Council approves premium holiday for insurance fund



On Monday, the Town Council approved a $1 million “premium holiday” due to a surplus in the town’s self insurance reserve fund. By an 8-1 vote, the council decided that the surplus will be distributed with $755,000 appropriated to the Board of Education and $245,000 appropriated to the General Government.

William Dziedzic (R) was the only dissenting vote.

The premium holiday will give the BOE and the town government relief from making payments into the fund for this current fiscal year (2017-18) as the boards continue to grapple with a deficit due to state cuts.

The premium holiday was a key element of the BOE’s deficit mitigation plan, which Superintendent Timothy Connellan submitted to the Board of Finance for review on April 11.

At the Feb. 15 Self Insurance Committee meeting, Southington public schools director of business and finance Sherri DiNello pointed out that the town is consistently adding to the self insurance fund and reserve fund balance. DiNello reported that the fund balance has increased $1 million since June 30, 2016.

Board of Finance vice chair Joe Labieniec (R) said the overall fund balance, at $5.5 million, was a “conservative” figure, and he reported that the fund is “in very good shape” at about $900,000 under budget at the time of the meeting.

At the Town Council meeting, councilor and Self Insurance Committee member Chris Poulos (D) cautioned that claims tend to increase in the last few months of the fiscal year. The self insurance fund operates in accordance with the fiscal year, so there are still more than two months left for employees to make claims.

Council chair Chris Palmieri (D) said the healthy reserve fund balance is a result of overpayment into the fund. According to the town’s policy, if the self insurance fund comes in more than 15 percent under budget, the funds become available for the town for one-time expenditures. Otherwise, any surplus gets reinvested into the fund.

“This is reducing contributions,” said BOE chair Brian Goralski (R). “The holiday allows the BOE to reduce the amount they put in, the Town to reduce the amount they put in, and employees to reduce the amount they put in.”

BOF member Tony Morrison (R) expressed concern that dipping into reserve funds would become a trend for Southington, and he questioned why cuts to self insurance were not made if the numbers were so favorable. Morrison said nearby towns, Meriden and Plainville, both recently dipped into their self insurance funds, and both towns are facing severe consequences.

“They were, in my view in numbers, less conservative than us,” Morrison said, “but there are warning signs.”

Morrison proposed that policies be put into place to prevent this situation from occurring again. Labieniec said there is no policy in place right now, but the committee would look into it.

Town councilor Mike Riccio (R) also voiced concern about the premium holiday at the April 16 council meeting, pointing to a long-running stalemate between the BOE and the council.

“At some point, we need to find out how we can change the way we deliver education without attacking our kids or teachers,” Riccio said, referencing the BOE cuts to middle school sports and threats to conduct teacher layoffs. “How can we understand this ‘pot of gold’ won’t be here next year? We need to take some of this money and hire a consultant to go through the books and tell us what ‘can’ be cut, not ‘if’ cuts can be made.”

During the discussion, five councilors—three Democrats and two Republicans—expressed frustration regarding the ongoing stalemate between the boards during this budget season.

Riccio pointed out a bipartisan letter that was penned to the Superintendent of Schools and the Town Manager on Sept. 22, 2017 when Riccio was council chair and Palmieri was minority chair. The two had asked Connellan and Town Manager Mark Sciota to prepare a list of cuts to be presented to the Town Council by Oct. 20, 2017.

At the Sept. 29, 2017 BOE meeting, Goralski read a response letter on the minutes noting that the council, according to the town charter, did not have the power to address the superintendent. The BOE chair said that he felt uncomfortable preparing the list for the council. BOE member Bob Brown (D) and Goralski proposed a joint meeting of the BOE, BOF, and Town Council.

Councilor John Barry (D) acknowledged the stalemate between the boards during this process, and said that he is concerned about using the self insurance fund as a “piggy bank” during a budget crisis. “In terms of action tonight, I don’t know where to go,” he said. “We have to pay the bill.”

“It feels like they’ve pushed us against the wall,” councilor Kelly Morrissey (D) said about the BOE. “I have trouble with the fact that I need to approve a budget I have zero oversight for.”

The premium holiday will affect the current fiscal year. Of the $755,000 to the BOE, $637,200 will be used in the budget mitigation. The remaining $17,800 will go to BOE employees. On the town’s side, $211,000 will be used in budget mitigation, and $34,000 will be returned to town employees.

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