Members of a financial committee charged with reviewing the superintendent's proposed budget are trying to squeeze in another $250,000 for something called the other post-retirement benefits (OPEB) fund.
The quarter-million-dollar request is from Mayor John A. Harkins, who, in a meeting with Superintendent Irene Cornish two months ago, asked the school board to include the funding in its fiscal year 2012-13 budget.
Cornish, however, did not include the appropriation in the proposed budget she presented to the school board on Jan. 23. Her draft of "anticipated expenditures" was a .41 percent increase from this fiscal year's budget, which equates to a $378,347 increase for a total of $93,780,529.
"[Mayor Harkins] said he wanted us to fund OPEB, however, if in order to do that you have to close a school, then don't do the OPEB," Cornish said in a phone interview Tuesday.
The financial committee that's responsible for forwarding a revised budget to the school board met Monday night. At that meeting, Board of Education Chairman Gavin Forrester said if the $250,000 were included in next year's budget, that would bump the percentage increase from last year's school budget to .67 percent.
"We go above .5 there might be some red flags," he said. "I would not feel comfortable presenting [to the mayor] anything more than a half point."
Forrester said Mayor Harkins has requested a final budget proposal from the school board by Feb. 21.
OPEB = POTENTIAL LIABILITY
"OPEB is your liability, your obligation," Supt. Cornish said. "If everyone covered under [the school's health insurance] were to all retire tomorrow, this is how much money the town would need to fund that obligation. That's your potential liability."
The number on the school's side is $5.7 million, according to Michael Feeney, the school board's chief operating officer. He said the town's number for its employees is $9.7 million.
Cornish said the school board was first asked to fund the liability two years ago. She said members were "caught off guard" and did not include it in the budget. Nor did they last year. In fact, OPEB has never been funded by a school budget, Cornish said.
The superintendent said several area towns don't fund this liability.
WHY OPEB IS IMPORTANT
The OPEB number -- now at $5.7 million -- will continue to grow, school officials said.
"It becomes a very large unfunded liability," Feeney said. "And eventually rating agencies will be looking at that line."
Much like a federal government credit-rating downgrade, an empty OPEB can lead to the town falling out of favor with certain rating agencies, Cornish said. And if the town's bond-rating is downgraded, she added, that could negatively affect the town's ability to borrow money for construction projects, among other things.
"We have been told by the town to contribute, they are trying to develop a trust to pay down this liability," Feeney said. "Right now it's pay-as-you-go."
MALLOY TO THE RESCUE?
Gov. Dannel P. Malloy's proposed school reform could give Stratford schools an extra $576,597 next fiscal year.
'Could' being the operative word, according to Forrester.
"Proposals are only pieces of paper," he said Monday. "It's meeting with skepticism on both sides of the aisle."
Forrester, who chaired the meeting Monday, gave the committee the homework assignment to find room in the budget for the $250,000.
If it's possible, the committee will determine during a meeting tomorrow night, which will precede a special school board meeting where it's anticipated a vote on the budget will take place.