By Mike Brodinsky
The Board of Education has a pot of money, unnoticed by most, with nearly $2 million in it. We call it the 1% fund. It was created pursuant to a state law passed in 2011, which allows the Board of Education to build up its own reserve by keeping its surpluses, year after year. The money in the fund is in addition to the board’s contingency funds, which protects against cost overruns. This 1% fund resembles in some respects the town’s general fund.
Why is the money being held by the Board of Education? Before the law was passed, school districts were treated like other departments in a town. Money left over in a department’s budget when a fiscal year ended lapsed into the town’s general fund. That meant some school boards had a “use it or lose it” approach.
Feeling pressured to use all their money before a fiscal year ended, some engaged in “pre-buying,” or making purchases just before the year closed primarily to use up more of its budget. This practice was not good, because sometimes a board would buy stuff it didn’t really need, or it bought stuff in a rushed process in quantities or at a price that wasn’t optimal.
The legislature sought to remedy that by allowing school districts to keep their surplus at the end of a fiscal year, with the approval of the council. At first, the statutory limit was 1% of the school district’s budget; more recently due to a change in the law, the Board of Education is allowed to keep 2% of its budget.
The 1% fund was first used in Wallingford in 2014. The council has allowed the school district to keep its surplus every year since. The Board of Education’s written policy for handling this fund is broad and flexible it can use the money for whatever it wants. The enabling state statute says only that the money must be used for educational purposes. In Wallingford, the board does not need the approval of the council or the mayor to make expenditures from the fund.
Since the fund’s inception, the board has spent from the fund $1,869,946.97. But, nevertheless, the unspent fund balance grew to $1,445,327 as of November 12, 2019, when the council, by a vote of 8-0, authorized another rollover of the surplus in the amount of $478,121.00. That takes the total unspent balance in the 1% fund to $1,923,848.
The education community might bristle at this revelation and demand to know what’s the big screaming deal with the board having some discretionary cash onhand. That depends upon one’s perspective. One view could be that the 1% fund is a money sponge, without controls or limits, which absorbs and stores taxes with no transparent showing of urgent need.
Another view could be that the town never allocates to the Board of Education all that it wants, so it always has unmet needs. Some are long term and expensive.
So if the board is able to save a few extra bucks here and there, the board shouldn’t be penalized by having to give up what it’s been able to save but not quickly spend.
No matter which way one views this, the decision-making process by the Town Council on 11/12/19 was disconcerting. During the discussion, while the board was asking the council for permission to rollover another year-end surplus, it never disclosed that it had almost $1.5 million on hand in the 1% fund. And the council never asked about it. Maybe the council didn’t think the current balance was important. Or, maybe it never thought the board could have so much money stashed away. Either way, regardless of the rationale, taxpayers picked up the tab. Now, the council needs to have a conversation on whether the money in the 1% fund should be used or stored, and whether the fund should be allowed to roll on indefinitely and continue to grow into an even heftier sum.
Mike Brodinsky is a former Wallingford town councilor and host of the “Citizen Mike” show.