Education Funds Finding Other Uses

Some Communities Have Been Diverting State Grants To Municipal Accounts

July 18, 2005
By LORETTA WALDMAN, Courant Staff Writer

Taxpayers might not know it, but the state aid sent to cities and towns for education does not always find its way to schools. Municipal officials have been able to divert or "supplant" portions of educational cost sharing grants to pay for roads, heavy equipment and other expenses having nothing to do with education.

A provision tucked into a bill passed in the waning hours of the state legislative session last month is changing that. The added language is putting teeth in the Education Cost Sharing program and giving school officials the leverage they need to claim the money.

Technically an amendment to the state Education Cost Sharing grant program, the measure requires any municipality getting an increase in ECS money to appropriate no less for education than it did in the prior year, plus the increase in ECS funds. Municipalities that do not comply face penalties twice the amount they shortchanged education. The money would be taken from future ECS grants.

"It's basically saying if a town receives additional education dollars, those funds must be spent on education," said state Rep. Andrew Fleischmann, D-West Hartford, and House chairman of the legislature's education committee. "Unfortunately, there are a number of towns who have a lamentable history of reallocating education dollars for other needs. "

In New Britain, the battle over the money has become an annual sideshow.

School leaders grumble about not getting what they're due while skeptical elected officials wrestle with competing demands on their scant resources and try to keep taxpayers happy.

This year was the first in recent memory when cash-strapped city leaders did not fund education at or only slightly above the minimum required by the state. In the fiscal years beginning in 2001 and 2002, education spending teetered so close to the edge that it triggered audits by the state Department of Education and threatened New Britain with fines double the amount of the shortfall.

School officials in Bridgeport, where school spending also hovers close to the minimum allowed by the state, requested the change in the law, Fleischmann said.

Another municipality where funding for education has been an issue is Winsted, where voters have the power to cut funding for education below what it was in the previous year.

It took until the spring for Winsted voters to approve the 2004-05 town budget. The spending plan went to referendum seven times before passing.

The tussle over the money is rooted in the fact that education cost sharing grants and other state aid for education are deposited in the general fund of a city or town and then doled out to school boards. Because any additional education cost sharing money is not allocated until the end of the legislative session in late June, city officials have the option of hanging on to whatever they receive above the amount requested for school budgets.

"It beefs up the fund balance when it's more than anticipated," said Glenn Clocko, comptroller for Bristol, who estimated that 80 percent to 90 percent of cities and towns in the state use the money for expenses other than education.

"That's the game," said Mark DeNicholas, director of finance for the Winsted Board of Education. "As long as [city officials] zero out the budget in the end, they can manipulate the money."

That's exactly what happened in Winsted last year, when a local legislator secured an additional $275,000 in education grant money for the city, none of which was passed through to the school board.

"It was used to defray taxes," said Kathleen O'Brien, the school board's chairwoman.

The tighter guidelines apply only to ECS grants - the largest chunk of state aid for education by far - but municipalities can still hang onto reimbursements from the state for special education, public school transportation and education for the blind. That's where city leaders in New Britain found the $308,275 needed to reduce the tax rate by half a mill.

"It's the common council's prerogative," said John Jedrecjezyk, finance director in New Britain. "If they want to pass it through they can, but it's certainly within their authority" to keep it.

The measure was one of 60 provisions in a larger bill known as an "implementer," which stipulates how state money should be spent for various education programs and initiatives. It went into effect July 1, but interpreting it has not been easy.

In Tolland, the town council sought the opinion of the town attorney before voting Tuesday on how to spend its $133,000 ECS windfall. The school district wanted the extra money, but town officials were not sure they were entitled to it because of the school budget increase of nearly $1 million they was approved.

Cities are not obliged to turn over the money when increased spending exceeds ECS increases, the town attorney determined. Council members voted 6-1 to give the money to the school board anyway, but over the objections of residents who said they felt that the decision undermined voters, who approve the school budget by referendum.

"You have competing principles here," said Peter Curry, Tolland's acting town manager. "It wasn't easy to sort out."

School officials applaud the measure, but they have reservations.

"It's a step in the right direction, but it doesn't go far enough," said New Britain Superintendent Doris Kurtz. "At a time when we are all expected to get to the same finish line ... all state money for education needs to be passed through."

"I think there is still vagueness," said Tolland Superintendent William Guzman. "Until the state decides how they will monitor this stuff, there will still be uncertainty. In our particular case, [we were] asking the town council to appropriate the money because our budget was reduced and we [knew] the funds [would] go a long way to bring back some of the programs we cut."

Municipal officials put up little resistance to the change, Fleischmann said. He suspects that it has something to do with the demands they make each year at the state Capitol for more ECS money.

"You can't have it both ways," he said. "You can't accept extra money and then use it for something else. That's just duplicitous. I think taxpayers have the right to expect that when we allocate more money for education, that money will be spent on education."

Lisa Carver, chief of staff for New Britain Mayor Timothy Stewart, called the measure unnecessary, at least in New Britain.

"We already have been doing this," Carver said. "Clearly, in a community with our educational needs, the city funds education well above what we get from the state. It's just one more mandate on municipalities that gives [municipalities] less flexibility with their budget."

Fleischmann defended the change and said the existing law did not do enough to ensure that the money was spent on what it was intended for. The fact that $1.6 billion was poured into the program by the legislature this year - the biggest allocation in the history of ECS - made protecting the money all the more important, he said.

"This new mechanism is a powerful enforcement tool," Fleischmann said. "We had to make sure that money was used for education, not fixing potholes."