EAST GREENWICH—The town council voted Tuesday to pass a resolution to request that the state general assembly enact legislation that would provide the town and all other municipalities in the state an emergency exemption in the required computation of maintenance of effort (MOE) funding while dealing with the costs of COVID-19. The MOE requires that the town maintain a consistent level of funding to the school district each year.
“It will be a challenge when [the district] asks us for money, which it looks like they will have to do,” said council vice president Michael Donegan. “This is a measure designed to help us help the schools should they need it.”
The purpose of the MOE is to ensure that the district be able to provide a consistent level of quality of education from year to year and normally works by requiring that previous budgeting practices be at least met if not increased from year to year. This has created some worry, however, that should the town need to grant emergency funding to the district due to COVID-19, this would raise the budget amount required in the next year.
Effectively, due to the twin banes of COVID-19 and the loss of state aid in the current year, the council may have to make a one-time contribution to the school district for the FY21 year to help keep the district operating smoothly through the pandemic. The MOE, however, could mean that in FY22 the town would have to meet the previous year’s allocation.
Current statute does allow for so-called non-recurring expenses that are not calculated into the final tally, which emergency COVID funding should qualify as. To this end, the council is attempting to be proactive by communicating with other municipalities and the general assembly about its needs. In seeking the exemption, the town would be able to give the school more funds than were initially allotted in July’s budget.
“At the end of the day, it really comes down to prioritizing what some of the key takeaways are and what some of the key funding need is going to be,” said town manager Andy Nota. “In most places it’s probably going to be your projected education aid and your reopening cost.”
The push for the exemption coincided with the first meeting of the state’s new Municipal Resiliency Task Force, of which Nota is a member, as well as the release of a number of documents by the Rhode Island League of Cities and Towns, of which Nota is also a member.
Members of both the League and the Office of Management and Budget (OMB) delivered presentations to the task force Thursday outlining huge anticipated revenue losses across the state due to the COVID-19 pandemic and the difficulty of simultaneously trying to dedicate new funds to keep municipal government up and running throughout.
In all, it is estimated that state revenues fell so sharply in the wake of COVID-19 that the projected state deficit is in excess of $708 million. This deficit, compounded by delayed PILOT payments, motor vehicle excise phase outs, and the widespread decrease of education and other state aid, means that towns like East Greenwich can simply not afford to offer emergency funding to their districts if such monies would later have to be met in a normal budget.
Representative Justine Caldwell, who attended Tuesday’s meeting, spoke of the town and state’s financial woes.
“When I go and talk to people, they realize that the town really cannot afford to give all of this emergency money to the school and still help Main Street restaurants stay open, still strive to provide the emergency services that we need for the town to survive a wintertime of COVID,” Caldwell said. “And so that is certainly on people’s minds.”
“This burden has fallen largely on the town,” council member Renu Englehart said. “This is a huge expense for us and it does affect how we fund other projects in the future.”
The passing of the resolution also coincided with a discussion of how to best go about facilitating a conversation between the town and state regarding the MOE and level-funding generally, as well as the town manager’s report from the League that the Federal Emergency Management Agency (FEMA) is rejecting reimbursement claims related to COVID.
“With FEMA now starting to reject certain municipal reimbursement claims and limiting the scope of future reimbursements, it is even more important to make a strong case to the Governor for reimbursement,” Nota said. “The [League] will work with OMB and the Division of Municipal Finance to develop a reporting template for cities and towns to quantify their COVID-19 costs, including those not covered by FEMA.”
The discussion largely centered around Rhode Island General Law 16-7, which set the minimum community requirements for providing a budget to the school district, the MOE and how to calculate non-recurring expenditures. Under the law, the deductions on non-recurring expenditures must be approved by the Education Commissioner.
“We’re anticipating that there will be full support,” Nota said.
“There’s going to need to be communication coming from a lot of different angles on this issue,” Nota added. “I think our legislators are going to play a key part in that, as well as the council.”
State senator Bridget Valverde, who was also in attendance, spoke to the importance of engaging with the Rhode Island Department of Education (RIDE) quickly.
“It is best to start with RIDE,” Valverde said. “I imagine there are several other towns who are in the same place.”
“We’ve been initiating the narrative with RIDE and others,” Nota said. “The narrative that the League has been putting together regarding legislative initiatives that are in the immediate future and in the long term include this conversation.”
A discussion around providing a supplemental appropriation to the school committee to help offset the costs of operating and reopening in the COVID era will likely take place at the next meeting of the council on Oct. 13. Council president Mark Schwager spoke to the importance of continuing good relations between the town and district during this time.
“I think that whenever the school committee hears that the town council is messing around with maintenance of effort, it gets their eyebrows raised,” Schwager said. “It’s very important to assure them that we’re working with them jointly.”
To that end, Caldwell expressed that the coming months would require close understanding between the council, district and local business about the state of finances in the town and across the region more generally, as solutions are sought.
“It’s everybody’s goal at the general assembly to make sure that our town makes it through the winter without losing any businesses and our kids can keep going to school,” Caldwell said. “I do think this is an instance where some normal tensions get allayed and we’re all rowing in the same boat together.”