There was a lengthy discussion on Wednesday, February 15, at the New Fairfield Board of Finance (BOF) meeting about the upcoming round of bonding for the new school building projects. A major point of concern for BOF members is a reduction in the State reimbursement rate for portions of the school projects, due in part to space-to-student ratios and other ineligibles, which will drive up the amount needed to bond.

The elementary school’s reimbursement rate was reduced from 38% to 31% and the high school’s reimbursement rate is possibly changing from 28% to 26%. The reductions will increase the planned $12M bonding to nearly $16M. The plan is to investigate why the rates were lowered and appeal to the State to request higher funds. Originally planned for March 9, the bonding will likely be pushed out for a variety of reasons, including the fact that the Town’s audit is not complete following an extension from end-of-year  to January 31. There was concern noted by BOF members that the audit is not complete, however, it was explained that the entire auditing industry is experiencing delays.

An in-depth discussion was had regarding whether to consider altering the Town’s debt policy to allow the BOF to skip two years of payments on the aforementioned, soon-to-be bonded amount. A newly discovered option, skipping two years of payments in the 20-year bonding will help this year’s budget by decreasing the total by $400K. However, this has a trade-off that some BOF members believe is too steep—a higher interest rate that is expected to amount to $25K per year or a total of $500K over the life of the bonding. BOF Chair Mr. Wes Marsh said, “As we all know, this year’s budget is going to have a lot of increases, more so than last year,” going on to say that this is “one way of potentially smoothing out” the budget in the short term. The current debt policy language limits the BOF’s ability to alter a payment schedule in this way. Board members agreed to hold a special meeting, proposed for Monday, February 27, to review amended policy language that gives them more flexibility.

Marsh stated he is in favor of having “as many options available to us as possible, even if we decide not to take it up.” He went on to say, “I think in the long run if we can not do it, it would be better not to have to pay the extra interest over the twenty years. But if we have a budget that is simply going to be absolutely unaffordable, and we have very, very few options for doing what the Town needs and getting the tax rate to a reasonable level, then I think we need to have all of the tools available to us.” Several BOF members expressed concerns with the possible payment deferral.

BOF members were surprised regarding an update by First Selectman Ms. Pat Del Monaco on the future bus lot. She explained that the delays in approval have limited available funds in the project to spend more than what was planned for the Consolidated bus lot. She proposed that the alternative bus lot site on the high/middle school campus “will cost a mi llion dollars more than to build it on the Consolidated site at 302 Ball Pond Road. And that million dollars is not in the project budget so that will be directly on the taxpayers.”

Initially, Del Monaco explained that opportunities were lost in the ability to reuse fill from the high school site at the future bus lot. However, the Permanent Building Committee (PBC) made many attempts to save the fill when it was being removed and there wasn’t anywhere to store it—at the time, Consolidated was in use. The PBC’s Mr. Don Kellogg clarified, when asked about selling the fill last year, that, in the middle of the construction project, there were not people interested in purchasing the fill to offset the cost of removal. Added funds are needed to purchase fill if the bus lot is located near the high/middle school, but not the Consolidated site, Kellogg explained.

Regarding legal fees that have accrued by the PBC and the Zoning Commission, it was noted that $16,720 was spent so far. The total estimated legal costs are expected to fall between $40K and $60K. There is a possibility of mediation or a settlement in the future. Kellogg stressed of the PBC, “we decided that, in the best interest of the Town, we would demolish the school and grade the site so that if we prevailed in the appeal… it allows us to  more easily or more effectively put the lot there if we do prevail.”

In reviewing their medical fund report, BOF members agreed that the total amount on the report should be changed to reflect the recent transfer of surplus funds to the account. Given that the payments are made only to cover actual claim payments, it was difficult for the Board to see where the account stood in total.

There was also a discussion about the way that the Town’s finance office is pre-issuing purchase orders. It was noted that this is not a typical practice in corporate finance but is common in the municipal finance world.

New Fairfield’s Board Finance will meet on Saturday, March 4, 9:00 a.m. to hear the Boards of Selectmen and Education budget presentations.

By Sarah Opdahl