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Region One surplus fund could save taxpayers money

The Region One School District could save taxpayers considerable money in the long run if it could hold some of its annual surpluses to pay down debt or use it to pay for needed capital improvements. Such was the recommendation of the six-town school district’s Business Manager Sam Herrick earlier this month.

At the Region One Board of Education’s Sept. 8 meeting, Herrick reiterated his contention that the district could benefit from setting aside a portion of an unexpected surplus of about $291,000 from last fiscal year to pay down a bond issued in 1998, or to help pay for a new gymnasium floor.

The bulk of the surplus came from higher than expected revenues.

State law allows regional school districts to hold up to 1 percent of their operating budgets (or about $132,000 this year) for capital funds earmarked for specific purposes, but Region One has typically returned fund balances to its six member towns (Cornwall, Falls Village, Kent, North Canaan, Salisbury and Sharon) in the form of credit against Housatonic Valley Regional High School tuition payments from the towns for the following year.

The boards of finance in those towns say they prefer to work that way.

But Herrick said many other regional school districts in Connecticut make a practice of holding a percentage of surplus funds.

Herrick explained the advantages by using as an example a 20-year bond for technology and infrastructure issued to Region One in 1998 that totaled $1,263,000 at an interest rate of almost 4.9 percent. If Region One were to use part of the surplus to prepay $100,000 of that loan by Oct. 1, for example, the interest savings to the district would be almost $51,000 over the remaining life of that bond.

But another option Herrick presented would also be a money saver, because it would limit the need for future bonding for anticipated capital projects such as the gym floor in the high school. The $132,000 in surplus funds could be placed in a capital account for the specific purpose of replacing the floor of the high school gymnasium.

That floor was installed in 1962 and fared remarkably well until 2004, when a large tree fell in a gale, damaging the roof and allowing rain to fall on the hardwood, which subsequently separated from the subfloor.

“It’s not a safety issue yet, but it could become one,� Herrick said. “You can see the humps on the floor.�

“Maybe it could be a home court advantage,� quipped board vice chairman and Cornwall representative Phil Hart.

“The [Boston] Celtics got away with it, right?� Herrick replied, referring to the dead spots in the parquet basketball floor that bedeviled the Celtics’ opponents in the old Boston Garden.

Judge Manning, who chairs the Region One Board and is the representative from Sharon, said he favored the second option, of holding funds for specific projects, because of its narrowness.

“That’s the reason we have the trust of our boards of finance and boards of selectmen,� he said. “I don’t think we ought to just accumulate money but I am in favor of specific projects rather than just say every year we’re going to hold monies.�

Other board members, including Hart, Amanda Halle of Salisbury and Gale Toensing of Falls Village, agreed.

Herrick said it is not clear how much the replacement of the gym floor will cost, but he expects an estimate soon from a contractor. Previous estimates have run as high as $200,000, depending on what’s underneath the floor. If the subfloor contains asbestos, it might need to be completely replaced and disposed of with special precautions. It might even require the insertion of a vapor barrier to guard against future moisture.

Since holding surplus funds would go against the wishes of most members of the boards of finance, the move is considered politically sensitive. Manning and other board members went to members towns earlier this year and floated the idea of keeping the surpluses rather than returning the funds. The reaction was lukewarm. Most of the town officials felt Region One should include capital monies in its yearly budgets or hold special referendums for the projects. However, those towns and local boards of education themselves routinely retain surplus funds for reserve accounts of specific purposes such as energy or technology.

Ultimately, the board took no action and will discuss the matter at its Oct. 6 meeting.

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