Finance board flummoxed: Tea-leaf reading state budget moves
Fiddle, bicker, discuss — the state’s very public political process makes problems for the town.
“Hartford is 19 square miles, surrounded by the real world,” said Dick Moccia of Ridgefield’s Board of Finance.
Fiscal planning by the town is complicated by the state’s ways: it’s urge to offload costs onto municipalities; the schedule that has legislative sessions ending after town budgets are all done; the tendency to file bills, talk them into something else, and then vote to do a third thing.
The looming state-related problem the finance board discussed at the end of its March 20 meeting concerns the talk in Hartford of transferring to towns and cities some of the state’s obligation to finance pensions for the thousands of teachers working in schools all across Connecticut.
“The obvious problem, it’s been the state’s responsibility to fund this, and they haven’t — for years and years and years,” said finance board chairman Dave Ulmer.
The finance board was discussing Gov. Ned Lamont’s budget — proposed budget that is, what will get approved in the end is still shrouded in the capital’s gold dome air of mystery.
Lamont’s budget proposal has towns and cities contributing to the pension cost, based upon a formula that factors in the size of their certified educator payroll, their average educator salary, and percentage above the state median that their average salary is.
Numbers from the state show Ridgefield has a “total pensionable salary” of $43,644,000 spread among 469 educators for an average salary of $92,999 — 18.2% above the state median salary.
Based upon this, the state is projecting Ridgefield would be asked to pay pension contributions of $458,600 next year in 2019-20, $947,000 in 2020-21, and $1,435,500 in 2021-22.
“That would be a considerable hit to everybody’s budget,” said Ulmer.
The state’s logic of the state’s formula isn’t easily self-evident.
“We don’t know a lot about it: how these numbers were generated,” town controller Kevin Redmond told the finance board.
“If $1 million is difficult for us, how about some of these other numbers” Ulmer said. “...Norwalk?”
Norwalk would be asked to pay over $1 million the first year, rising to over $3.4 million the program’s third year.
Danbury would pay $479,000, 990,000 and $1,500,000.
Pretty similar to Ridgefield’s $458,600, $947,000 and then $1,435,500 would be Wilton’s proposed contributions over the three years: $462,900, $956,000 and $1,449,000.
Greenwich — Connecticut’s model rich town — would be asked to pay $1,321,500, $2,729,000 and $4,136,400.
How to plan?
The question the finance board has trouble with was how to plan for large potential expenses that might or might not be handed down from the state.
The town also gets money back from the state, and the board noted that the Educational Cost Sharing or “ECS” grant — coming in at $500,000 to $600,000 in recent years — was roughly the same magnitude as the proposed contribution to the pension cost for the first year, anyway.
Between the state’s unpredictability and its continuing budget woes, the finance board decided last spring not to include any ECS money in the current year’s budget. So the roughly $500,000 in ECS money that came in only added to the town’s $14 million surplus fund balance.
“We didn’t budget any this year, and we got it,” Ulmer said. “...We have gotten ECS every year, despite the fact we thought we might not.”
The draft budget for next year that the board will be working from didn’t have project any ECS money as revenue.
“I was really reluctant to put those in revenues,” Redmond said of the numbers. “...We don’t know what they are.”
Ulmer said the Connecticut Conference of Municipalities list of projected ECS grants from the state to various towns and cities showed Ridgefield likely to get $517,000 next year.
“If we were to build in this $500,000, that pushes up your expense budgets,” Redmond said.
Still, board members seemed to favor building in some ECS money into projected revenues in next year’s budget.
But the board remained unsure how to deal with the potential teacher pension costs the state may hand down.
Ulmer thought the town’s $14 million fund balance — a store of unspent money that builds up from annual surpluses year after year, and functions a little like a savings account or a rainy day fund — could handle any pension costs that get handed down after legislative action late in the session.
“If we get a bill from the state, we just pay it from the general fund,” Ulmer said.
What about the second and third years’ costs?
Those could be budgeted next year, he figured, since the town will know where the state’s coming from.
“Then,” Ulmer said, “we know we’re going to get a bill from the state.”