Revenue Problem or Budget Problem? Officials Wrestle With Looming School Deficit

by | Jul 23, 2017

May 16, 2017 – At Monday night’s (5/15/17) budget hearing, with the Town Council and the School Committee and a report from outside auditor Gail Corrigan, everyone agreed with the basic premise: the EG School Department has a structural deficit of at least $1.2 million. Figuring out next steps may be a different matter.

For Town Council President Sue Cienki, the deficit represents years of unsustainable property tax rate increases.

For School Committee Chairwoman Carolyn Mark, the deficit represents promises unkept – referring to the School Committee’s decision to dip into surplus funds last year based on $1 million in town debt service that is coming off the books this year.

For auditor Corrigan of Providence Analytics, the deficit was the first step toward the type of insolvency that forced Central Falls into bankruptcy in 2011 – a move taken by state-appointed Central Falls receiver Bob Flanders (former state Supreme Court justice and EG resident), for whom Corrigan served as chief of staff.

Corrigan’s report did not uncover anything significantly new with regard to the EGSD’s financial picture, but she emphasized that the School Committee’s use of surplus funds was not sustainable. Corrigan also said there was no way to “tax your way out of” a structural deficit like that facing the schools. The state caps the amount a town can increase school spending at 4 percent a year. There are times when a municipality can seek a waiver for an up to 6 percent increase, Corrigan said, but not for structural deficits.

Corrigan recommended having the town and school be considered as a whole; consolidating town and school departments; increasing revenue; decreasing special education costs; and developing a five-year school and town budget plan.

Councilman Mark Schwager asked Corrigan if she could pinpoint why there was a deficit. Corrigan said there had been a lack of transparency in the budget in recent years and that special education spending had increased. (Supt. Victor Mercurio in his presentation noted that unexpected special education out-of-district placements had added $460,000 this past year.)

Town Council President Cienki called for Providence Analytics do the same type of audit on the town as it just conducted on the school department. The Town Council will consider that request at its meeting next Monday, May 22. The town paid the $6,000 cost of the schools audit.

Cienki conceded that dealing with the deficit would not be easy but said, “If we ignore it and just give the schools what they are asking for, we will end up where Central Falls ended up.”

Town Councilman Nino Granatiero could not contain his frustration. Elected in November, Granatiero said he found the EGSD budget process confusing, since school officials keep referring to cuts that have been made even as they are requesting a 4 percent increase.

“We never actually attack the core expenses,” he said. “To me, that doesn’t make sense.”

School Committee member Matt Plain asked Granatiero what he meant by “core expenses,” noting that there are state and legal mandates that require, for instance, limits to the number of students in a class.

“We never go back and cut the base to offset the increases,” Granatiero said.

A number of residents rose to comment after town and school officials had finished their questions and comments. Most spoke on behalf of giving the school department some increase, with several speakers noting that they had moved to East Greenwich based on the good reputation of its schools.

One resident, Paul Schmidle (married to town IT director Wendy Schmidle), took an opposing view, decrying the yearly tax rate increases. He praised officials for “finally” being willing to make “hard decisions.”

Alternatively, resident Joe Farside, father of three preschool-age children, said that home values were higher in East Greenwich precisely because of the reputation of its schools.

The crowd for the town’s annual budget hearing easily exceeded that of recent years but topped out at about 220 people, well within Swift Community Center’s 253 capacity. About 36 to 40 of those present Monday night were teachers, conducting what organizer teacher Christina O’Day called a “silent protest.” The teachers were protesting the 3-year contract they recently finished negotiating with the School Committee, which they contend is unfair.

This is just one more step in the town’s overall budget process. The School Committee approved a $39.6 million approved budget in April, which calls for a 4 percent increase in town funding. Town Manager Tom Coyle presented his $61.9 million budget at Monday’s hearing.

In coming weeks, the Town Council will meet with various town department heads to review their parts of the budget. A final budget must be approved no later than June 10. That is a Saturday this year, so the Town Council is tentatively scheduled to vote on a final budget on Monday, June 5.

– Elizabeth McNamara

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