You will hear the Superintendent of Schools and some current School Committee members talk about “Chargebacks” or “Indirect Cost” or “Maintenance of Effort”charges. Do you know what they are or how they affect the Lowell School Department budget?
Most people don’t ! To be clear there is NO “REAL CASH” that is paid to the City by the School Department. If anything, they are charges used by the City to NOT have to give more CASH to the School Dept.
I pointed out previously that only approx. 12.875% of City Property Tax is budgeted as a cash contribution to the School Dept. the STATE of MA funds most of our School Cost in Chapt. 70 funding.
Of that 12.875% given for the 2017/2018 fiscal year, the School dept. is forced by the City to pay for Transportation which is NOT included in NET School spending and this year is budgeted for $9,043,069 which leaves $9,220,512 or slightly more than 6.5% of local tax dollars being spent on Lowell Schools in direct cash contributions.
Chargebacks are the cost or charges for City Services to the Schools that isn’t a School side budgeted line item but charges the City assesses for services against their Net School Spending Requirements.
In other words, what the city says it cost them to staff nurses and police, pick up the trash, process benefit related items, MIS, Auditing and Purchasing services etc. Attached is the breakdown from Fiscal Year 2011 through Fiscal year 2015 which shows the charges from the City.
When we had a different CFO, he provided the School Committee with an Excel Spreadsheet that showed line by line what the City charged back to the Schools and what they used to try to meet and/or exceed their NET School Spending requirements. This current CFO has not yet done that or if he has, has not made it public.
To make it easier I have listed below what these line items are:
Administrative Services – The cost of municipal accounting, auditing, central data processing and central purchasing.
– The actual expended budget for the Office of the Treasurer
– The actual expended budget for the Office of the Auditor
– The actual expended budget for the M.I.S. Department
– The actual expended budget for the Purchasing Department
Employee Benefits Administrationhe indirect costs of administering employee and non-employee insurance programs shall be computed by multiplying
(1) the costs of salaries and supplies for such administration by
(2) the number of school department employees covered by insurance divided by the total number of municipal employees covered by insurance.
The actual cost of Medicare Tax paid by the City of Lowell on behalf of school department employees.
Employee Retirement Programs
The actual costs of pensions paid to school department retirees or the actual costs of assessments paid to the state, county or municipal retirement systems on account of school department employees or retirees, including any special assessments for early retirement incentive programs for school department employees
The direct insurance premiums for retired school department employees after deducting all retiree contributions and assessments for retired school department employees under G.L. c.32A.
The actual costs of claims paid by the City of Lowell to school department employees for worker’s compensation.
The actual costs of claims paid by the City of Lowell to former school department employees for unemployment compensation.
According to the “Agreement”the following is supposed to be approved (which means voted on)by the SCHOOL COMMITTEE but to my knowledge this School Committee has not done that while they have been in office.
The following discretionary expenses, with approval of the school committee, will be reported and count toward net school spending:
The salaries of health personnel who provide direct services or instruction to public school students, as well as the related costs for supplies and materials.
School Security Services*
The salaries of police officers who are solely assigned to work within the school district.
Operation and Maintenance of School Facilities*
The direct costs of salaries, supplies, materials and contractual expenses for the maintenance of school buildings, grounds and equipment. This figure shall be recorded from the total services completed by Department of Public Works staff as determined by work orders closed by Lowell Public Schools staff documented in the Lowell Public Schools Building Maintenance Work Order System.
1) Snow and Ice Removal:
The cost of snow and ice removal shall be computed by multiplying the total expended snow and ice budget of the City of Lowell by 4.5% to apportion the share of this expense to the school district.
2)Trash Removal and Recycling: To calculate the trash removal expense the following formula shall be applied: The total yards per week of trash removed for the public schools x 88.35 pounds per years x $ 70 per ton x 40 weeks of school. To calculate the recycling expense the following formula shall be applied: Total expense of the City of Lowell x 3.28% (total percentage of trash removal expense).
3)The direct costs of utility – electricity invoices paid by the City of Lowell on behalf of occupied Lowell Public School buildings. This figure shall be recorded from actual invoices received from the utility company and paid by the City of Lowell during the fiscal year.
4)The direct costs of utility – natural gas invoices paid by the City of Lowell on behalf of occupied Lowell Public School buildings. This figure shall be recorded from actual invoices received from the utility company and paid by the City of Lowell during the fiscal year.
The direct insurance premiums for school buildings, grounds, equipment and liability coverage.
These chargebacks or Maintenance of Effort charges rise each year and as of 2015 totaled $21,594,054
In this year’s budget the Superintendent of Schools without a vote that I could find from the School Committee made the following changes moving cost that were line items in the School Budget to the City side which I’m sure they will capture in the Indirect Cost / Chargebacks / Maintenance of effort charges
*All maintenance is covered under the City budget. The Heating Maintenance,Energy Management Systems,LHS HVAC Tech , two Plumbing positions and the Bld repair and maintenance line items that were in the 2016/2017 Lowell Public School’s budget have been my bed from the School Budget to the City (that totals $429,256)
*All School Resource Officers will be funded through the City of Lowell’s budget in lieu of being deducted from the Lowell Public School’s budget. In the past the City paid for all but 3 so these 3 are now on the city side (That would be a $263,594 Savings)
Those two items added to the Maintenance of effort budget by $692,850
The $155,000 that is charged for Water and Sewer in the School Budget (which the current school committee failed to ask about and get a clear answer on) should be charged to this maintenance of effort spreadsheet. Why it isn’t and why the School department seems to be the only department charged for these services need to be addressed.
The CFO was never asked by this School Committee why he claimed ZERO was budgeted and why he list a $43,000 deficit or why the entire Water and Sewer charges get charged to the Food Service Account (especially when many schools need new paint and tables in their Cafe).
I will ask these type of questions when elected.