Woonsocket Accused of Underfunding Own Schools by Millions
Friday, July 05, 2013
The city of Woonsocket is being accused, by its school superintendent, of stiffing its own schools in millions of funding and causing local education services to be reduced to the bare minimum—a charge that met with strong objections from the mayor and city council president.
The superintendent, Giovanna Donoyan, said she wants to combat the public perception that an over-spending school district is what has pushed the cash-strapped city so perilously close to bankruptcy.
“I think everyone in the state thinks we are a hungry monster of a district that eats up money with no regard,” Donoyan said in an interview.GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST
Such a perception is unfair and untrue, she said. Instead, she says the real problem is that the city has underfunded the school district by about $4 million over the last few years. “Unfortunately, the message to the public continues to be that we are over spending, but the reality is that we have been underfunded for many years by the City,” Donoyan wrote in an e-mail.
Budget cutting: ‘we’re at the bone marrow’
Donoyan said she knows there’s no fat in the budget because she rebuilt it from scratch after taking charge of the school system in fall 2011. Her method, zero-based budgeting, allowed her to justify every expense in the school system for the budget she proposed for the 2013 fiscal year, which just ended.
In the process, cuts have been made where possible, according to city and school officials. Music has been eliminated from elementary schools. So have sports at the middle school. The district has no assistant or deputy superintendents and closed down an elementary school last year. For two years in a row, the school department has issued mass layoff notices, although most teachers ended up getting called back.
Donoyan said school services have been cut to the bone. “We’ve shaved the bone,” she added. “We’re at the bone marrow.”
Any further cuts at this point, she warns, could harm basic educational services.
“I’m not going to cancel math throughout the district,” she said.
As a result of her efforts to streamline spending to the point of absolute necessity, Donoyan said she was able to win approval last year from the state-appointed budget commission for her $66.6 million budget for 2013.
Most of that was funded through state aid, which was originally anticipated at $49.3 million.
That left about $17 million the city needed chip in. Instead of calling for further cuts—which Donoyan said would entail denial of legally mandated educational services—the city approved $17.4 million in municipal appropriations to the school system, according to a budget document the city filed with the state Department of Revenue. (See below documents.)
That was about $4 million more than the $12.9 million city had contributed in fiscal year 2012. For three years in a row before that, the city contribution was about $12.5 million, according to records Donoyan provided. (See below.) Because every cost in her $66.6 budget—with its $17.4 million city appropriation included—was justified, Donoyan is arguing that past city appropriations have been insufficient.
Members of the budget commission agree that Donoyan’s budget had pared down spending to the bare essentials.
“I think it was a lean and mean budget,” said Peder Schaefer, who is also the associate director at the Rhode Island League of Cities and Towns. “I don’t think there’s anyone on the budget commission who would say there was anything wasted in that budget.”
“It’s a lean budget,” agreed John Ward, another commission member and also the president of the city council. “We’ve basically cheapened our [school system] into a McDonald’s,” Ward added, saying the comparison applied to the low pay and high demands that teachers and other educators face in Woonsocket.
Spending is expected to remain about the same next year at a budget of $67.1 million and $17.9 million in city aid, according to the five-year financial plan adopted by the budget commission.
City officials point finger at state
But city officials sharply disagreed with Donoyan’s charge that Woonsocket has been underfunding its own schools.
“I think it’s disingenuous at best,” Ward said. “I contend that’s the fallacy being propagated by the commission of education.”
Instead, Ward and Mayor Leo Fontaine say the issue is underfunding by the state. “I should note that with the development of the State funding formula, the state has admitted that Woonsocket has been underfunded by the state by several million dollars,” Fontaine said in an e-mail. “Even with the first few years of phasing in the funding formula since then, Woonsocket still remains shorted by approximately 4 million dollars until it is fully implemented. There have been efforts to address the inadequacies of the funding formula, but those have fallen on deaf ears.”
While the state has made significant slashes to its education aid to Woonsocket in recent years, Fontaine noted that the city has “never reduced funding.” Instead it has level-funded schools or even made increases, he said.
But Donoyan said the numbers tell a different story. From her perspective, in remaining level, city funding has not kept pace with increases in state funding. In 2012, Woonsocket’s funding of its own schools was about $1.8 million higher than what it was in 2002. During the same period, state funding overall increased by about $5 million, although there were decreases in some individual years, as Fontaine noted. (See below table.)
Fontaine disputed Donoyan’s argument that because the city increased funding by about $4 million it had underfunded schools by $4 million in previous years.
“Though this is a significant increase from prior years I think it’s quite a reach and perhaps a drastic oversimplification to say that the increase in funding this year is an indication of underfunding at the local level for prior years,” Fontaine said. “More appropriately, it is the effort of the City and Budget Commission’s effort to adjust for reduced state funding and for the deficit that was realized in FY2010 and carried forward.”
