School For Scandal

"I am conducting an internal review of the health insurance line and the manner used to project employee contributions, School Superintendent JeanAnn Paddyfote said in a story by Nanci Hutson in today's News-Times. "When the internal review is concluded, the information will be shared with the Board of Education."

Sure. Sounds like the fox/henhouse fable to me. And what do you suppose that this "internal review" will likely find? Uh-huh. I agree with you. Nothing. That's why I believe that the Town Auditor should be looking into this.

Let me see if I can explain two of these issues very clearly.

1) The $2,400,000: Every year, the Town has a budget line for the medical expenses of its employees. That line is part of the General Fund. Medical claims are paid out of the Internal Service Fund that, for obvious reasons, is highly regulated and to which strict accounting rules apply. During the fiscal year, all payments are made to the providers of medical services out of the ISF and then the ISF is reimbursed for those payments by the monies in the GF. It is this payment due to the ISF from the GF that people are calling the "receivable." As you can see, this is nothing more than an accounting or bookkeeping entry. At the end of each fiscal year, there are always payments that have to be made that either weren’t billed or weren’t paid prior to the end of the fiscal year and this is "washed out" shortly after the beginning of the new fiscal year. That receivable is the $2,400,000. There is absolutely no "shortfall."

2) The BOE slush fund: The ISF was established in 1993 but Ray Jankowski put his foot down in 2001 when he began to see discrepancies about its handling by the BOE. Prior thereto, this is how its predecessor, the medical reserve account, worked. Or didn’t. Let’s say that the BOE budgeted the sum of $10,000,000 for receivables...any and all co-pays for employee medical insurance. And let’s say that it did this even though its history (in accounting parlance it’s "experience) suggested a different number, let’s say $11,000,000. Despite that experience, with full knowledge that it was grossly underestimating the revenue, the BOE apparently did this year after year, generating a surplus that was then transferred from this account to others. Remember that the Statutes, unlike the Town, allow the BOE to make these transfers from one account to another. Now please understand this next point. The so-called "Town-side" had no specific knowledge of the problem since the BOE was sending the allegedly proper amount – the $10,000,000 -- to Ray Jankowski for deposit into the ISF. Without access to the data such as the number of retirees in the school system, he could not know for sure that there was anything untoward happening.

In about 2000, former Town Auditor Derek DeLeo made a comment about the way that the BOE finances were being handled. I will follow up on this and post as soon as I can find them. [ed. note: see comment 3]

So the affect on the taxpayers is that we footed the bill for $1,000,000 more than we had to. This is truly voodoo accounting; it is unlawful to overtax the taxpayers and, in my opinion, that’s exactly what was being done for years by the BOE and it is exactly what Ray Jankowski alleges in his letter.

Who knew about this? BOE Finance Manager Tom Corbett surely had to know. Former Chair Wendy Faulenbach? JeanAnn? Time will tell.

Jankowski Cites BOE, Paddyfote and Diamond "Improper Budgeting Technique"

I have known Town CFO and Treasurer Ray Jankowski for more than 15 years and know him to be a quiet, gentle man who avoids the limelight and the fray. No one's dupe, he does his job expertly and efficiently with a small, excellent staff and pays close attention to and abides by all applicable laws and accounting procedures.

Thus the tone of the letter that he wrote today to the BOE and JeanAnn Paddyfote came as a surprise. In a scathing rebuke of what he describes as the use of "an improper budgeting technique," Ray makes accusations of what in my opinion clearly amount to malfeasance.

Insisting that this "budgeting technique end immediately," he wrote, "this is not the result of poor guesswork but [was] deliberate and with purpose that could never be attained under the rules imposed by my office using Generally Accepted Accounting Principles on the funding of an Internal Service Fund."

Let's put this in context. This is only one account. One portion of a bloated budget for which no one is held accountable and which I would guess that no one except Bill Wellman understands. Can you imagine what Ray would find if all of the books were open to him?

Mr. Jankowski has the power and the authority to take over the BOE Finance Department or to hire someone for it who reports to him. Such dire changes are long overdue.

This is very, very serious. The person or persons who are responsible for this ought to retain an attorney forthwith.

