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BOF Meeting 10/10/17: How Does the Lack of a State Budget Impact Haddam?

Submitted by Ed Munster.

The Board of Finance held its October meeting on 10/10/17.  Much of the discussion was regarding the lack of a state budget and the impact on state funding that is sent to towns, particularly Education Cost Sharing money.

As previously reported the Town of Haddam has already made three payments to the school district per the original schedule totaling 30% of the full commitment for the fiscal year.  The next scheduled payment to Regional School District #17 is due on October 15.  Because there is no State budget, the town of Haddam may not receive the Educational Cost Sharing payment from the State which is normally received late in October.  This ECS money is used by the towns to support education costs.

The immediate issue is what will be the impact on the October and November payments from the towns to the RSD.  Haddam First Selectman Lizz Milardo and Killingworth First Selectman Cathy Iino have met with RSD #17 Superintendent Howard Thiery on the topic.  Thiery agreed in a memo to the towns that the towns could reduce their October and November payments by $500,000 for each of those months and that RSD could handle the near term impact on cash flow.  However, for the rest of the school year if no agreement is reached with the RSD, the monthly payments will need to be increased to make up this $1 million or major cuts to RSD spending will have to be made.   When a State budget is finally reached and actual ECS funding levels to the towns is established, this will need to be revisited. 

The worst case scenario for the present fiscal year is that the ECS funds of about $4 million (approximately $2 million from each town) are cut entirely by the state.  As RSD #17 makes up about three quarters of the total town budget, the current thinking between the towns and RSD is that RSD would look to reduce spending by three quarters of any reduction in ECS money and the towns would look to reduce general government spending to offset the other quarter.  In the worst case, that could mean that RSD would have to reduce spending by about $3 million if the state eliminates the ECS money entirely.    The Haddam Board of Finance says the worst case for the town would mean a half million reduction in general government funding could be taken from reserves.  Regardless, the Selectmen and BoF have taken steps to contain spending this year.  If the state funding is not approved, then the town and the RSD will be faced with reducing services or increasing taxes via a supplemental tax bill or some combination.  The BoF stated that it does not want to call for a supplemental tax bill.  If the RSD can offset any shortcoming of state funds with spending cuts then there will not be a need for a supplemental tax bill this year. 

Taking a more long-term view, a recent joint meeting of the Boards of Selectmen and the Boards of Finance from the towns of Haddam and Killingworth with the RSD #17 Board of Education considered the possibility that the ECS money from the State might be eliminated or cut drastically not  only this year but indefinitely.  A proposal for the long-term was discussed at this meeting that the towns and RSD would, as above, share this cut in State funding in proportion of RSD spending to general government spending.   Readers are warned that this is only in discussion and there is no formal agreement along these lines.

Editor’s Note: When the official minutes are released, they will be found on the town website, www.haddam.org.

 

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One Response to BOF Meeting 10/10/17: How Does the Lack of a State Budget Impact Haddam?

  1. jody lynn

    October 12, 2017 at 9:58 am

    what a mess, thanks for info/update.