Lowell School Committee
LOWELL -- The budget approved by the School Committee this spring has an over $1.6 million deficit, according to the district’s newly hired interim chief financial officer, Billie Jo Turner.
But what is causing this hole?
At a special meeting of the School Committee on Thursday, Turner described more than seven areas contributing to the estimated deficit found by her review of the budget.
Here’s a breakdown of these findings:
Sick Leave Buy Back
The largest contributor identified by Turner is the deferral of $500,000 in sick leave buy back costs to next year.
This year’s budget, fiscal year 2019, sets aside $700,000 for sick leave buy back. However, the district typically spends $1.2 million annually in this area, according documents provided to the School Committee covering the past six years of spending.
Turner said deferring a half million in spending to the next fiscal year will force the district to close a $1 million gap during the next budgeting season -- before even considering raises or other revenue issues.
She strongly urged the School Committee to fund the buyback at the usual rate.
“We would have to bring this back up to where it should have been plus the $500,000 it was carrying forward,” she said. “I strongly recommend this is funded.”
Next, the district’s food services account is expected to impact this year’s budget by $498,675, she said.
According to Turner, the issue with this fund is complex, as it involves both revenue and expenses.
Due to issues verifying the participation rate in the district’s free meal program, state funding for this account has dropped since fiscal year 2017, according to Turner.
This year, Turner said the impact is $442,000, however this may change as Acting Superintendent Jeannine Durkin said the state just approved a new, higher percentage for the district.
Additionally, an audit conducted by the Department of Elementary and Secondary Education found the district was charging indirect costs to the account that exceeded the roughly 11 percent cap allowed by the state.
According to Turner, the findings affect what expenses the district can charge to the account. This year, the offsets listed in the budget need to be reduced from $1.59 million to $1.27 million, she said.
On the list of deficits, Turner included a $266,400 expenditure approved by the School Committee last week to fund busing for a split schedule at the STEM Academy at Rogers School.
Starting this school year, sixth and seventh graders will begin classes at 8:40 a.m., a half hour earlier than younger grades. The change will match the length of the school day for these students to those at other middle schools in the district, according to a memo from Robin Desmond, assistant superintendent of curriculum instruction and assessment.
At an earlier meeting, School Committee member Gerry Nutter expressed frustration that this sum was not included in the fiscal year 2019 budget, despite, he said, the topic coming up during the budgeting process.
Otherwise, Turner said the transportation budget is fully funded.
“We do feel the transportation budget is sufficient after the $266,000 increase that you voted last week,” she said.
An expected $125,000 offset to an account paying the district’s phone bill was listed in the budget, but needs to be removed, according to Turner’s review.
She said the city’s chief financial officer told her this sum, an E-Rate reimbursement, must be requested after the city’s free cash is certified, since the available amount depends on this certification and other priorities.
“It flows into the city through a special fund and then it has to be certified as free cash before they could even consider giving that to us,” Turner said.
During the budgeting season, she said the city informed the district this amount needed to be fully funded without the E-Rate reimbursement.
School Committee member Robert Hoey Jr. said this request marks a departure from past years.
″(For) about 20 years we received $125,000 every year from the city and last year we didn’t get the $125,000 off the city, but we’ve been getting it for all those years,” he said. “I don’t know why we just all of a sudden don’t get that.”
Nutter said he also had a similar understanding of the funding.
Turner said she has not yet fully researched the claim, but believes new laws in the Municipal Modernization Act caused this process to change.
Use of Facilities
In her report, Turner lists a $107,794 shortfall in the use of facilities offset.
In past years, the district generally brings in about $265,000 in revenue for this account, according to Turner. This year the budget lists $421,760 in expenses, according to a spreadsheet provided by the city.
About $50,000 remains in this fund from last year, which, even combined with projected revenue, will not cover all expenses, according to Turner.
“I met with the city on, I believe it was Aug. 10, and they identified, we’re not going to have enough money here,” said Turner.
Nutter said the district will likely lose additional revenue this year, since the Lowell High School pool is closed.
Money set aside for pool maintenance will now pay for the rental of the University of Massachusetts Lowell pool. Numbers released last week suggest this funding will fall about $18,000 short of the full rental and transportation cost.
Additionally, Turner describes $52,391 in offsets for employee health insurance included in the budget, which are not available.
Turner said she and city officials are still reviewing this to ensure the account is “adequately funded.”
Beyond these expenses, Turner identified a number of other costs and issues, which total to a “tentative” $183,000 deficit.
This includes a $50,000 third-party audit of the district’s budget approved by the School Committee last month. The audit was approved in the same 4-3 vote, which approved the motion to terminate Superintendent Salah Khelfaoui.
The budget also includes a “significant reduction” to the fund used to settle grievances, causing a $70,000 deficit.
Moving the Day School to Cardinal O’Connell School cost an estimated $30,000, which will add to the deficit, according to Turner.
Last week, principals at the School Committee meeting said the district was short 19 paraprofessionals. This week, Durkin said her team is “combing through” the district evaluating the placement of para-professionals to meet student needs.
The School Committee is expected to meet again next week to discuss Turner’s next budget updates. According to Turner the next step is reviewing union contracts to ensure they are updated to reflect staff changes, meeting with the city’s human resources department to determine if employee health insurance is adequately funded and reconciling the food services fund balance with the balances of provider, Aramark.
Follow Elizabeth Dobbins on Twitter @ElizDobbins