The fiscal year is coming to a close for the Town of Wallingford, and it is an opportunity to look ahead and try to determine what might be coming over the horizon. One subject that will surely be prominent in the coming months will be how Board of Education capital expenditures are handled.
Now stop groaning! This doesn’t have to be a mind-numbing, headache-inducing, eyes-glaze-over discussion of esoteric finance stuff of interest only to accountants and government geeks. Presented properly, it will be an interesting conversation centered around many questions that will need answering. Two that come to mind are: 1) Just what is a capital expenditure versus an operational expense? 2) Who pays and who decides what gets funded and when?
Question one: The BOE initiated the discussion during budget discussions, contending that their budget should really only contain expenditures directly linked to education, and that capital improvements should be financed separately and perhaps handled by general government. A working definition of what is considered a capital expenditure seems to be what is “bondable”, wherein something is purchased or built that will be used or will last at least somewhat beyond the 10-year life of a bond sold to raise the funds for that improvement. This would apply regardless of the method of financing.
It gets a little trickier when you get right down to determining a specific purchase or project.
In the previous two multi-million-dollar school renovation projects, much of the building committee’s time was spent determining what the State Department of Education deemed reimbursable expenses. I am not familiar with the exact determinants as to which expenses were and weren’t, but it basically divided along the line as to what was a capital improvement or addition and what was pretty much a maintenance item. Capital items were reimbursable; maintenance items weren’t.
If the BOE proposal to shift all capital expenses to a special budget funded separately from the education budget is adopted, this definition of a capital expense will be the fault line on which most of the discussion will be based. The BOE and the Town could do worse than to adopt the guidelines the state uses. It could forestall a whole lot of bickering between the two bodies.
Question two: “Who pays” has a simple answer: we all do. Regardless of which pocket it comes out of, it’s the taxpayer who ultimately foots the bill. But it would appear, from what I have read, that a part of the school system’s thinking goes beyond just shifting annual capital expenses to the general government side.
The idea that is taking shape is to build a catalog of small capital projects, purchases and improvements and lump them all together into another school renovation project with a price tag of around $8 million. Assuming that the State of Connecticut buys this approach, a potentially significant portion of the cost of all these small projects could be paid for with state funds. That’s pretty creative thinking, I have to say. It will be interesting to see if a collection of unrelated capital purchases can be sold to state government as a unified project such as were the two massive ones undertaken in the past decade or so.
Regardless of how that idea plays out, Superintendent Menzo and the BOE are determined to bring about a significant change in the way the school system pays for bricks-and-mortar infrastructure. The question then becomes: In an effort to secure more money for instructional purposes, are they willing to hand over control of all the school system capital improvements to the general government? In order to be relieved of the burden of making tough choices between instruction and infrastructure, are they really prepared for some other department to call the shots? Because this warning is as relevant today as ever: “He who pays the piper calls the tune.”
Stephen Knight is a former Wallingford Town Councilor.