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Simsbury board seeks legal clarity on decades-old capital "payback" practice
Summary
At a special May meeting, the Simsbury Board of Finance asked town counsel and finance staff whether the town may stop funding the long-standing capital non-recurring (CNR) "traditional payback" system or must follow chapter 108 and Conn. Gen. Stat. —7-346; counsel said both keeping and unwinding the practice are legally permissible and recommended clearer local documentation and a summer review.
The Simsbury Board of Finance convened a special meeting to get a legal opinion on its "traditional payback" method for capital purchases and whether the practice can be halted without violating statutory procedure. Town counsel told members the charter references chapter 108 and that the board must follow statutory procedures if it relies on that authority.
Finance staff presented an accounting walkthrough showing the mechanics of the capital non-recurring (CNR) fund. Amy, the finance director, explained the town had a prefunded corpus (about $832,500 for the town and roughly $1.1 million for the board of education, totaling about $1.9 million) that offsets annual chargebacks. "If we did not have this beginning fund balance that prefunded it, this would be an interfund loan," Amy said, describing why auditors do not classify the current structure as a loan.
Board members questioned whether using the five-year apportionment every year defeats the intent of Conn. Gen. Stat. —7-346, which was written to smooth the tax impact of large, multi-year expenditures. One member argued that running the five-year smoothing in perpetuity for relatively small recurring purchases undermines that statutory intent and can make capital harder to cut. Finance staff acknowledged that point but stressed the accounting result is driven by the prefunded balance.
Town counsel summarized the legal takeaway: there is no clear statutory prohibition on either unwinding the practice or continuing it as currently structured, especially given that the board of education's side remains funded. "I don't think anything was illegal because of that section of the charter that says [it] enables you to apply the principles of chapter 108," counsel said, while urging adherence to the statutes' procedures when the town chooses to rely on them.
Members discussed practical options: (1) leave the CNR practice in place for now and review over the summer; (2) discontinue the town's contribution while leaving the BOE contribution intact; (3) use the prefunded corpus to pay down outstanding chargebacks; or (4) unwind the practice on a multi-year schedule, reallocating funding sources for a small number of capital items (staff identified two items totaling $416,250 that could be shifted). No formal motion or vote was taken at the special session.
Accounting and bond-rating consequences were also raised. Art, an accounting participant, said the town has flexibility but emphasized transparency and consistent policy compliance to protect the town's AAA bond rating. Members repeatedly asked for written materials and a clearer public explanation; several recommended postponing any substantive change until the board can circulate Amy's analysis and give the public time to review.
Next steps: counsel and staff recommended drafting clearer local documentation (an ordinance or written policy that codifies how the town applies chapter 108) and preparing materials for summer study sessions. The board agreed to review staff's written analysis before deciding whether to change the current CNR funding practice at a later meeting.
