July 16th Meeting: Lawyer Proves Hearing was Needed

School District Lawyer’s Letter Proves Timberlane Failed to Comply with Budget Law

Guest Contribution by Arthur Green

Three contentious issues were discussed at the July 16th meeting.

1. Transfer of appropriations (Policy DBJ) not being respected
2. LGC HealthTrust Refund money not being accepted by public hearing  (Total received to date: $1,054,000)
3. The school district audit being 8 months late.

This blog will be addressing each of these topics in a separate post. Let’s start with #2.

Exhibit A at the Timberlane School Board meeting July 16 was a letter from district counsel which was supposed to prove that the district had met the legal requirements for receiving the million-dollar LGC Health Trust refund without holding a public hearing. The lawyer’s letter (Link: Lawyers Opinion 198-20-b) shows the opposite: a public hearing should have been held. The summary quote from the legal opinion reads:

Under RSA 198:20-b it is only when the District intends to accept and expend [emphasis in the original] revenue received that the district is required to hold a public hearing.

The district expended about $200,000 over and above the amount transferred to surplus, so a public hearing was necessary by the board’s own legal advice. The calculation goes like this:

• Total refund to the district was $1,054,000
• Refunds to employees and retirees, approximately 15% – $158,000
• The remainder after refunds is $896,000
• But the amount transferred to surplus was $855,050, about $41,000 less

By virtue of these expenditures, the district was definitely required to hold a public hearing by their own legal advice.

The School Board is aware of the weakness of its position, as evidenced by the fact that Donna Green was prevented for weeks from reading the lawyer’s letter until it was produced like a trump card at the July 16 meeting. This was clearly done to prevent it from being effectively rebutted in public. But even if we grant the lawyer’s interpretation of the law with which we disagree, there were expenditures and therefore there should have been a public hearing.

Kelly Ward, school board member from Sandown, asked at the July meeting if he could get a full accounting of this money if he went to the SAU office to meet with Mr. Stokinger.  He was assured by Mr. Stokinger that was the case.  Two days after the meeting, Mrs. Green sent the Board Chairman and SAU a request to account for the difference between the gross refund from LGC and the amount transferred to surplus. To date there has been no answer.

Mrs. Green has repeatedly asked the administration for a detailed accounting of this transaction (including a motion voted down at the July 16 meeting). We know a few things with certainty.

• The total value refunded to the district : $1,053,947
• The 2010 portion of the refund occurred Aug 27 2013, for $770,461
• The amount transferred to surplus was $855,050

Some information has been provided in only general terms:

• The 2011 portion of the refund, worth $283,486, was taken partially in the form of a credit on the Workers Compensation premium.
• The cash portion was received by the district in August 2013
• The credit portion was approximately $60,000
• The reimbursement due to be returned to retirees is approximately 15% of the total value of the refund

Information which has not been provided:

• The exact amount and date of the refund of 2011 surplus funds
• The exact amount and date of the premium holiday on workers compensation
• The exact amount of the employee and retiree reimbursements, and the distribution dates of those reimbursements
• Use of any portion of the refund for other General Fund expenditures, if any
• Added: FICA remittances on the amounts refunded to employees, if any, and source of such remittances

To be clear, I am strongly of the opinion that the law calls for a public hearing, even if all the money is claimed to be transferred to surplus. This is to protect taxpayers from the exact situation which has arisen at Timberlane.

The 2013/14 spending and revenue budget was deliberated and approved from Nov. 2012 through Mar. 2013, while the LGC matter was before the courts and definitely not part of any revenue forecast.  On the budget of $65 million, the district was counting on carrying forward a $2 million surplus into 2014/15, and they would have to do this by holding spending to $63 million.

In June 2013 the LGC notified the district that they would be receiving a refund of more than a million  dollars in August 2013.  This unanticipated revenue was not budgeted for the 2013/14 year.

This should have gone to a public hearing.  Had it done so, we might have returned almost $3 million to the taxpayers instead of $2 million.

Instead, the district increased its spending form $63 million to $64 million… still within the appropriation voted in March 2013, but a million dollars higher than expected at the time the budget was approved.

And the School Board pats itself on the back for delivering a $1.9 million surplus.

UPDATE July 27: Added question about FICA remittances to the list of information not provided.  Medical insurance witholdings are pre-tax dollars, so the employee refunds would appear to carry an obligation to withold tax.  Did such witholding reduce the amount remitted to the employees, or was it paid from additional General Funds?