East Lyme Finance Board Approves Investment Policy, Warns Of Fire Department Overtime Overruns

EAST LYME, CT — The East Lyme Board of Finance unanimously approved a short-term investment policy Oct. 14 as officials warned that Fire Department overtime expenses could exceed the annual budget by as much as $375,000.

The board also approved funding for a wellness prevention coordinator, postponed decisions on two youth services grants and a revised purchasing policy, and reviewed preliminary budget projections for fiscal year 2028.

Board Approves Short-Term Investment Policy

Deputy Treasurer Denise Hall presented the proposed investment policy, developed following the town's request for proposals for banking services.

Hall said the policy establishes written guidelines for managing excess municipal cash while complying with Connecticut law.

The policy prioritizes preserving principal and maintaining access to funds rather than pursuing higher returns through riskier investments.

Permitted investments generally include certificates of deposit, U.S. Treasury securities, government-backed money market mutual funds and repurchase agreements backed by government securities.

Hall said the policy was developed using guidance from the Connecticut Conference of Municipalities and the Government Finance Officers Association.

Board members questioned who should have authority to designate the town's investment officer.

Hall said the finance director would typically be designated by the first selectman, while First Selectman Dan Cunningham explained that the proposed language was intended to preserve flexibility.

Members also discussed whether the full Board of Selectmen should approve the appointment to provide additional oversight.

Acting Chairman Richard Steel said the policy formalizes investment practices already followed by the Finance Department rather than establishing new procedures.

Hall recommended reviewing the policy annually to ensure continued compliance with state requirements.

Kim Kalajainen moved to approve the policy, with Lauren McNamara seconding. The motion passed 5-0.

Fire Department Overtime Could Exceed Budget By $375,000

Finance Director Kevin Gervais reported that firefighter overtime expenses were averaging approximately $17,000 per week, compared with a budgeted $12,500.

If that pace continues, overtime spending could exceed the annual budget by approximately $240,000 to $375,000, he said.

Gervais reported that weekly overtime costs had recently declined from approximately $19,000 to $13,000.

He attributed earlier increases partly to storm-related staffing demands, military leave and injuries.

Cunningham said minimum staffing requirements established by labor contracts limit the ability of volunteer firefighters to offset overtime expenses.

However, he said rebuilding the volunteer program could reduce the need for additional full-time employees in the future.

Kalajainen called for greater budget accountability, saying projected overtime overruns should be accompanied by explanations and corrective action plans from department leadership.

She also emphasized the importance of identifying savings elsewhere in town operations to offset unexpected expenses.

Gervais and Cunningham said contractually required overtime had been included in the budget, but staffing shortages and operational demands had pushed projected costs above those estimates.

The board agreed to continue monitoring overtime spending before determining whether additional action is necessary.

Board Approves Opioid Settlement Funding For Prevention Coordinator

The board voted unanimously to approve an appropriation of opioid settlement funds for a wellness prevention coordinator position.

The agenda identified the funding as $50,000 annually, totaling $150,000.

Gervais said the position was already included in the town's operating budget, but formal approval of the funding should have occurred earlier in the fiscal year.

Barry Sheckley moved to approve the appropriation, with McNamara seconding. The motion passed 5-0.

The decision followed discussion of several funding requests associated with youth services and prevention programs.

Youth Therapeutic Garden Proposal Discussed

Gervais presented a proposal to allocate $10,000 in cannabis tax revenue toward creating a therapeutic garden behind the Community Center.

The project would support programming through Youth and Family Services.

McNamara moved to approve the proposal, with Sheckley seconding.

Kalajainen questioned whether cannabis tax revenue should be considered as part of a broader youth services strategy.

She requested additional information about long-term goals, measures of program effectiveness and how proposed initiatives would work together.

Steel agreed, saying he wanted Youth and Family Services Director Sarah Firman to explain the department's overall plan for cannabis tax revenue before additional requests were approved.

Steel also suggested including senior citizens in the therapeutic garden program, noting that the Senior Center had not received funding for a similar proposal.

Two Youth Grants Postponed

The board voted 5-0 to table consideration of a $6,417 Local Prevention Council grant and a $37,854 Youth Services Bureau grant.

Sandra Bullock introduced the motion, with Kalajainen seconding.

