Finance Board Moves CIP, CIP Policy To Council
The Board of Finance recently completed a nearly year-long review and refinement of a Capital Improvement plan or CIP Policy and formally presented it to the Legislative Council for its segment of the final review and approval process November 6. Then, on November 12, the finance board completed its review and approved a planned five-year CIP, which will go to the council for review and approval in December.
The process and approval of a final CIP by the Council is important because a number of spending authorizations in excess of $1.5 million each, that need to be bonded in the 2020-2021 fiscal year, need to be placed on the April budget referendum for taxpayer approval by Charter.
Following an earlier review and acceptance of municipal capital proposals, the finance board refocused this week on several proposed projects that were submitted by the Board of Education, according to Town Finance Director Robert Tait. On November 5, the CIP, Finance and Facilities Committee of the school board recommended and received approval on capital requests extending out ten years.
The current official CIP only takes the subsequent five years into account, but both the town and school district have begun building in the subsequent five years for as a means of facilitating better long-term planning.
Documentation presented to the finance board on November 12 showed the inclusion of a $300,000 capital request in the 2020-21 fiscal year for engineering for ventilation and air conditioning renovations at Hawley Elementary School, with the anticipated bonding of $3,962,000 slated for FY 2021-22.
That same fiscal year, the school district is planning to request an additional $750,000 in bonding to cover replacement and/or restoration of the high school stadium turf field and track, which will be in its 11th year of service.
The district’s planned 2022-23 capital requests include $1,452,730 to install high efficiency gas boilers and to complete an energy-saving LED lighting conversion at Reed Intermediate School. That same year, the district is requesting a $300,000 allocation for the engineering phase for ventilation and air conditioning renovations at the Newtown Middle School.
Bonding for the construction phase of that project is included in the 2023-24 fiscal year at $3,568,140. That year, the district also plans to request $997,672 for various improvements at Head O’ Meadow School that will include LED lighting conversions, new boilers, water heater, and pump replacements.
The district’s 2024-25 requests involve a $1 million earmark for a generator at Hawley Elementary School, and another $1 million earmark for window modifications at Middle Gate Elementary School.
The total district requests under the official CIP total $13,330,542. Each year that projects move forward, estimated project costs are escalated by six percent to account for anticipated inflation. A number of the projects may be eligible for partial or full state reimbursement, which was 36.43 percent in the current fiscal year, and are subject to change or elimination in any future fiscal cycle.
Any added capital projects not meeting the minimum CIP threshold of $200,000 are approved, documented, and accounted for in the district’s operating budget and are not individually subject to taxpayer endorsement or approval by the Board of Finance and Council.
Additional district projects in years six (2025-26) through ten (2029-30) are roughly estimated to total $39,821,000 — and involve capital improvements at each of the town’s seven public schools. The only newly included project on that year six-ten CIP projection is the development and installation of a $1.1 million turf practice field in the rear of the high school in the 2025-26 fiscal cycle.
CIP Policy Presented
Following Finance Board Chairman James Gaston’s presentation of the CIP Policy to the council November 6, that document was unanimously moved to the council’s Finance & Administration Committee. Mr Gaston was joined by board colleague Ned Simpson, who was said to have done “yeoman’s work” helping to document, refine, and edit many of the fine details that were either removed or modified in the proposed new policy.
Mr Gaston briefly outlined that a proposed policy was delivered to his board from the selectmen in December 2018, and it was the subject of discussion during more than a dozen meetings since.
Mr Gaston immediately overlayed the selectmen’s proposal over the current approved policy and that master document served as the roadmap upon which finance officials worked to craft the finished product that was approved earlier this fall.
The major enhancement to the policy came from the selectmen and is codified in section 310, Mr Gaston explained.
“It’s clean, transparent, and we liked that,” Mr Gaston said, adding that section 310-2 could possibly be considered for either inclusion as proposed, modification, or removal.
“We had some discussion as to whether this was a policy or regulation,” Mr Gaston told the council. “Our consensus was it was really a policy — regulations are things like ordinances. We also took out [a section referring to] the role of the Board of Finance. It’s really not the role of the Board of Finance because it’s really the role of the council to pass the final policy.”
After outlining other edits and revisions, Mr Gaston said much of the technical process involved removing redundancies and other language, “to make it transparent and make it easier for the public to understand it and the process that takes place.”
The finance chair said the bulk of substantive discussion occurred around whether a capital project must go to the Public Building & Site Commission (PBSC) for consultation during initial planning phases and a provision that would allow a newly elected first selectman to make changes to year one of a CIP immediately following them being seated.
Following a question from Councilman Chris Smith on the top few most important points that emerged over the course of the finance board’s work on the policy, Mr Gaston replied: clarification of document language, the timeline of the CIP process, and when it must end.
In regard to the PBSC, First Selectman Dan Rosenthal said he would encourage the new school district facilities director to coordinate with the commission as early and often as possible during various projects’ planning stages.
Another change questioned by council member Judit DeStefano involved fixing a $200,000 minimum threshold for CIP inclusion. That fixed benchmark was modified from the project meeting a number that represented a percentage of the corresponding fiscal year’s budget.
Again, Mr Gaston defended the adjustment as making the policy and process more simplified, and the qualifying number consistent from year-to-year regardless of fluctuations in proposed budgets.
Councilman Ryan Knapp then noted several provisions that extended documentation in the policy beyond its former scope, wondering if the language extended beyond the CIP process and into project appropriations.
Mr Gaston said that issue was a matter of discussion, but his board decided to present the language as approved by his board, adding that keeping it as part of the policy would support the greatest public transparency, although there could be an argument for pulling it out as a footnote or for inclusion in the policy appendix.
Specific Policy Changes
Significant changes to the CIP Policy, specifically under section 310, are as follows:
1. Definition of CIP items. Conform to “Capital Asset/Project”;
2. Threshold for inclusion was changed to $200,000, recognizing that there are circumstances where an item under the threshold needs to be in the CIP, for example, to show matching funds for grant application;
3. Time span of the plan approve was left at five years, However, ten years projection will be included in BOS and BOE submissions. Five years is in the charter;
4. Majority BOF and LC vote for additions was left in the policy;
5. Changes were made to be much more careful with additions or changes to Year One;
6. A new provision was added for newly Elected First Term First Selectman Submittal that reads: In odd years, if the election of a First Selectman results in the election of a person other than the First Selectman who presented the CIP to the Board of Finance in October of that year, that new First Selectman may request changes to the first year of the CIP under review by the Board of Finance and Legislative Council;
7. The process calendar was updated to reflect recent practice as follows:
*Board of Selectmen departments prepare their CIP requests;
*First Selectman presents the proposed First Selectman CIP to the Board of Selectmen;
*Board of Education develops their CIP based on that board’s policy and procedure.
Board of Finance second meeting in September:
*Board of Education presents its proposed CIP to the Board of Finance.
Board of Finance 1st meeting in October:
*Board of Selectmen presents its proposed CIP to the Board of Finance.
Finance Director presents the combined Town of Newtown CIP along with analysis, including a Debt Forecast Schedule.
By November 30:
*Board of Finance presents its recommended CIP to the Legislative Council.
By January 31:
*Legislative Council adopts its approved CIP;
*Legislative Council determines which first year CIP projects go to referendum in April.
*Bond resolutions go through the approval process for CIP projects that have been approved for referendum.
8. Wording was added to discourage bundling of items into a CIP Capital Asset/Project.
The Council’s Finance & Administration Committee will now perform its own review of the CIP Policy and make any suggested revisions before formally presenting it to the full council for discussion and eventual adoption.