By Melissa Fales
WARE – The School Committee and the Board of Selectmen held a joint meeting March 14 to discuss the $937,001 the town owes the school district after mistakenly including health insurance costs for retired teachers in its net school spending figures. This amount includes the $270,519 the town will need to appropriate to the schools in before the end of the fiscal year in order to bring the net school spending up to 95 percent and avoid a penalty reduction in its Chapter 70 state aid. Department of Elementary and Secondary Education School Finance Administrator Roger Hatch was at the meeting. “We have not had to institute a penalty for districts that fall short by more than five percent since 2003,” said Hatch.
According to Hatch, Ware was one of 28 districts across the state that failed to meet their net school spending in fy 2011, fy 2012 or both. When at least 95 percent of net school funding is spent, five percent or less may be carried forward into the next year. The town of Ware carried $593,204 into fy 2012 from fy 2011. However, Ware currently has a $937,001 shortfall, which is 7.03 percent of the net school spending total. In order to avoid the penalty, the town must pay $270,519, or the 2.03 percent difference, by the end of the fiscal year.
School Committee Chair Christopher Desjardins asked Hatch if the town’s repayment plan could be spread out over several years. Hatch said he thought spreading the payment out over at least two years was an option although it’s never been done before. “We at the state recognize that this is a very difficult fiscal year,” said Hatch. There is no established time frame for repayment, no way to waive the penalty, and no appeal process.
Selectman William R. Braman said he hoped the state understood that the town had intended to meet, and believed it had met, its net school spending requirement, adding that the town and the school had been in agreement on the funding and on the way it was reported since the Education Reform Act of 1993. Braman also noted that the state had not caught the error for many years. “Do we need to correct it? Yes we do,” said Braman, however, he said he didn’t believe a penalty was appropriate in this situation.
Braman noted the town was already struggling with a tight budget and expressed concern about the drastic financial measures the town might have to make in order to pay what it owes. “What we need is a thoughtful resolution to this,” said Braman. “We’re talking about people’s jobs and our ability to provide services…”
Hatch said it was at his suggestion that the auditors who review the end-of-year reports were specifically instructed to focus on net school spending for the first time in 2010. He said he instituted this change of instruction because he suspected there were issues. “For some reason, many communities do a very bad job at reporting it to us,” Hatch said. “It’s very difficult to get a completely accurate report.” Hatch said the town had been notified via letter every year that it did not meet its net school spending requirement. “This didn’t come out of the blue,” he said. “Well for us it has,” said Selectman Richard A. Norton. The selectmen said they had never received a letter about the minimum school spending requirement not being met.
Braman questioned why the town and district were notified so late in the budget year. “If this happened at the beginning of the year it would have given us a more reasonable time to manage this at a consistent level rather than panic mode,” he said.
Hatch acknowledged that the notice came late in the budget year. However, he said the end of the year reports are due at the end of September and the state did not receive Ware’s report until December. District business consultant Andy Paquette of the Management Solution said he had filed a request for an extension. He said the delay was due to some technical issues.
Hatch admitted it was not atypical for reports to be late.
Town Manager Stuart Beckley said the town intended to bring the $270,519 appropriation to the voters at town meeting in order to bring the net school spending for fy 2012 up to 95 percent.
Beckley said he had submitted a draft budget to the Finance Committee for fy2013 which includes the first installment of repayment at $50,000, although Beckley wasn’t confident that that amount will survive the budget process. “It will take time,” he said and will lead to “some devastating cuts to the town budget.” Beckley noted that the need to repay the school district is not the sole reason that severe budget cuts need to be made. “There is a structural deficit of equal size that has to be addressed,” he said “To be hit with both in one year creates a tough situation for us.” Moving forward, Beckley said when one-time funds become available, such as the sale of town property, he would put it towards the amount owed the district.
Beckley said the town would meet the 95 percent minimum funding process in the future, carrying over the five percent as needed. Desjardins asked if that could be rolled over indefinitely or if it would need to be paid at some point. Hatch said legally that five percent could be carried over indefinitely. “You have a moral obligation to try to get closer and closer to that target,” he said.
Beckley said the retired teachers health insurance costs will be incorporated into the town’s budget moving forward, approximately $466,000 for fy 2013. “It’s going to bankrupt the town,” said Norton.
Desjardins said as citizens of Ware, the committee members were looking to the selectmen for a plan to get the money. “I haven’t heard any plans,” he said. Board of Selectmen Chair Nancy J. Talbot said she understood that all residents are concerned about this. She said the board wanted to wait to meet with the committee and Hatch in order to fully comprehend the situation before formulating any plans. “With our leadership, we’re going to work to see how best we can meet this amount…without devastating the rest of the community.” Desjardins suggested raising money instead of slashing costs. He asked if there were any surplus property the town could sell. He also alluded to the situation with Kanzaki Specialty Papers and the cost of treating their wastewater. “We’ve been afraid to say anything for fear they’re going to pack up and walk away,” he said. “Perhaps we need to get a little tougher.” Talbot responded that the real estate market is slow. She also stated that the results of a study between the town and Kanzaki will be available soon and that hopefully a mutually beneficial agreement between the two parties will be reached.
Selectman John A. Desmond suggested the selectmen and committee petition a special act of legislation would forgive the $800,000. “That would go a long way in resolving the issue,” he said. Desjardins said that would be saving any money, but rather like taking money out of the students’ pockets.
Sawabi said since issue is between the state and the town, the the committee would follow the selectmen’s leadership. He called for the two groups to present a unified front before the voters at town meeting. “We need to send a unified message, he said.