FINANCIAL BUSINESS REQUEST (FBR)
Motion/Request:
title
MOTION to MOTION to establish a new Board of Education Non-Lapsing Fund in accordance with CGS 171-10-248.
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Background:
1/7/2026 Finance Committee Meeting:
Discussion: Councilor Ryan provided some background explaining that last year the State Legislature adopted a new Public Act #24-45 “An Act Concerning Education Mandate Relief”; which basically obviates the “Resolution Creating a Funding Mechanism for Making Annual Appropriations to a Capital Reserve Fund for the Board of Education”. He noted that since 1988 the Resolution allowed for the Board of Education’s surplus at the end of the fiscal year to be transferred to their Capital Account to specially be used for Capital Expenses. He stated Public Act #24-45 allowed Connecticut Board of Educations to use Non-Lapsing Accounts to carry over unspent education funds (up to 2% of the prior budget) for future Educational Expenses.
Councilor Ryan went on to explain that it was his understanding that the Board of Education currently does not have “Non-Lapsing Account”, noting that a new fund would need to be set-up. School Superintendent Jason Hartling stated that the Board of Education would transfer their budget surplus to their Capital Non-Recurring Fund. However, he noted that per Public Act #24-45 that the funds did not have to solely be used for Capital Expenses, noting that the Public Act stated the surplus funds were to be used for “Future Educational Expenses”.
Councilor Ryan stated Public Act #24-45 would take precedent over the 1988 “Resolution Creating a Funding Mechanism for Making Annual Appropriations to a Capital Reserve Fund for the Board of Education” to the extent that it allows the surplus funds to be transferred, noting that the language of Public Act #24-45 stated: “Notwithstanding any existing ordinance; or any existing requirement in a Municipal Charter”. However, he stated in accordance with Chapter VII of the Ledyard Town Charter that the Town Council was responsible “for appropriating all non-budgeted revenue”. Therefore, he stated regardless of what Public Act #24-45 said that the Town Council would still be required to act to transfer the funds, noting that the Board of Education could not transfer the funds. He stated if their Town Charter was silent or did not address that financial power, and give it to the Town Council; that the Board of Education could at its own discretion transfer their year-end budget surplus.
Finance Director Matthew Bonin explained the following terms:
Non-Lapsing Fund:
• Was a Special Fund where unspent education funds don't automatically revert to the town's general fund at year-end.
• Would allow the Board of Education to save and use surplus funds for educational needs in subsequent years, rather than losing them.
• It was not solely for the Capital Expenses.
Capital Non-Recurring Fund:
• Used specifically for Capital Expenses
• It could not be used for other educational purposes.
Mr. Bonin went on to explain for the Board of Education to transfer up to 2% of their year-end budget surplus for Future Educational Expenses that a new Non-Lapsing Fund would need to be set-up.
Councilor Garica-Irizarry questioned the process going forward if they cancelled the 1988 “Resolution Creating a Funding Mechanism for Making Annual Appropriations to a Capital Reserve Fund for the Board of Education”.
Councilor Ryan stated because there would be reporting requirements for Auditing purposes that it would behoove them to have some controls in-place on how the funds were expended, noting that the funds would be transferred on the Board of Education’s side of the ledger.
Councilor Buhle questioned how Mayor Allyn, III and Superintendent Hartling interpreted Public Act #24-45 in relation to the Town Charter.
Superintendent Hartling stated that it was complex noting the following:
• State Law when it was in conflict with the Town Charter, supersedes. He stated the Town Charter could not override State Law.
• Town Council’s February 28, 2024’s action set-up a new, stand alone, Board of Education Capital Fund for Non-Bonded Board of Education Capital Items to reside outside of the Town’s Capital Non-Recurring Fund (CNR Fund 210) (Non-Lapsing Account). Mr. Hartling stated this account already exists on the Board of Education’s side of the budget ledger and was under the authority of the Board of Education per Public Act #24-45.
