By ETHAN HARTLEY Over the course of nearly four hours, including public comments, the Warwick School Department presented its $173.6 million budget during the first budget hearing for FY2020 held at City Hall Tuesday night, outlining a need that they
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Over the course of nearly four hours, including public comments, the Warwick School Department presented its $173.6 million budget during the first budget hearing for FY2020 held at City Hall Tuesday night, outlining a need that they assert is based in the rising costs of education and flat contributions from the city since 2010. The amount represents a $7.7 million increase from the city.
The council made no recommendations regarding that ask, but Council President Steve Merolla made a presentation of his own that indicated the school department could realize as much as $3.5 million in budgetary savings for the current fiscal year – which, if realized, would negate a large portion of their approximately $4 million deficit for the end of year – and fired back at criticism that the city had received regarding a mediation award that, among other areas, targeted the schools’ private pension fund as a source of potential money to close that deficit.
“There's been a lot of talk about pension plans and one pension plan in particular as if that was the only issue on the table,” Merolla said, referencing mediation talks the city conducted with the school department regarding their deficit, which commenced as a means to avoid a lawsuit between the city and schools, concluded earlier this month and had been ongoing since last fall.
“We all [the city council] thought it was best to hire outside help to look at this in an objective manner to give us opinions as to what is accurate and what is not accurate.”
That outside help came from Kyle Connors, director of assurance at Marcum LLP, one of the country’s largest independent public accounting and advisory services firms. Connors analyzed nine months of the school department’s expenses for the current budget year and made “conservative” estimates for the remaining three months to indicate where certain line item expenses should end up.
Those estimates resulted in some eyebrow raising figures amounting to about $3.5 million in potential savings, including everything from $150,000 savings on textbook and periodical purchases, $222,000 in savings on medical and athletic supplies and $215,000 in savings stemming from substitutes and curriculum-based expenses. Another figure that drew Merolla’s attention was a finding that the schools had failed to report about $257,000 in state housing aid reimbursement revenue.
Connor’s analysis, as has been widely reported, also concluded that the schools had contributed about $4.1 million above the recommended annual contribution (ARC), as recommended by their actuary, to their private pension plan since 2014. However, Merolla sought to clarify that the mediator’s award did not mandate that the schools cover their deficit with purely money from the pension fund.
“The mediator's binding decision was they [the school department] didn’t need any additional funds, but they didn't mandate that they get it from this list or the pension fund, did they?” Merolla asked Connors.
“That is correct,” Connors responded.
The mediator award, which was presented by attorney Vincent Ragosta on May 1, concluded that the school department had testified that withdrawing money from the pension plan would assess no financial penalty or “adverse tax consequences” and indicated that, “based on the above representations of the WSC [Warwick School Committee] and its commitment that it shall access and withdraw up to $4 million from the Retirement Plan’s assets for the adequate funding of its fiscal year 2018-2019 budget, the City shall not be required to appropriate or further fund the WSC budget…”
Merolla expressed frustration that accessing consistent financial data from the school department seemed to always involve numbers that constantly shifted. For example, when the schools went before the council last year during budget time, their ask was for about $8 million. Yet, at the end of the year, he said, that number had shrunk to a $4.6 million overall deficit.
“It makes it very difficult to make determinations based off facts when I get reports like this, that I think are fair and objective, compared to what's being told to me at the beginning of the year,” he said, adding later that, “I'm proud of being a product of Warwick schools. What I’m upset about is that I’m put into a position where I have to be a judge of the veracity and credibility and truthfulness of statements.”
Superintendent Philip Thornton said in a phone interview Wednesday that the mediator award “spoke for itself,” meaning it clearly directs the schools to close their budget deficit with pension money.
Finance director Anthony Ferrucci, also on the call, said that Connor’s analysis which concluded $3.5 million in potential savings was inherently flawed, as it utilized projections that didn’t take into consideration line items that have irregular payment schedules, such as vacation time, which he said is paid out largely in June.
Other items, like gasoline – which Connors concluded could bring the district about $56,000 in savings based on the nine months of expenses he saw – were totally incorrect because the department had only made three gasoline payments during a time period that Connors assumed incorporated nine months of payments. Ferrucci said the city is responsible for sending utility bills for gasoline to the schools, and that he just handled the December bill for gasoline this past week.
“Our records are not synchronized that simplistically, and he did not take the time to dig into how many payments we actually made, or actual accruals,” Ferrucci said, adding that there were similar problems with most of the line items he presented as having room for savings.
