East Windsor Board of Education OKs Using Funds to Prepay 2012-13 Health Insurance

The Wednesday told administrators to proceed with a plan to use $325,000 in reserve money to prepay health insurance in fiscal 2012-13.

School officials had planned to use the money in fiscal 2011-12 for the same purpose, but had been told by Town Treasurer Catherine Cabral that she believes it would be wrong to spend money from one year in the next, Superintendent of Schools Theresa Kane said.

However, school officials got a legal opinion from the district’s attorney saying it’s allowable under state statutes, and advice from state Board of Education officials that the practice is proper, Kane said.

“While it was in contention, we’ve been holding it in reserve,” Board Chairman Christopher Mickey said.

Kane said school officials were first informed of Cabral’s concerns during the fall. There have been several meetings between town officials and school officials about the disagreement, she said.

An auditor had given a verbal opinion questioning the practice but an end-of-year audit made no mention of the money or the practice, Kane said.

During that time, officials found ways to meet all of the school system's financial obligations without the $325,000, Board member William Raber said.

Board member Kathleen Bilodeau said it’s clear that the board of education does not have to submit a line-item budget to the town. The board can choose what it wants to do with the money it receives, within the law, Bilodeau said.

The school system has prepaid insurance in the past. Kane said doing so frees up money that can be spent on other needed items in the schools. Prepaying health insurance will also be the cleanest to undo if officials somehow find it was done in error, she added.

The money has to be encumbered, or committed to a payment, before June 30, officials said.

Kane said school officials will continue to discuss the use of the funds with town officials. She said Cabral is fulfilling her role of notifying officials if she sees something she feels is wrong.

Board members also said they want to put to rest rumors circulating that the school system was either asking for an additional $325,000 from the town or the budget was overspent by that amount.

“It’s not true,” Raber said.

Selectman James Richards, who is the liaison between the boards of education and selectman, said he wants more information about how the issue started and why it has persisted.

“It makes perfect sense to me taking $325,000 and prepaying health insurance,” Richards said.

Board member William Schultz abstained from the vote saying he was uncomfortable making a decision about that amount of money during the last week of the fiscal year.