LYNN — As the new mayor figures out how to close a $7 million shortfall in the city’s budget, the state is withholding millions more in school spending.
In a letter to Mayor Judith Flanagan Kennedy on Monday, the Massachusetts Department of Elementary and Secondary Education said the city was $5.1 million short of its school spending requirements of $197.4 million.
“Lynn is alone in getting money taken back,” John J. Sullivan, associate commissioner, told The Item. “I warned them in April that the city had not budgeted sufficiently. The money was given to them to spend on education and it wasn’t. If they don’t have the $5 million, they spent it somewhere else.”
The state will withhold that amount over the next seven months, he said.
Peter Caron, the city’s chief financial officer, said about $2 million of the shortfall is due to the failure of the school department to spend it. He said the schools put aside the cash to fund teacher raises, but the contract was not signed by the end of the fiscal year in June.
“We are being penalized for the School Department holding onto the money rather than spending it,” he said. “Health insurance continues to be a problem in terms of how it’s counted.”
Caron said he did not know if the shortfall will lead to layoffs.
“We plan to address this with the state Department of Education and the Department of Revenue and go from there,” he said. “But it certainly adds to our bottom line budget problems.”
Mayor-elect Thomas M. McGee said he is still gathering information about the financial condition of the city and is not ready to make any decisions on how to deal with the crisis.
“We are looking at numerous options, including working with the state to help us get through this to find a way to solve it,” he said. “We are not at the point of asking for a financial bailout.”
By law, school districts are required to spend a certain amount of money annually. In Lynn, that figure was $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 education costs.
This is not the first time the city has faced a dire warning from the state. Last year, Sullivan told the city they were short more than $11 million. Two years ago, state Education Commissioner Mitchell Chester told the superintendent that Lynn has fallen $8.6 million below its net spending requirement.
School Superintendent Dr. Catherine Latham could not be reached for comment.