Schools in the red

The administrators of the Warwick School Department and the members of the Warwick School Committee adjourned their meeting at Warwick Veterans Middle School on Tuesday evening without a balanced budget for FY19 – approximately $1.5 million in the hole – which is a violation of state law.

The reason? The schools faced a $6.6 million deficit going into the meeting. Proposed at the meeting were $6.6 million in cuts – “draconian” cuts, as financial director Anthony Ferrucci called them – that include laying off 15 custodians, cutting the entirety of Warwick’s athletic program and committing to a plan of laying off math interventionists who help struggling students with arithmetic.

Thornton introduced the “awful” cuts, as he described them, by prefacing that the schools received a 0 percent increase in funding from the city since 2010 (about $124 million in city property tax allocation both years, according to him), while rising expenses from salaries, pensions, principal and interest payments on a 2006 bond, Department of Education mandates, out of district tuition and reductions in state aid have outpaced any savings generated from a 10 percent decline in enrollment and the closing of nine schools since 2008.

“By contrast, city spending in 2010 was $78.5 million. Today, city spending is $115.8 million. So, city spending is up 33 percent since 2010. None of these dollars have gone to schools, that's a fact,” Thornton said. “Now tonight we have to unfortunately cut $6.6 million from our budget. None of these cuts I'll recommend to you are good; they're all awful in my mind. But we must by law balance our budget tonight.”

Audits pave way for lawsuit

Though the drastic cuts would have, at great cost, balanced the budget, school committee member at large David Testa made a successful motion to save the athletics program and all 6.5 math interventionists from the guillotine, which left a funding gap of about $1.5 million left. That gap could not be solved immediately, but Thornton said a meeting will be held sometime next week to grapple with that deficit. Ferrucci said on Wednesday that meeting would likely be Tuesday, June 17.

Regardless, since the schools are already beyond the 30-day deadline to balance their budget from when they received their funding allocation from the city’s coffers – a $1.5 million allotment granted in early June that fell well short of the school department’s ask of $8.1 million – the imbalanced budget now, in theory, triggers an automatic investigative audit from the state Office of the Auditor General. Ferrucci said he wasn’t sure if this would happen or not, as the department is actively seeking to remedy the imbalance.

Whatever the Auditor General decides, the school department is fully poised to take this issue to the Rhode Island Superior Court. They approved a second audit consultant Tuesday night who will dig into the department’s fiscal practices. A consultant to perform a programmatic audit had already been approved by the committee in June. Thornton said he was hopeful the two consultants could prepare a report by early August.

That report, along with the independent audit that might come from the Auditor General, would all likely be utilized as part of a Caruolo Action lawsuit against the city of Warwick, which the schools could file in order to try to force the city to allocate more funding under the premise that the school department cannot satisfy state requirements for education laid out in the state’s Basic Education Plan (BEP) with the money they have received.

Before legal action can be taken, however, the law states that the school department must appear once more before the Warwick City Council with an official request for additional funding, and that they must also request waivers from certain RIDE programs that may free up additional money.

Included in the cuts was an assumption the department could get the $690,000 cost of the state’s Pathways program waived, which is a program that sends students to other school districts for specific educational programs, even if those programs are offered in-district. Thornton indicated at the meeting the department would also seek relief from the approximately $1.28 million in costs associated with sending students to charter schools in the state.

However, these waiver requests will have to wait until next week, as the committee, in an oversight following the extensive budget conversation, did not authorize Thornton to send the waivers to RIDE at the meeting by mistake.

In an interview on Tuesday afternoon, Mayor Joseph Solomon said that he had received an email from the schools requesting to sit down and talk about the budget situation. On the subject, he said: “I plan on sitting down and talking with them to see what they have to say. But I know what resources I have, and I know what resources the taxpayers have entrusted us with. You can’t spend what you don’t have. Don’t tell me how much you have, tell me how wisely you spend it. That’s a big difference.”

As of Wednesday afternoon, school committee chairwoman Bethany Furtado said she had not received a response from anybody at City Hall in regards to setting up a meeting, a message she said she sent on July 9.

Furtado re-expressed frustration with the city’s small allocation on Tuesday night, saying that she had proposed compromises and means to “make one more cup of lemonade out of this lemon” with the city, only to receive less than one fifth of what the schools demonstrated as their need.

“No one wants it to get ugly, but I will tell you this. If it's a fight, I am going to go in with my sleeves rolled up to my shoulders and I am going to fight for this district,” Furtado said. “I am going to demand that we get taken care of. Enough is enough.”

A long time coming

Members of the school committee said Tuesday night that this budgetary reality is the culmination of a financial storm brewing for years since at least 2011, when the city slashed funding to the schools by the maximum 5 percent that was temporary allowable by the state, which has never been directly restored. That storm, they claim, has finally made landfall, and the damage will be revealed in the coming months.

“I feel gutted looking at this,” said Terri Medeiros, school committee member at large, of the cuts necessitated by the financial woes of the district. She proceeded to tear up, unable to finish her thoughts until later in the meeting. “I thought the saddest day was when we have to give the pink slips to all of those great, energetic teachers,” she would later continue. “But this is worse.”

“I've said it before from this very seat and I've equated it to putting a frog in a pot of water and turning on the heat. Now that water is at a pretty good rolling boil,” Testa said. “We've been essentially level funded for nearly 10 years. Even if our allocation had kept up with the rate of inflation, we wouldn't be in this situation that we're in today.”

The largest cut from a single place in an attempt to balance the budget does not come from athletics or personnel. Rather, approximately $1.75 million was cut in a single swoop by not committing the department to paying the principal and interest on the $25 million bond that was issued by the city in 2006, payments that the school department argues should be the responsibility of the city.

“It was wrong 10 years ago when we first paid it and it's wrong today,” Testa said in support of not continuing to commit funds to the bond payments.

School committee vice chair Eugene Nadeau has decried the city mandating the schools pay for the principal and interest of the bond for many years, and he did not let up on Tuesday night. He reiterated that the bond itself states that the city shall be responsible for the principal and interest payments, not the schools, and that the payments have prevented the department from providing better education.

“I know this is my last year,” said Nadeau, who is not seeking reelection. “This will bother me for the rest of my life, no matter how many years there is left.”

The decision to not pay the principal and interest could potentially result in a court dispute of its own. The money is not paid out in a physical means to the city, rather it is an accounting figure. It will be something to keep an eye on for next budget year, as neither the schools nor the city will have that payment accounted for in their budgets, presenting an obvious problem.

As the school department must find $1.5 million from a budget that has already been significantly scraped – the cuts as they stand would mean the buildings can only be cleaned every other day, and with very few employees to do so, in addition to kids no longer being able to use the ice rink or swimming pools – Ferrucci warned that even worse cuts could be on the way.

“This is a sad day in Warwick,” said committee clerk Karen Bachus, summing up the somber mood of the evening.