In response to the recent revelation that operating funds in the school budget were used to cover overruns on a capital project, the Board of Education on Monday night adopted a new capital projects policy.

The policy, unanimously approved by the board, was prompted after a municipal audit sparked controversy when it revealed that more than $1.6 million in the school district's operating budget had been used to cover additional expenses for cleaning up lead and mold at Kings Highway Elementary School.

According to the policy, funds from the operating budget can be applied to a capital project in amounts not to exceed $10,000 under normal conditions and not to exceed $25,000 in emergency situations. The superintendent of schools has the authority to do that, according to the policy.

"We are doing this because of the overage," Board of Education Chairwoman Elaine Whitney said.

"We have come in under budget on all capital projects and returned money," said Superintendent of Schools Elliot Landon. "This was the only one," he said about the Kings Highway project overruns. "We had no choice."

He said that if the project was delayed that school would not have opened in time. "Should we have gone to the board" before making the transfer, Landon asked.

"In retrospect, sure," he added. "And the board would have said, if you have the money go for it."

"Transparency is the key issue, as you know," Whitney added.

The policy also calls for monthly reporting by the superintendent on capital projects with quarterly discussions of them. It also says the superintendent should "proactively alert" the board if projected expenses are anticipated to exceed the approved amount.

At that point, the school board would make a determination to whether to seek a supplemental appropriation from the town's funding bodies or use its operating budget to fund unanticipated overruns in expenditures, according to the policy.

At one point, PTA Council Co-president Sue Calger said she was "amazed" at "how much distrust there is on this side of the table," she said referring to board members.

"How much reporting do you need, why so much detail?" she asked, adding Landon already spends a good deal of his day "doing reports."