HAVERHILL — City leaders are scrambling for a way to plug a shortfall as high as $1.4 million in the school budget.
The problem has Mayor James Fiorentini calling for an outside audit of Haverhill’s school spending. The city also faces tapping money that was to be to put aside for emergencies in the coming year.
The City Council will have an emergency meeting tonight to consider Fiorentini’s plan for ending the problem.
State law requires cities and towns to set their annual operating budgets by the end of the fiscal year, which is Sunday. If the schools don’t have the money, the city must cover the shortfall, Fiorentini said.
In a letter to the School Committee, Superintendent James Scully said the shortfall could be as high as $1.4 million, most of it from cost overruns for services for students with severe learning disabilities.
As of yesterday, the mayor, who is also chairman of the School Committee, said school officials were unable to tell him exactly how much money the schools need to bridge the gap.
Fiorentini said he is “deeply disturbed” that school officials don’t know the extent of the problem this close to the end of the fiscal year.
As a result, the mayor said he plans to call for an outside audit of school finances and accounting methods at tonight’s meeting at 6 in City Hall. The School Committee is set to meet after that at 7 p.m., also in City Hall.
“We need an audit to determine if there are sufficient financial controls and sufficient reporting of the budget status,” the mayor said. “This can’t happen ever again.”
Fiorentini said he also intends to bring back a proposal the School Committee rejected in 2008 that would have merged the city and school financial departments under the direction of the city’s chief financial officer.
Fiorentini proposes to cover the shortfall with $500,000 from the city’s “free cash” reserve and $900,000 from its health insurance trust fund, which covers medical payments for workers and retirees in the city’s health care plan. Fiorentini said about $3 million will remain in the trust fund after the withdrawal and that the city will put the money back later.
Free cash is money left over from the prior year’s budget that cities and towns are free to spend once it is certified by the state. The $500,000 withdrawal would leave just $50,000 in that account, the mayor said.
Fiorentini has also left open the possibility of tapping the city’s main reserve account — called the stabilization fund — or taking money from the next year’s school budget if more money is needed to cover the shortfall. The mayor said he expects some councilors may want to use money from next year’s school budget, but that he wants to avoid that if possible because it would have the effect of punishing students for the budget problem.
If the council does not approve monetary transfers to cover the shortfall, the state would intervene, the mayor said.
“We are lucky that we have the money in free cash this year to cover this,” Fiorentini said. “In years past, this would have been a full-blown crisis. We would have had to have gone to the Legislature to ask for special permission to borrow money to pay for an operating expense, and that would have hurt our bond rating.”
Scully briefed the School Committee on the budget overrun for the first time at its June 7 meeting. At that time, he attributed the shortfall to an unexpected influx of students with severe learning disabilities — including one child the School Department has spent about $350,000 on since January.
Scully said 14 special education students have moved to Haverhill since the school year began in September — the largest number of mid-year move-ins that anyone can remember, he said. The cost of providing school services for the 14 students has been nearly $1.3 million — money that was not budgeted because the students moved here during the school year, Scully said.
Under state law, public school districts must provide whatever staff and other resources are required to educate students with learning and physical disabilities.
At the June 7 meeting, School Committee members and the mayor said they were disappointed the school administration was not prepared to act that night.
“Why don’t we have a plan to solve this here tonight?” Fiorentini asked Scully at that meeting. “This is unacceptable not to have a plan.”
Others joined the mayor in pressing Scully for an immediate solution.
“I don’t want us to have to call an emergency meeting with five days left in the fiscal year and have to go to the mayor asking for the city to bail us out,” committee member Scott Wood said.
“I’d like to see an immediate cost-cutting plan,” committee President Paul Magliocchetti said.
At that meeting, Scully said he hoped the special education deficit could be reduced during the final weeks of the fiscal year using money left over in other accounts. Instead, the deficit grew and the problem worsened.
Since then, the special education shortfall increased by $450,000 and school officials identified a $250,000 shortfall in the tuition-based full-day kindergarten program, Scully said. The kindergarten program is subsidized by the state, but families also pay tuition based on income. The district projected $600,000 in revenue, but more families than expected qualified for free or discounted tuition, Scully said.
“There is no room for excuses or blame,” the superintendent said in June 25 memo to the School Committee. “These serious circumstances have resulted in a freeze on all accounts and hiring of staff, with the exception of classroom teachers.”
Scully said he plans to implement changes Monday to resolve “structural matters” in the school business office. Monday is also the last day on the job for long-time Assistant Superintendent Kara Kosmes, who oversees the school budget. Kosmes recently took a new job to be Whittier Regional Technical High School’s business manager. She is being replaced by Leighton O’Connor, a former budget consultant for Haverhill schools. His appointment was approved by the School Committee earlier this month.
Fiorentini said the special education overrun is exactly the kind of crisis he envisioned in insisting the School Committee set aside money every year in a contingency account.
“This is why I have been calling for the schools to have a special education contingency fund, which I did for them on my own this year because they would not do it for themselves,” the mayor said.
Over the objection of some School Committee members, the mayor put $200,000 in a reserve school account that can only be used with the approval of City Council. The money came from a source that has traditionally been given to the schools to use as they wish.
Special education cost overruns Residential placements: $478,000 Contracted services: $298,000 Tutoring: $196,000 Aide stipends: $90,000 Day placements: $102,000 Supplies and equipment: $59,000 Translator: $31,000 TOTAL: $1,254,000 (Deficit also includes $250,000 shortfall in full-day kindergarten program) NOTE: Numbers provided by Haverhill School Department