September 27 2018

Town Meeting Approves use of Stabilization Fund to Cover School Deficit

By: Rich Hosford

Burlington will cover an FY18 School Department Deficit using the town’s Stabilization Fund.

 

On Wednesday evening, after a lengthy discussion, Town Meeting voted by a large majority but a relatively slim margin, to allocate $699,926.54 from the Stabilization Fund to make up for the school deficit. The final vote was 92 in favor, 5 opposed and 3 abstentions. It was a clear majority but due to state law on votes concerning covering a deficit during a “special Town Meeting” the threshold was a 9/10 majority vote.

 

The discussion started with an apology by School Committee Chairman Kristin Russo for the department having a deficit in the first place and a pledge that they are doing all they can to ensure it doesn’t happen again.

 

“The School Committee is continuing to adopt policies and procedures with Ways & Means and the town auditor,” she said. “Moving forward we are working to ensure that all policies and procedures are being followed and we look forward to the new reports and learning what we can from them.”

 

Superintendent of Schools Eric Conti took some time to present the driving forces of the deficit and to talk about changes in practices and procedures that have been put in place. The deficit, he said, was from an over-expenditure on salaries. In total the FY18 budget had $41,900,710 allocated for salaries but that $42,993,625 was paid out for a difference of 1,092,915. Roughly $300,000 was made up with a freeze on non-salary, discretionary spending imposed in March with the remainder being the deficit in question.

 

Conti said there were a number of factors in the salary budget that led to the deficit. One was an over-expense on substitute teachers of $212,884 that came about from an unexpectedly high amount of maternity and fraternity leaves. There was also an over-expense of $290,614 on tutors. Finally, Conti said there was $198,208 over-expense on vacation buyouts and two employee settlements that were decided during the fiscal year. Settlements, he said, are unpredictable and are not accounted for when planning a budget.

 

Conti said changes have been implemented and further review, auditing and discussion for other procedure changes are underway. One big change, he said, was that for the FY19 the budget was created from the ground-up, not by looking at past years as was the practice. This change came about when the School Department’s new Finance Manager Nicole Coscia came on board.

 

Another new policy to control spending is an electronic purchase order system now in place. Rather than allowing the various schools and departments to use their allotted funds independently now all spending requests will go to Coscia’s office for approval if the funds are available.

 

“There lot of purchases from different schools and departments and now all those will go to one desk to ensure the funds are available before a purchase is made,” Conti said.

 

The big question of the evening was how to cover the deficit and there were three possible funding options available.

 

The first was to use money from the Stabilization Fund. This would satisfy the deficit and balance the FY18 budget while minimizing any impact on FY19 operations. The balance of the Stabilization Fund as of June 30 is approximately $8.8 million.

The second option was to raise and appropriate the funds through the FY19 tax levy that will be set in November. This option places an additional burden on the tax levy and thus the taxpayer.

The third option would be to take the funds from the School Department’s FY19 budget. This option would negate the tax levy impact but would have an adverse effect on the schools’ current year operation.

 

Some Town Meeting members expressed frustration and anger about the situation.

 

“This was just beyond an issue of ‘oops, we mispent a few dollars,’ this is a staggering amount and goes beyond just a mistake,” member John Cormier said. “In the private sector there would be consequences for something like this and what’s frustrating as a taxpayer is that whenever something happens nobody is ever held accountable. Normally someone would be fired or at least tender their resignation.”

 

Some members suggested the School Department should pay the town back by asking for less funds in the upcoming years. There had been some discussion about holding off on capital projects at recent School Committee meetings but it was thought that cutting the operating budget could not be done without negatively impacting the students.

 

There were some members who were more sympathetic to the School Department leadership.

 

Member Frank Monaco addressed complaints about using the Stabilization Fund to cover the deficit. He said situations like this are one of the reasons the town has the fund in the first place.

 

“The fund is meant for exactly what it says, it is there to stabilize finances or for an emergency,” he said.

 

There was also a lot of talk about what would happen if the town did not pay what it owned to the vendors who had completed services for the schools but had not yet been reimbursed. Town Accountant Paul Sagarino said that first, those vendors would likely sue in court and the town would be on the hook for not only its own legal expenses but possible the vendors’ legal fees as well. Second, the Department of Revenue would almost certainly force the town to raise the funds through taxes, impacting the property tax rate. Third, not covering a deficit would likely impact the town’s standing in the eyes of accrediting agencies, putting Burlington’s AAA bond rating in jeopardy.  

 

Town Meeting and Ways & Means member Sonia Rollins spoke about that possibility at the end of the discussion.

 

“I think we understand that the bills have to be paid, that Burlington is not a community that doesn’t pay what we owe,” she said. “We agree there was an error but we nonetheless have to take care of that problem. If we deny that tonight all that’s going to happen is it will be done by mandate.

 

Rollins added that she believes the School Department has started to take the proper steps to fix the issue and that Ways & Means will work with them to ensure things are done properly. She also said they will work on reimbursing the town over time.

 

“I assure you as a member of Ways & means that we’re not stopping here,” she said. “We will find out how to replicate that $700,000. I ask you to support this.”

 

In the end the article to use Stabilization Fund was approved.


 

 
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