In regards to the more than $250,000 in unreported revenue, Ferrucci said this was also a misrepresentation of facts that had already been publicly presented during an April meeting of the Warwick School Committee.
He said the district had learned they would be receiving about $53,000 in unanticipated housing aid above what they had budgeted, but the remaining balance that was identified by Connors was not going to actually be received because it was tied into the district making principal and interest payments on the 2006 school bond – payments which the school department did not make or even put into their budget for the current fiscal year.
“We were never going to receive that money for principal interest,” Ferrucci said. “I was not going to take credit for housing aid revenue coming into the city if I was not going to pay the principal and interest.”
Still, Thornton said that the district was always open to the suggestions made by Marcum, as they went into mediation seeking around $4.6 million to close their deficit. By the end of sessions, the gap was closer to $4 million, as they incorporated some of the suggestions.
Although Tuesday night’s hearing was intended to discuss the need for next year’s school budget and the expenses incurred within, much of the conversation instead focused on the schools’ “overfunding” of its pension plan and its current year deficit.
Ferrucci mentioned that he was proud that the school pension plan had been one of the most well-funded in the state, and that it was praised in the State General Treasurer’s pension report that was released in April.
“If I was in your shoes, I would feel nothing but shame,” said Ward 8 Councilman Anthony Sinapi. “And you feel pride. That sickens me.”
“Many of us have mortgages, and we all like to pre-pay our mortgages, but not when we can't pay the electric bill,” said Merolla, adding that the schools cut custodians and programs like Mentor RI and, in the same year, contributed $800,000 above the maximum ARC contribution for the pension fund. “We had to get calls that we were not funding education properly. It leaves a bitter taste in this councilmember’s mouth.”
“How I see it is that these pensions were overfunded with taxpayer dollars...At the expense of the students,” said council finance committee chairman Ed Ladouceur. “You did not need to put an additional $4 million beyond what the professional actuaries advised you of doing, but you did.”
Those who spoke at public comment were not happy about the tone taken by multiple council members in regards to their deliberation with the school department.
“It’s been about 20 years coming to these hearings. I cross my fingers that this time will be different. All I heard this year was about how we're going to work together. And again, I walk in here and it's an absolute attack,” said Tracey McDermott, a long-time member of the school’s WISE union. “The finger pointing has got to stop or it's never going to get better.”
“In the last months this school committee has taken efforts to be more fiscally responsible,” said school committee member Nathan Cornell, who said the additional $7.7 million is an accurate portrayal of the district’s need following “difficult” cuts to even get it to that number.
“To me, our message is simple,” said school committee member David Testa on Wednesday morning. “For at least the last dozen years, the Warwick schools have not been the reason for the 10 or so property tax increases that we've seen during that time. Last night started as an interrogation and, for some, became an inquisition. I've been attending these for the last nearly 20 years and it's like what the shampoo bottles say, 'Lather, rinse, repeat.’”
Testa also took issue with the notion put forth by Ladouceur and Merolla that the schools could have brought back custodians and programming like Mentor Rhode Island if they hadn’t over contributed to the pension fund.
“I have to re-emphasize, the narrative that somehow if we put more than what the ARC was, we would have had custodians is patently false,” he said from the podium on Tuesday night. “It has been explained that before any custodian could have come back, we had [out of district] tuitions that had to be covered, we had the $500,000 for school sports, there was about three and a half million [dollars] that had to be filled first before a conversation on custodians ever came. So, the narrative is a false narrative, and I won't ascribe motive to it publicly, but it wasn't fair.”
School Committee Chairwoman Karen Bachus put forth an impassioned plea for more cooperation, drawing back on statements made by Mayor Solomon during his inauguration in January where he alluded to a tumultuous relationship between the city and the schools that he sought to address.
“That, to me, was a promise and a pledge. And I promised the mayor and many of you if not all of you, that this school committee was invested in doing the same. And we still are. Do not judge us on the mistakes of the past,” Bachus said. “I beg you, all of you, and the community as well, to work with us honestly. And let’s make this city and this school district a better place, and do so honestly.”
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enoughalready
"They closed three schools, they laid off employees, the population of the city of Warwick is going down and the school district population is going down, they're going up in cost," said Councilmen Steven Merolla (WPRI News, Kim Kalunian)
What ? ? ? ?
Mr. Councilmen, please help me follow your logic here. If I understand you, you feel that as the school district population goes down, you would expect costs to go down. I follow your logic so far.
Then you stated the City of Warwick’s population is also going down, using your own logic I would expect City costs to go down. Yet, you are proposing $6,500,000 in new spending.
Now you have me confused. Which is it? You cannot have it both ways.
