The School Committee has approved a recommended revised budget projecting $163,185,410 in revenues and $163,127,659 in expenses, thereby achieving a $57,751 surplus for the current fiscal year (FY 2015). The budget was approved by a 4-0 vote during the School Committee meeting on March 18. Committee member Terri Medeiros was not present.

That’s a stark contrast from the potential $546,607 deficit for FY 2015 projected at a School Committee meeting on Dec. 9, 2014 by Chief Budget Officer Anthony Ferrucci.

Ferrucci said transitioning from a budget deficit to a surplus was not due to the School Committee making any budget cuts, but rather through achieving savings and benefiting from additional revenues.

“The success [of the surplus] was a factor of extra revenue and on the building improvement side, we had budgeted the [Warwick] Vets roof and paid a portion off last year because it was started earlier than July 1, so we’re cutting that [cost] out of this year’s budget and moving it to last year’s,” Ferrucci said during a phone interview Tuesday.

In December, revenues were projected at $995,960 and expenses were projected at $1,502,297, largely due to the School Committee’s approval of a one-year contract extension with the Warwick Teachers Union, which included raises, at a cost of $795,650. Also contributing to expenses was the fact that the school department did not achieve breakage, or the cost savings for 20 layoffs and replacing 20 retiring teachers with less senior teachers. Breakage was budgeted at $3 million, but the department only achieved savings of $2,133,119 (29 percent short of budget), thereby needing to make up $866,881.

As part of his December budget projections, Ferrucci said there were two non-salary items also impacting expenses, including the reduction of $219,000 based on prior payments for the Vets roof and the addition of $75,000 to continue supporting the old administrative software system.

“It was expected that when the new administrative software package went online, the need to keep supporting the old system would terminate,” Ferrucci said in December. “With the transition taking longer than anticipated, the old system support is needed for the year and is unbudgeted at this time.”

With approval of the teacher raises, Ferrucci said he expected he would need to increase the salary line item by approximately $1.5 million based on who was employed in November and would remain employed through the end of the school year.

However, Ferrucci said he was able to realize savings and reduce that increase to approximately $1.4 million due to the unexpected retirement of the purchasing manager and not hiring a technology director.

As part of his March budget projections, Ferrucci said the salary line item increase has been reduced to $1,413,098 due to $76,317 in savings from vacancies not being filled during the past three months as well as a reduction of $173,117 due to a calculation error in which that amount was moved out of the salary line item and into the Department Heads line item. Factoring in an additional $99,239 in other minor adjustments to salary lines and $75,892 in fringe benefit savings brings total salary cost projections to $1,436,445.

Despite the need for an $88,243 increase in administrative support to cover the contract for the long-term facilities planning consultant ($150,000 was set aside by the School Committee, which approved a $238,243 contract with Symms, Maini, McKee & Associates) and $14,808 in other minor adjustments, Ferrucci projects a $515,542 total reduction in non-salary/fringe accounts.

Ferrucci said the correction and adjustment for the recording of the Vets roof payments, resulting in a $493,593 total reduction in the building improvements line item, was the largest item impacting the $581,394 variance in expenses between what was projected on Nov. 18, 2014 and what was included as part of the recommended revised budget approved on March 18.

“With the transition to a new accounting system and the departure of the school department’s controller on Aug. 21, 2014 and the arrival of the new controller on Sept. 11, 2014, the bookkeeping between the bond account and the local budget was impacted in the projections,” he said. “To date, all bills have been paid and processed, so we can now align the budget properly.”

Savings were also achieved through reductions in tuition payments – a $75,000 reduction due to declining student participation at state charter schools and a $50,000 reduction due to declining student participation in other state career and tech centers.

“We had been losing 10 to 12 students a year to career and tech centers and charter schools, but we’re down this year, saving us $125,000,” Ferrucci said, adding it can be difficult to predict since tuition bills aren’t available in November, as they don’t come in until later in the year.

Therefore, total expenditures are projected to increase by $920,903.

On the revenue side, the $955,690 projected increase in December was a result of a $609,628 increase in the re-appropriated fund balance, a $146,062 increase in housing aid support, and a $200,000 increase in Medicaid revenue.

During a School Committee meeting on Nov. 18, 2014, Ferrucci reported a total surplus of $3,944,128 for FY 2014, which would be available to be used in this year’s FY 2015 budget. Those numbers have since been audited.

“With the audit’s conclusion on March 12, we have confirmed surplus of $3,973,931,” Ferrucci said, resulting in a $29,802 variance.

Based on the FY 2014 actual audit results, the re-appropriated fund balance is projected to increase by $639,431; based on what has been received so far, housing aid support is projected to increase by $107,753; and based on prior year actual audit results, continuing in FY 2015, Medicaid revenue is projected to increase by $211,072. Adding in a projected $20,398 increase in other miscellaneous revenue accounts brings the total projected revenue increase to $978,654.

With revenues projected to increase by $978,654 and expenditures projected to increase by $920,903, the $57,751 slight surplus is achieved.

Ferrucci said the potential exists for additional surplus funds to be achieved by the end of the year.

“There appears to be adequate funding to support the budget managers through the remaining school year while positioning us for the potential to see a greater surplus than what has been projected,” he said. “Based on prior year experience, we may see an additional surplus of $200,000 to $300,000 by the end of the year.”

Ferrucci explained there are currently $7 million in encumbrances, which are the current approved purchase orders (PO) in vendors’ possession by budget managers. A PO is required for anything exceeding $500 and he said the department averages 50 to 70 per week.

“In past years, unused POs have been returned, thus contributing to surplus at the end of the year,” he said. “At this time of year, we consider these to be spent.”

Ferrucci said there is $6,066,448 in projected expenses under budget managers’ control, which accounts for money budget managers plan to spend throughout the remainder of the school year. However, whatever is not spent will be applied toward the surplus.

Of this amount, Ferrucci said $1,126,500 is earmarked for debt and interest payment, with the balance under budget managers’ control that may provide for additional surplus by the end of the year.

Following Ferrucci’s presentation, School Committee Chairwoman Jennifer Ahearn expressed concern with the number of budget transfers from budget managers.

“When I see a lot of transfers, it tells me we’re not identifying proper need when crafting the initial budget,” she said.

Ferrucci countered.

“Budgets should be scrutinized and challenged, but once they are set, we should allow the managers the ability to properly manage their budgets,” he said.