By JOHN HOWELL Still reeling from the loss of key people within the finance department with the change of administrations, the city has yet to finalize the audit for the 2017-18 fiscal year, although in the next three weeks the mayor and the City Council
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Still reeling from the loss of key people within the finance department with the change of administrations, the city has yet to finalize the audit for the 2017-18 fiscal year, although in the next three weeks the mayor and the City Council will finalize the budget for the 2019-20 fiscal year.
The audit, which among other things will show how much money remains in city reserves, giving the administration valuable information in finalizing the next budget, was to have been completed by December 31, 2018 by state law. State Auditor General Dennis Hoyle granted an extension that was then extended to April 30. On Friday Hoyle said the city had not met the deadline.
“It’s going to need another extension,” he said. Hoyle said he met with city representatives. “I strongly encouraged them to get this done,” he said. The school side of the audit is “largely complete,” he said.
Hoyle was also involved in discussions about the current fiscal year and the School Department’s more than $4 million shortfall.
Last week, Mayor Joseph Solomon announced that through mediation, with attorney Vincent Ragosta acting as mediator, the city and the schools reached an agreement whereby pension reserves earmarked for the Warwick Independent School Employees (WISE) pension will be transferred to plug the budget gap. While many municipal pension plans face significant unfunded liabilities according to actuarial studies, the WISE plan is close to 100 percent funded if not slightly exceeding that number, according to the city administration.
City Council Finance Committee Chair Ed Ladouceur has questioned how schools could continue financing an already well-funded pension plan while making budget cuts that reduced custodians, leaving bathrooms and schools not cleaned and raising the possibility of spreading illness and cutting out funding support for Mentor RI and other programs.
While the mediation agreement hasn’t been released and questions remain as to whether the transfer of pension funds will be contested, closing the gap on the current budget does not address the 2019-20 school budget and the committee’s request for more than $8 million in additional city funding.
Hoyle has followed the situation and the city’s financial situation (going into the budget, Mayor Solomon talked about facing a $18 million shortfall) and says, “It’s a concern.”
What about reducing pension payments or, as the plan with schools, using those funds?
“I think [they] should be cautious on this,” said Hoyle. He said he voiced that opinion when asked about the plan.
Although 80 percent funded pension plans are considered out of danger, Hoyle points out “the goal of any plan is to be 100 percent.” Further, he notes, few municipal plans are 100 percent funded, yet to take from them or reduce contributions make it difficult to maintain payments flowing out for benefits.
“It’s not like it’s over once you hit 100 percent,” he said.
As for the lack of the 2017-18 fiscal audit, Hoyle said Warwick is not alone in failing to meet the deadline. North Kingstown and East Providence, as well as some smaller communities, have also surpassed their deadlines.
A concern is that Warwick will fall into a position of having to play catch up going forward.
“It’s not just one year. They’re behind the eight ball going into the next year,” he said.
What of the state requirement that school departments and municipalities submit a plan if they project a budget deficit?
Hoyle said as there was mediation between schools and the city, he did not see that as an issue. He said he is looking to continue discussions with the city this week.
3 comments on this item Please log in to comment by clicking here
Warwick Man
Where is the Fire Department Audit. Why is the city not releasing it? They spent $30,000 of your hard earned tax dollars on it over a year ago.
Tuesday, May 7, 2019 Report this
Former User
So, the same people who are accusing the school department of not being fully transparent (see the story on Merolla and Ladouceur trying to justify raiding the WISE pension fund) are already months late on the city audit, and are saying it's going to take even longer to release information on the city's financial condition.
I would not be surprised if the delay is less about providing information (that was originally legally required by 12/31/18) and more about how Solomon and the council can portray it.
If their prior attempts are any indication, they will insult the taxpayers (yet again) by trying to spin the audit into something that doesn't actually prove their own responsibility for the city's current mess.
Tuesday, May 7, 2019 Report this
bendover
If the city charter mandates a balanced budget shall be submitted and ratified by the Council and an audit is supposed to confirm the numbers and it is still not complete for 2017-18, what are we, on automatic pilot? There are ethical and civil penalties right in front of the decision makers faces and clearly, they don't give a damn. FBI, do your job, this place stinks to high heaven.
Monday, May 13, 2019 Report this