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February 25, 2013

School money at risk in Methuen

State says city is not spending enough

METHUEN — The city and the state are working through a technicality that, if unresolved, could result in the city losing a portion of its state education aid next year, according to state and city officials.

Data from the state Department of Elementary and Secondary Education show that in the last fiscal year, which ended June 30, 2012, Methuen funded the schools by $4.7 million, or 6.5 percent, below the minimum required by the state. The city underfunded the schools for two fiscal years before that as well, but not by enough to risk a reduction in Chapter 70 education aid.

City Auditor Thomas Kelly said the problem is bureaucratic and dates back to the education overhaul of 1993 and a checked box about retiree insurance. As a result of checking that box, an error made 20 years ago “has come back to haunt us,” he said in an email to state education officials last month.

“This will require a legislative fix,” Kelly said in an interview Friday.

Methuen is not alone in its predicament, though the local problem has become acute.

The box in question was checked, “no,” which meant that health insurance for retired employees was not counted toward education spending totals. Kelly said that check was incorrect to begin with, but it was not an issue in 1993, or even 2003.

“But 126 communities checked no and now they need to change it because health care has become a major expense,” Kelly said.

State accounting rules require health care spending on current and retired employees to be reported separately. Kelly said Methuen had an understanding with state education officials that because of the checked box, which cannot be unchecked under state regulations, Methuen would count all health insurance, including retirees, as current employees as long as the city detailed all its health care spending to the state in a supplemental letter.

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