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01/10/2017 02:30 PMAs municipalities across the state work to build their fiscal year 2017/2018 budgets, work on the remainder of the current budget is not over. Just before the New Year, word came that the state will send less money than expected to municipalities for the fiscal year ending July 1. For all municipalities, that means absorbing midyear budget cuts. For Guilford, that means mitigating an unexpected $309,748 cut in state aid.
On Dec. 29, 2016, the governor’s budget director sent a letter to legislators announcing $50 million in midyear cuts, a move the letter said was necessary to cover a hole in the adopted state budget. The cuts break down to a $20 million cut to Education Cost Sharing (ECS) grant money—a program that serves as the state’s primary financial resource to help municipalities run their schools—and $30 million cut to the Local Capital Improvement Program (LoCIP)—a program used to help fund local construction projects.
Within the cuts, Guilford lost $137,903 in LoCIP funding and $171,845 in ECS grant money. Board of Finance (BOF) Chair Matt Hoey said there was always a chance of cuts, but he had hoped the state would have been able to find the money elsewhere.
“When the legislature passed the budget last year, they anticipated that there may be revenue shortfalls so they passed this provision that allowed the Office of Policy and Management to make revisions or find savings,” he said. “This was passed and the hope was they wouldn’t have to go after municipalities.”
While some savings were realized, it wasn’t enough to fix the budget hole according to the letter from the governor’s budget director. Now Hoey said the town will have to decide how to handle the loss in revenue.
“The good news is we have a healthy fund balance and we have been consistently able to generate surpluses in our operating budget. We have been able to consistently add to our undesignated fund balance, so the assumption is that we will find savings within other areas of the budget or, if that doesn’t materialize, we would be forced to use the undesignated fund balance,” he said.
LoCIP funds are not counted as revenue in the budget; they are used to offset funding for different public works projects. First Selectman Joe Mazza said the town will look carefully at any future capital projects in this fiscal year.
“I put a moratorium on all of our capital spending that has not been encumbered or earmarked to be spent until we find out what our financial position is going to be through the winter months,” he said.
ECS grant dollars are counted as revenue in the budget and while Hoey said Guilford sustained a comparatively modest cut in funding (Guilford lost 5.9 percent of its ECS funds while Greenwich lost close to 90 percent of its ECS money), Superintendent of Schools Paul Freeman said it won’t be easy to sustain a cut after a difficult budget season.
“Our budget is a barebones budget. There was a 0.6 percent increase over the dollars we had last year, so there were increased expenses, but there was no increase in money,” he said. “The reality is that we will look carefully at not conducting any discretionary maintenance work for the remainder of the year and we will look carefully at any overtime that applies to any activities outside of the school day, but our essential core functions still need to continue and so in large degree this will end up representing a loss in revenue that the town counts on.”
Freeman said the timing of the cuts presents its own challenges, too.
“It is incredibly disappointing and I understand that the folks in Hartford have really difficult decisions to make, but to reduce a budget mid-year is a really difficult thing to do and it is unfair to the towns that have to absorb those reductions,” he said.
The midyear cuts have offered a fairly grim outlook on future state funding. In the coming weeks as the BOE prepares to present its budget, Freeman said the board will always have to keep an eye on the possibility of more cuts.
“It certainly puts all of the decisions we need to make going forward under even greater pressure,” he said. “I hope to be able to continue to provide Guilford with the quality education they have come to expect.”