Neglected school infrastructure will be getting a closer look from a new committee, the finance board is shooting for a tax increase below 2% next year, and the 2019-20 budget work will start with a projected 5.2% school spending increase while the selectmen — having cut several positions — are hoping to hold town departments to a near-zero increase.
That was the financial landscape outlined at the annual tri-board meeting, when the selectmen, school and finance boards gathered Dec. 18 in the town hall annex to share perspectives on the town’s financial situation and the upcoming 2019-20 budget.
“We are falling behind and our schools are crumbling,” Board of Education member Doug Silver told the meeting. “We are not catching up.”
Major problems that have not been addressed include a bathroom at the high school that has been closed because the water doesn’t work, and a badly leaking entry vestibule at Barlow Mountain Elementary School.
“It’s not functional,” Silver said of the vestibule. “We have blue tarps up.”
Members of other boards were surprised, maybe a little shocked.
“We didn’t hear about water not working in bathrooms,” First Selectman Rudy Marconi said.
“Deferred maintenance costs more than taking care of it,” said Selectman Steve Zemo. “…Leaking roofs are not going to go away.”
Town and school officials alike complained that capital spending budgets once focused on building repairs and equipment replacement were now being consumed by computer-related expenses. An example was the Board of Education’s replacement of servers that are a “must have” because they control door-locking systems in school buildings.
“These requests aren’t just about bricks and mortar,” school board Chairwoman Margaret Stamatis said. “…A lot of it has to do with the safety and security of our students.”
”The software, the technology — [it’s] taking up all of our capital,” said Marconi.
School board members recalled the major capital investments made a couple of decades back with passage of “the bundle” — a $90 million bond issue that financed a major school expansion and improvements, as well as construction of the new recreation center (with Barlow Mountain being converted from recreation back to school use).
The selectmen reminded the school delegation that at that time of “the bundle,” Ridgefield schools were dealing with overcrowding — 500 students were being taught in an elementary school designed for 300, East Ridge Middle School, with an original capacity of 800 students, was serving 1,200, they said.
Today, enrollment has been in a multi-year decline — although school officials said the turnaround is coming soon.
“Not only is the trough not at severe, we’re starting to see an uptick in a couple of years,” said Stamatis.
In the end, there was agreement to form a committee with representatives of all three boards and have it look into the problem of school capital needs. Doug Silver of the school board, Amy Freidenrich and Jessica Mancini of the finance board, and Selectmen Zemo and Maureen Kozlark stepped forward to serve on the committee.
Schools talk 5%
Acting Superintendent of Schools Dr. JeanAnn Paddyfote told the meeting that the school board had signed a new contract with teachers, the town’s largest employee group, but projections of next year’s budget costs were dependent on negotiations with three other unions — paraeducators, secretaries and custodians.
“We won’t have solid numbers when we put the budget together,” she said.
Given that, Paddyfote said, the school administration is projecting a roughly 5% increase with a “roll-over” or maintenance budget — even if that includes cuts to four teachers anticipated as the third year of East Ridge Middle School’s elimination of one teaching team due to falling enrollment. That reduction in teaching staff that hit sixth and seventh grades the last two budgets, and will be felt in eighth grade next year as the smaller classes move up.
Still, costs can be expected to rise.
“If we look at everything driving increases,” Paddyfote said, “…We’re looking at 5.2% right out of the gate.”
Town eyes zero
The budget for town departments — police, fire, highway, parks and recreation, town hall administration — isn’t subject to student enrollment changes, as the school budget is, Marconi admitted.
“The town is probably a little more consistent year to year — we know what we have,” he said.
“The town is looking to come in at zero — maybe a little bit more,” Marconi said.
Like the schools, the town struggles annually with cost increases in areas, such as health insurance. Initial increases in premiums — approaching 20% — are projected by insurance providers each year, and then negotiated down to something like 10% or 7%.
With the town’s health insurance account totalling $4.4 million, Marconi said, those percentage increases still mount up — and they can’t go on year after year.