The minutes also list the opioid settlement appropriation among the items initially included in the tabling motion, although the board subsequently approved that appropriation in a separate unanimous vote.

Finance Officials Review Proposed 2028 Budget Targets

Sheckley presented a budget forecasting model developed with assistance from Gervais.

The model is intended to establish spending targets and improve long-term financial planning.

Sheckley said historical analysis showed town spending growth had exceeded inflation by approximately 2.75 percentage points.

The proposed framework uses inflation plus 2.75 percentage points as a maximum guideline for budget growth.

Current projections estimate increases of approximately 4.1 percent for town operations, 5 percent for the Board of Education and 4.97 percent in overall expenditures.

Sheckley said the figures would serve as targets for departments preparing budget requests, with additional accountability measures tied to goals and performance indicators.

Several board members expressed concern that a spending increase approaching 5 percent could face opposition from taxpayers.

Some favored lower targets to encourage departments to identify savings, while others cautioned against setting targets that could not realistically be achieved.

Gervais said much of the projected increase is driven by fixed expenses, including union contracts, pensions, health insurance, debt service and previously approved staffing additions.

He also emphasized that expenditure growth and tax increases are separate issues.

The board agreed to continue refining the model and requested additional information about contractual expenses before establishing final budget targets.

No final targets were adopted.

Purchasing Policy Changes Delayed

The board postponed action on proposed revisions to the town's purchasing policy.

Gervais outlined changes that would lower the formal bidding threshold from $50,000 to $35,000, increase the threshold for obtaining quotes from $2,500 to $5,000, establish a formal purchasing waiver process and expand oversight of purchasing cards.

The revisions would also consolidate purchasing procedures into a single document.

Board members questioned how the proposed policy would interact with the town's existing capital asset policy, including definitions and capitalization standards.

Gervais agreed to circulate the current capital asset policy and work with members on possible revisions.

Bullock moved to table the purchasing policy, with McNamara seconding.

The motion passed 4-0-1, with Sheckley abstaining.

Town Reports Strong Tax Collections

Gervais reported that East Lyme had collected 55.7 percent of taxes due as of Sept. 30, compared with 55.1 percent at the same point in 2025.

He attributed part of the improvement to collection efforts involving delinquent accounts.

Revenues for fiscal year 2027 were tracking ahead of expectations, supported by tax collections and higher investment earnings.

The town had budgeted to use $1.4 million from its fund balance, but stronger revenues could reduce that amount, Gervais said.

Most departments were operating within budget, although officials continued monitoring legal expenses and overtime in the Fire and Public Works departments.

For fiscal year 2026, Gervais reported that revenues finished approximately $99,000 below budget, while expenditures were about $1 million under budget.

He said some savings resulted from correcting a sewer bond accounting issue that had previously charged expenses to both the General Fund and Sewer Fund.

The remaining money will be returned to reserves.

Gervais also said work on the fiscal year 2025 audit was expected to resume after the auditors' busy season, with completion targeted for March.

The Capital Improvement Program Committee is tentatively scheduled to resume meeting Dec. 2. Gervais requested two Board of Finance representatives.

Environmental Testing Continues At Former Dominion Police Station

Cunningham reported that environmental testing was continuing at the former Dominion police station property.

Contractors were drilling test holes inside the building and parking lot to determine whether contamination remained from previous vehicle operations.

The parking lot had been closed to public access as a precaution during soil sampling.

Cunningham said the town was moving quickly because Dominion was undergoing an acquisition, and agreements involving the property might need to be carried forward by the new owner.

He also reported efforts to rebuild volunteer participation in the town's fire service.

A recent recruitment event at Station 2 had generated interest from several potential volunteers.

Cunningham explained that the Niantic Volunteer Fire Department operates as a separate nonprofit organization that appoints its own chief, while the town maintains a unified fire department structure.

He said the town was providing equipment and support for qualified volunteer recruits.

Previous Minutes Approved

The board unanimously approved its Sept. 9 meeting minutes on a motion by McNamara, seconded by Sheckley.

The Oct. 14 meeting was held at East Lyme Town Hall and remotely via Zoom.

The meeting began at 5:30 p.m. and adjourned at 7:16 p.m. following a unanimous vote.