Questioned about town surplus, Simmons says state should budget so well

Questioned about town surplus, Simmons says state should budget so well

Record-Journal
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Rob Simmons talks to the Associated Press. | AP File Photo

STONINGTON — The town’s fund balance may appear high compared to other towns, but the amount represents years of fiscal planning in order to improve the town’s bond rating so that two elementary schools could undergo renovations, which is the biggest bonding project in the town’s history.

That was the message First Selectman Rob Simmons sent to the state after he received a request from Benjamin Barnes, secretary of the Office of Policy and Management, to provide the town’s fund balance, or surplus, for 2016-17 and estimated for 2017-18.

The state’s request came on the heels of Gov. Dannel Malloy’s proposal to cut 100 percent of the town’s Education Cost Sharing funding, totaling $1,649,159.

According to Simmons’ office, the town’s estimated total surplus for fiscal year 2017 was $16.4 million of which $13.9 million is designed as unassigned. Stonington’s budget is $67.6 million including municipal, school, debt service and capital spending.

The projected fund balance for fiscal 2018 is $14.6 million and the unassigned fund balance is $11.3 million. The fiscal 2018 budget has not been finalized because the state has not finalized its budget.

At his office Monday, Simmons said the town’s balances appear high because the town had been saving for more than a decade toward the renovation of Deans Mill and West Vine Street elementary schools, a project totaling $68 million and costing the town $52 million if state reimbursement comes through.

Referring to his Aug. 17 letter to Barnes, Simmons explained the town’s financial position.

“Over the past 16 years, the town’s bipartisan Board of Finance has had the foresight and financial restraint to plan ahead for this big bonding event,” he read. “By promoting tight and sometimes painful operating and capital budgets leading up to the present, Stonington has been able to build a fund balance adequate to offset the significant impact these two school projects are having on the town.”

Simmons also said that towns are encouraged to maintain a reserved and unreserved balance if they want to have a high bond rating, which determines the cost of borrowing money through the sale of bonds. A decade ago the town’s rating was AA3 and has worked to achieve its current AA1 rating.

The town also adopted a fund balance policy of keeping at least two months of operating expenses available in the unrestricted fund balance, or at least 16.67 percent of budgeted operating expenditures, which was “instrumental in the town achieving its AA1 bond rating,” he said.

Simmons said the town had been advised that the national average for municipalities’ unrestricted fund balance is 25 percent, which is one of the metrics the town is measured against.

“Our advisor further suggested that any decrease to the town’s fund balance will undoubtedly weigh against [us] when we bond this fall for the school projects,” he read from the letter. “We agree and we urge the state not to take any action against our fund balance that places our current bond rating at risk at this crucial time.”

Simmons said the Board of Education recently published a list of deferred capital maintenance projects that total more than $10 million.

The town’s public works projects have also been underfunded during the preparation for the two elementary schools’ renovations, he said. In addition, some funds have been reserved for the repair or replacement of three of the town’s bridges that are under assessment, he said.

Simmons said any use of the surplus to offset state aid cuts would significantly impair the town’s ability to safeguard the town’s assets.

He added that the town’s approach should be promoted as an example to other towns.

“Raiding these funds to support other municipalities is not just unfair, it is tantamount to theft,” he read from the letter. “We should not be penalized for exhibiting foresight, ‘belt tightening’ and fiscal responsibility; rather, the responsible approach we have taken should be promoted as an example for other towns to use as well. It should be rewarded by the state. Anything less is just not good public policy.”

chewitt@thewesterlysun.com


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