Schools to report unexpected surplus

Over the summer, the Warwick School Department projected a deficit for the first time in Anthony Ferrucci’s seven-year tenure as finance director. However, documents sent ahead of a special school committee meeting to be held this Thursday reveal that some favorable fiscal developments have wiped out this projected deficit and returned a scant surplus for FY18.

The financial report must still undergo a finalized audit, of course, but the news means the auditor general will not need to be notified about Warwick running a deficit, which was projected at $545,064 during the July 10 meeting of the school committee.

Thanks to unexpected revenues above projections – including over $100,000 in state housing aid and over $130,000 in Medicaid/indirect funds – and items originally being projected to run a deficit actually coming out above expectations, the schools are projected to achieve a surplus of $157,847.

You may be wondering how this could happen, or that it’s convenient that the schools were able to find money during the eleventh hour to avoid showing a deficit – even though that original projected deficit only accounted for about 0.3 percent of the school’s $166 million operating budget at the time.

The simple explanation is that the July 10 projected revenue/expenditure report was just that – preliminary. The schools must report such projections after the school year during the summer, despite the fact that accounting for line items such as salaries – where the largest disparity in projections versus actual numbers occurred – continues until the end of the year.

This means that the schools have to make decisions for upcoming school years based on projections that are, at the time, essentially a best calculated guess. In this case, the schools couldn’t anticipate getting more money from the state and were able to compensate certain salaried positions through grant moneys rather than the general operating fund. Additionally, the schools are able to collect money if there is an overdrawing of the sick bank for staff. These variations resulted in the unexpected surplus.

However, running an unexpected surplus for last year does not mean much in terms of the ongoing budgetary crisis being experienced by Warwick schools this year. Those challenges, including the number of students who have requested out of district placement for various programming, will dissipate this surplus quickly.

Ferrucci declined to comment on this story, as he will be officially reporting this information in more depth to the school committee on Thursday. The meeting will be held at 6 p.m. at Warwick Veterans Middle School.