Seymour could be on the hook May 1 for $580,000 because the town didn’t apply to the state for reimbursement on a portion of its middle school building project.
First Selectman Kurt Miller broke the news at a meeting Nov. 20, saying the town needs to obtain a waiver from the state in order to avoid paying the money.
But a week after making the news public, town officials still aren’t sure how the blunder happened and went unnoticed.
The Seymour Board of Finance met Tuesday night and wrestled with the issue for 25 minutes.
“I think what happened is failed financial leadership,” finance board member William Sawicki said. “People in the private sector, their careers get cut short if things like this happen. It’s not right. It absolutely should not have happened. There’s no excuse in the world for it.”
What’s The Problem?
Miller revealed what he called the “extremely troublesome” problem during a Seymour Selectmen meeting Nov. 20.
In 1998, residents approved borrowing about $34 million to build Seymour Middle School.
Miller said that $1.3 million worth of bonds issued by the town to pay for the project are due in May.
The money itself is eligible for reimbursement from the state — but, for nine years, Seymour didn’t go “through the process of applying for the reimbursement,” Miler said.
State law sets a 10-year time limit on how long towns can roll over financing for such projects. On May 1, money to repay the notes will have to come from the town, with no state dollars to ease the pain since the town never filled out the paperwork.
“If we do not have this taken care of by May 1, 2013, the town will be required to pay a sum that’s roughly equal to $580,000 in cash,” Miller told the Selectmen Nov. 20.
That could lead to cash flow problems in Seymour government, Miller said.
Eventually the town would have to figure out a way to pay the rest of the $1.3 million, about $720,000.
The issue came to light in mid-October, according to Miller, when he was working on refinancing the town’s debt with Seymour’s bond counsel, Doug Gillette.
Who The What The How The?
Seymour officials pulled back from their mini-fiscal cliff Tuesday. Miller said he’s had discussions with state Sen. Rob Kane, who is confident Seymour will be given an extension on its due date, to May 2014.
Meanwhile, the town is working to file the proper papers.
Town officials were also quick to point out Tuesday they don’t see this issue triggering a tax increase in Seymour. They said Seymour can pay the money, if need be, and that such a problem won’t happen again.
Still, there are more questions than answers about what went wrong.
Click the play button on the video at the top of the story to see Board of Finance Chairman Trish Danka, Miller, and Finance Director Doug Thomas talk about the reimbursement.
Finance board members said the town has to get to the bottom of how the problem arose in the first place.
Miller said the buck stops at his desk.
But Miller has only been First Selectman since 2011. The problem seems to have been going on for nine years.
“Whoever the First Selectman is, the four of us that have sat in that seat for the last 12-plus years, I think the ultimate responsibility falls with us,” Miller said.
Danka said the project predated the town’s current finance officials.
“This process even started before (Finance Director) Doug (Thomas) or (Assistant Superintendent for Finance and Operations) Rick Belden were hired as employees,” she said. “This has passed through multiple hands.”
Finance board member Michele Pavlik echoed the sentiment and said that “corrective action” will be needed.
“People were paid to do their jobs and that didn’t happen and we can’t hide that fact,” she said. “We do need to find out how it happened to make sure it doesn’t happen again, and that may lead to administrations or individuals, and if it does, so be it.”
Questions Without Answers?
Danka also said that she and other finance board members have been asking about the status of the reimbursements due to the down since at least 2010.
After the meeting, she again stressed that taxpayers need not be concerned — at this point, anyway — about whether the town will have to fork over the $580,000 next May, but added that “I wouldn’t blame them for being angry that we have found ourselves in this situation.”
“I personally can’t get my head around how many people had their hands in the pot here,” she said.
And while she said there are “absolutely understandable” reasons why some of the reimbursement application was put off — the town couldn’t sign off on the project until a lawsuit regarding the cafeteria floor was resolved, for instance — “The Board of Finance has been asking for updates regarding the grants for the last couple of years.”
“I may be thinking of it too simply because I’m not as involved as a full-time employee,” Danka went on. “(But) there were these questions that came up. How come nobody figured it out then? Between 2010, 2011, when these questions were being asked, how come nobody figured out at that point that this could potentially happen?”
Miller said after the meeting that the town will get to the bottom of the matter — eventually.
“I think a lot of people are at fault,” he said. “But the most important thing is we fix the problem now, we make sure the problem doesn’t happen in the future, and once we’re assured of those two things, I think at that point we circle back and see ultimately whose fault it was.”
He said that the town’s response would depend on who is to blame.
“If it’s an administration, you really can’t do much,” he said. “If it’s a specific employee, part of your professional staff, I think at that point that would need to be addressed. What that would be I don’t know.”
