OLD LYME–The Region 18 Board of Education on Monday evening unanimously sent the proposed $39.7 million 2025-26 budget to referendum unchanged despite calls from several residents to take money out of its reserve funds to reduce the impact on taxpayers going forward.
The referendum will be held Tuesday from noon to 8 p.m. Old Lyme residents and qualified taxpayers will vote at the Lyme-Old Lyme Middle School Gym, 53 Lyme Street. The vote in Lyme will be held at the Lyme Town Hall, 480 Hamburg Road.
Of the proposed budget’s $2.7 million or 7.39% increase, $1.8 million is attributable to debt payments on the extensive renovation project affecting all the district’s schools except Lyme-Old Lyme High School.
Old Lyme resident Andy Russell, a member of the Old Lyme Board of Finance and the District Building Committee, who said he was speaking for himself, asked the board to use $700,000 of its $3.1 million undesignated fund – colloquially referred to as the ‘Rainy Day Fund’ – to offset the anticipated increase in the district’s special education spending.
State law beginning in 2023 empowered each regional school board to create a reserve fund for “educational expenditures.” The law previously specified reserve funds could only be used for one-time capital expenses.
Special education is up $726,721, or 58.67%, in the proposed budget. Superintendent of Schools Ian Neviaser has attributed the increase to the number of students, who need to be placed in programs outside the district to meet their needs. There are four students requiring outplacements in the coming year compared to the single student identified when the current budget was approved.
Russell said the school board could dip into its undesignated fund balance for the next several years until the debt payments stop increasing.
He said the district typically ends each year with a healthy surplus.
“I’m reminded that you’ll probably end up – because the school district is very well run – with another $700,000 put back in that budget following this year,” he said.
David Kelsey, another Old Lyme Board of Finance member, who also said he was speaking for himself, said the school board needs to be more “healthily skeptical” of the enrollment projections from the New England School Development Council (NESDEC) that helped justify the need for the renovation project.
He said the NESDEC forecast overestimated the number of students in the district.
“Going forward, we have a high school that’s going to need to be renovated as well, and I do not think that we need to rely upon projections that are not commensurate with an obvious skepticism that’s required,” Kelsey said.
District Building Committee Chairwoman Susan Fogliano before Monday’s vote to send the budget proposal to referendum laid out the school board’s case for not dipping into the ‘Rainy Day Fund.’
She said the school board over the past two years used reserve funds to reduce the overall amount of money that would have to be borrowed for the project, which resulted in the proposed 2025-26 budget coming in lower than the 10% increase originally anticipated.
She also cited grant funding and advantageous interest rates that helped bring down costs. Neviaser said the district will be spending about $17 million less than the $57.5 million price tag approved by voters at referendum in 2022.
Neviaser said the district’s bond rating – which district business manager Holly McCalla said has stood at an AA2 rating from Moody’s since 2017 – is influenced by the size of the district’s undesignated fund balance.
“Keep in mind too, we will be bonding again this summer, so they will be looking at what’s in our undesignated fund, and that does impact our rating,” he said. “We’ve confirmed that with our bonding agent, so that’s another consideration.”
Fogliano pointed out the school board has earmarked $1 million of the undesignated fund balance to be used if necessary for security upgrades to the school vestibules.
She said the district hopes to cover the expense out of the total project budget.
“We hope, but we can make no promises,” she said.
She cited the potential impact of tariffs enacted under the administration of President Donald Trump.
“A great number of our materials have already been purchased, but it’s possible we may see overruns that we don’t anticipate based on future purchases that we can’t control,” she said.
Fogliano and Neviaser said state law allows the district to put an amount not exceeding 2% of the prior fiscal year’s education budget into its reserve fund. But they said the school board is willing to put less than that into the fund in the coming year – if it makes financial sense at the time based on district needs – so that it can return more of the surplus to Lyme and Old Lyme.
“I just wanted to have that out on the table so everyone understands that we are thinking about this concept, and that we are doing as well as I think anyone could expect under the present circumstances,” Fogliano said.