March 8, 2012

"Deficiencies In Internal Fiscal Controls": Woonsocket School Committee Brings Down The City (Bonds)

Monique Chartier

So Monday night, with the Governor in attendance, Mayor Fontaine broke the disastrous findings of the audit of the school department's budget.

Thanks, in large part, to $4 million in overspending on salaries, the Woonsocket Education Department is projected to exceed their 2012 budget by more than $7.3 million.

A budgetary recap is in order at this point. In less than four months, we've gone from a small surplus to a $2.7 million shortfall to, now, a $7.3 million gap.

How did we get here? Well, the initial $2.7 million was in large part the result of off-the-book hirings by the prior Woonsocket superintendent - hirings about which the school committee purported to be completely uninformed.

By the way, my favorite public comment at Monday night's City Council meeting was from a taxpayer who, citing the need for accountability, called for the de-certification of the prior superintendent. Absolutely. If the school committee was, indeed, not apprised of these hires, they will take this step forthwith so as to protect other cities and towns from, literally, millions of dollars of unauthorized spending by an out of control superintendent.

But a rogue superintendent was not the cause of the entire shortfall. Check out item #4 of the list compiled by Sandy Phaneuf in this excellent Valley Breeze article.

The committee spent their 2012 state allocation in advance and therefore miscalculated their actual deficit for 2011 by $2 million.

The school dept was given a $2 million advance on its state aid. It repaid this favor by wrongly accounting for the entire sum. Further, it took an outside auditor to uncover the $7.3 million shortfall. At best (which is not good at all), it appears that the school committee was once again gormless about yet another chasm that had opened up in its own budget.

As with the superintendent's unauthorized hirings, these developments would be grounds for criminal charges in the private sector.

Now, the final blow. As a result of the Woonsocket School Committee's gross, recidivist incompetence, Fitch reduced Woonsocket's bonds to junk status this afternoon.

An estimated $7.3 million deficit, about 7.6 percent of the city’s general fund, is projected for the fiscal 2012 school budget, following a deficit in the previous year. That reflects “deficiencies in internal fiscal controls,” Fitch said today in a statement. The company lowered Woonsocket’s rating to BB-, down from BBB-, the lowest investment grade.

Senator Tassoni has proposed a law (S2239) that would transfer all school department fiscal matters from school committees to city/town councils. I share Justin's caution about the bill and the potential that ulterior motives lurk for its passage. At the same time, the City on the Move would almost certainly be in better shape right now if such a Gut-The-School-Committee law had been passed, say, five years ago.

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Last one out, shut off the lights...oh wait, Woonsocket already did that to cut costs.

Posted by: JTR at March 9, 2012 12:38 PM
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