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WOONSOCKET â€” In the end, it probably wasn't a surprise to some city observers that an ongoing audit of city finances in 2011 would end up reporting a $2.7 million deficit for fiscal 2011.
The auditing firm, Braver PC, had been working on the School Department's final numbers for fiscal year 2011 last week and indicated it would only have a preliminary finding on Monday, one day prior to inauguration of city officials to the new term of office Tuesday night.
The bad news that the School Department was found to have overspent its $59 million appropriation for 2010-2011 by $2.7 million came during the City Council's final meeting before the new term and prompted City Council President John F. Ward to call a special meeting with school officials and the auditors Thursday evening to air the auditor's finding.
Mayor Leo T. Fontaine and City Finance Director Thomas M. Bruce III presented the council with a letter from Braver principal Robert J. Civetti outlining the preliminary findings of his company's review of city spending in fiscal 2011.
â€śClearly this is not something that we were pleased to find and I think there are some very difficlut question that need to be asked at this point in time,â€ť Fontaine said of the company's finding.
â€śI think we all went into this process understanding the severity and importance of balancing our budgets,â€ť Fontaine said while noting his administration's effort to correct past city deficits with a $12 million deficit reduction bond supported by the state Department of Revenues as a one-time correction to the city's fiscal problems.
Avoiding future deficits was expected to be a key component in restoring the city's lowered bonding ratings and restoring a mandated level of general fund surplus under the city's turnaround efforts.
â€śUnfortunately it has become a very serious matter us,â€ť Fontaine said while pointing to the school deficit as requiring â€śimportant discussionsâ€ť with school officials and representatives of the state Department of Revenue.
The new fiscal problems could in fact trigger a state effort to put the city under the direction of a special master for fiscal affairs as was recently done with the City of East Providence over its school deficit, according to Bruce.
Ward advised school officials to gather information on what went wrong in the department's budget plan so a full discussion of what must be done about the problem could be conducted during the joint meeting on Thursday.
In some manner, he said, the school department either counted on revenues that did not materialize during the course of the fiscal year, overspent its cost estimates, or did not receive anticipated grant funding, he said.
â€śThere are pieces to this puzzle which all fit together,â€ť Ward said of the opportunity to breakdown the causes of the deficit.
Ward predicted there will be criticism of the school department as news of the deficit circulates in the city but asked that a calmer view of the problem be taken as city officials sit to discuss it on Thursday.
â€śWe need to know what must be done to fix this and make it work,â€ť he said. â€śWe will find a way to make it work because we have to,â€ť he said.
In his letter, Civetti said initial findings point to a $435,500 surplus in municipal side spending that acknowledges the city must exclude $1 million in host fee revenue it did not actually collect during the fiscal year due to ongoing negotiations.
That surplus, however, was countered by the $2,715,600 deficit the auditors tallied during a review of school spending Civetti said is 98 percent complete. There is a question remaining over the use of $640,000 in grant revenue that could lower the overall school deficit but Civetti said he is still awaiting supportive information on that amount.
Civetti said the audit and final review of the School Department's fiscal 2011 financial statements should be completed by Friday, Dec. 9. â€śOnce the final review is completed, I will provide you with an update of the financial results,â€ť Civetti said.
School Committee Chairman Marc Dubois, who joins the City Council with inauguration on Tuesday, said he was â€śshockedâ€ť by the auditor's deficit projection.
â€śWe were told at a committee meeting at the end of the fiscal year that we would probably finish the year with a small surplus,â€ť he said.
Dubois said he planned to spend his last day as a member of the School Committee exploring what happened with that predication and what can be done about it now.
School Committeewoman Anita McGuire-Forcier said she was â€śembarassedâ€ť to hear the school department did not have a balanced budget for 2011. The city had taken the School Department to court over its budget early on in the fiscal year and won a decision requiring school officials to cut the budget to available revenues.
That step was reported to have been taken, Forcier said, and she added former Superintendent Robert Gerardi and School Department Business Manager Stacey Busey both indicated the budget had been balanced to the court's figure of $59 million.
As the budget closed, Forcier said she was again told the budget was correct. â€śWe were told we had a slight surplus and now we find out after the election the budget is not balanced,â€ť she said.
Forcier said she wants to know if the school department is now in contempt of court as a result of the deficit and also wants to know what will be done to cover the shortfall. â€śIt's not going to be good for the children,â€ť she said.
George King, a city resident who made an unsuccessful bid for School Committee in the recent election, listened to the news of a new deficit in school spending Monday night and said it proved a prediction he had made in his campaign.
â€śI said the school department says it has a surplus but that surplus will turn into a deficit after the election,â€ť he said. â€śIt came to be true,â€ť King added.