Trumbull residents got two big wins Thursday evening, one for the Board of Education, the other for all of us.
First, the Town Council Legislation & Administration Committee approved the recently executed three year contract between the Board of Education and Trumbull Education Association, the bargaining unit representing our teachers. The contract was concluded in arbitration, meaning that each side offered a take-it-or-leave proposal and the arbitrator chose one, rather than the sides being able to trade individual points, as is the case prior to arbitration.
Floyd Dugas of Bercham, Moses & Devlin, P.C., the board's attorney, called the contract “on par with current year's settlements.” Teachers will receive salary increases averaging 2.88 percent per year. But the cost to our taxpayers will average only 1.88 percent as the result of the board replacing its purchased insurance policy with a self insurance program. This will reduce costs without increasing risk (before you ask, the new plan includes a reinsurance policy to mitigate against a catastrophic loss).
Connecticut teachers' contracts have been subject to compulsory arbitration for the better part of 40 years. This means agreements taking effect concurrently must have reasonably comparable terms. One result is that it is unlikely that a contract like Trumbull's just expired one, with two years of zero increases, would be approved by the state today.
The community win was the approval by the Board of Finance of bonding of $2.9 million to renovate our 33 year old police headquarters to accommodate necessary emergency communications, acquire the new communications equipment, place antennas on several commercial buildings around town, and install the equipment at each location. The Town Council must now give its approval. With its OK, the system should be in operation by late 2014 or early 2015.
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However, a couple of loose ends must be resolved. The sore thumb – to this observer – is that Trumbull Center will remain something of a communications dead zone. While the majority of town benefits, the plan under consideration does not appear to offer the center a remedy.
The other is that there seems to be an insufficient understanding of the most appropriate financing structure. Many on the board seemed averse to bonding, perhaps because they just dislike incurring interest charges, or because “bonding” means 20 year bonds, which all agreed would be too long for most of the project elements.The business rule is that funding must match useful lives. Once a list showing the economic (or technologically) useful lives of the included assets is available funding term decisions can be made. Most assuredly some portion of the project will be best funded within the operating budget, while long life components should be bonded – a digital radio system with an estimated life of ten years should be funded by ten year bonds, construction at the police station may be best funded over 20 years, and so on.
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Whether to bond or not becomes a discussion when rates are high. But today's are near historic lows. And with the town's Aa bond rating we will receive extremely attractive offers for our bonds. Not bonding means funding long life assets in the operating budget and take the entire hit in the initial year. Why?
