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June 28, 2013

Council OKs school bailout

Outside firm to review education spending

HAVERHILL — Crisis averted.

The city will give its schools $1.35 million to plug an 11th-hour budget shortfall. In exchange, the School Committee will hire an outside company to perform a management audit of school finances and accounting methods, according to a deal reached at an emergency City Council meeting last night.

Superintendent James Scully also agreed to provide detailed budget updates on a monthly basis to the council and Mayor James Fiorentini.

City officials have known they were facing a large school budget shortfall since the beginning of the month, but Fiorentini said school administrators were able to tell him the exact amount only a few hours before the meeting. The late notice and uncertainty drew sharp criticism among councilors and the mayor.

Councilor Michael McGonagle said Scully told councilors two weeks ago that the schools would likely end the fiscal year with a deficit in the $400,000 range.

“In the private sector, people would lose their jobs with a last-minute deficit like this,” McGonagle said.

State law requires cities and towns to reconcile their annual operating budgets and pay all their bills by the end of the fiscal year, which is Sunday.

“This shortfall and the late notice is completely and utterly unacceptable on so many levels,” Fiorentini told the council. “The schools, like everyone else, has to live within their budget. It’s unacceptable for them not to give better updates and reports. The special education overrun is the heart of it, but it’s also inappropriate accounting and poor oversight.”

Scully said the deficit was primarily the result of 18 special needs students who moved to Haverhill since August, including one whom has cost the district $329,000 since October. A second student has cost $141,000 since January, according to information provided by school officials.

The superintendent said the total special education overrun was more than $2 million, but that he reduced the deficit by freezing non-essential spending months ago. He said superintendents across the state are dealing with surging special education costs.

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