By LINDSAY OLIVIER
NORTH KINGSTOWN – The North Kingstown school district is expected to run a deficit for fiscal year 2012 and, as a way to stop it from getting worse, the town attempted to file a restraining order last week in court to halt any spending without the town’s approval.
Instead of a definitive ruling, however, Washington Superior Court Judge Brian Stern told both the town’s and school’s attorneys they had a month to work it out on their own.
Last week, school Superintendent Dr. Philip Auger notified the town council and Town Manager Michael Embury about the possible deficit of about $712,000. During a meeting between Embury, town council President Elizabeth Dolan, Auger and school committee Chairperson Kimberly Page, town finance director Patricia Sunderland notified them about the restraining order.
“The town’s attorney never got the chance to file the order,” school committee vice-chairperson Richard Welch said. “So it was decided that any emergency expenses that occur and that are not in the budget, will have to get approval from the town council.”
Welch felt that a lot of money was spent and the town got nowhere.
A consent decree has been signed by both attorneys and was filed in court Tuesday. As stated in that decree, all expenses need approval from Sunderland.
At Monday’s special town council meeting, the council unanimously approved authorizing Nadeau and Wadovick CPA’s of Warwick to conduct an audit at a bid price of $22,850. The firm will analyze the school department’s revenues and expenses to determine the extent of the deficit and to look into areas in which savings can be achieved.
Council member Michael Bestwick questioned how long the audit would take and where the $22,850 would come from. The next court date is Jan. 17, giving around three-four weeks for the audit to be completed.
“As for where the money will come from, I don’t know yet,” said Embury. “Once the letter of engagement is complete then we’ll know. But I don’t have an exact account to tell you.”
The school department had no objection to the firm chosen and the town council did look at more than one firm.
Throughout the past week both sides have been referring to Rhode Island General Law Title 16, Chapter 16-9, School Funds and Property, with two different interpretations. The law states that the town has the authority to halt any “purchase orders or financial commitments even on the order of the school committee unless it can be proven that there will not be an excess of expenditures, encumbrances, and accruals over revenues.”
“After the school committee meeting last week, we felt we needed to get clarification on how the law applied,” said Dolan. “I’m glad we went to court and I’m hoping we can work this out in a peaceful manner. If not, we’ll be back in court and that’s something none of us want.”
Tuesday evening the school department submitted a deficit reduction plan to Dennis Hoyle, Rhode Island Acting Auditor General informing him of the anticipated deficit and two key elements as to why this is the case.
In the letter, Auger explains that the reason for the revenue shortfall is because for fiscal year 2012 state aid will be less than anticipated by $176,479; Jamestown student numbers are lower than expected resulting in a tuition decrease of $394,895; a lower Medicaid reimbursement in the amount of $125,000; and a reduction in indirect costs in the amount of $16,246.
The expenses have also been exceeded due to new hires being needed, an estimated cafeteria loss of approximately $150,000 and a loss due to difficulty in negotiating the contract with the North Kingstown Non-Certified Union, causing an expense of $500,000.
The way the school committee plans to correct the anticipated deficit is as follows: request that the town fund the revenue shortfall, utilize $257,000 of the fund balance for fiscal year 2012 positions, utilize $64,470 of the fund balance for the cafeteria shortfall, utilize $117,406 of fund balance for early retirement incentive health care, move the Fishing Cove ADA expense in the amount of $50,000 to the unspent $2 million bond fund, and leave a maintenance position created by a retirement unfilled in the amount of $35,000.
If the school committee is unsuccessful in obtaining the $712,620 from the town, it would have to use the $500,000 which is remaining in the fund balance; leave the maintenance supervisor position vacant which would save $40,000; use the utility savings from a mild fall which is $25,000 and continue with arbitration for the North Kingstown ESP Union and, if necessary, make unilateral changes to the same, resulting in the amount of $150,000.
Bond moves forward
Last week, the school committee voted 4-3 to allow the town council to submit enabling legislation for a special election to see if voters will approve a much needed $6.5 million Capital Improvement projects.
The school district has six months, which began Nov. 30, to bring the bond to voters in order to take advantage of a 30 percent reimbursement from the state legislature via the Rhode Island Department of Education Board of Regents.
Town Clerk Jeannette Alyward estimated the special election would cost between $8,000 and $10,000 depending on how many polls are open. A lot of the costs are absorbed by the state, but the town still has to pay poll workers and other items. If there is no June budget referendum, then the cost would come from the town clerk’s budget.
However, if there is a referendum, then that cost will have to come from somewhere else which hasn’t been determined yet.