’s District Reference Group (DRG). The “net current expenditures per pupil” or NCEP calculations are clearly defined on the CSDE website.

When questioned on this matter by GMW during the budget process, Superintendent Kevin Smith said he was aware of the NCEP data and had sent questions to the CSDE about the calculation. “We are in the process of trying to better understand the calculation of our own per-pupil expenditure and are curious about the [2019-2020] year over year increase in our number given that our budget was flat and we returned money to the town,” he said, and noted that the BOE had used historical data from a different source in its recent budget analysis. “We use the information that is published by the Connecticut State Department of Education on their Edsight database. The Edsight database has not been updated to include per pupil expenditures for 2019-2020,” he said.]

Sandy Arkell agreed with Koenigsberg on the BOE budget that “there are definitely challenges and trends that are not looking [favorable], we’ve got the decreasing enrollment as [Koenigsberg] pointed out, and there’s also just a lack of certainty right now during this pandemic” and felt the BOF would “need to address those [issues] as we go forward.” Overall, however, she praised both the BOE and the BOS for their “thoughtful and responsible” budgets.

Rutishauser put the discussion in the broadest context. “When we met last year at the beginning of the pandemic and under the emergency order by the governor, all the uncertainty we faced was like looking into a dark abyss. The townspeople were enduring major financial crises including suddenly losing their jobs. We had no idea how their financial distress would affect the tax revenues we collect to fund the municipal and educational services we provide. A vaccine was still a promise of the future without an if or when… The BOE and the BOS had to take the responsibility for a number of out-of-the-ordinary challenges due to COVID. Today we are in a much clearer position.”

He specifically credited senior leadership of the town and the BOE. “[They] all worked together to deliver the services we have come to expect… and things we have never done in the past at this scale. Their day jobs quickly became day and night jobs as they successfully led and managed the COVID response for the town.”

Importantly, Rutishauser continued, “To ease some of the financial burden on the taxpayers last year, we determined to cut or defer a significant amount of expense that resulted in a decrease of the mill rate last year of 3.77%…  We knew then that a number of the expenses deferred would be reinstated when times got better, and we would potentially be facing a mill rate increase roughly equivalent to last year’s decline. And the early rollups of the budget’s projected mill rate increase was more than 4% of last year… it looked like a large one-year increase over last year’s COVID lockdown budget. But the BOE and BOS sharpened their pencils and whittled their respective budgets.”

But that wasn’t the only factor resulting in Wilton’s projected budget health for next year. Rutishauser said, “Last year, we built up a large amount of reserves in the budget in case the worst happened. About $2.9 million in reserves, the highest in modern Wilton history. We hoped they wouldn’t all be needed, but kept them until we could be certain.”

That time has come for the BOE. With just a few months left in its fiscal year, the BOE now feels confident in its ability to anticipate costs associated with the pandemic, thus prompting them to release the funds back to the town.

“Of all the years that I’ve been on the BOF, I am most impressed by what the BOE and BOS and department heads have done this year in responding to the challenge of COVID and positioning the town for the future. You deserve our respect and gratitude,” Rutishauser concluded.

The budget and mill rate calculation are summarized on the chart below:

Source: Board of Finance FY2022 mill rate model

Having voted during the April 6 meeting to approve the major components of the budget as outlined in the chart above, the BOF is expected to vote to approve the new, lower mill rate at the next BOF meeting, tomorrow night, Tuesday, April 13, at 7 p.m. The meeting is open to the public. A link to the Zoom meeting can be found on the meeting agenda which will be posted on the town website.

Responding to the positive tone and consensus during the meeting as well as to some closing comments by Kelly-Lenz on the support she received from the town during the challenging pandemic times, First Selectwoman Vanderslice offered the following remark, “What a great way to end the meeting, to have the BOS, the BOE, the BOF and the town CFO all on the same page. That doesn’t happen in any other municipality!” she exclaimed, adding, “We are so fortunate for the collaborative boards we have.”

CORRECTION:  The article has been updated to clarify that a change in mill rate calculation was impacted by a reduction in the request for supplemental appropriation, rather than by money returned from the current year’s BOE budget.