Daily Archives: August 8, 2017

A $600,000 Budget deficit, combined with Title 1 & 2 Cuts + possible Grant Shortages = Fiscal Chaos!

Last night at what was a very uncomfortable School Committee Finance Sub-Committee meeting the Asst. Superintendent of Finance not only confirmed the deficit in the school dept. budget of $600,000 but informed the Sub-Committee of $500,000 cuts in Title 1 and Title 2 funding plus shared what I would call questionable accounting practices. In addition today I’m hearing of possible Grant shortages in the amount close to $500,000!!

The Asst. Supt. of Finance estimated the School would end the year with approx. $71,000 in “Free Cash” (appropriated but unspent funds throughout the entire budget after negative balances are cleared through transfers)

The Fixation by some people on the busing issue, when at the end of the day there really is no issue and the overlooking of a budget that has a $600,000 + shortage is amazing to me. The new information about the Federal cuts is a real cause for concern but there seems to be none of that being expressed by the Administration and in my view only a few School Committee members showing frustration with the fiscal chaos.

I was going to speak at tonight’s Council meeting but cancelled. Having a City Councilor propose adding operational cost to a budget that already has a deficit and in an area where he really has no say is not a worry. How the Administration and School Committee will respond to these shortfalls 3 weeks before the School year begins is what my concern is and how and why we got to this point needs to be addressed..

The next School Committee meeting is August 16th 2 weeks before the School year begins.

Very concerning to me is the deficit and the accounting practises used by the Asst. Supt. The Asst. Supt. admitted he overspent the Health Insurance Line Item by $600,000 in order to insure that money would not be returned to the City and that they had ‘greater flexibility” in spending this year, it was alarming.

The outside Auditors last year were not happy with somethings the Asst. Supt. did and flagged the Administration and this year I expect this line item to be Red Flagged.

The Asst. Supt. also shared that the City Manager has sent a written promise to the schools to pay from the city’s “Free Cash” when certified (usually around late Nov. early December) the $250,000 he verbally committed to.

The Asst. Supt. stated the Administration would be working on recommendations to reduce the existing budget by the $600,000 but did not address what the Federal cuts would do to existing programs.

Mr. Frisch was trying to be very diplomatic by not coming out and stating that many of the end of year budget decisions were based on spending as much “Free Cash” has possible so that money wasn’t turned back to the City’s General Fund and their “Free Cash”.

His explanation of using money for either PO’s or charging grant benefits to local funds and delaying the “offsets” to the 2017/2018 budget was alarming. It is a process that I’m sure is NOT best practice and to purposely overrun an account to a deficit even knowing you can use other money at years end to correct is NOT proper accounting practise and I’m not an accountant but I know in my business the Owner doesn’t let me run any item into the negative.

While I understand his intent I’m not sure the process or way he gets to the end is correct.

A few other items that caught my attention

1) Mr. Frisch stated the City Manager instructed them to base the School Dept. budget on the Senate version of the state budget containing the $600,000 and that’s what they did and the reason they asked for only $250,000 from the city in additional funding. The Manager he stated is responsible for the shortfall. However he has or provided nothing in writing to substantiate those claims.

In a response to the Mayor asking the Manager to address the 2018 Budget Shortfall in late June (before the State Budget was even finalized) the Manager responded to the Mayor and City Council with this memo saying the School Dept. would receive the $250,00 they asked for and any additional Chapt 70 funds but if the funding came in lower adjustments would have to be made by the School Department.

In the past I have seen School Committee’s vote to fund positions with placeholders and put money into a suspense account pending final approved numbers but for whatever reason this School Committee did not.

2) The Ast. Supt. was unsure when the State budget was approved or exactly when the School Dept became aware of the $600,000 shortfall. I was giving Connie Martin that information when she asked me instead to address the entire meeting which I did and informed the sub-committee and Asst. Supt. of the July 17th post on the DESE Website.

3) Mr. Frisch stated that the School Dept would have been able to finish the year with more funds but the budget took a hit when the kindergarten para grant was cut and they had to find and use around $600,000 from the existing budget to pay the Para’s.

Except the School Committee made this vote in September 2016 for more city funding but the Supt. and / or Mayor never followed it through and no present School Committee member asked for an update on the status. It’s the Committee’s own fault they used the money that they now need.

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4) Mr. Frisch did say he was the person to request the City Solicitor to review the busing contract to make sure there was no conflict of interest with Mr. Decouteaux leaving to go to work for that busing company. Asst. Business Manager Cassidy informed the subcommittee he is the person who changed the wording of the contract to mandate that they must be garaged in the city and didn’t do it with any bias in mind only thinking the city could collect excise tax.

Mr. Frisch also informed the committee that upon further research the Solicitor found that many urban cities receive only 1 proposal for busing and that it is a very common occurrence.

The same vendor with the same price was awarded the bid and it was through negotiations that the busing price of the original contract was dropped from $362 to $350 per bus they are hoping they can do that again, at least for this year.

Jackie Doherty pointed out that compared to other large city’s like Worcester, Lowell has a great contract with lower rates and questioned the need to even ask for a review of the contract that the School Committee had already approved,especially doing so without first informing the committee!

5) The School Committee was not informed by the Superintendent of the $600,000 shortfall until late last week or that Mr. Frisch had requested the Solicitor to review the bus contract or that the busing contract was going out to bid until they read it in the newspaper or were asked about it on the Radio.

The Superintendent, Mayor and School Committee members Mr. Gendron and Mr. Decouteaux were not in attendance (being it summer vacations could have been a reason or Mr. Gendron travels for work) but with a $600,000 deficit in place ,I would have expected better attendance.

For the Administration only Asst. Supt. Desmond and Asst. Business Manager Casey were there beside Mr. Frisch.

No other School Committee candidates attended the meeting to hear about the shortfall or the busing contract or to learn that we now have a deficit in Tittle 1 & 2 funds.

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