EagleTribune.com, North Andover, MA


June 27, 2013

Schools ask for $1.4M bailout

Mayor calls for audit of education budget


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.

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