Chapter 70

School spending ‘thorn in our side,’ mayor says

By THOMAS GRILLO

LYNN — Five months after the state threatened to withhold millions in school funds, the city is on the hook again as they face a spending shortfall, The Item has learned.

On Thursday, the Department of Education is expected to tell Mayor Judith Flanagan Kennedy that following a review of the city’s finances, school spending is off by about $826,000. As a result, the state may withhold that amount from Lynn’s $11 million monthly allocation of Chapter 70 school payments in June.

Peter Caron, Lynn’s chief financial officer, said the city is again working to get school spending back on track.

“It’s challenging,” he said. “We are trying to guess how much money we will spend on schools, but the state doesn’t do the accounting until six months after the fiscal year is over. It all goes back to the health insurance; we don’t know in May how much we will spend on it. It’s a crap shoot.”

Kennedy said she expects the school spending issue to be resolved, but she’s not sure how.

“Overall, net school spending has been a thorn in our side for a number of years,” she said. “When you increase the number of students in the schools by nearly 20 percent over the last six years, it causes problems on how to pay for it.”

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Lynn is the fifth largest district in the Bay State with more than 16,000 students.

“Until we can slow the increase in school population or look to possible federal assistance, we will not be able to meet the threshold spending for the foreseeable future,” she said.

The city’s finances came into focus last year when the Massachusetts Department of Elementary and Secondary Education told the mayor that the city’s contribution to school funding was short by $7.5 million and the state threatened to withhold its $11 million November payment in school funds until City Hall came up with more cash.

Since then, the school deficit has been reduced to less than $1 million and the state money was released to the city.

John J. Sullivan, DOE’s associate commissioner, declined to comment until the letter is issued to the mayor.


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

 

Loose ends in Swampscott

Swampscott’s School Committee is scheduled to approve the public school budget on Wednesday even as answers to a number of spending questions remain out of reach to committee members.

Before continuing on its predetermined path to Town Meeting, the budget needs to get untangled from state funding questions and teachers’ union challenges. If the teachers’ union and town officials can agree on a contract, what will the agreement’s price tag total and how much money will teachers get for raises?

Public employee contract talks are prone to heating up when money becomes a focal point of the conversation. The teachers want an explanation for how a school budget gap topping $1.6 million dropped to a fifth of that amount.

Their question deserves an answer and it is not the only pressing concern committee members need to address as they resolve budget challenges. Covering the budget’s $275,000 gap could mean ending all-day kindergarten in town and reverting to half-day kindergarten. The full-day option would be retained — but only for parents interested in paying tuition to cover part of the day.

It is a shame to see a community like Swampscott, where parents and educators value local schools and education, consider cutting a fundamental program like all-day kindergarten.

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Education in the 21st century is a process that begins before children can walk and includes familiarizing them with reading fundamentals while making them technically adept to function in the virtual world of online education.

All-day kindergarten is an opportunity to immerse children in education and acquaint them with the socialization skills required for modern learning.

Swampscott is home to Massachusetts’ governor and Charlie Baker’s past service as a town official makes him familiar with the challenges involved in funding local budgets and making sure schools receive enough money.

State tax dollar support for city and town schools is an enduring source of debate and contention for local officials and legislators. There are renewed cries this year to revamp the state Chapter 70 education funding formula to better benefit communities. This is a complicated process and an important one in an era when charter schools and traditional public schools compete for tax dollars.

It makes sense to consider juggling the state finance formula with money to ensure communities like Swampscott receive “must have” money to make sure services like all-day kindergarten are preserved.

Swampscott, like all communities, must get its own house in order when it comes to providing enough money for local schools. But the town could use help from the state in the form of additional money or more freedom to spend state allocations the way local educators see fit.

Lynn’s budget gap not as bad as expected

By THOMAS GRILLO

LYNN  City officials say it’s too early to tell whether there will be layoffs as department heads are urged to trim costs and the city treasurer recalculated health care costs in the face of a budget deficit.

“The mayor is reviewing the budget looking for cuts,” said Peter Caron, the city’s chief financial officer. “But for now, we’re not cutting active employees.”

