Dept. of Ed threatens to withhold $11 million from Lynn

November 8, 2016

By THOMAS GRILLO

LYNN — The state Department of Education is threatening to withhold $11 million in school funds this month until City Hall ponies up its school spending money.

“We consider this very serious,” John J. Sullivan, associate commissioner, told The Item. “I would not hold out Chapter 70 payment if I didn’t think so, this is not common at all.”

In a letter to Mayor Judith Flanagan Kennedy on Monday, Sullivan said a review of the city’s fiscal year end financial report discovered that Lynn was in violation of state law.

“Your plan stated that in fiscal year 2016 through 2019 the city would appropriate $2.2 million in addition to each year’s net school spending requirement … the city did not even meet the FY16 net school spending requirement and you have not budgeted sufficiently to meet the city’s obligation in FY17,” Sullivan’s letter said. “I need to inform you that violation of this agreement is serious and will require immediate attention.”

Kennedy was unavailable for comment. In an emailed statement she wrote, “I just received the letter from the Department of Elementary and Secondary Education. I have asked the chief financial officer to review the figures presented, and if we have an additional funding obligation to the schools, we will certainly address it promptly.”

Peter Caron, the city’s chief financial officer, declined to comment, and School Superintendent Dr. Catherine Latham could not be reached for comment.

By law, school districts are required to spend a certain amount of money annually. In Lynn, that figure was $191.9 million in fiscal year 2016 and $197.4 million in 2017. To help meet that requirement, Lynn is provided with state aid to public schools, known as Chapter 70 money, which covers most local education costs. Lynn received $147 million for fiscal year 2016.

But in addition, the city must come up with $2.2 million annually to supplement their required net school spending over four years to phase in retirees’ insurance costs as a contribution to net school spending. That solution is aimed at solving a problem, in Lynn’s case, that dates back a decade.

At the heart of the problem is a formula calculating how retired teachers’ health insurance costs are counted toward “net school spending,” a basic calculation outlining a community’s contribution as to how much money public schools receive.

Lynn is not permitted under state law to include retiree insurance costs toward net spending. The excluded costs play a role in spending calculations.

“There was a law passed a few years ago to count their retiree health insurance as part of net school spending even though Lynn had not done so in the past,” said Sullivan. “But in order to do that they had to come up with a four-year payment plan and agree to about $2.2 million in addition to their required net school spending for that fiscal year.”

This is not the first time the city has faced a dire warning from the state. Two years ago, state Education Commissioner Mitchell Chester told the superintendent that Lynn has fallen $8.6 million below its net spending requirement.

School funding comes as the cash-strapped city faces a number of financial challenges.

Last summer, the mayor and Lynn police agreed to a more than $3 million wage hike over four years. The retroactive agreement provides a 1 percent boost for 2014, a 2 percent increase for 2015, 2016 and 2017, and a 1 percent raise for 2018. The contract for 2014 to 2017 will cost taxpayers $2.1 million.

For months, the city and the Lynn Firefighters Local 739 have been in negotiations on a new contract that is expected to be completed by year’s end.


Thomas Grillo can be reached at tgrillo@itemlive.com.