Thursday, May 30, 2019 Report this
Former User
Don't you understand, had enough? There's one set of rules for the city and another set of rules for the school department, and the mayor and city council get to make the rules.
It's perfectly reasonable!
(That is all sarcasm.)
It's just plain offensive that Merolla would so blatantly and shamelessly set up this double standard and somehow think people are going to accept it.
On another level, it's ridiculous that this is what he, Solomon, and the rest of the council are doing with their total control of the city: Playing word games and shell games with our taxes.
Thursday, May 30, 2019 Report this
CravenMoorehead
time to flip the council !
Thursday, May 30, 2019 Report this
Daydreambeliever
Next election we need to clean house. The mayor and council need to go. Overhaul the school committee also.
My vote won't be going to any of them.
Thursday, May 30, 2019 Report this
Reality
Joe has used the old Avedisian playbook. Blame the schools for all Warwick's problems. Give the schools no new money but increase your spending like a drunken sailor.
Joe, you know you can do better. So far you have been failing the taxpayers.
Friday, May 31, 2019 Report this
Thecaptain
Let me understand this:
Council President Merolla deposes the CPA that was hired to do a financial projection of the school. He interviews him like he was a trial attorney and had his expert witness on the stand. (what a set up) He then states that the CPA firms numbers are right on the money and there is no margin of error.
However, the same CPA firm performs a financial projection on the city side and Merolla hides it for 10 months. Then when it is leaked to the public, Merolla states that it is filled with errors. Same CPA firm, 1 report spot on , the other NG.
Whats interesting to note is the city financial projection points to insolvency, receivership, skyrocketing taxes, and 130 million dollar deficit over 5 years with maximum tax increases. What would be the motivation for the council president and the mayor not to release that report?
Hmmmm
Saturday, June 1, 2019 Report this
PatrickRamsey
Supposedly, these are the cuts that are going to be made...
All sports
All clubs
Technology - chromebooks, computers
All new textbooks
Pension
All Teacher Training & PD
Cut Teacher assistants
Cut maintenance personnel
2nd shift custodians not restored
Cut Mentoring
Cut VOWS
Cut High school accreditation process
Cut (CCRI) graduation
11 out of 13 directly impact students. The community has had it with the Thornton administration. We made it abundantly clear when the voters changed three members (majority) on the School Commitee last November.
However, what most people don't know is the Thornton Administration made a deal with the last School Commitee to renew their contracts for 3 YEARS with increases in pay! Right before the new School Commitee could take office. Corrupt and unethical if you ask me.
Votes May 2018:
Bethany Furtado - YES
Terri Medeiros - YES
Eugene Nadeau - YES
David Testa (still active) - YES
Karen Bachus (still active) - NO
Since then, the school department has bankrupted the city two budget seasons in a row with "excessive salaries" (Beacon's headline) and severe mismanagement.
For what the Thornton Administration has done, they should be fired. It would actually match Thornton's last to districts, he was fired from NK and Cumberland too.
Good for the council, someone needs to stop this craziness.
Saturday, June 1, 2019 Report this
wwkvoter
Regarding "patrick ramsey"s false accusattions, and fake facts,
Dave Testa in another thread where "patrick ramsey" also spewed his false info, said this:
Dave Testa:
Patrick, to say that this budget issue (or last year's budget issue for that matter) is Thornton's "fault" is silly. No one "made a deal" with anyone with respect to any contract extensions - that allegation is bunk. Also, your implication that they got extensions "with raises" is a bit disingenuous in light of no raise being given this year for any administrator. And the contracts were extended for two years, not three. I explained my reasoning for voting the way I did (http://warwickonline.com/stories/schools-need-to-see-plans-through,135008?). In my opinion, your use of the word "corruption" is nonsensical. Also, you said "since then, the school department has bankrupted the city two budget seasons in a row with "excessive salaries" (Beacon's headline) and severe mismanagement." Seriously? The school budget has had no bearing on the city's fiscal health at all - the vast majority of your tax increase dollars over the years have not gone to the schools. They've gone to the City side of the book and it seems that they're doing a pretty good job of heading towards bankruptcy on their own. And that Beacon headline was also talking about teacher salaries too and our teachers are, and have been, among the highest paid in the state for several years. Finally, please double check your facts as Thornton was not fired from either NK or Cumberland.
Sunday, June 2, 2019 Report this
DannyHall82
That must be the Patrick Ramsey who played Quarterback for the Washington Redskins
Monday, June 3, 2019 Report this
wwkvoter
LOL Danny. doubt it...
Tuesday, June 4, 2019 Report this