BOF Votes to Move $700k of Self-Insurance Funds

The school's self-insurance fund has been a point of contention for more than a year. Long story short, Stafford's former CFO, John Lund, said the self-insurance bank account was running low, and to ensure claims could be paid, he moved money from the General Fund to cover it. All in all, the town says that over time it moved about $1.2 million into the self-insurance account and that it needs to be paid back.

At this time last year, the Board of Education (BOE) presented a few possible repayment options suggested by One Digital (and here's another), though none seem to have been implemented. The BOE also voted to request proposals for a forensic audit of the self-insurance account. However, the proposals were more expensive than they expected. That has not gone anywhere. However, at the June 5, 2025, special Board of Finance (BOF) meeting, the board took action to start getting the money back.

The cash balance in the self-insurance account was $874,973.96 as of the June meeting. Back in May, we reported, "Because of the budget freeze and the district’s inability to hire for open positions or replace staff who leave, Dr. Norbut says the district estimates it will need less than the $600,000 remaining in the benefits line to cover insurance costs for the rest of the year." However, when the schools brought up the idea of using some portion of these funds to offset the deficit, it met resistance from the BOF. Back then, Stafford's CFO, Yana Abramovich, told me the self-insurance fund's deficit at the end of April was $477,981. Now, she says it is $685,026. According to Abramovich, this includes the $1.2 million due to the General Fund and $360,000 in IBNR Reserve (Incurred But Not Reported) expenses.

Recently, the schools announced they have eliminated the deficit in their operating budget, but still have more than a $200,000 deficit in the food services line. And, of course, the self-insurance fund remains an issue. The BOF has repeatedly discussed moving the school employees to the state partnership health plan, like the rest of the town, which is more expensive but predictable. However, the district still has not elected to make that move.

At Thursday's meeting, BOF Chair Steve Geryk said First Selectman Bill Morrison asked to move money from the self-insurance fund to the General Fund. Abramovich presented several scenarios; ultimately, the board voted on moving $700,000 immediately and $50,000 every month thereafter until the General Fund is paid back. The expectation is that the $600,000 will be moved to the account to make up for that significant transfer out.

Of course, I had questions about how this would impact the self-insurance fund's deficit, so I reached out to Abramovich, who told me via email, "To prevent a reclassification of the amount due to the General Fund as nonspendable (which would significantly impact our unassigned fund balance), we transferred funds. Importantly, this did not change the overall deficit in the fund—it simply reduced both the cash asset and the liability to the General Fund. The net position (bottom line) remained the same, but it showed good-faith effort toward repayment, which auditors will view more favorably."

As you can see, conversations with the town's auditors spurred this move. During the meeting, Abramovich said the town needed to show a plan to have this $1.2 million paid back by the end of the next fiscal year to avoid having part of its General Fund potentially marked as non-spendable. This plan would have the money paid back by April 2026. She also noted that the state's Office of Policy and Management (OPM) had recently provided towns with guidance saying that having an unassigned General Fund balance less than 5% of a town's operating budget will be cause for adding it to a watchlist.

Importantly, Geryk said that if the monthly $50,000 becomes a problem for the schools, the BOF welcomes working with the new administration to find another solution.