Shelton BOE Surplus Money Questioned
The Shelton BOE has $212,000 in a reserve fund, but who has real control of it?
Photos
The Shelton boards of education and aldermen are at odds over money again, but this time the city’s auditor says they better hash it out before it gets even more muddled.
During his 2010-2011 fiscal year audit report, David Cappelletti pointed out that the Board of Education has $212,000 in a reserve fund to be spent on dental insurance as needed.
He said that, although set up well and in an organized manner, the account poses a miscommunication issue down the road, and is difficult to audit going forward.
“In my experience, reserve funds are often set aside and then not touched and it can get confusing about its original purpose,” Cappelletti said. “I can see five or six years down the road, the BOE needing and using this money and the aldermen not seeing where it came from.”
So, where did it come from, anyway? BOE Finance Director Al Cameron explained that because last year was the first year the BOE was self-insured for dental, they were unsure of how to budget for it and ended up with the surplus.
“I suppose the city [has control of the money], but the cash account itself is at the BOE so they could spend out of that account and the aldermen would never know,” Cappelletti said. He suggested that the aldermen and BOE address the issue of authority sooner rather than later.
Cameron said the BOE made a resolution to open the reserve fund after reaching out to other self-insured education boards about risk reduction.
Mayor Mark Lauretti was not convinced that this entitles them to control of the money. “The BOE has a long history of establishing resolutions then changing them,” he said.
Cameron said the reserve fund could provide a security net in the future. “The day is going to come when we’re going to have a not-so-great claims experience.”
He also ensured that the money will not be used for purposes other than dental insurance overruns. “This money is at Wells Fargo, the city’s primary depository. It isn’t sitting in a bank in the Cayman Islands or anything.”
In This article
-
City of Shelton
54 Hill St, Shelton, CT -
City of Shelton Board of Education
382 Long Hill Ave, Shelton, CT
Chris Panek
8:34 am on Friday, February 10, 2012
Amazing that the BOE has "leftover" money yet every budget year they are rallying parents to support them for increased funding. i am a parent with kids in the school system and a strong supporter of education funding but things like this really leave me puzzled. Here we are charging parents up to $600 per year for thier children to play sports yet the BOE ends up with $212K in unspent funds. The Mayor made an interesting point last night.....historically the city and BOE never spend that much for dental insurance so it is tough to buy the argument from the BOE that they guessed on the amount due to the new self insured health plan and ended up with a surplus. Regardless those are tax payer dollars that were earmarked for education and they should be spent. There should be no surplus. Transfer the money elsewhere in the budget, give the money back to the taxpayers, refund the pay to play money, buy some books.....but don't just let the money sit there. Taxpayer dollars aren't investment dollars meant to accrue interest. The money should be spent in the current budget year or given back to the city at the end of the fiscal year.
wayne bragg
12:20 pm on Friday, February 10, 2012
I find it interesting that the auditor would question the BOE reserve balance yet let the annual surplus in the city departments go unquestioned. The auditor is correct in saying that “In my experience, reserve funds are often set aside and then not touched and it can get confusing about its original purpose,”...But the reserve that is created through the city department surplus is a far more confusing practice as the estimated reserve amount is co-mingled with expenditure line items in each department’s operating budget. This practice, although accepted by the auditors, is not the best method as departmental operating budgets are overstated making it difficult to determine how much of the under run was “reserve” and how much is true departmental cost performance
Chris Panek
1:26 pm on Friday, February 10, 2012
What the auditor said last night was that Shelton is within the 6% to 12% of reserve fund balance that the rating agencies like to see. That being said I agree that the amounts that certain departments return year after year should also be anlayzed. In my eyes that is the job of the Aldermen during the budget process. As the fiscal authority of the city they should use the historical expenditures of departments as one of guidelines for future budget requests and allocations.