Breathalyzer For Students And Parents

The BOE is considering the adoption of Rules for the "Use of Alcohol Detection Devices." Here is the draft. The italicized matter is the proposed new language. Note the language in Section 5 that applies to "students and/or their guests"who attend events.

Lundgren Pushes To Raid Medical Reserve for BOE

Town Councilman Mary Jane Lundgren put on quite a show last night at the behest of her BOE buddies. Working from a folder containing materials that were obviously prepared for her, she demanded answers to questions that she herself did not understand. So embarassing to be asked a question about your question and have no meaningful response.

The BOE people think that they are entitled to money from the Internal Service Fund. Not so, for the reasons elaborated by CFO Ray Jankowski, the Mayor and Town Attorney Randy DiBella.

Come on, folks, you're already getting the benefit of $500,000 from the fund, half the million that was included in the Mayor's proposed Budget.

BOE Reduction At $320K, Not 1.7M

Here's an update of the BOE 1.7M reduction:

1) it was reduced by 280k as a result of retiring personnel (60k) and lower insurance costs (220k)

2) it should be reduced by taking the 560k that the BOE wants for capital from its capital reserve fund; and

3) it was reduced last night by 640k which is 80% of the 800k savings from going back to self-insured.

So the 1.7M reduction can be down to 320k. Surely the BOE can find that amount and if it can't, Ray Jankowski certainly can! Give him the books...I'll bet he can find some voodoo accounting going on over there!

Town To Be Self-Insured, Saves $800,000

Town CFO Ray Jankowski announced last night that the Town is going back to being self-insured effective July 1, 2008, resulting in a savings of approximately $800,000.00.

The newly calculated tax increase is 3.5% instead of 4.9% and a mill rate of 22.09.

Umbarger: 'Don't Lay the Blame Entirely On BOE'

I have to take exception to several comments in your post on the proposed New Milford budget deliberations.

But first, I agree that the economic situation is ‘not good’. Actually I think the national, state and local economic conditions are the worst I have seen in my lifetime, with no ‘blue sky’ on the economic horizon. Forces are in play beyond the control of federal, state or local policy makers.

You, in draconian or theatrical fashion, mention that to close town hall, curtail all capital projects, higher town employee medical contributions should not be entertained as discussion points for budget deliberations.

I believe everything should be on the table, what’s wrong with discussing having town employees pay the increase for their health insurance (the premiums are not going to go down – there has to be a restraint on this expense). Certainly there will be resistance, but not to discuss such a significant expense borders on dereliction. Soon, very soon the unions will have to realize that this benefit should not and cannot continue as it is currently structured.

To lay the blame entirely on the BOE, as you do, is an attempt at obfuscation and/or misdirection. A quick perusal of the budget indicates there are some material benefits that could be realized by looking at the ‘Town’ side.

Why in this economic environment do we need a two person staff for economic development, which have salary expense of over $100,000? If the thesis of dire economic forecast is correct, then the Town’s support of this expense is counterintuitive. Why should we pay to entice economic activity if there is none to be had? Why not cut these positions to a .2 personnel allocation, which would allow the Town to maintain development activity commensurate with the economic forecasts (and save $80,000)? But the big one, the best piece of pork, is $7,000 for workshops/memberships/conferences for the Economic Development Supervisor and Secretary. Let’s get real – that’s a complete waste of money when ‘every dollar counts’. Sounds like we are ‘building a bridge to nowhere!’!

And what about the Candlewood Lake Authority contribution of $58,800? That’s the amount the Town pays First Light (a private equity firm, or, - hedge fund) all the while First Light wants to ‘tax’ lakefront property owners for shoreline management and recreational boaters a sticker fee to support marine enforcement, while the Town has no zoning/building/health code jurisdiction below the 440 line according to the recent Supreme Court decision. I think the Town should seriously reconsider its $58,800 ‘tax’ payment to First Light.
Isn’t it interesting that First Light has been given zoning, environmental, health, jurisdiction which supersedes the towns’ in which the lake is domiciled, but additionally has quasi-police power through the marine patrols, proposed taxing power through the boat sticker and lakefront property fees. Sure sounds like we are ceding governmental power to a ‘private equity’ firm. Jay – you’re an attorney, with the recent court decision is First Light subject to local municipal ordinances below the 440 line, and are they even subject to State Statute with the FERC (Federal) governance decision?

