The fall in Nutmeg had been quite warm. But, starting with the holidays, it had been snow, snow, cold, and more snow, and the maintenance crew in Nutmeg racked up a record amount of overtime. To make matters worse, with heating oil at an all-time high, it was costing a fortune to heat the drafty old buildings in Nutmeg.
Given these expenses, Board member Penny Pincher was concerned that the Board would overexpend its budget. She sent an email to Earl Eyeshade, the Business Manager for the Nutmeg Public Schools, for an update on the budget, copying each of the Board members. Earl wrote an email back to the whole Board, with a copy to Mr. Superintendent, explaining that a surplus in the teacher salary account should take care of the shortfall in the fuel and overtime accounts. Another Board member, Red Cent, wrote back to Earl, asking for greater detail, with a copy to all Board members. Earl sent an Excel spreadsheet with his budget projections to each Board member and Mr. Superintendent. As Penny commented in a reply email to Earl and the Board, Earl’s projection looked pretty good, and she dropped the matter.
Sadly, things did not pan out in accordance with Earl’s plan. The winter remained harsh, and fuel prices stayed high. These unanticipated expenses overwhelmed what turned out to be a meager surplus in the teacher salary account. Somewhat sheepishly, Earl sent an email update to Mr. Superintendent and the Board, in which he explained that a year-end deficit was between likely and certain.
The Board members were livid over Earl’s incompetence, and during the executive session last week, they laid it in on the line with Mr. Superintendent – someone was going to be fired, and if it wasn’t Earl, Mr. Superintendent would be out.
Mr. Superintendent got the message, and he met with Earl the next day to tell him that he was finished. After a brief discussion, Earl resigned. Mr. Superintendent thought that was it for Earl. However, Earl filed for unemployment compensation, and to Mr. Superintendent’s shock, he was granted unemployment compensation.
With the budget in deficit, the situation was dire. Seymour Dollars, venerable Chair of the Nutmeg Board of Finance, stated publicly that the Town would not make a supplemental appropriation under any circumstances. With the Board members sweating gravy over potential personal liability, Mr. Superintendent took charge. He was able to get a handle on district finances, and in two short months, he had made the necessary cuts and imposed the spending freezes necessary to avoid a deficit.
Did Mr. Superintendent prevent the Board from violating the law?
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The Board members should be grateful to Mr. Superintendent, because his action avoided a deficit. A public official who spends money without authorization can be held personally liable for the expenditure. To be sure, no board of education member has actually been held personally liable, but no one wants to be the test case.
In any event, the Nutmeg Board of Education should take a refresher course on Connecticut General Statutes, Section 10-220. This statute provides that boards of education can expend its appropriation in its discretion. By contrast, other town departments are subject to spending oversight throughout the year. This statute also provides that boards of education may not spend more than the appropriation made by the town, along "with such money as may be received from other sources for school purposes." Finally, this statute sets forth a procedure for requesting additional funds from the fiscal authority. These provisions are well-known.
What the Nutmeg Board of Education did not understand is a further provision in Section 10-220 concerning line item transfers. Added in 1998, this provision states that the board of education shall make line item transfers, and that it may "authorize designated personnel to make limited transfers under emergency circumstances if the urgent need for the transfer prevents the board from meeting in a timely fashion to consider such transfer." Moreover, the statute also requires that "All transfers made in such instances shall be announced at the next regularly scheduled meeting of the board." Here the Nutmeg Board of Education failed in its oversight function because it left to Earl the line item transfers that Earl thought would keep the budget in the black.
Given this statutory responsibility, boards of education must adopt a policy to address the issue of line item transfers. In so doing, boards are well-advised to define "line items" broadly; otherwise, the board will be burdened with micro-managing the budget. When funds must be transferred from major budget category to another (as here moving funds from the salary account to the fuel account), however, that is a job for the board of education.
There are two other legal issues of interest here. First, the Board’s initial involvement with the budget probably violated the Freedom of Information Act. Whenever there is communication among a quorum (including email) to "discuss or act upon" matters within the board’s jurisdiction, a "meeting" occurs. By having a quorum of the Board exchanging various emails on the budget, the Board members may have "discussed" the budget and thereby conducted an unposted, illegal meeting.
In addition, it appears that Earl’s rights may have been violated. Before an employee may be discussed in executive session, he or she must be notified that he or she may require that any such discussion occur in open session. Significantly, the Board could have invited Earl into the executive session, but Earl could not otherwise insist on attending. Here, unless the Board or Superintendent notified Earl that his employment would be discussed in executive session, the Board’s ultimatum to Mr. Superintendent violated Earl’s rights. Interestingly, however, Earl had every right to collect unemployment. While ostensibly he resigned, that resignation was anything but voluntary, and the termination of his employment would be considered a constructive discharge for unemployment compensation purposes.