Hartford — Lawmakers on Wednesday voted to eliminate penalties faced by six towns, including Montville, for not hitting the state Department of Education's minimum budget requirement.

State Sen. Paul Formica, R-East Lyme, said the bipartisan measure arose because municipalities and lawmakers believed towns faced unfair penalties for reducing their budgets following Gov. Dannel Malloy's budget holdbacks in the middle of the 2017-18 fiscal year.

Montville shaved about $1 million in spending for the 2017-18 school year after Malloy ordered the holdbacks in November. But in February, Montville and five other towns were warned by Kathy Demsey, the education department's chief financial officer, that they cut too much spending and could face penalties for being out of compliance with the minimum budget requirement.

Per state law, the minimum budget requirement prohibits towns from budgeting less for education than they did the previous year, unless they can demonstrate a drop in school enrollment or a boost in savings through increased efficiencies.

Montville Superintendent Brian Levesque disputed the state's minimum budget requirement calculation because it did not factor in the $1,023,764 holdback Malloy ordered for Montville.

The Department of Education says the midyear holdbacks don't count as state aid reductions for the purposes of the minimum budget requirements, even though the holdbacks won't be restored this fiscal year. The department was prepared to penalize Montville by holding back $355,012 in Education Cost Sharing Grant funding in 2018-19, double the amount the town is below the minimum requirement, according to the state.

But Montville — which faced tough 2018-19 budget options that included some layoffs — and its representatives argued towns shouldn't be punished for reducing spending in light of Malloy holding back funding beyond education cuts identified in the state budget.

Formica said the legislature "worked hard to adopt a bipartisan budget last year that minimized reductions in aid to our towns."

"Unfortunately, the administration cut further from our town budgets through gubernatorial holdbacks instead of following legislative recommendations to reduce costs in other areas," Formica said in a statement. "By working together today, lawmakers are able to stop towns from being penalized further."

Formica; Sen. Cathy Osten, D-Sprague; Rep. Mike France, R-Ledyard; Rep. Kathleen McCarty, R-Waterford, and Rep. Kevin Ryan, D-Montville, wrote a joint letter in late March urging the Department of Education to waive the penalties.

On Wednesday night, Levesque thanked the local delegation for pushing for the legislation.

"I never understood why the holdbacks were not a part of the (minimum budget requirement)," he said. "We worked very hard to do what was best for our community in a difficult budget crisis. It did not make sense to punish us for doing what was best for the school and community."

Levesque wrote to Demsey on March 20, saying the letter he received in February indicating the district was in violation of the minimum budget requirement "came as a complete shock to us."

"This threat is placing our town and school budgets at great risk for additional harm," he said of the potential penalties.

He added that the state's claim Montville's school spending plan was below the minimum budget requirement didn't make sense because he previously had received an email from the state indicating a preliminary minimum budget requirement figure of $35,814,361, which was less than the $36.6 million approved by Montville's Board of Education in December.

Groton also originally was told it was also not in compliance with the minimum budget requirement but resolved the issue on its own.

The bill now heads to Malloy's desk after receiving staunch support in both houses: the Senate voted 34-1 in favor of waiving the penalties; the House vote was 141-2.

b.kail@theday.com