Lastly, about deferring the implementation of the BOE strategic plan. I would bet the same folks who are now suggesting that the BOE defer plan implementation are the same folks who several years ago criticized the BOE for not having a plan – damned if you do, damned if you don’t.

BOE Member Wellman's Proposed $743K Reduction

This is a list of the reductions to the proposed BOE Budget that were recommended by BOE Member Bill Wellman. "Most of the Administrators said that last year's Budget was good," he said. "Given the economic times we're facing, I don't see the need for these increases."

So there's no misunderstanding, here's how to read this. For example, the proposed increase in Object line 321, Instructional Programs, was $5,495.00. This is an 8.9% increase over last year's Budget.

OBJECT, TITLE, PROPOSED INCREASE $, PROPOSED INCREASE%

321, Instructional Programs, $5,495.00 , 8.9%
322, Program Improvement, $12,100.00, 22.8%
323, Pupil Services Guidance, $69,449.00, 14.9%
324, Staff Training, $47,700.00, 97.3%

432, Non-Instructional Equipment, $4,553.00, 5.3%
433, Building & Grounds, $20,110.00, 8.5%

641, Texts New, $16,764.00, 18.2%
642, Texts Repair, $32,280.00, 67.6%
647, Periodicals, $4,385.00, 18.1%

720, Buildings & Improvements, $157,200.00, 214.2%
731, New Instructional Equipment, $66,043.00, 410.0%
733, Non-Instructional Equipment, $228,346.00, 1210.0%
734, Non-Instructional Equipment, Replace $45,359.00, 256.3%

810, Dues & Fees, $33,291.00, 69.0%
TOTAL PROPOSED REDUCTION: $743,075.00

Bill's motion failed, 7-2. Only he and Julie Turk voted for it.

Some Budget Basics

Without any increases in either the School or "Town-side" Budgets, there would be a 3.2% tax increase that results from revenue losses like fees from the Town Clerk, Buildings Department and Zoning Commission. In addition, every time the Fed lowers the lending rate, the Town's interest income takes a hit.

No increases in union salaries, debt service, medical payments or road work or anything else. Everything stays flat and there'd be a 3.2% tax increase. Subtract this from the proposed 4.9% and there'd be a 1.7% tax increase.

What will happen if the voters reject 4.9%? Then very tough decisions will have to be made about where to make cuts, balancing the services that taxpayers demand against their willingness and ability to pay for them. Should Town Hall be closed 1 day a week? Should all capital projects stop? Should employees make a higher contribution to their medical insurance? No.

I think that the money should come out of the BOE Budget, not the "Town-side." I am not in favor of emasculating the Public Works Department or decreasing the level of services anywhere in Town.

Every year we hear the rants of the PTO and BOE who swear that there's no money to be cut from anywhere. Baloney. And then, to make their point, the first cuts they make are those that most affect the kids like pay-to-play. Let's see, there are how many principals? 18? And how many of them make over 100K? All of them, I think.

How many BOE and PTO members are truly qualified to manage or even comment on a budget of this magnitude? Get a group of qualified and sophisticated people together to examine the BOE Budget and demand the supporting evidence - not the hyperbole or rhetoric - the hard evidence. They'll find the scratch, believe me. Open the BOE books to Ray Jankowski, the Town's CFO. He'll find it.

"The economic climate is not good," he said at the Budget presentation last Tuesday. "Do we want to take 2.5 million dollars from undesignated?" Not really, but there doesn't seem to be a choice if we want to be able to deliver services."

"Do I want to use a million dollars from the internal service fund? Not really."

Finally, Ray cautioned the Council and Board of Finance with regard to requests for money that come before the Members. "Every dollar counts," he said. He's so right.

Don't fall for the BOE and PTO hype. Demand accountability.

Mayor's Budget Suggestions to BOE

I can't argue with any of the suggestions made by the Mayor in this FOI'd letter. My bet is that the BOE will pay little or no attention. What do you think?