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Julia Steiny: Blackstone Valley School’s Nosedive is a Cautionary Tale

Thursday, March 29, 2012

 

Within the next few weeks, the Woonsocket School Department -- a school system just over the border in RI -- will run out of cash entirely. They have no clue how they’ll make payroll. They’re frantically working to save themselves.

Schools will stay open, if only because Rhode Island law mandates public-school instruction for at least 180 days.

Moody’s junked the City’s bonds recently, so conventional borrowing is probably not a solution. And drowning in its own red ink, the State couldn’t bail out a dinghy.

And while it’s cold comfort, Woonsocket is not alone. A quick internet search turned up similarly dire cash-flow problems in Chester Upland and York in Pennsylvania, Utica, New York, and Highland Park, Michigan.

Cautionary Details

Still, Woonsocket’s tale offers some cautionary details.

The immediate facts are these: on November 21st, 2011, the schools’ business manager of the last few years told the School Committee that the district had a $1.2 million surplus.

On December 5th, she said: oops, actually there was a $2.7 million deficit.

Freaked, the School Committee brought back a retired Woonsocket business manager to dig through the financial rubble. This manager found an even bigger hole of about $7.3 million, for a total deficit of $10 million.

Hmmm. So how’d the City slip into this seemingly miraculous nosedive?

If you squint, Woonsocket is a pretty old mill town, along the mighty Blackstone River, that once powered America’s Industrial Revolution. There are lovely historic neighborhoods of people who mostly send their kids to private schools.

With your eyes back in focus, the downtown is shabby and half-boarded up. Woonsocket has the third-lowest median family income in the state. The lowest is already-bankrupt Central Falls.

For much of her tenure ending in 2009, the 7-term, ex-Mayor Susan Menard delivered on her promise not to raise taxes. Rhode Island is a super-high-tax state, so this was much appreciated. The headquarters of the big drugstore chain CVS was expanding in her backyard, along with other blossoms of economic development. So increasing revenues worked in her favor.

But she also kept taxes down by cutting substantially among her city departments, including fire and police.

And for the decade ending in the mid-2000s, she level-funded the School Department, despite its growing expenses. School employees accepted contract concessions including a 20 percent co-pay on their medical insurance and what is considered in public-employee circles a massive deductible, $500.

Woonsocket’s per-pupil spending is 5th from the lowest. This is a bit of a feat when fully 21 percent of its student population need special education – the State average is 16 percent.

“We’ve Tried to be as Lean as Possible”

Two years ago, the City Council hired auditors to sharpen their scalpels and tackle the School Department budget. But they reported finding little fat. Middle-school sports were already gone, so they offered up guidance counselors, school nurses and other student supports. But even the auditors, born fiscal conservatives, recommended the City reinstate all-day kindergarten. Not that they did.

Once a School Committee member and now President of the City Council, John Ward says “We’ve tried to be as lean as possible while serving our citizens and students.”

Then the recession hit. In 2009, then-Governor Donald Carcieri phased out general revenue sharing, which put Woonsocket in a serious financial bind. Since then, the City has raised taxes 29 percent.

Also in 2009, Rhode Island became the last state in the nation to get a funding formula, a law designed to govern the equitable distribution of the state’s allocation of aid to education. On paper Woonsocket was a “winner” district, meaning they are now owed a significantly larger share of state education aid. But to ease the pain of the “loser” districts, the formula will be phased in for 7 years. We all could be dead by then.

Ward feels that it was then, in 2009, that the School Committee made an understandable, but fatal mistake. Using a head-hunter, they hired a new business manager on the cheap. She had the right credentials, but was totally green, with no experience of running a business office of her own before.

Simultaneously – penny wise; pound foolish – they cut the accounting manager who entered the data for the manager. The newbie could do both jobs, no?

Well, no.

Ward says, “They chose to cut expenses to the point of slicing their own artery.”

The hapless, soon-to-be-ousted business manager was definitely not up to the job. But her biggest mistake was not realizing that the job could not be done. She’d accepted a set-up for failure.

Which eventually produced the seemingly-sudden $10 million deficit.

Woonsocket’s officials have turned to the State for help, of course. They just push back. And the City is asking concessions from the public-employee retirees, reminding them that negotiated concessions would probably be a lot less painful than what they’d get from a bankruptcy Receiver.

In any case, the City has all of a few weeks to figure out how to keep from drowning. Ward feels as though they being punished for being lean.

However the story plays out in Woonsocket, surely they’ll be getting more cash-strapped company. This will be hard to watch. Good luck to them all.

Julia Steiny is a freelance columnist whose work also regularly appears at EducationNews.org. She is the founding director of the Youth Restoration Project, a restorative-practices initiative, currently building a demonstration project in Central Falls, Rhode Island. She consults for schools and government initiatives, including regular work for The Providence Plan for whom she analyzes data. For more detail, see juliasteiny.com or contact her at [email protected]

 

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