August 9 2018

Ways & Means Discusses Options for School Department Deficit

By: Rich Hosford

Wednesday night’s Ways & Means meeting had only one issue on the agenda: the reported FY18 budget deficit incurred by the School Department.

 

As reported by BNEWS, Superintendent Eric Conti informed the School Committee last month that there were more expenses in FY18 than had been allocated for in the annual budget. He originally estimated the deficit to be roughly $1.7 million but during Wednesday’s meeting said now, after accounting for some duplicate purchase orders, he estimates the amount to be closer to $880,000.

 

Conti said these expenses include employee stipends, funds to cover a higher-than-average amount of substitute teachers and maintenance costs.

 

During the Ways & Means meeting there was some discussion about what the next steps might be. Town Accountant Paul Sagarino, who will be taking over as Town Administrator in 2019, said the first thing that must be determined is the vote threshold needed for a Town Meeting vote. To appropriate funds to cover expenses for a previous, closed-out, fiscal year the state requires a 4/5 vote during an Annual Town Meeting. However, if it is a Special Town Meeting the vote requirement is 9/10. Burlington has three Town Meetings per year and Town Counsel is working to determine whether there can be more than one “Annual Town Meeting” under Massachusetts law. If not, any vote to correct the deficit will require a 9/10 vote.

 

The big discussion of the evening was to the source of the funding to cover the deficit. Sagarino laid out three different options.

 

The first was to use money from the Stabilization Fund. He said 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. Sagarino said this places an additional burden on the tax levy and thus the taxpayer. It is true, he added, that the Stabilization Fund is also comprised of tax money but those are funds already collected and thus would not mean additional taxes in the current year.

 

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.

 

Sagarino said that if Town Meeting did not vote to authorize the payment of the outstanding FY18 bills there would be potentially severe consequences and expenses for the town. He said it is likely the vendors who are due money would take the town to court, where they would win, and the state would then force the town to raise the funds through the tax levy. However, in this case the town would also incur court fees and a refusal to pay vendors could negatively impact its AAA bond rating.

 

Members of Ways & Means expressed their displeasure with the situation and asked how they go to this situation and what can be done in the future.

 

“When do you write your warrants, once per month?” member Phil Gallagher (who is also BNEWS’ regular anchor) asked. “Do you check them once a month and reconcile against that once per month? So these were not annual expenses that showed up on the scene on the last day of the fiscal year, they had to be accumulated during the course of the year. So why wasn’t that check run reconciled against the budget line item so a red flag would come up and you’d know that you have a deficit? I can’t understand that from an accounting standpoint.”

 

“I hate to say the word, but we’re all embarrassed,” Gallagher added.

 

Conti said his department is already working to fix the accounting process problems and get things in order going ahead. One big change, he said, is a more regular examination of the finances and a monthly report to the School Committee to keep everyone more up to date.

 

“We’ve operated on a year-end basis for decades and we’re changing and putting the processes in place that will allow the real-time pluses and minuses to be kept track of and for us to do better year-end projecting.”

 

Conti also mentioned that the department has been in a transformation of the business office and that since coming on board last year as the new Finance Manager that Nichole Coscia has been working tirelessly to address the issues in the way the finances are handled. One thing everyone seemed to agree upon was that Coscia was not to be blamed for the current situation. At one point she was given a round-of-applause for her work in the position.



Finally, Ways & Means member Sonia Rollins said she didn’t think taking the funds from this year’s budget was prudent and emphasized that the town will pay its bills.

 

“I don’t really think affecting our FY19 budget is going to be prudent,” she said. “What I believe in my heart of hearts is if we can get this funding because, folks, Burlington is not a community that is not going to pay what we’ve rightly spent… now the question becomes where that money comes from. Is it infuriating, of course. Is it embarrassing, absolutely. But is it needed, yes. So really the question is how we fund it and how we replenish that funding.”

 

Finally, School Committee member Christine Monaco said the School Department will make it up to the town in a way yet to be determined. She floated the idea of asking for fewer capital expenses in upcoming annual budgets for a couple of years.

 

There were other avenues of discussion explored during the meeting. You can watch the full meeting here.


 

 
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