2015-01-15 / Front Page

School Deficit May Be Looming

By Barry Bridges

Six months into the 2015 fiscal year, there are indications that the Newport school system may once again be faced with a year-end budget deficit.

Councilors have been advised by the city administration that figures show a potential shortfall of between $1 million and $1.5 million. The school district submits budget information to city financial personnel on a monthly basis.

In a conversation with Newport This Week, School Committee Chair Jo Eva Gaines said, “I’m actually kind of relieved, because I thought it would be worse.”

Gaines described two factors that have impacted the current fiscal year: transportation costs and problematic negotiations concerning retiree expenditures.

“We based our budget on projected income and savings assumptions that have been blown out of the water,” she said. “With transportation, we have added two new buses. That has inflated our costs. We have also not realized certain savings that we anticipated, mainly surrounding the health costs of our retirees.

“In the past, retirees kept the health plans they previously had,” Gaines explained. “But our school employees have moved to a different Blue Cross policy, and we want to transition our retirees to that plan as well. It’s important to emphasize that they will not lose benefits with such a scenario. Retirees will receive the same coverage while we incur fewer costs. But we wanted to have an open dialogue, as some may be wary about any type of change in benefits. The negotiations are bogged down, so we haven’t realized the savings we had counted on. It’s affecting our budget.”

The disappointing news follows the district’s struggle with deficits in the previous fiscal year. During the budget process last June, the council seemed generally sensitive to the financial needs of the schools. The city effectively met the schools’ request for a $918,000 increase in funding by adopting a plan put forward by Councilor Justin McLaughlin that appropriated an additional $418,000 to the district while moving $500,000 in capital expenses to the city’s side of the ledger. The city’s total school allocation for 2015 approached $24 million.

However, even with this year’s boost, the school administration warned last spring that it could still incur a deficit of between $1 million and $2 million, even with “status quo” spending levels.

Third Ward Councilor Kathryn Leonard was frustrated with the latest news, and directly referenced the budget negotiations. “It makes me want to say that we are through taking over all of the expenses and giving the same amount of money,” she told Newport This Week. “How can they be so broke already in January? What are they doing to rectify it?”

Leonard also questioned the district’s recent efforts in investigating the former Triplett School as a potential home for Newport’s growing preschool and Head Start programs. “We don’t have $7 million for a preschool,” she said.

At-large councilor Justin McLaughlin was hesitant to draw too many conclusions at this point in the fiscal year. “At this stage of the game, I’ve heard informally that there are funding and spending issues cropping up, but I don’t know the details,” he said. McLaughlin also explained that the required monthly budget updates to the city don’t necessarily reflect the current numbers. “A monthly report received today would actually show numbers for November.”

“It’s probably too early for this to be an issue for the council, but the School Committee does have the responsibility to keep us informed,” McLaughlin continued. “They can’t be in a deficit situation.”

In his opinion the school budget can be difficult to analyze because of its somewhat fungible nature. “Eighty to 90 percent of their money goes to salaries, so you have to fence away a certain amount of dollars now to pay teachers in June. This can complicate the picture,” McLaughlin explained.

Adding context is what some have seen as the historically “difficult relationship” between the City Council and School Committee. McLaughlin pointed to previous years where the council met requests for more money only to see the district ending the year with a surplus. “This created a bad precedent going forward,” he said. “Now when we hear calls of a ‘deficit’ we may hesitate. Past shenanigans contributed to this psychology.”

But Gaines would perhaps argue that the current committee employs a different approach. “One of the things we want most is transparency,” she said. “In addition to the monthly reports, the city also gets weekly updates from the superintendent. So the council knows as much as we do.”

Moreover, Gaines said, the potential deficit will most likely be a topic of discussion when the School Committee/City Council Liaison Subcommittee convenes for a meeting next week.

As for the remaining six months of the budget cycle, she remarked, “There’s nothing on the radar as of now that would worsen the situation.”

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