Caron and Mayor Judith Flanagan Kennedy have asked City Hall managers to find a way to pay for raises to City Hall employees totaling $587,360 this year.

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In addition, Caron sent a memo to each department on Friday seeking information about permit fees and fines that could be increased and how much it would raise. He will also review every line item transfer and any expenditure over $500.

“If a department wants to buy a couple of cases of paper, that’s fine,” he said. “But if they want new furniture, that will get reviewed.”

On another major budget buster, Caron is relying on city Treasurer Richard Fortucci’s latest review of health care costs paid to school employees.

Fortucci said he has recalculated the number of retired teachers  receiving health insurance benefits and could save the city as much as $5 million.

Originally, the treasurer used actuarial accounting, a statistics- based method favored by the insurance industry, to account for the number of retired school workers who receive city health benefits.

That calculation earlier this year had 1,043 retirees getting benefits. But Fortucci’s headcount last week determined the number was closer to 970.

While the difference of 73 workers does not seem significant, Fortucci said the rising cost of health care —  more than 24 percent over the last two years  has pushed the budget beyond its limits.

“The difference in the number of employees by itself looks harmless, but when you examine the rise in health care costs, it’s huge,” Fortucci said.  

If the treasurer’s latest count is correct, it would reduce a budget deficit in the school department to $2.5 million, down from $7.5 million just a few weeks ago.

It will be up to the Massachusetts Department of Elementary and Secondary Education, which is expected to review those numbers in the coming weeks, to see if they are accurate.

If the school deficit is not fixed, the state said it will withhold $11 million in Chapter 70 school funds this month until City Hall makes the cash available for schools.

A few weeks ago, Caron floated the idea of a Proposition 2½ override to make up the shortfall. While Kennedy initially agreed, the mayor reversed course a few days later and said raising taxes may not be necessary after all.

“We are still scrambling to get caught up,” Caron said.  “We will probably get through this year. My concern is fiscal year 2018. That’s when in a few months we may have to lay people off.”


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

Lynn council takes up tax talk

ITEM FILE PHOTO
Lynn City Hall.

By THOMAS GRILLO

LYNN — For more than 90 minutes on Tuesday night, Peter Caron, the city’s chief financial officer, faced tough questions from city councilors about Lynn’s financial problems and how to solve them.

After the talking ended, councilors agreed to hold a public hearing in December to set the property tax rate and seek state approval to send a preliminary tax bill before year’s end.

Caron’s request to mail the tax bills early buys time to figure out how to deal with the lack of cash.

Mayor Judith Flanagan Kennedy faces several big ticket spending items: A $7.5 million shortfall in school spending and a wage increase for the Lynn Police Department over four years that was negotiated earlier this year with more than a $3 million price tag.

Add to this list the city’s prospective share for the cost of building two new middle schools is $68.5 million and The Lynn International Association of Firefighters Local 739 is in arbitration discussions on a wage hike.

With questions raised about a possible Proposition 2 ½ override to deal with a budget shortfall, Ward 1 City Councilor Wayne Lozzi said he was distressed to learn about the city’s financial woes and asked if the administration was considering cuts before tax hikes.

“There’s a storm on the horizon and I’m very unhappy with what’s coming down the road,” he said. “The buck has to stop somewhere. What I haven’t heard are the steps being taken to start saving money now. Should we be asking departments to cut 5 percent across the board? I don’t want to raise taxes.”

In response, Caron said everything is on the table including raising building fees in the Inspectional Services Department to a local option meals tax that could raise $600,000 annually.

Caron noted that if the council and the voters did not approve raising taxes either by a Proposition 2 ½ override or a so-called debt exclusion to pay for two new schools, the city would be forced to make cuts in the police, fire or the Department of Public Works to make up for the shortfall.  

“It would take a very high toll on personnel,” he said.

Ward 3 Councilor Darren Cyr said based on Caron’s projections, the city is facing layoffs.

“We are in extremely dire circumstances,” he said.

Kennedy signaled last week that given the rise in student population, the city is at the point where it can’t fund basic city services. As a result, she is willing to ask the voters to approve a tax hike.

