Budget Analyses Highlight Financial Management Issues

By John Voket

This year’s budget season with its referendum trilogy was marked with some of the most contentious debates and organized advocacy in recent memory. But it also signaled an apparent turning point in the way at least some town officials want to see the entire budget process play out in the future.

As the 2009-10 fiscal cycle ended Wednesday, June 30, The Bee began reviewing a package of analyses, which, for the second year in a row, was initiated by Board of Finance Chairman John Kortze, both as public documentation and as a tool for elected officials to consider as they turn their focus toward what might be an even leaner budget cycle in 2011-12.

Unlike last year’s single-sheet analysis by the finance board chairman, this year’s packet of information included sheets of backup material, including a spreadsheet that was circulated in May by Councilman Kevin Fitzgerald; references to statements made about imminent teacher layoffs in school board minutes; projections about personnel actions on the school superintendent’s blog; and the Board of Education’s final budget.

The latest documentation was produced in concert with a number of Republican officials who either contributed to or publicly supported projections made during the final weeks of the budget process by the finance board chairman, school board Vice Chairman Kathryn Fetchick, Legislative Council Chairman Jeff Capeci and Vice Chair Mary Ann Jacob, as well as First Selectman Pat Llodra.

(The entire package of data can be viewed at newtownbee.com)

Mr Kortze released the data about a week after the Board of Finance requested the town and school district look into combining their now-separate financial and business management operations — and computer software systems. And this week, the council took up the issue of possibly combining school and town financial management, as well as initiating dialog toward seating a Charter Revision panel to consider making changes to current budget and related process mandates. (See separate story in this week’s edition)

Ms Jacob told The Bee before the July 7 council meeting she favored consolidating the school and town financial software and management operations.

“You’re going to need to prove to me why we shouldn’t do it,” Ms Jacob said. “This could be another way for the school system to save money, conserve personnel, and even help reduce the burden on taxpayers.”

The 2009-10 fiscal analysis not only took confirmed data into consideration, but also highlights additional areas where the school district might realize more savings if officials choose to move existing teachers affected by cutbacks into vacant positions, thereby saving both unemployment expenses and benefits for each.

One of the prime motivations for supporting the fiscal management consolidation, in Mr Kortze’s view, related to how long it took in several cases to provide or update information that was being circulated to the public, particularly by education officials.

The finance board chair specifically pointed to five separate cases where town Finance Director Robert Tait requested financial information from the school district so he could update budget documents posted for the public on the town website. Mr Tait said in each case, he was either denied or never provided the information by school district officials.

Projections

In the latest analysis, Mr Kortze and his GOP counterparts contend that projections of final costs and savings in the current budget made by the finance board were the most accurate compared to the school board’s final numbers on those costs and savings — even more so than projections made by school officials, advocates, and Superintendent Janet Robinson in both the school board meeting minutes and on her own school district website blog.

Projections presented during the Republican press conference held after the second failed 2010 budget vote, and before the third successful referendum. indicate that the town-side cost projections ended up spot-on.

Ms Fetchick said at that time she felt she had enough fresh information to support the projections the Republicans offered.

“I never thought we would have to reduce teachers,” she said, adding the teacher cuts already made to the district’s final proposal were justified by enrollment declines, not because of any anticipated financial reductions.

“I always believed the final utility, unemployment comp, and insurance cost estimates were all too high, and I stuck to that throughout the [subsequent] budget process,” the school board vice chair said.

First Selectman Pat Llodra told The Bee that any municipal surplus coming out of last fiscal year’s budget will be negligible — but the town will using $2 million authorized from its fund balance to balance the 2009-10 budget.

On the school side of the ledger, the $2.3 million reduction to the district’s requested increase authorized by the council resulted in another relatively accurate outcome — with the school board announcing an approximate $300,000 surplus as the 2009-10 fiscal year drew to a close June 30.

A spreadsheet issued by Mr Fitzgerald cited in Mr Kortze’s analysis represents one of a number of updates the Independent Party of Newtown (IPN) council member made during the budget process. The estimates reflected in the spreadsheet used for comparison by the GOP reflect a nearly $800,000 difference between Mr Fitzgerald’s interim update and the final school board tally.

