SOUTHAMPTON — At a May 23 meeting, the Southampton Selectboard received updates from representatives from the Hampshire Regional School District about why an excess and deficiency refund was issued to member towns and clarification about the use of School Choice funds.

As it was the first meeting after the town election, the board voted to reorganize before moving into the agenda, with Chair Christine Fowles retaining her seat as chair, Jon Lumbra being named vice chair and new member Dan LaValley being named clerk. New member Stephen Johnson was given authority to sign for the board while member Joy Piper was assigned as an alternate for that role.

Incoming Hampshire Regional Business Administrator Mickey Buhl, who officially assumes full-time duties on July 1, began the budget discussion by explaining why towns in the Hampshire Regional School District received a refund totaling $617,000 from the district’s excess and deficiency fund.

“The [excess and deficiency] fund is capped at 5% of the budget, so it’s never been above $704,000 and in fact this year, after returning the $600,000 plus to the towns and committing $367,000 to next year’s budget, which was an explicit strategy to reduce the impact on town assessments. After committing that money the [excess and deficiency] fund is lower than it’s been in a decade,” he said.

He explained that the low point for the excess and deficiency fund in the last 10 years was $339,000 and with the refund being issued, the fund is now below $336,000. Buhl also explained that the money did not necessarily need to be refunded to the towns.

“That was a choice that the School Committee made, there are both laws and regulations related to the excess and deficiency fund and the first step is anything over 5% has to be applied to the budget. What the School Committee could have done is apply that $617,000 that was over to next year’s budget,” Buhl said.

If the refund was instead applied to the budget, Buhl said it would have created an issue because that funding was already accounted for in Southampton’s budget.

During the discussion, Lumbra also noted a “mistrust” toward the district from the town, which may be changing after the most recent budget.

“There’s 20-30 years of mistrust going on right now that is all bubbling up to the top and I think over the past two years collectively the governing bodies have made tremendous strides at improving that. The overall budget this year was the most transparent it’s been under Superintendent [Diana] Bonneville, nobody could ever see the central office budget,” Lumbra said.

Lumbra said the concern from the town’s point of view was that money was not spent, leading to the large excess and deficiency fund.

Buhl explained that the amount the excess and deficiency was certified at was a mistake that is still being sorted out.

“It was a mistake that resulted in it being certified at $1.3 million, that was way higher than ever before. We had a couple hundred thousand dollars of spending that hadn’t gotten applied to it that I haven’t sorted through,” he said. “It was artificially high and after the money goes back and the committee had already voted to commit a higher amount, it is lower than ever in recent memory.”

Buhl said that one of the biggest drivers in changes to the budget is the costs the district cannot control.

“The 25% increase in non-discretionary costs is enormous and there’s a couple big drivers of that. Out of district tuition is the biggest one, it is going up by about 125%. The utility costs of electricity and fuel are skyrocketing, transportation costs going up, insurance costs going up,” he said.

To combat what towns would be seeing in local assessments, Bhul explained the committee devoted $2 million in reserve funds, including School Choice and the excess and deficiency fund, to make up the difference.

“If the district had for prior years, run really lean on the reserve funds, it would have been an ugly year for the town assessments. In a way those two funds worked exactly as we all would want them to mitigate the impact on town assessments for what hopefully are not going to be continual increases,” Bhul said.

In the future, Lumbra said he hopes to see better communication with central office when it comes to budget planning.

“The more central office can communicate beyond the school committees to the select boards and the finance committees, the smoother this process will go,” he said.

Going forward, Buhl agreed and said it would be important to begin the budget process earlier.

“I think we should all commit to a really early start. This created a real problem for the district and towns, we can’t do it again, we have to make sure we’re on top of it on time for this year and so we’re going to try to get that done early which is going to be a critical part of the decision making for the budget creation,” he said.

Buhl said he wanted to begin discussions in the district about planning the budget over the summer.

During the meeting, the board also recognized the resignation of Conservation Agent Nicolas Pietroniro and Finance Committee member Vicki Leigh Moro.