FOR IMMEDIATE RELEASE

Contact: Heather B. Habelka, Office of the Mayor, 203.385.4001

Mayor Miron Announces Third Budget Surplus Last Decade and $1.2 Million in Savings

Stratford, Conn. (October 25, 2007) - One of only three budget surpluses in the last ten years in the Town of Stratford; record tax collection rates; corrections of management errors of previous administrations; increased contributions to the fund balance and a correction to the Police Plan B Pension Fund were highlighted by Mayor James R. Miron and Finance Director John G. Norko at a press conference at Stratford Town Hall.

The 2007 Fiscal year was the first complete budget cycle under the Town’s new Mayor form of government and the Miron administration.

FY2007 Operating Budget

Third Budget Surplus In Last Decade:
The FY2007 operating budget ended the year with a surplus of $580,049, only the third budget surplus in the Town of Stratford in the last decade, according to Mr. Norko.

Expenses totaled $163,449,102 and revenue totaled $164,029,151.The resulting surplus of $580,049 increased the general fund balance to over $8.8 million.

An End To Improper Use Of Fund Balance:
Unfortunately, in the previous nine fiscal years, former town managers and prior Town Councils have used the fund balance seven times in order to balance the budget. As a result, the general fund balance declined from $15.1 million in 1997 to $8.2 million in 2006. In November 2005 during a credit rating review, Moody's Investors Service was critical of the Town's diminished financial position as a result of the continued use of reserves (fund balance) for operating expenses.

“One of my first budgetary and management priorities as Mayor was to stop the irresponsible practice of using the fund balance improperly,” Mayor Miron said. “The FY 2007 increase is a significant step toward improving the Town’s financial condition.”

Tax Collections:
Current tax collections in FY07 ended at 98.4%, the highest current tax collection rate in over 20 years. Collections in FY06 were 98.3% and the
prior five fiscal years were 97.5%.

"The credit goes to Finance Director John Norko, Tax Collector Deb Heim and her hard working staff,” Mayor Miron said. “These results demonstrate why they are a key part of my management team.”

The Town generated $928,000 in additional tax revenue from a recent tax lien sale. This was the first tax lien sale conducted by the Town in 10 years.

“There will be more tax lien sales for the most delinquent offenders as we move forward,” said Mayor Miron. “This is a matter of fundamental fairness as all property owners must pay their taxes.”

The Town's tax receivable has decreased from $6.5 million on June 30, 2005 to $4.3 million on June 30, 2007. This represents a $2.2 million reduction in two years. The $4.3 million tax receivable is the lowest tax receivable figure in many years.

Specific Management and Financial Findings

$1.2 Million in Town Funds Affected:
The Miron administration has uncovered a number of administrative errors and omissions that can be tracked back over the previous 10 years.

Mayor Miron cited the discovery of fiscal irregularities involving the Police Department Plan B Pension Fund; Water Hookup Fund; the Sewer Revolving Fund; the 401a Defined Contribution Pension Plan; non-collection of railroad ticket revenue; payments of rent and utilities to third parties for no consideration; and departmental grant mismanagement as examples.

“I report today that through the hard work and efforts of my administration, we have uncovered a series of fiscal and management errors and omissions, totaling $1.2 million to date,” said Mayor Miron. “I will continue to work to ensure that our tax dollars are not only being spent wisely, but that every penny is allocated correctly and accounted for. The good news is that we found these long-standing and hidden fiscal and management irregularities and have put them to an end.”

Plan B Employee Retirement Deduction:
The Town administration is currently working with Police Union Officials to rectify the Town's Police Department’s Plan B employee retirement deduction errors dating back ten years to 1997 and totaling $174,000. It was discovered by the Miron administration in April that deductions for officers new to the police department (February 1997- April 2007) were being made on gross pay including callback and regular overtime. According to the provision of Plan B, the deductions should have been calculated from base pay only. It is estimated that the actuarial liability reduction will more than offset the repayments to the 46 police officers.

As a result of this correction, it is estimated that the pension fund un-funded liability will be reduced by approximately $175,000. Effective July 1, 2007, the payroll deductions for employee pension contributions for all Police officers

covered by Pension Plan B were corrected and are consistent with the agreement between the Town and the Union. The employee contribution to Pension Plan B is 7 percent of the base salary.

Capital Projects – Water Hookup Fund:
The project to install the public water supply on Judith Terrace was completed in the fall of 2002, after being approved by the Town Council as a public improvement project in 2001. The Town contracted and paid for the project, at a total cost of $306,053, to be assessed to the Judith Terrace property owners. This item was stricken from the Town Council’s agenda on November 14, 2005 and as a result, the assessment was never performed and the Town has not been reimbursed for costs to implement the project for the Judith Terrace property owners. The administration recommends that the assessment issue be brought to the Town Council for action in order to eliminate this deficit in the Water Hookup Fund.

Sewer Revolving Fund:
Due to several corrections, a total of $445,671 has been added to the WPCA Fund Balance.

