In August of 2017, the Region 4 Board of Education, representing the towns of Chester, Deep River and Essex, spent $379,916 to purchase the Mislick Property adjacent to Valley Regional High School. The idea was that someday in the future the land could be used for additional sports fields.
In a July 5 email, then-Superintendent Ruth Levy announced that the district’s offer was accepted and the purchase would likely be finalized within the month.
“We are very appreciative of the entire negotiation process and your support in this ‘once in a lifetime’ opportunity,” she wrote in the email to the board.
There were three problems with the purchase. First, no appropriation was made for the purchase. Second, residents from Essex, Deep River and Chester were never given a chance to approve the decision as required by state statute. Third, the funds that the board of education expected to use to pay for the purchase didn’t exist in the account.
“It’s a frustrating situation, we will be picking up this cost when the Board of Education spent it on a purchase that never went before the townspeople,” said Virginia Carmany, the chair of the board of finance in Chester said in a phone call Thursday.
Now, because the town purchased the land without the funding in place, the board of education will need to raise fees from town residents to cover the resulting deficit.
A failure of procedure
According to board of education minutes, Levy was authorized to negotiate the purchase on May 7, 2017 after an hour-long executive session by the Region 4 Board of Education.
“A lot of the decisions we made in the past weren’t made in the correct way – we didn’t make motions, they weren’t always in the minutes,” said Jennifer Clark, chair of the Region 4 board of education said during the board of education meeting on Wednesday.
The board of education failed to designate the purchase of the Mislick property as a line item in the budget, as required by state law for all capital investments, CT Gen Stat § Section 10-51.
In fact, according to Rick Daniels, a Deep River resident and member of the Region 4 Board of Education, until this past year money was never designated in the budget for specific purchases.
At a board of education meeting on Wednesday evening, Jane Cavanaugh, a board of education member from Deep River, explained the confusion. “When we made that purchase we were told that we had the money to do it,” Cavanaugh said. “We believed that the money was already there, that we didn’t have to do anything or move anything.”
An audit turns up a deficit
Cavanaugh was correct that the funding for the purchase was available, the problem was that that funding was required to cover liabilities to other accounts totaling $523,875. The result was a deficit.
“At the end of fiscal year 2018 I asked the superintendent, ‘how much money do you have from the last year?’ She told me $459,000,” Carmany said. “But then the audit came out with a deficit. How can the audit say we had a deficit?”
According to Carmany, the school district spent money that it didn’t have, because officials had confused money available in a bank account, with money in the entire fund.
“They didn’t understand the difference between a bank account and a fund,” Carmany said. “If you don’t have the financial ability to understand that, how do you exercise financial oversight of your own budget?”
Despite similar concerns expressed by several residents at the meeting regarding the competence of board members, every candidate for the Region 4 Board of Education is running unopposed in the fall election.
“The boards of education all say constantly that this is so complex, this is so difficult to understand with five different boards that regular people say I can’t put my time and energy there,” Carmany said. “Every budget presentation that I’ve heard makes it sound so complicated the public has been trained to give up.”
The first formal mention of the purchase of the Mislick property was in a January 2017 email from Levy to administrative personnel at Region 4, asking for an item to be placed on the agenda of an upcoming meeting on February 8, for Bruce Glowac, then-facilities-director for Region 4, to propose the land purchase.
Glowac was not only facilities director, he was also selectmen for Essex, as well as a member of the board of directors of Essex Savings Bank, which owned the Mislick Property at the time.
The property is directly next to the high school and undeveloped.
While the board and superintendent prepared an offer for the property, they were apparently unaware that they were already in a deficit.
The origin of the deficit was not in 2017. The issue began sixteen years earlier on May 10, 2001 when the board of education appropriated $41,860,000 to construct a new high school.
Approximately 30 percent of the project was to be funded by school construction grants from the state. But the state provided these funds over time. In 2006, Region 4 still had a $5.52 million deficit. In 2011, $1.61 million — when the last portion of state funding was paid — the liability to other funds appeared for the first time on the budget.
In 2012 that liability had increased from $44,811 to $577,061. This liability payment continues each year with no explanation and without ever being fully paid.
“We thought we had money in the capital account, we didn’t know it was already earmarked for the due tos,” Clark said.
A missing resolution
And that capital account may not even truly exist.
According to state law, a resolution must be passed by a board of education in order to establish a capital reserve to hold money allocated for non-recurring expenses, such as land purchases.
According to emails from Levy, the former superintendent, a resolution was made and could be found in the minutes. At the meeting on Wednesday, however, the new superintendent Brian White said his administration has been unable to find when that resolution occurred.
“My team has looked through all the minutes and have not found any resolution to set up a capital reserve fund,” White said.
Moving forward, the board of education along with its member towns will need to determine whether it should create the capital reserve fund it thought it had all these years.
“That’s something you need to discuss with your member towns. The big question is do you build up funds in your Region 4 for those big expenditures, or do you wait until you have a big project and then put a big levy on the towns,” said Charles Ward, the former business manager for West Hartford public schools who attended the board of education special meeting to help explain the current state of the budget and funds.
Concerns among Chester, Deep River and Essex residents of the potential for rising taxes and the frustration at the mismanagement of funds, convinced the former superintendent after the district’s purchase of the Mislick property to look for a property that the school owns which could be sold.
According to May 2018 Region 4 Board of Education minutes, Glowac, gave a report to the board highlighting potential properties that could be sold.
“Mr. Glowac reported that in response to feedback from some citizens regarding the recent purchase of a piece of property adjacent to VRHS, Dr. Levy had asked him to review all of the property owned by the district to see if there were any parcels that don’t hold as much value for the school that the Board may wish to consider selling. He discussed a parcel that meets that criteria, as it is non-contiguous with the rest of the school property. It is approximately 8 acres and could possibly be subdivided into 3 or 4 building lots.”
The board pursued Glowac’s recommendation and released an RFP for a real estate firm with no response.
“An RFP was placed on the website on May 23rd and was published in the June 6th Valley Courier. A walkthrough of the property was held on June 10th, but no one attended and no proposals were received by the June 14th deadline,” said White at a September 5 meeting of the Region 4 Board of Education.
In addition, to compensate Deep River for the loss of income from the Mislick property taxes, First Selectman Angus McDonald had originally requested that Region 4 make a fixed payment of $10,000 per year in lieu of taxes. However, due to the change in superintendent the agreement was not finalized and for now, McDonald is not pursuing the payment.
“The loss of taxes was and is impactful to our town, but it is not going to break the town,” McDonald said. “We have and will continue to cooperate with Essex and Chester and Mr. White seems like a good superintendent. We will work this out.”