“I’ve said from the beginning of my administration that my absolute last resort is laying people off, and this is the only way to avoid that,” she said.   

The city’s finances came into focus earlier this week when the Massachusetts Department of Elementary and Secondary Education told the mayor that the city’s contribution to school funding was short by $7.5 million. As a result, the department was prepared to withhold $11 million in Chapter 70 school funds this month until City Hall makes the cash available for schools.

The fix would require an infusion of new revenue into the school budget as a way to address the problem.


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

School math may add new taxes in Lynn

By THOMAS GRILLO

LYNN — The city’s chief financial officer is considering a Proposition 2 ½ property tax override next year — a first in the city’s history  —  to pay for a school budget shortfall, two new schools and raises for union members.

“We’re looking at options and an override is definitely a possibility that should be on the table,” said Peter Caron. “If officials don’t want to do that, we’ll have to examine other options, such as cutting services.”

Caron called on City Council President Daniel Cahill to schedule an emergency meeting of the council for next Tuesday to approve a home rule petition to send out the third quarter tax bills early, Cahill said. By doing so, the city buys time to figure out how to deal with the lack of school money.

“If we get approval, I won’t have to set the tax rate until mid-March and we can consider our options to find money in the existing budget or to find new revenue to address the problem,” Caron said.

The CFO declined to say how much money the city needs or how much it would cost taxpayers.

There are a handful of large ticket costs that must be addressed.

The list includes a $7.5 million shortfall in school spending. A wage increase for the Lynn Police Department over four years will cost more than $3 million and the city’s prospective share for the cost of building two new middle schools is $68.5 million.

And there’s more debt coming. The Lynn International Association of Firefighters Local 739 is in arbitration discussions on a wage hike.

In an interview early in the day, Mayor Judith Flanagan Kennedy said the city’s schools are not facing a financial crisis.

“It’s not insurmountable,” she said. “It’s just going to be a process in collecting tax money in the most expeditious manner possible,” she said.  

Lynn is the only city in Essex County that has not opted to impose a .75 percent local tax on top of the state’s 6.25 percent meals tax. The tax would add 75 cents to a $100 dinner bill, about 19 cents to a $25 meal and raise about $600,000 annually for the city.

“The mayor is opposed to any new taxes,” Caron said. “But she has an obligation to make sure that the city is run, you can’t just ignore this problem, she’s got to address it.”

Originally, the city was planning to ask voters to approve a  so-called debt exclusion in February to pay for the new schools that would add $163 annually to the real estate tax bill for 25 years.  

“We were planning on a debt exclusion for the new schools,” Caron said, referring to the temporary tax increase. “If any solution involves going to the public for a vote, it should be a single vote, not a debt exclusion and a Prop 2 ½ override.”

Under Prop 2 ½, the amount of property tax raised can never exceed 2 ½ percent of the full cash value of all taxable property in a community. An override is a permanent addition to the levy limit.

The city’s finances came into focus earlier this week when the Massachusetts Department of Elementary and Secondary Education told the mayor that the city’s contribution to school funding was short by $7.5 million. As a result, the department was prepared to withhold $11 million in Chapter 70 school funds this month until City Hall makes the cash available for schools.

Caron said he talked with John J. Sullivan, the department’s associate commissioner, and explained the shortfall was based on an “unanticipated reallocation of health insurance for the active and retirees.” In addition, he said the city is reviewing the calculations that resulted in changes to health insurance to make sure they are accurate.  

The fix would require an infusion of new revenue into the school budget as a way to address the problem. It’s unclear where that money would come from. The city budget is $299.6 million. Of that, $197.4 million is allocated for schools in fiscal year 2017.

“The Department of Elementary and Secondary Education understand the parameters of the issue,” said Caron. “It appears they are willing to give us some leeway to devise a workable plan that allows us to make the schools whole before imposing any penalties.”  

Still, Sullivan said the issue has not been resolved yet.

“I’m waiting for Mr. Caron to email me so that we can internally discuss possible next steps,” Sullivan told The Item in an email.


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