He noted that the $4 million in added city aid “equals what we are currently being shorted by the state, according to the state’s funding formula.” (Asked for a response, Elliot Krieger, the spokesman for state Education Commissioner Deborah Gist, e-mailed this statement: “It is correct that the formula as enacted has a 7-year phase-in for underfunded districts.”)
Donoyan responded that the state already funds more than 70 percent of the education costs in Woonsocket.
The chair of the school committee, Vimala Phongsavanh, saw valid points on both sides of the debate. She said the problem is a combination of insufficient local aid, state aid cuts, and even shortfalls in federal funding. (Federal funds, which amounted to about $7 million in fiscal year 2013, are not included in either the above revenue or expenditure totals.)
She added that the city administration is not to blame for local aid cuts. “I don’t think it’s Mayor Fontaine. I think it’s a local philosophy on education. I think the city doesn’t appreciate education the way other cities and towns have,” Phongsavanh said.
Donoyan said the city doesn’t realize that its greatest economic asset, other than having CVS headquarters located in the city, is its education system.
Did city force ‘unrealistic’ cuts to budget?
In some ways, Woonsocket is still reeling from a perfect storm of events that erupted over the school budget a few years ago—a city lawsuit against the school department, a surprise deficit, and the firing of the school finance director.
Fontaine traced the troubles back to the “drastic cut” in state aid around 2010.
In fall 2010, the city took the Woonsocket School Department to court to balance its fiscal year 2011 budget, according to Phongsavanh, who said school officials were forced to consider “many draconian cuts” to its programs. “We pleaded to the City that we would not be able to make these cuts without hurting the students, but to no avail as they served us with our court papers. We ended up the year in a $2.7m deficit,” she wrote in an e-mail.
In an interview, Donoyan described the decreased budget as “unrealistic.”
But at the time school officials didn’t blame the deficit on “unrealistic cuts” or “underfunding”—as Fontaine puts it—but on health insurance increases and salary expenses that were not in the budget, according to a local news report he cited.
But deficits only worsened. For fiscal year 2012, the school department proposed a $59 million spending plan, millions less than in previous years, according to city records.
Fontaine noted that a consultant, Bacon and Edge, had run a “performance audit” and concluded that the school system could run on a budget of approximately $59 million in January 2011. He said it was school officials who adopted the consultant’s recommendations. (Click here to read the audit.)
But Phongsavanh said school officials felt they had little choice. “In 2011, because of our experience with the previous year, fear of another law suit, and legal expenses we developed an unrealistic budget and sent it to the City Council with the hope that they would advocate for more funding for our schools. We made significant cuts in uncontrollable expenses that later resulted in a $7.5m deficit. I don’t think it was realistic to believe that we would be able to survive on $59m,” she wrote.
State Rep. Lisa Baldelli-Hunt, D-Woonsocket, pointed to the lower budget amount as evidence that the school system had been underfunded. Baldelli-Hunt, who is running for mayor this year, asked why the city administration had “shortchanged” students.
After back-to-back deficits, the school committee fired its former finance director last spring for “misrepresenting” school finances. In particular, school officials and others had been caught off guard by a surprise $2.7 million deficit at the end of fiscal year 2011, when the finance director had been forecasting surpluses.
The incident has undermined the school department’s public credibility on fiscal issues. “I think it’s just a jaded community that in recent years hasn’t trusted in the school department,” Phongsavanh said. “There’s the feeling their investment hasn’t paid off.”
An end to the ‘budget from hell’
Overall, local officials seem cautiously optimistic about the future. At the end of last week, the city struck a deal with all five of its unions on a variety of cost-saving concessions. Also, the city has won approval for a $12 million advance on state aid from fiscal year 2014. And on the last day of the legislative session it received word that the General Assembly had passed a supplemental tax bill expected to raise about $2.5 million in additional revenues for fiscal year 2013.
Woonsocket isn’t completely out of the woods: rank-and-file members of the police union won’t finish voting on concessions until today, according to Baldelli-Hunt, who said the bill only takes effect if the city is able to negotiate a total of at least $3.75 million in savings.
School officials told GoLocalProv they are ending the year in black.
The reality is a bit more complex though. Although the budget commission approved $17.4 million in city funding for the 2012-2013 school year, it only had $12.9 million to offer. So, some public documents show $17.4 million in appropriations while others show $12.9 million, the figure Fontaine cited when asked about it. (See below documents.) Ward said the budget commission deliberately approved the full $66.6 million budget, knowing there would be a “built-in deficit.” Donoyan said the gap was why the city had requested the supplemental tax bill.
Days after it ended, Donoyan recounted a tight fiscal year where spending came down to the wire. “We’ve been counting our pennies,” she said, referring to the final few weeks of the fiscal year, when she said she lost sleep worrying about whether the department would be able to make payroll.
“I called it the budget from hell—666,” Donoyan said. “I view it as symbolic of everything we went through.”
Stephen Beale can be reached at [email protected]. Follow him on Twitter @bealenews
Woonsocket Schools: City vs. State Aid
Woonsocket Schools: Five-Year Budget Projection
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