Submitted by Sean Goldrick, Riverside
Let’s set aside for the moment Republican First Selectman Fred Camillo’s unhinged, invective-laden rant (CAMILLO: Clarifying Our Town’s Financial Position and Budget Process, April 10, 2023) regarding my op-ed on the budget (OPINION: It’s Time to Put Our Cash Reserves to Use For Our School Projects April 2, 2023), and focus on what’s important to taxpayers and public school families: Greenwich’s large cash reserves, and how we can prudently and effectively put a significant portion of them to work for our schools.
First, let’s get the facts straight: as of the end of the last fiscal year when they were calculated, Greenwich held cash reserves of $92.2 million. That is the official figure reported by our town finance department. Those reserves include $75.9 million in “unrestricted” fund balance, $12.5 million in the “restricted” capital non-recurring fund, and $3.9 million in the Risk Fund.
You see that $75.9 million figure listed in Mr. Camillo’s official presentation in January to the three major credit rating agencies (Standard & Poors, Moody’s, and Fitch). It’s recorded as “GF Fund Balance (GAAP).” The presentation also shows “Available Fund Balance (Moody’s),” based on Moody’s calculation of $88.5 million. The rating agencies compare cash reserve figures with a municipality’s operating budget to determine whether the cash is sufficient to tide the town over in an emergency situation.
So let’s look at those ratios.
The Greenwich BET’s official policy requires the town to maintain an unrestricted fund balance within a range from 10% to 15% of the town’s operating budget. That means that, given the recently approved $482 million budget for the next fiscal year, an appropriate “unrestricted” fund balance according to BET policy can range from $48 million to $72 million. Yet the town’s unrestricted fund balance already exceeds that range, with $76 million in unrestricted fund balance, representing 15.7% of the upcoming budget. So Greenwich’s unrestricted cash reserves exceed by nearly $4 million the upper policy limit set by the BET. And that doesn’t take into account a likely increase in fund balance for the current fiscal year ending in June.
The reserves exceed the equally acceptable lower policy limit of 10% by $27 million.
Further, according to Moody’s calculation of $88.5 million in “available fund balance,” the town’s available cash reserves exceed our lower 10% policy limit by over $40 million. Again, this is according to official BET policy and the data listed in Mr. Camillo’s own official presentation to the credit agencies.
Further, Mr. Camillo included a bar chart in his presentation using the town’s own figures for unrestricted fund balance showing Greenwich’s fund balance more than doubling over the past decade from under $30 million to $76 million. That chart also shows the ratio of reserves to budget rose from 8.1% a decade ago to 16.5% most recently, again well above the BET’s policy range for what it considers prudent and necessary.
So it is odd that the Republican chairman of the BET, Dan Ozizmir, would claim at a recent BET meeting that our fund balance ratio is just 8.9%, a figure vastly lower than any official figure used by the town, or in any official presentation.
Mr. Camillo chimed in in his op-ed that Greenwich’s ratio is “14.1%, below the 15% level the rating agencies would like to see for a AAA rating.”
Again, these Republicans are making up numbers that are contradicted by the town’s official figures, and stand clearly at odds with the BET’s own policy guidelines.
Let’s consider one more issue: the supposed use of cash to “balance” the town’s budget.
Mr. Camillo implies that Greenwich must not make use of our cash reserves because they are too low relative to comparable Connecticut towns.
Apparently, he is completely unaware that the BET has for years enacted budgets that purport to draw down our cash reserves by millions of dollars to fill supposed deficits in the budget. Yet those cash drawdowns are entirely fictitious, and instead of our cash reserves dwindling, we have in fact added millions of dollars each year to cash balances.
In the last completed fiscal year, according to our official budget reports, the BET claimed it was drawing down fund balance by $20 million to close a deficit. Yet at the end of the year, not only had fund balance not contracted by $20 million, instead we added $4.5 million to cash reserves. Indeed, while we’ve included cash drawdowns from fund balance in each budget for the past decade, we have in fact on average increased cash reserves $4.5 million every year.
The same will likely be the case this year and next. Instead of cash drawdowns of $24 million each year on paper, we are likely to add to cash. Yet Mr. Camillo appears completely oblivious of that fact.
Mr. Camillo writes that my “biggest misstatement…is that the Town has $195.2 million of unrestricted cash available to spend.” In fact, Mr. Camillo’s own official presentation to the rating agencies lists “Total Government Funds Unrestricted Cash” of $195.2 million as the top metric of the town’s liquidity. While they are “allocated,” those funds are also being invested. So the town of Greenwich will certainly record a major increase in interest income this fiscal year as a result of returns on its high levels of invested cash.
Mr. Camillo claims that the $12.5 million in cash in the “restricted” capital non-recurring fund cannot be applied to our school reconstruction and repair projects, because the fund is supposed to be used, “to pay for emergency capital projects funding.
Examples would be interim appropriations to repair Town infrastructure during Superstorm Sandy and the various flooding instances in schools over recent years.”
But the emergency of Central Middle School is precisely the kind of project for which we should be utilizing that fund. While not the result of a hurricane, the school was suddenly discovered to be in such horrific physical condition that it was declared “dangerous and unfit for human occupation” just months ago, and must be torn down and rebuilt. Is that not an “emergency capital project”? Is that not precisely the sort of project for which this fund can and should be used?
Turning to the $3.9 million risk fund, Mr. Camillo pointed out that it, “is used to pay legal settlements, which are only increasing in number.” Let’s keep in mind that one lawsuit facing Greenwich stems from Mr. Camillo’s firing of the highly respected 31-year veteran of the Greenwich Police Department, Captain Mark Kordick, in an act of naked political retaliation for Captain Kordick’s exercising his first amendment right to put up campaign signs. It is possible that the jury to be empaneled just days from now could decide that Greenwich must pay out millions to Captain Kordick, of which the first $2 million would be taxpayer dollars from that risk fund?
The town of Greenwich does, indeed, possess tens of millions of dollars in cash reserves it can, and should, put to use for our sorely needed school capital projects. The reason Mr. Camillo and BET Republicans refuse to do so is their deep-seated hostility toward our public school system. They are determined to delay, deny, and underfund our schools. They’ve done it for years, and they will continue to do so until they’re voted out. And that is the bottom line.
Goldrick served as a Democratic member of the Board of Estimate and Taxation for four years