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Pawtucket School Department

Pawtucket School Department. The Budget DeficitFY10 - $2.3 MillionFY11 - $3.9 MillionNote: FY means

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Pawtucket School Department

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    1. Pawtucket School Department BUDGET DEFICIT Work Session January 18, 2011 Prepared by Debbie Cylke, Tom Conlon and Maggie Baker

    2. Pawtucket School Department The Budget Deficit FY10 - $2.3 Million FY11 - $3.9 Million Note: FY means fiscal year which is July 1 through June 30

    3. HOW DID WE GET HERE?

    4. Critical Questions Why did Mayor Doyle ask the School Committee to reopen negotiations with ALL employee union groups? What are the numbers behind the budget crisis? How did such a deficit develop? What happens next?

    5. The City has a deficit of $12+ M The RI legislature in 2010 decreased revenue to all municipalities when it decided to withhold automobile excise tax revenues during this last legislative session. The City of Pawtucket lost $9M through this ONE action

    6. School Department Deficit FY10 The School Department ended FY10 with a $480,000 deficit, or less than .5% of the total budget. A judge, through the Caruolo action, ordered the City and School Department to create a budget deficit reduction plan to address this deficit (a plan to pay off that amount over five years.) In late June, the RI legislature voted to reduce revenue to all School Departments in the State by 3% or $1,865,300 for the 2009-10 school year. Keep in mind that school year had already ended and money for that year had been spent.

    7. Therefore the total FY 10 deficit is: $480,000 + $1,865,300 = $2,345,300 deficit for FY10 The $2.3M is carried on the Citys ledger as a deficit. Law requires a budget deficit reduction plan. A budget deficit plan was prepared by the City in July.

    8. A Deficit Plan for FY10 had been submitted to the Auditor General Law requires a deficit plan by the City and the deficit must be paid over no more than 5 years Yr 1- $150,000 Yr 2 - $450,000 Yr 3 - $600,000 Yr 4 - $600,000 Yr 5 - $600,000 Total: $2.4M

    9. Auditor Generals Response The Budget Deficit Reduction plan was denied due to the fact the City had considerable debt, and therefore a concern arose about the Citys ability to implement the BDR plan. The Auditor General advised the City to resubmit a BDR plan after the City and School Department had a long range plan to address the Citys debt.

    10. School Department Deficit FY11 Business Director, Tom Conlon, prepared the FY11 budget, to include all negotiated step and salary increases. We started the new year with an anticipated deficit of $500,000. In an approximate $95M budget, this relatively small amount could be addressed during the year to balance the budget.

    11. HOWEVER In late June, the City of Pawtucket, due to their revenue losses as imposed by the legislature, reduced their FY11 contribution to the School Department by $2.9M. This represents 95% of the maintenance of effort, as minimally required by law, and a reflection of a drop in student enrollment in prior years. $500,000 + $2.9M = $3.4M

    12. And to make matters worse An additional unexpected182 students arrived in September. An additional $470,000 was needed to put teachers with these students

    13. Total School Department Deficit Recap FY10 $2.3M 1,800,000 State reduction in aid by 3% 480,000 Operating deficit FY10 FY11 $3.9M 500,000 Deficit July 1 2,900,000 Reduction in MOE 470,000 New teachers TOTAL: $6.2M

    14. The Law Requires a Balanced Budget The School Committee advised the City of its deficit. Caruolo action must include a plan to address the deficit. However, considering the Citys financial status, a Caruolo action was not the direction the Committee felt was realistic.

    15. There are two ways to balance the budget Raise taxes School Committee does not have authority to raise taxes Reduce expenditures Seek every possible cut in the current budget Delay salary increases Furlough days Increase co-pays Eliminate positions Freeze Hiring Freeze Spending

    16. Contractual Context The Non Certified contract has expired The Pawtucket Teachers contract was renewed in Fall, 2009. A 1.5% (first six months) and 1.5% raise (second six months) for FY11 was negotiated as well as a 3% raise for FY12. Co-pay was increased for teachers from 5% to 6% in FY11 and will increase to 9% for FY12.

    17. Budget Advisory Committee The new superintendent created a Budget Advisory Committee Includes representation from all PSD employee groups Goal is to ensure everyone is getting the same information and transparency

    18. October Meeting with City What is the number we are attempting to address? FY10 $480,000 deficit is PSDs $1.8M (State decrease) would be resolved with a City Budget Deficit Reduction Plan PSD and the City agreed on the FY 10 budget deficit plan.

    19. FY 11 Total Deficit $3.9M + $480,000 from FY10= $4,380,000 Federal Education Jobs Monies + $2.9M $4.4M $2.9M = $1.5M

    20. Negotiations The PSD is looking for $1.5M in concessions to balance the FY11 budget Furlough Days/ Length of Contract > Co-pay Forego salary increases Goal has been to keep people employed

    21. Other Possibilities Federal adjustment to Medicaid reimbursements +$180,000 Unidentified Cuts exceed the $1.5 projected There is a possibility that we may have savings due to maternity leaves, lower utility bills, etc. Lay-offs May only lay off PTA employees notified by March 1 of each year Non-certified have already been reduced by 5 custodians and a plumber

    22. Other Possibilities Review option to utilize the self funded health insurance reserves Funded by monthly contributions from local and grant budgets (like a premium) When we annualize claims as of Dec 31, we are projecting a $900,000 reserve balance The City is utilizing its own health reserves to help balance its budget Rule of thumb is to have 1.5 months ($1.9M) of reserves on hand to cover claims incurred but not paid Projections are iffy

    23. Questions and Discussion Committee Requests Committee Actions

    24. Next Year Structural Deficit for FY12

    25. Structural Deficit FY12 What is a structural deficit? A deficit there before you begin Prior years deficits that are unresolved or anticipated For example: $470,000 for new teachers hired in FY11 will be needed in FY12 $500,000 FY11 operating deficit there in FY11 will be there in FY12 Will the City fund PSD at 95% Maintenance of Effort in FY12?($1.5M) Will the State maintain a 3% or even higher reduction to school departments in FY12?($1.8M) Total: $4.3M possible structural deficit Next years required increases: 3% increase in teacher salaries ($1.5M) $1.2M in pension increases 4 FTE kindergarten teachers ($300,000) Total: $3M in required increases Funding formula will add approximately $1M to revenues, however the Legislature may delay implementation of the new funding formula if they have a deficit POSSIBLE $6.3 Million - $7.3 Million Deficit going into FY12!

    26. Actions Taken By the School Committee at the January 18 Meeting Freeze: $85,000 salaries savings/retirements $350,000 in professional development fund $180,000 in Medicaid reimbursements Utilize toward FY10 Deficit: Self funded health insurance reserve balance at end of this fiscal year (currently at $900,000) Total potential savings if medical reserves stay at $900,000: $1,515,000

    27. FYI - Salary Increases The following slide shows the various negotiated salary increases among the various Pawtucket employee groups.

    28. Negotiated Salary Increases 2006-2012 Note: 6 of 9 employee groups have salary increases for FY11

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