• Under State Law, each year the Town Councils gives the Board of Education an annual appropriation (Annual Budget). For Fiscal Year 2025/2026 the Board of Education’s annual appropriation was $40,667,242. He stated that $40,667,242 was exclusively under the direction of the Board of Education. He explained that Public Act #24-25 stated that if the Board of Education had funds remaining at the end of the fiscal year that they could transfer those fund (up-to 2%) into the Board of Education’s Non-Lapsing Account; without anyone telling them how to use those funds. He stated that the Board of Education has indicated that they would use those funds in the non-Lapsing Account for Capital Needs.
• 1988 “Resolution Creating a Funding Mechanism for Making Annual Appropriations to a Capital Reserve Fund for the Board of Education” - Mr. Hartling explained that the Resolution stated that the Board of Education’s year-end budget surplus would be appropriated to their Capital Non-Recurring Account to be used solely for Capital Expenses. He stated the Board of Education’s current position was that the 1988 Resolution was not in-conflict with Public Act #24-25 and did not present any problem or risk to the town. He stated by keeping the 1988 Resolution in-place would require them to wait until the Annual Audit was completed before the surplus funds could be transferred to the Capital Non-Recurring Account.
Mayor Allyn, III noted Mr. Hartling’s statement that “the Board of Education has indicated that they would use those funds in the non-Lapsing Account for Capital Needs.” Therefore, he suggested, as was done in 1988 that this intention be put in writing via a Resolution or Policy that the Board of Education’s year-end budget surplus would be appropriated to their Capital Non-Recurring Account.
Mr. Hartling stated because the Board of Education’s year-end budget surplus would be a one-time infusion of funding that it should not be used for on-going operational costs and should be solely used for one-time Capital Expenses. However, he stated it would be the Board of Education’s decision on how to use their year-end budget surplus which in according to Public Act #24-45 could be used for educational purposes; and whether they wanted to implement a Policy, noting that it would be at the Board of Education’s discretion.
Councilor Ryan stated that he generally agreed that State Law would supersede Local Law unless there was a carve out. He stated Public Act #24-45 included a carve-out noting that it stated: “For the Fiscal Year Ending June 30, 2024; and each fiscal year thereafter, not withstanding any provisions of the General Statutes, or any Special Act, Municipal Charter, Home Rule Ordinance, or other Ordinance, a local Board of Education may deposit into a Non-Lapsing Account….” Therefore, he stated the Town Charter would take precedence, which provides the Town Council the power to appropriate any non-budgeted revenues, which again, this would be. Mr. Hartling stated the second the funds were allocated the to the Board of Education during the Annual Budget Process, that those funds were a budgeted revenue. He stated that once the Board of Education has its budget that the Town Council does not get to pick what the Board of Education spend those funds on.
Councilor Ryan asked Finance Director Matthew Bonin whether the year-end budget surplus a non-budgeted revenue. Mr. Bonin explained that the movement of the Board of Education’s Fiscal Year 2024/2025 year-end budget surplus would take place in the Fiscal Year 2025/2026; because the prior fiscal year budget (fy 24/25) was closed. Therefore, he stated currently there was no budget to transfer those funds to. Mr. Hartling stated that Mr. Bonin was correct, in that the Board of Education does not have a mechanism, to move their year-end surplus, because the funds reside in the General Fund, noting that the Board of Education does not have access to the General Fund, noting that this was a process piece; and not a conflict with the State Law.
Councilor Ryan stated that there appeared to be some interpretation her. However, he stated that he thought what Mr. Hartling was saying was that the 1988 “Resolution Creating a Funding Mechanism for Making Annual Appropriations to a Capital Reserve Fund for the Board of Education” did not need to be cancelled. Mr. Hartling stated Councilor Ryan’s understanding was100% correct.
Councilor Buhle stated that based on their discussion, there does not seem to be any harm if they keep the 1988 1988 “Resolution Creating a Funding Mechanism for Making Annual Appropriations to a Capital Reserve Fund for the Board of Education”.
Councilor Ryan stated because Public Act #24-45 does not require the Board of Education to transfer their year-end surplus to a Capital Account, that he would agree with Mayor Allyn’s suggestion that the Board of Education put in writing their intention with the adoption of a formal Resolution, that they would transfer/appropriate their year-end budget surplus to their Capital Non-Recurring Account.
VOTE: 0- 3 Motion Failed
Department Comment/Recommendation:
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Finance Director Comment/Recommendation:
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Mayor Comment/Recommendation:
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