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SEE YOU IN COURT! - May 2016

CABE Journal

May 2016

Authors: Thomas B. Mooney

Expenditures under the 2015-2016 budget have been a mixed bag in Nutmeg.  The fuel oil account and the snow removal overtime account are both underexpended, given the mild winter.  However, special education expenses have exceeded the budgeted amounts month after month.  After the budget was set for the year, three children with extensive special education needs moved into Nutmeg, and the cost of their programs exceeded $100,000 each.  Scrambling to find the funds to pay for these students, Mr. Superintendent moved $500,000 from the fuel oil and overtime accounts into the special education account.  Everything was fine until he told the Board about his actions.

In the deliberations on the 2016-2017 budget, Mr. Superintendent asked for a significant increase in the line item for special education expenditures, and Board members Red Cent and Penny Pincher started asking him a bunch of questions at a public budget workshop.   Mr. Superintendent didn’t like being grilled in open session, and he asked that the Board convene into executive session to discuss “confidential student matters.”  For once, the Board members took Mr. Superintendent’s recommendation, and in executive session Mr. Superintendent described these unanticipated expenses, explaining that he had to make the budget transfer months ago.  Going forward, he continued, the Board members should expect that these high special education expenditures will continue in 2016-2017.

Penny Pincher was incensed that Mr. Superintendent would make such decisions without her input.  “When were you going to tell us about your budget machinations??” she asked pointedly.  “We have an important oversight responsibility here, you know!”

Mr. Superintendent affected a conciliatory tone.  “You are right, Penny,” he conceded.  “I get busy, and sometimes I forget how capable the Board is of doing my job for me.  Next time I will certainly talk to you and the Board members about the budget transfers necessary to stay out of the red.”

Penny wasn’t sure if Mr. Superintendent was being sarcastic, but continued with her diatribe.  “We need more than platitudes here.  I move that we direct Mr. Superintendent to consult with the Board of Education before making any budget transfers in excess of $100,000.  We have a job to do as well here.”

After some discussion, the Board voted 4-1 in favor of the motion.  Mr. Superintendent was obviously annoyed.  He told the Board that it was intruding into managerial decisions, but he agreed that he would follow this procedure for the future.

Did the Nutmeg Board of Education have the right to exercise this supervisory control over Mr. Superintendent’s executive decision-making?

*        *        *

The Board of Education has not only the right but also the responsibility to exercise such oversight with regard to the budget and midyear line item transfers.  Conn. Gen. Stat. Section 10-222 requires that boards of education present an itemized budget estimate to the municipality each year, and it confers significant discretion on the board of education in expending the funds subsequently appropriated, providing:

The money appropriated by any municipality for the maintenance of public schools shall be expended by and in the discretion of the board of education. Except as provided in this subsection, any such board may transfer any unexpended or uncontracted-for portion of any appropriation for school purposes to any other item of such itemized estimate.

Since 1998, however, the statute has further required that in their oversight capacity boards of education monitor the budget over the course of the year.  Specifically, in 1998 the General Assembly added the following provision:

Boards may, by adopting policies and procedures, authorize designated personnel to make limited transfers under emergency circumstances if the urgent need for the transfer prevents the board from meeting in a timely fashion to consider such transfer. All transfers made in such instances shall be announced at the next regularly scheduled meeting of the board . . . .

Moreover, since 2013 the statute has further required that

. . . and a written explanation of such transfer shall be provided to the legislative body of the municipality or, in a municipality where the legislative body is a town meeting, to the board of selectmen.

Through these amendments, the General Assembly has made clear that boards of education are generally responsible for making line-item transfers throughout the year; the statute imposes these special requirements only when others make the transfers.

Given the Board’s oversight responsibility under the statute, it is clear that Mr. Superintendent should have come back to the Board of Education for its approval before making the transfer in question.  However, the definition of a “line item” is the key in defining Mr. Superintendent’s responsibility to seek Board approval for a transfer.  Budget adjustments that are not “line item transfers” do not trigger the statutory requirement that boards of education make line item transfers except under “emergency circumstances if the urgent need for the transfer prevents the board from meeting in a timely fashion to consider such transfer.”

An amendment in 2013 clarified the board’s duty here by adding the following definition to the statute:  “ ‘itemized estimate’ means an estimate in which broad budgetary categories including, but not limited to, salaries, fringe benefits, utilities, supplies and grounds maintenance are divided into one or more line items.”  Given that “broad budgetary categories” can be divided into “one or more line items,” boards of education may define “line items” broadly and may consider further detail in the budget estimate (and budget ultimately adopted) to be further budgetary subdivisions, not separate “line items” for purposes of the statute.  To avoid the need for board action on minor budget adjustments, boards of education should define “line items” for purposes of budget oversight as broad budgetary categories as set forth in the statute.

Special education expenditures have been a particular concern in Nutmeg this year.  One hopes that the Nutmeg Board of Education is aware that the Town must credit excess costs reimbursement from the state to the Board’s expenditure account unless those expenditures were included in the Board’s budget in the first place.  Given that these expenditures were unanticipated and not budgeted, the Town should have provided that credit.

Finally, Mr. Superintendent’s discomfort with the public discussion of the budget transfers caused the Board to violate the FOIA.  The Board was discussing budget transfers, not individual student cases.  Accordingly, there was no “personally-identifiable student information” under discussion, and the Board had no right to conduct its discussion of line item transfers in executive session.

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