Simsbury Board of Finance Seeks Legal Clarity on Capital Nonrecurring Fund and "Traditional Payback"

Simsbury, Conn. — At a special April 10 meeting, the Town of Simsbury Board of Finance requested a legal opinion on whether the town's Capital Non-Recurring (CNR) fund and its use of a so‑called "traditional payback" budgeting method are consistent with Connecticut law.

The request followed staff and attorney explanations of the town's accounting treatment for CNR projects and a review of audit materials showing the fund was prefunded. Town Attorney Bob DeCrescenzo said the town charter allows creation of a CNR account and that Connecticut General Statutes Chapter 108 contains procedures for using current-year funds to pay prior-year expenses; he recommended the town adopt an ordinance spelling out how Chapter 108 would operate locally.

Why it matters: The Board flagged $416,250 in Town CNR allocations as material to the operating budget and sought clarity on whether that recurring practice triggers the statute cited by one member. The legal and accounting determination could affect how capital costs are budgeted and whether the town needs a formal local ordinance to govern the CNR account.

DeCrescenzo told the board that, in general, a current-year tax levy pays for that same year's expenses unless the expenditures are debt service. He said Simsbury's CNR structure fits more naturally under Chapter 108 and that, because the town prefunded the CNR balances, there is no interfund loan to be repaid.

Finance Director Amy Meriwether walked the board through the audit and a spreadsheet showing the CNR prefunding. She said the interfund transfers that total $416,250 are recorded in the audit, and because the fund was prefunded the accounting shows a zero balance and "there is nothing to be paid back, and there is no loan." Meriwether also identified prefunded reserve balances: $832,500 for the Town portion and $1,100,600 for the Board of Education portion in the model presented to the board.

Town Manager Marc Nelson cautioned that a statutory citation to Section 7-346 is undercut by the program's "in perpetuity" character, saying the statute is aimed at smoothing a large one-time expense whereas Simsbury's practice repeats the allocation each year. Board Chair Lisa Heavner said the total $416,250 is material and suggested keeping the traditional payback in place while reviewing it over the summer; Dr. Lalitha Shivaswamy said she needed time to evaluate the details, and member Art Wallace said he would accept the Town Manager and Selectmen's recommendation if the shift were clearly communicated.

Next steps: DeCrescenzo and others recommended drafting a local ordinance to document how Chapter 108 would be implemented in Simsbury. No ordinance was adopted at the meeting and there was no vote on budget adoption. The board adjourned at 3:16 p.m. after a motion by member Bert Helfand, seconded by Dr. Shivaswamy, which passed unanimously.

Key figures noted at the meeting include a $416,250 annual Town CNR payment in the presented model, a Town prefunded reserve of $832,500, and a BOE prefunded reserve of $1,100,600. The board directed that the policy be reviewed and communicated before any shift away from the traditional payback method.