
Seymour Town Hall
SEYMOUR — An $800,000 deficit in the Board of Education’s budget last year, the global pandemic, and a possible national recession caused Seymour’s bond rating to be lowered, according to a report from S&P Global Ratings.
S&P lowered Seymour’s debt rating from AA+ to AA. The town’s financial outlook is stable, according to the report.
The bond rating is a reflection of a town’s fiscal health. It can determine how much interest the public pays when the government borrows money.
The report was released in late July. Seymour’s Chief Administrative Officer Rory Burke gave the Board of Selectmen an overview during the board’s Aug. 2 meeting.
“We moved from AA+ with a negative outlook to AA with a stable outlook,” Burke said. “Practically speaking, it is still the third-highest rating, but as a result we may have access to marginally higher interest rates when we issue debt.”
S&P cited the downgrade due to “two consecutive deficits during the pandemic which have resulted in a decline in available fund balance to 5.1 percent of expenditures from a prior high of 11.87 percent in 2017, which falls short of the town’s 8 percent fund balance policy.”
The report stated that “during the past two fiscal years, Seymour’s reserve position has declined as a result of unexpected operating deficits involving pandemic-related expenses and increased costs for the school district. In response to the weaker operations, the town increased its tax rate twice and has implemented cost controls to pre-empt similar issues in the future and maintain structural balance.”
Burke said S&P generally likes to see municipalities have reserves between 10 to 12 percent.
Burke said when town officials got their first look at S&P’s draft report, they took issue with S&P’s numbers in terms of the fund balance percentage. They contacted S&P officials to dispute the figures, but were not successful.
“We disagree with their position, and according to Doug Thomas (Seymour’s Finance Director), our fund balance is at about 9.5 percent,” Burke said. “In real numbers, the town’s current unaudited budget basis fund balance position is $5.5 million, or approximately 9.5 percent of our $59,178,558 budget in fiscal year 2021 – 2022. We spoke with S&P about this, but they didn’t want to listen to what we said. We were above 10 percent (in our fund balance) prior to the board of education deficit.”
The school budget deficit was discovered earlier this year by School Business Manager Salvatore Bucci, who was not the business manager at the time the deficit was incurred. The deficit was caused by a miscalculation of employee benefits by the school district’s previous manager, who Bucci said had the wrong numbers for health insurance and pension costs.
First Selectwoman Annmarie Drugonis said the school district is more transparent with its finances than in the past.
“We now have more sets of eyes on the school board’s finances,” Drugonis said. “We have a responsibility to the taxpayers. This was not an easy pill for any of us to swallow. They (the previous school business manager and superintendent) were not forthcoming to the Board of Education. Now when we see something that doesn’t seem right, we will get the answers.”
The S&P report also revised Seymour’s management policies from good to standard.
“The town’s strategic plan does not include forward-looking budgetary forecasting and funding sources for capital projects are not identified,” the report said.
The report said Seymour’s rating can improve “If the town were able to demonstrate a track record of strong reserves in line with its policy while formalizing long-term planning processes, and if socioeconomic indicators were to improve, we could raise the rating.”
The report also cited that real estate values increased by nearly 9 percent in 2021, as a result of revaluation. Also the development of future projects, including a potential new community center behind Stop & Shop, along with existing businesses, like Basement Systems, continuing to expand in town helps.
“We note that Seymour has replaced its management team (former school business manager and superintendent, both who left) and implemented a new budget system at the school district, which it expects will enable the teams to better coordinate to avoid these unexpected outcomes,” the report said. “For fiscal 2022, management expects to record a modest surplus as a result of state grants and increased property tax collections.”