“10% that’s $400,000 right there,” he said. “A 7% increase in premiums is unsustainable.”
Health insurance has long been problematic for towns, he said. “If you look at municipalities, compared to the private sector, we pay more than anyone,” Marconi said of health benefits.
So to hold down expenses — salaries as well as benefits — the selectmen have been been trimming the workforce.
“The town just completed an incentive retirement plan,” Marconi said.
He said 11 workers had retired, and there were also two layoffs. Even with changing roles and some rehiring, there’s a reduction in headcount.
“The majority will not be backfilled,” Marconi said.
The town anticipates savings of about $500,000 from the workforce reduction, he said.
“Whether that allows us to come in at a zero increase remains to be seen,” Marconi added.
Like the schools, the town has some capital projects in the works, and some more on the horizon.
The $48-million sewer plant renovation was approved by voters last fall, and there’s a scramble to get the new plant designed, sent out to bid, and a by awarded by June 30. If the town doesn’t make the deadline, it could lose portions of an anticipated $11.5 million in state grant money that is expected to reduce local cost from about $48 million to $36.5 million.
The next major capital expenditures the town is anticipating are renovation or construction of new facilities for emergency services — both the fire and police departments.
“We need to address improvement of both those facilities,” Marconi said.
“The firehouse was built in 1896,” he said.
And the police station on East Ridge is in a converted Victorian mansion.
“Do we rebuild the police station here, rebuild an old home?” Marconi said.
He recalled an architect who’d previously studied the police station saying: “No matter how much money you put into it, it’s still an old house…”
So, police and fire department needs are under study.
“That will be the next major project we’ll be working on,” Marconi said. “…Probably in a 2021-22 time frame. There’s a lot of work to be done yet.”
“We have to keep our local tax rate as low as possible,” finance board Chairman Dave Ulmer told the meeting.
“The rate of inflation is somewhere under 2%,” Ulmer said. “I think we can easily hold our rate of increase under 2%.”
The 2.5% “spending cap” the state set for municipalities a couple of years ago shouldn’t be a problem, according to Ulmer.
“I think we can do a lot better than that,” he said of the 2.5% cap.
The financial prospects for the coming budget are bolstered by good revenue and spending projections for the current 2018-19 fiscal year, as well as the recently completed 2017-18 year.
“The following year is going to be worse. It’s going to be harder,” he added.
The roughly $14-million “fund balance” represents 9.7% of the annual budget — above the finance board’s guideline of a fund balance between 8% and 9%. That means some fund balance money will be available to be returned to taxpayers by using it as non-tax revenue to hold down next year’s mill rate increase.
The current 2018-19 budget is set up to use $1.6 million from the fund balance as non-tax revenue, following “use of fund balance” budget lines of $1.8 million in 2017-18 and $1.95 million in 2016-17 — although with revenues coming in strong and spending held below projects, usually the actual use of fund balance comes in below what is budgeted.
“We’re looking at a pretty good year this year and a few more challenges the year after that,” Ulmer said.
Still, he said, “At some point you’re going to run out of fund balance.”
Ulmer warned town officials involved in budgeting to keep in mind the fallout from this year’s “tax cut” approved in Washington. The changes to the federal income tax structure — with lower rates offset by the elimination of deductions, including a $10,000 cap on state and local tax (SALT) deductions — would hit many Ridgefield residents hard, he said.
The average Ridgefield house pays about $12,000 in property taxes. “That alone gets you above the $10,000,” Ulmer said.
“It’s not only state and local,” he warned,”there’s a lot of other deductions that go away.”
Ridgefielders who are working might be seeing a slight decline in taxes taken out of their paychecks, Ulmer said, but they’ll feel the other side of the tax law changes — the loss of deductions — when they pay their federal taxes April.
And the April 15 federal tax deadline is just a couple of weeks before town’s budget and taxes will be presented for approval by voters — “a lot of whom are going to be in an angry mood,” Ulmer said, “angry at taxes.”