The district, which serves Prospect, Cheshire, and Wolcott, sent each town a bill to help cover a shortfall that is above and beyond the regular fees the company is charge in the current fiscal year.
“Chesprocott Health District has fallen into a fiscally dire condition at this point in time and is in need of cash to continue our basic operations,” Director of Health Thomas Wegrzyn wrote in a letter to Mayor Robert Chatfield.
Wegrzyn wrote similar letters to Cheshire Town Manager Michael Milone and Wolcott Mayor Thomas Dunn.
The letters asked each of the towns for a fee of $1 per resident. For Prospect this bill came to a total of $9,494.
“Although this is an unprecedented and highly unusual direction to be taken by the district, at this time it is a necessary move,” Wegrzyn wrote.
All three towns have voted to pay the bill.
Chatfield was not pleased to receive the news from Wegrzyn.
“This is very annoying because we’ve been with Chesprocott since 1976 and never had a problem like this. In fact, their auditor, in their annual report, chided them because they were using too much money out of surplus,” Chatfield said during the Town Council meeting on June 5.
Wegrzyn said, in a subsequent interview, the district previously had a large fund balance due to many prosperous years. He said that it is recommended that a district have three to four months of operating fees as its fund balance. Chesprocott had a fund balance that would have covered six months of operating the business, he said.
Wegrzyn explained the district started spending down its fund balance to the four month mark so that it would not incur extra operating fees.
It was shortly after they implemented that strategy that the economy went into recession.
“This year we also overestimated the amount of revenue from fees. This year, even though we reduced the estimate, it was not close to what it wound up being. We recognized that we were not taking enough in,” Wegrzyn said.
He pointed out the district had not raised its fees in over four years.
Before Chesprocott realized it was going to come up short for the year, the district took precautions to prevent such a thing from happening, Wegrzyn said.
According to Wegrzyn, the district reduced staffing and spending where it could. The people who were left at the company took pay decreases, he said.
Wegrzyn explained sending out the bill to the three towns was not the company’s first choice.
“We checked with the bank to see if they would give us a loan, but they were worried that the loan would not be paid back. So we were left to come to the municipalities for extra money to get us through this crisis,” Wegrzyn said.
He explained the next fiscal year the district will raise its rates by $1 per person per town, which is a flat increase after factoring in the recent new bills the three towns paid.
Wegrzyn said the district is not receiving as much money from the inspections it does for restaurants and other businesses.
Since the downturn in the economy, construction of new businesses is down, this means that Chesprocott is not doing as much business as previously. This has led to the company raising the fees it charges to businesses to help offset the costs.
Wegrzyn knows that charging the towns an additional fee is unprecedented, but he hopes that Chesprocott will still continue to serve these towns after its financial crisis has ended.
“Our plans are to continue to provide service to the municipalities as we always have, but that all depends on the municipalities’ decision to support that. I can’t predict beyond that,” Wegrzyn said.
Wegrzyn hopes to see Chesprocott become fiscally healthy in the near future so the district can begin to grow its fund balance once again.
“When you don’t have a reserve you don’t have a fall back, and that’s essentially what happened,” Wegrzyn said.