FY 2023 Budget Outlook: Bd. of Finance Considers a School Operating Capital Budget, Won’t Give Guidelines to BOE/BOS

At the September Board of Finance (BOF) meeting, the board members discussed ways for the Board of Education (BOE) to avoid losing previously approved funding for building capital expenditures if the start of a project gets delayed.

Currently the town funds BOE building projects in two main ways: bonding for projects that have at least a 10-year life and cost more than $250,000, or through the BOE’s annual budget.

If a budget-funded project is deferred beyond the fiscal year in which the funding is allocated — as some were during the pandemic — the funds get returned to the town’s general fund balance, and the BOE loses the funding.

On rare occasions, the BOE has found budget surplus to pay for maintenance expenses, as it did for FY 2020 when it used surplus funding from Continuing Education income to replace carpeting at Cider Mill, but such an option is not a reliable funding source.

CFO Anne Kelly-Lenz presented two options that could help the BOE hold onto funds for deferred projects.

The first is a BOE reserve fund. Under State Statute section 10-248a, any surplus funds from the prior fiscal year that were budgeted for education can be placed into a non-lapsing account if it follows three rules:

  • The deposited amount cannot exceed 2% of the total budgeted appropriation for the prior fiscal year.
  • Each expenditure shall be made only for educational purposes.
  • Each expenditure needs to be authorized by the BOE.

Option two is a separate BOE operating capital budget. Rather than be included as a part of the annual BOE budget, it would be managed by the Board of Selectmen (BOS) along with the BOS’s own operating capital budget. The benefit of an operating capital budget is that the school district would have up to five years to use what’s been budgeted for a particular project.

“This would give the BOE a chance to get these projects done without the fear of losing the capital,” said Lenz.

Glenn Hemmerle, BOE Vice-Chairman, spoke in favor of implementing a BOE operating capital budget.

“We have limited opportunities because of the way the school year works, students in the buildings, out of the buildings, etc., to make a lot of these changes and do a lot of these things that we just can’t get done and that money goes away, it’s lost … We have to go back again and ask for it. This would give us some flexibility, and the assurance that we have the funds there, and we are able to work toward getting it complete within the five-year time span allowed under the operating capital budget.”

Kelly-Lenz said it would be possible to set up a BOE operating capital budget and have it in place for the upcoming FY 2023 budget cycle, although some details still need to be worked out, including how developing the budget and expenditures would be managed given that it would fall under the BOS and overall town budget.

BOF member Stewart Koenigsberg was supportive of the idea and pointed out that in the past, building maintenance has been an “easy” area to cut when the BOE has been asked to reduce its proposed budget.

“Because the town owns all the buildings, even those which are shorter-term investments in nature tended to suffer.”

BOF member Sandra Arkell, who’s also on the joint BOE-BOF Finance Subcommittee, explained that an operating capital budget would primarily be used for project-based, non-recurring needs, like bathroom renovations, flooring, and lighting, while ongoing regular maintenance would be covered under the BOE’s annual budget.

With general support from all BOF members, First Selectwoman Lynne Vanderslice told them that the next step is for school officials to meet with her and Kelly-Lenz to work out details and procedures, and then she’ll bring it to the BOS. Once BOS members are on board, both the BOE and BOF would need to vote on adopting it.

In the meantime, BOF Chair Jeffrey Rutishauser suggested the BOE members can likely count on the new mechanism to be in place for when they begin structuring their FY 2023 budget.

FY2023 Budget Discussion

The board members moved on to begin discussing the FY 2023 budget. Rutishauser noted that in some prior years, the BOF has provided targets and guidance for budget increases to the BOE and BOS — but not every year.

While he sees pros and cons to both, Rutishauser asked the BOF members whether they wanted to provide guidance to the other boards and if so, what number would they give as a target and how would they decide on it.

BOF member Chris Stroup said he would opt not to give guidance. “I prefer the two boards put together recommendations based on what they believe is best for the town.”

Koenigsberg said he believed everyone was unanimously against setting guidelines. He did speak in favor of getting more information on multi-family developments and other Planning & Zoning projects in the pipeline, and their potential budgetary impacts — potential tax revenue, how many have been approved, rough estimates of increases to the student-age population, etc.

He would also like information from the BOE that is focused on a longer-term view of what it hopes to achieve in quality in the schools and how Wilton compares to other districts.

Jeffrey Rutishauser recommended asking the BOS and BOE to answer some of these questions and address them when putting together their budgets.

While there was no official vote, Jeffrey Rutishauser had this final comment:

“I’m not wild about fixed guidelines, they sound great in theory. We had great promise years ago, and then a couple things happened the past couple of years that soured me on it. They became a safe harbor. Once you got that number you could stop working on your budget and I think that led to some behaviors that I didn’t think particularly appropriate in the budget process. I am not in favor of them either. I think we have unanimity that we will not be setting budget guidance.”

The Board of Finance meets next on Tuesday, Oct. 12.