At a special Windham Town Council meeting on Tuesday night, councilors voted 6-1 to set the town’s tax rate at $17.80 after discussing a $1.1 million school surplus with school officials.

Frustrations over a lack of knowledge concerning the school surplus had prompted the council to call the special workshop and meeting.

Now it appears that the surplus, much of which had been earmarked for capital improvements, cannot be spent by the School Board without consent of the public. However, with the tax rate set for this year, the council and School Board must wait until the next budget cycle to decide what to do with the existing surplus.

“Maybe we didn’t understand what legally we were able to do, but our intent in good faith was to do some very needed capital improvements,” School Board member Toby Pennels said during an emergency school board meeting held prior to the council workshop.

At that hastily called meeting, school finance attorney Dick Spencer informed the school board that money set aside for capital improvements could not be spent without voter approval. The School Board had designated $340,606 in past surplus from fiscal year 2004 for such projects as asbestos removal at the Field Allen School and had planned on putting $410,838 from the $819,060 surplus this year toward further capital improvements.

“It’s earmarked, but it’s not appropriated for capital improvements,” Spencer explained. “So, at this point you don’t have the authority to spend it.”

This information was a surprise to the School Board and school administration who had hoped to get some projects from their 10-year capital improvement plan done this year with the surplus.

Workshop discussions

News of the $1.1 million surplus had spurred town councilors and concerned residents to ask questions as to where the money had come from. During the council’s special workshop with the school board, Superintendent Sandy Prince attempted to answer some of these questions with a Power Point presentation that gave rough details of the two-year surplus.

In summary, the $1.1 million came from $340,606 from fiscal year 2004 and $819,060 from fiscal year 2005, Prince explained. This school department came under budget by $472,932 due primarily to savings in benefits ($346,000). This number added to $346,128 in increased revenues – of which $252,944 came from a state revolving fund – resulting in $819,060 in new surplus.

“Our balance is up, but it’s not the first time it has crested the $1 million level,” Assisant Superintendent Donn Davis said of the surplus.

Davis explained that in previous years the school department has used surplus to alleviate the tax burden and pay past debits on the high school construction.

In response to the administration’s explanation of this year’s surplus, Councilor Elizabeth Wisecup said that she and other councilors had been given figures by Donn Davis during the budget process of 2004 which pointed toward a potential surplus, specifically $252,000 from the state revolving fund and a $227,000 in projected savings in benefits.

“What I’m having a problem with is that a lot of this surplus for this particular year was already predetermined before the budget was approved,” Wisecup said.

Wisecup asked why the school board had told the council and the public that year that they needed an extra $279,000 or else they would have to cut services and programs.

Donn Davis replied by saying that, because of a decrease in Raymond tuition and problems with the high school construction, the school department was worried that they would not come in under budget.

“One of the things I wanted to remind people of is this million dollars covers two years and $252,000 in money that the state gave us,” said Michael Duffy, Chairman of the School Board. “I think that the part that probably bothers me the most is that we have unmet needs that we were putting off in hopes to have a reserve. And now, according to the legal advice, we have the reserve, but we’re not able to spend it.”

Councilors then asked how the School Board was going to address capital improvements, like asbestos removal and leaky ceilings, without the $340,000 they had been counting on.

“We’re going to take care of what we need to take care of,” Davis said, informing the council that $90,000 in capital improvements had been appropriated as part of the fiscal budget for 2005-2006.

Special council meeting

The special council meeting, following the workshop, began with comments from the public in which former councilor Gordon Browne again demanded that the $1.1 million in school surplus be used to lower the tax rate.

“We now have an agreement by the school committee that there is $1 million in undesignated surplus,” Browne said. “The important thing here is that money is on the table and available for use.”

Following public discussion, Councilor Wisecup made a motion to call a public hearing to consider a special town meeting. As part of the special town meeting, Wisecup recommended that the new budget warrant for 2005-2006 be changed with $700,000 from the $1.1 million in school surplus to be used to reduce the property tax levy and provide tax relief.

Former Councilor Tom Bartell then stormed up to the podium to say that because the public hearing vote was not on the agenda, the vote should be postponed to give proper notice to the public.

“You’ve got 14,000 people out there who don’t know what you’re doing right now,” Bartell said, “I think a special town meeting is premature. Take care of it during the regular budget process.”

Bartell then asked Town Manager Anthony Plante how much the municipality had in its fund balance, an account into which municipal surpluses are carried over. Plante reported that the town had $1.88 million in undesignated funds and $1.99 million in a capital reserve account. Plante clarified that the $1.99 million was in a legal capital reserve unlike the earmarked portions of the school surplus.

No special town meeting

Following Bartell’s remarks, Councilors Carol Waig, John MacKinnon, David Tobin and Michael Shaughnessy spoke out against the special town meeting, arguing that the school audit was not yet complete and therefore to have the public vote on unofficial numbers would be “risky.” Shaughnessy equated the action to “micromanagement under the veil of democracy” and advocated that the council wait and consider the money for the next budget cycle.

Councilors Robert Muir, Wisecup and Lloyd Bennett argued for the special town meeting to allow the public to decide what would be done with the school surplus.

In the end, the vote split 4-3 against the public hearing for a special town meeting.

Councilors and school officials chat before a workshop discussion of the schoolat money will remain untouched until the next budget cycle.