While he has since updated the information to reflect the same closing numbers as the school board, at the time his interim projections were posted, Mr Fitzgerald was on record saying that without his projections, he was concerned that taxpayers might head to the second budget referendum armed with “bad information.”

Unifying Financial Management

Mr Kortze told The Bee that part of his board’s motivation to recommend unifying future town and school financial functions was to ensure the public had access to transparent, real-time information. He contends that by providing that level of access to real time data would diminish some of the “confusion and fear” that resulted when older data was applied to the budget process.

“You couldn’t get the same answer to the same question when you ask it from the town and the district, and it appears to be because we are on two different [software] systems,” Mr Kortze surmised.

The finance chair also referenced the substantially reduced insurance costs, especially for the school district, and information about anticipated unemployment savings, which were received and validated, he said, sometimes weeks before details were made public or updated in school board financial documents or on Dr Robinson’s blog.

Mr Kortze, Ms Jacob, and Ms Fetchick also took issue with repetitive assertions by Dr Robinson, which were picked up and recirculated by school board members and education advocates, projecting dozens of possible staff cuts resulting from the finance board’s recommended $2.5 million reduction to the district’s requested budget increase.

“The most consistent information was 20 teachers and ten [educational assistants] would be cut. But there were no more teachers cut after the school budget was originally proposed and passed to the Board of Finance,” Mr Kortze said. “Any cut early on by the Board of Ed followed enrollment declines, and in the end, they actually added a half kindergarten position before the final school board budget was approved June 15.”

Mr Kortze’s analysis overlays budget projections against the school district’s anticipated savings one week before the second failed referendum; the school district’s final approved budget; and projections circulated by the IPN and Councilman Fitzgerald.

Mr Fitzgerald explained this week that the intent of his spreadsheet was to help taxpayers understand the difference between the “available savings” as communicated by Republican Town Committee members and those savings items which the BOE considered viable, possible, worthy of future consideration, or not viable at all.

“As the BOE confirmed new savings, I would update the chart,” he said. “They are each a snapshot in time, not a projection of the end result.”

‘Apples To Oranges’

Mr Fitzgerald contends that comparing the GOP savings forecast with what the school district’s positions were at different points of time, is like comparing “apples to oranges.” And he said that the review of the final budget comparison, even in its incomplete form, is flawed.

“There is another $400,000 in credits misassigned to the RTC when using the author’s apparent methodology,” Mr Fitzgerald said. “In the meantime, a quick scan of the items shows the Final Budget Comparison document is missing 11 line items — items 14, 16, 17, 18, 21, 22, 23, 24, 25, 26 and 27 — that the RTC valued at $1.7 million in savings the BOE could take. You may want whoever sent the Final Budget Comparison to you to include the entire list.”

After reviewing the analysis himself, IPN Chairman Bruce Walczak said the “focus by The Newtown Bee and [finance board] on whose forecasted costs numbers were correct is misguided. Numbers are simply estimate snapshots, at a point of time, based on arguable assumptions.”

Mr Walczak said the important focus should be how the proposed budgets, both municipal and education, meet the needs and vision of the residents.

“The Board of Finance’s singular focus on numbers rather than what the voters of Newtown wanted to achieve with the education and municipal budgets resulted in multiple budget defeats,” the IPN chairman said.

Mr Walczak maintained that the budget process did not work well.

“Communications and political posturing detracted from effectively constructing a budget which matched the voter’s needs,” he said. “Significant charter requirements create hurdles to a more efficient, effective, and simpler budget process, such as the inability to place advisory questions on the budget ballot and the requirement for a super majority vote to add money to budgets while a simple majority vote allows reductions.”

The IPN chairman concluded that Newtown needs a clear vision of where it wants to head so that it can make difficult budget decisions in the future.

“The [finance board’s] attempt to create a budget simply on the numbers will continue to have the potential of dividing the community and fostering contentious dialogue,” Mr Walczak concluded. “Newtown must start, as soon as possible, to have that conversation so that our future budgets are guided by the community vision of what’s important and what we are striving to become.”