The WPCA Fund was incorrectly charged a total of $311,971 for assessible sewer project costs for Craig Ave. (1999), Chapel St. (2003), Nelson St. (2005) and Tavern Rock Rd (2006). This adjustment was also made on June 30, 2007 to correctly charge the Sewer Revolving Fund.

In addition, a total of $133,700 in "new" sewer connection charges from January
2006 to July 2007 were recorded as revenue in the Sewer Revolving Fund. In order to correct this, the revenue was recorded in the WPCA fund balance and the Sewer Revolving Fund was adjusted accordingly as of June 30, 2007.

The net effect of these adjustments resulted in an increase to the WPCA fund balance and a reduction to the Sewer revolving fund balance by approximately $445,671 as of June 30, 2007.

This correction, which increased the WPCA fund balance by $445,671, is key as the WPCA moves forward in setting rates and financing the upgrade to the facility. It also ensures that ratepayers and those being assessed are not double billed.

401A:
Finance department staff discovered in August that for four years, the Town has failed to request refunds from ICMA for non-vested employees' employer contributions. In total, 18 employees and $270,000 including interest are to be refunded to the Town from ICMA, which will reduce costs in the general fund.

Railroad:
According to Mayor Miron, the Town, under former town managers, neglected to enforce the applicable rules governing the railroad parking and neglected to collect tens of thousands of parking and ticket fees owed to the Town’s Railroad Fund.

To date, uncollected ticket revenues have been increased by approximately $20,000 from Railroad parking penalties that have been recovered.

The Stratford Volunteer Fire Co. # 3:
The Stratford Volunteer Fire Co. # 3 building is located at 21 Prospect Drive, directly behind the Stratford Fire Dept Engine # 3 building at the same address. The Stratford Volunteer Fire Co. # 3 owns their building and the Town of Stratford owns the land.

Many years ago the Town entered into an agreement with the Stratford Volunteer Fire Co. # 3 to pay $3,000 per year for the operation and maintenance of the structure while the Town utilized some of the space there for training and other purposes. That agreement has long since lapsed. In addition, since the early 1980’s, the Town has also paid the heating oil and water bills for the building.

The Stratford Volunteer Fire Co. # 3 is a social organization. They do not fight fires, respond to any Town emergency or provide any service to the Town of Stratford. It has been a number of years since the Town has operated an EMS crew or even parked an ambulance at this location.

Mayor Miron recently notified The Stratford Volunteer Fire Co. # 3 that the Town of Stratford will be terminating this rental agreement effective immediately and will cease paying heating and water bills on their behalf.

Grant Management:
Blum Shapiro, P.C. Certified Public Accountants and Business Consultants were retained and asked to review the records of the Community Services Department for fiscal year 2007 due to indecipherable records by a former Supervisor.

Blum Shapiro’s review included meetings with town employees, a review of the Community Services fund accounts, transactions, journal entries and back up for fiscal year 2007.

Fund Accounting:
During fiscal year 2007, the Town matched $250,000 against a $40,000 State Department of Education grant. These amounts were accounted for through four different accounts within the grant (account numbers 3201, 3202, 3203, and 3204). A review of these accounts indicates that payroll for employees who should have been paid by other grants as well as other expenditures were paid through the DCF grant and accounted for in these four accounts. Payroll and expenditures related to other grants were subsequently allocated to those other grants at the end of each quarter and at year-end via journal entries. The only back up attached to these journal entries were the former Supervisor’s handwritten notes requesting journal entries to various fund accounts. It appeared that the numbers in the handwritten adjustments were reverse engineered in order to properly balance out each fund at the end of each quarter and at year-end.

Community Service Programs:
The Community Services operating budget for fiscal year 2007 included an $8,000 line item for the Town’s share of the Youth in Crisis Program. The Town contracts with the Council of Churches of Greater Bridgeport, Inc. to operate the Janus House Center for Youth-In-Crisis.

Blum Shapiro’s review of the YSB and DSS grants found no mandatory requirement for a Youth in Crisis program.

Staffing:
The Town hired an employee as a Social Service Case Manager/Job Developer on October 24, 2000. The Town’s offer letter indicated that this person’s position was a “grant funded position.”

In a letter dated June 29, 2005, the former supervisor informed this employee that the employee’s hours were being reduced from 37.5 hours per week to 25 hours per week due to state and local grant funding reductions. Although the October 24, 2000 and June 29, 2005 letters written by the former supervisor indicate that the employee’s position was grant funded, the position was included in the Town’s operating budget, as a town funded position for fiscal years 2004 through 2008.

For part of the fiscal year 2005 and all of fiscal years 2006 and 2007, Community Services received funding from the Town for a full time position while paying this employee a part time rate. While evidence of misappropriation of funds was not found, it appears the former supervisor may have misrepresented the status of the employee’s position resulting in additional funds that the former supervisor was able to use as a cushion to balance her department’s annual budget.

“As a result of these findings, I have implemented an official Town administrative policy that directs regular audits to occur whenever money, both cash and grant funds, are under the control of a Town employee,” said Mayor Miron. “In addition, should any employee who handles money or grant funding be transferred or leave Town employment, an immediate audit will be executed.”

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