Warwick schools ended the fiscal year better than was projected last fall; by $1.2 million, bumping the overall surplus for the year to $2.9 million.
In a report distributed to the School Committee in November, the schools’ chief budget officer Anthony Ferrucci outlined a combination of increased revenues and reduced expenses accounting for the larger than expected surplus for the year ending June 31, 2012.
While the information was not secret, the fact the department finished the year with a significant surplus generally flew under the radar until the last couple of weeks.
The surplus has enabled the committee to revise the current budget by increasing salary costs by $519,199, retiree medical costs by $878,961, fringe benefits by $189,422 and Workers Compensation Insurance by $84,043. Additional changes were made in the areas of services for out-of-district tuition, supplies and materials and capital equipment and property of about $400,000 to increase the budget from the $157 million the committee adopted in August to $159.1 million.
None of the surplus will go toward renovations required to meet stricter fire code requirements in the wake of the Station Nightclub fire that happened 10 years ago Feb. 20. Those projects that include $535,000 for a new fire alarm system at Winman Junior High, $155,000 for asbestos abatement at Drum Rock, engineering fees of $250,000 and $3.35 million in code improvements to a number of schools total $4.3 million. They are to be paid for with bond funding from the Rhode Island Health and Educational Building Corporation.
Also, Ferrucci defended the district’s $4 million reserve with WB Health. WB manages the department’s health care claims that Ferrucci said average $20 million annually. The reserve helps cushion un-projected claims and maintain a balance that insulates from a sudden bump in rates.
Mayor Scott Avedisian has questioned the need for such a large reserve, arguing it has become a means for the department to bury funds that could otherwise be used to reduce dependence on tax revenues.
So, how did the department manage to close the fiscal year with almost a $3 million surplus?
As early as last April, Ferrucci forecast a surplus of $249,000. In a July 19 report, Ferrucci revised his projection to $1.7 million based on the fact that the department had undertaken a number of initiatives, all of which were not completed by the end of the fiscal year, thereby leaving unexpended funds. In addition, there were savings in the purchase of services and supplies. Some of those savings were offset by increased fringe benefit costs, but overall the amount totaled $1.7 million.
Then that amount climbed by $1.2 million when the books were closed for the year.
Medicaid Claiming revenues for the year, largely a factor of conservative estimates, were up $161,110; additional salary and fringe benefits estimated at $500,000 actually came in at $42,000; purchase services came in at $265,028 less than estimated and out-of-district tuition for special education, charter schools and other agencies came up with a $290,439 savings. And there was an $82,304 savings on school buses. Some of the surplus was offset by $133,436 in capital and equipment expenditures, but, overall, the surplus was up another $1.2 million.
“I’m happy to get to where we were last year,” Ferrucci said Monday.
He felt, with the carryover of the surplus to the current year, the department is OK. Going forward, he doesn’t see the windfall the department realized during the transition to contracted bus services for special education students.
Acting superintendent Richard D’Agostino observed that, with a budget of more than $155 million, it is virtually impossible for everything to work out to the penny. But, he added, it is better that the department be on the plus side of the ledger than facing red ink at the close of the fiscal year.
As a practice, the administration allows the department to retain its surpluses. The exception has been when the department runs a deficit, as occurred about six years ago. In that instance, the committee committed to refund the deficit that the city was required to cover from future surpluses should that occur. For the last four years, the department has run surpluses with the $2.9 million being one of the largest in recent history.