Town residents have received their postcard reminder about the 2025-2026 district budget meeting and referendum vote from Regional 18 school district both scheduled for May 5 and May 6 respectively.
By means of background information on the school budgeting process, it is important to understand some of the Connecticut school laws defined by the general statutes. According to the Connecticut General Statutes Section 10-262(j) on minimum budget requirements, a school budget may not be less than the budget from the prior fiscal year except for limited circumstances defined in the statute.
Additionally, section 10-51(d)(1) was amended in 2024, such that a regional school district can create a “reserve fund for educational purposes” rather than the prior designation of such fund for only “capital and nonrecurring expenditures.” The statute had also been amended in 2021 to change the amount regional school districts are allowed to appropriate from the current fiscal year’s budget from 1% to 2%.
Key takeaway: Outside of exceptional circumstances, a school budget can never go down and there has been expansion for a regional school district like Lyme/Old Lyme in terms of how a budget surplus can be used.
The Region 18 school district has long taken the opportunity to fund their “undesignated fund,” or reserve fund, for at least the last 10 years (per the annual October Board of Education meeting minutes on the district website). For the last four years since the change in the statute to support 2% funding of the reserve fund, Region 18 has appropriated approximately $700,000 annually to the reserve. The current reserve fund balance stands at $3.1 million. Although the Board of Education has not formally approved any of the current earmarked projects in the reserve, they are formulated in the five-year facilities plan for the district. There is no reason to doubt that at the October 2025 Board of Education meeting, the board will again vote to fund the reserve based on past experience and determination of a budget balance (unaudited at the time of the decision) in a similar range of $700,000.
You may ask why these details matter. The 2025-2026 school district budget up for referendum stands at a 7.39% increase over the previous year’s budget and over half of the increase represents debt service (bonds) predominantly related to the $57.5 million PK-8 building project. Debt service obligation (principal and interest) for the district is estimated to increase annually for the next five years then start to drop dramatically.
Rather than increasing the budget as proposed to cover the current year debt service requirement, I recommend the board consider the use of a portion of the reserve funds to dampen the impact of debt service on the budget in the next five years.
Why not use all the reserve? Well, we don’t want to do that as it could adversely impact the credit rating of the district for future debt service. Further, the forecasted campus improvement projects could not be funded for the foreseeable future.
My suggestion is to use a portion of the reserve, equivalent to the maximum allowable 2% of budget holdback. Instead of increasing the budget by 7.39% to $39,650,803, the requested budget could be about $38.5 million, or a 5.5% increase. Presuming the recent historical trend of budget surplus continues, this strategy would limit the growth of the budget until the debt service started to decline in five years, at which time the contribution to the reserve fund could be resumed.
I hope that the residents of Lyme and Old Lyme consider contacting the Board of Education members about the above issues and that the board takes this into consideration at the district budget meeting on Monday May 5.
Editor’s Note: The author, Mary Powell-St. Louis, was a member of the Region 18 Board of Education for eight years.
Thank you, Mary, for putting forth this reasonable request.
This is a good idea. Thanks for explaining it. Makes a lot of sense, this 7.39% increase is troubling