The Town of Fairfield could have lost $3 million in state aid, if the Board of Education budget had been cut by the $2.1 million that a referendum had asked for last May. That's according to a formula emailed to First Selectman Ken Flatto from the state department of education.
In a press conference on Tuesday afternoon, Flatto spoke about this law, signed by Gov. Jodi Rell just last week. It penalizes school districts $2 for every $1 that they cut their budgets under an amount called the Minimum Budget Requirement.
Basically that's the previous year's budget minus certain state aid.
At the press conference on Tuesday, Flatto also discussed another new law that may make it harder to recover some of the money spent on renovating Stratfield Elementary School and he dealt with a third topic--the call for an audit of the school system by some of its critics. (See related article on p.1) The issue with the most far-reaching consequences dealt with the level of money that must be appropriated for a school budget before state aid is lost.
Ken Flatto said he had predicted during spring budget season that the town could lose money if the budget was cut too deeply.
"There was a debate whether the town would lose money if the budget went under last year's. My comments were very clear and turned out to be very accurate," said Flatto, adding that he had said there might be a risk if the budget were cut too much.
The new formula, laid out in an email from Brian Mahoney, Chief Financial Officer, Division of Finances and Internal Operations at the Connecticut Department of Education, and sent to the First Selectman, basically says that a school system's appropriation for this year (2009-2010) must equal at least what was appropriated for the year before (2008-2009), minus state funding called State Fiscal Stabilization Funds (SFSF), or it will be penalized $2 for every $1 the budget is under that amount.
Subtracting this year's State Fiscal Stabilization Funds for Fairfield, which were $512,168, from last year's 2008-2009 school budget appropriation of $139,614,137, would leave $139,101,969, or Fairfield's Minimum Budget Requirement, the amount that the town had to approve for 2009-2010's school budget, if it didn't want to lose state funds.
The RTM actually voted to appropriate $461,391 more than that, so it could have cut that amount before the town would have been penalized. The RTM actually did cut $502,000 from the amount appropriated to reach its final amount.
However, that $2.1 million cut that was asked for in a referendum that got two-thirds of the needed 1,800 signatures? That would have taken the board of education budget about $1.64 million below the Minimum Budget Requirement and the town would have been penalized by twice that amount, or almost $3.3 million.
The penalty would have come the following year in reduced state aid.
The same law will hold for the next year fiscal, 2010-2011, and Flatto said that if people want to argue about the budget this year, they should take into account the new law.
The old law expired on June 30 of this year and was similarly worded except that it had language that said the penalty would only be applied to towns that got an increase in state aid that year, Flatto said, noting, "The new law is broader."
On Tuesday, Flatto also warned that the extra $512,168 that Fairfield got in aid this year was due to the federal stimulus funding from the American Recovery and Reinvestment Act passed by Congress in February. That funding was probably a one-time thing he said and people should remember that when they talk about budgets in the coming year.

Second new law
A second new law states that "change orders" on school construction projects will not be reimbursed at the same rate as before. Specifically, change orders that exceed 5 percent of a project's total cost will no longer be reimbursed by the state at all. The previous law reimbursed such change orders at 50 percent of the usual amount.
The usual amount for Fairfield is 20 to 25 percent, according to First Selectman Ken Flatto.
The reimbursement amount is different for every school district and reflects a town's tax base or ability to pay. He said that large cities may get up to 80 percent reimbursement, well-off suburbs get much less.
"Change orders" can be anything that was not bid in the first round of bidding.
Those can be for unexpected costs, such as the second oil tank that was discovered on Stratfield Elementary Schools' property. The tank had to be carted away with its extra dirt.
Another unexpected cost for Stratfield renovations was the discovery of more ledge rock than the building committee had thought was there. Flatto said there are already a few hundred thousand dollars worth of change orders for the school.
A change order can be for design changes, as well as for unexpected renovation costs, and Flatto said that the state law probably reflects the fact that some school districts "add and add and add" after designs are approved by the state and the state doesn't want to end up reimbursing them. Flatto added that Fairfield doesn't do that on its projects.
The renovations for Stratfield Elementary School are budgeted at $17.5 million, according to Jack Boyle, Deputy Superintendent for the schools. Contingency fees, which are used for both construction and design change orders, represent $1.6 million of that amount.
The state will consider the final project cost to be whatever the cost is when all the bids are received and sent to the state for a second approval. For Stratfield, the final cost could be as low as $15 million, or it could be higher.
The good news is that in surrounding towns, "Today, the bids are coming in very favorably," Flatto said.