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This Monday, November 4, at 6 p.m. in the John Winthrop Middle School library in Deep River, three lawyers from a Hartford law firm will explain the nuances of the property purchase next to the high school over 2 years ago. Hopefully they will explain why they charged fifteen thousand dollars to close a three-hundred-fifty-thousand-dollar cash deal — with no bank work.
Since the closing — again over 2 years ago — we have spent at least another fourteen thousand plus on this same purchase and same firm to clean up title problems, and fight with Deep River over the land’s taxable status. As of this post, after speaking with the Deep River assessor, the tax status of this property has still not been settled. The district currently is showing about $30,000 in back taxes owed to the Town of Deep River.
Since the September meeting of 2017 that announced the purchase, there has been only one meeting to discuss this purchase referenced as a tax update a few months after that September 17 meeting. Since then — again almost 2 years — there has been no update as to the status of the property and its legal fight with the Town of Deep River over the tax status (see Board of Education meeting minutes and agendas for the past two years).
I spoke briefly with a board member months ago who said it was all settled and it wasn’t an issue. I told them that wasn’t the case, that they just hadn’t been informed of the continued actions. I don’t fault the board member for thinking it was settled as it was never discussed again or put on the agenda. It has been like it never happened.
It took the change in administration to bring this unsettled issue back to the Board of Education. This issue should have been an item on every single agenda, to be discussed every month, until it was settled.
So, we will hear from the three lawyers how this is all good. A deal so good that it likely was the number one factor that led to the retirement of the superintendent and her facilities person after it triggered the revealing of the practice of covering debt for years by moving funds that — by the District’s own policies and procedures — should have gone back to the towns and zeroed out each year, but instead the funds were split ½ back to the towns and ½ to cover deficits, or where put in a “sinkng fund” that legally did not exist.
This random ½ split was voted on over and over with no tie to a budget(ed) purpose, or district policy. (the policy has since been changed to allow the district to keep surplus funds up to 1% of the total annual budget per Connecticut State law).
On the positive side this land purchase triggered the 2017-2018 outside audit reveal that there were no funds for this, and no official account created to do this and has put an end to this practice. The purchase caused an unforeseen overage that made the old practice of covering deficits impossible due to the large sum spent as it could not be covered by even 100% surplus transfer from 17-18).
As stated in the September 2017 Board of Education meeting the previous superintendent told the board and audience, “The funds came entirely from Region 4 sinking funds; no additional funds were procured which would have required repayment to any outside entity.” The funds didn’t exist and if you did have them you still had never properly established a “sinking fund”.
When the previous facilities person was later asked to give a presentation to the Board of Education as to how capital projects were chosen and funded the response was,“I put them in the budget but you always take them out so I just wait to see if there are funds in the surplus fund then pick a project and get it done.”
Well, that means if they weren’t in the budget then they weren’t voted on and approved by the public, and if you just see what is there and do it, and there was no approved capital funds projects list, then the Board of Education didn’t approve them either, and even if they did that money was never in a properly established sinking fund, and we have now learned may not have existed for many projects, just IOUed to the operating fund.
Thankfully, the new administration and the Board of Education has, as of last month, voted to establish an actual capital fund that can now be tied to the capital projects that have been identified by the new facilities person, given estimated costs and an estimated timeline to complete. This type of purchase should never happen again and going forward the three towns will be made aware (explained) as to why any surpluses would be kept by the District as they are tied to an actual project that was identified prior rather than the money just being there and spent. Either put in the budget or in the board approved sinking fund.
I also want to hear from the firm why none of this was ever shared with the Board of Education who the law firm owes its ultimate duty of loyalty. I know some board members are mad at people, auditing firms, or newspapers, for pointing these things out, but the lawyers have not addressed these issues with the board in years. Otherwise, it wouldn’t have come as a surprise. The firm should have made sure the funds for this purchase were properly sourced and we actually had them, as well as what the tax implications of the purchase would be, and received clear title as part of the fifteen thousand in closing costs charged to us.
Finally, I want to point out there is an open RFP for legal services, the minutes from the joint board meeting didn’t reflect properly what was said at the meeting. They didn’t agree to contract this firm for another full year, it was said they would stick with this firm until they finished that RFP as this firm is still functioning off an old contract for services and had no time limit as it lapsed years ago — hard to imagine there was no new contract for services that have run into the hundreds of thousands of dollars. I believe it was mentioned in a meeting it had been 7-8 years since the legal services had been put out to bid.
We have been the gold goose for the lawyer who came down and met time and time again with the old administration and time and time again failed to tell the client, the Board of Education, what was going on and how much was being spent on all sorts of nonsense matters — that includes the FOIA matter that I was told by a board member had not been brought to the attention of the Board of Education until after the district was found to have violated the Freedom of Information Act, not once but twice. This was after a full year and multiple commission hearings on the matter, often with 2 lawyers present from the firm for the district. These are all active legal matters that the law firm did not update the board on over a period of several years.
I have sat on many boards, and never was the outside service provider for fee lawyer invited up to the front and sat right next to the CEO or president. The current lawyer regularly showed up at Region 4 Board of Education meetings I attended and sat right next to the superintendent. He isn’t an elected member of the board or has any status other than feeing the district for services as requested. The private bus company representative doesn’t come up and sit next to the Superintendent or the tech provider representative, or any other provider of services to the district for fee.
For years the lines were far too blurred as to who was whose boss, and that prominent position was a message being sent to anyone who wondered who the attorney was there for.
The RFP is still open and it is time to get that going again
James Carey
Essex