EDITORIAL

A no win situation for Warwick

Posted

We wish that we could say we were surprised to learn last week that the City Council is keeping the schools off the docket, essentially holding the fate of necessary, voter-approved capital projects for safe fire alarm systems and school roofs in the balance in what appears to be a heavy-handed bargaining tactic to attempt to get the schools to drop their lawsuit against the city and settle for less than the additional $4.9 million schools seek.

Unfortunately, in Warwick this is just par for the course. Instead of responsible cohesion between the schools and the part of government that approves funds for the schools, there are lawsuits. Instead of cooperation to reach an amiable solution, there is a political chess match with undertones of dishonesty and distrust.

It is unclear at this point exactly how this situation can come to an end that is anything but negative.

As outlined by Anthony Ferrucci, school finance director, in the news article that ran this past Thursday, delaying the release of bond funds that are already marked for crucial infrastructure projects intended to make long overdue safety improvements within our schools – utilizing bond money that was overwhelmingly approved by Warwick voters in November and approved by the city council to get it on the ballot, mind you – is akin to the city shooting itself in the foot.

Not only would critically important projects in our schools be delayed by at least a year, it will only end up costing the taxpayers even more. If capital projects aren’t completed in five years, the city loses its 40 percent reimbursement funding aid from the state for projects completed outside that time window. This means the city would have to eat potentially many millions of dollars if it wishes to complete the original scope of work outlined within the $40 million bond – significantly more money than a lawsuit would potentially cost.

The argument from City Council President Steve Merolla that the schools could utilize the offered $1.75 million from Mayor Joseph Solomon – an offer made last summer that, at the time, was advertised as an olive branch to cover the remaining principal and interest costs from a 2006 bond – in order to fund expenses for the new capital projects slated for the next two upcoming summers is disingenuous.

Firstly, the schools cannot pay for new capital projects through a random infusion of money from the city’s road paving budget. Even if they did, this could cause legal issues when it came time to get reimbursement from the state and they found that city’s approved bond money had not been used. Not only that, but the city council has on numerous occasions accused the school department of misusing its bond money. Would this wholly unorthodox method of avoiding releasing bond funds to pay for bond-funded capital projects not reek of hypocrisy?

Secondly, that $1.75 million has always been and continues to be a poor negotiating chip that is willingly ignorant of the gravity of the school’s financial situation. The schools continue to struggle with a roughly $5 million budget gap. All that money would do is cover one known encumbrance that the schools have. It does nothing to address cut custodians, out of district tuition that is unfunded or a $500,000 unfunded placeholder utilized to save sports from being cut – and to suggest otherwise is misleading.

Mr. Merolla has tried to paint the school department as playing politics with suspect information, pointing out how they walked away from that $1.75 million offer and how they are now seeking more through the lawsuit filed just before Christmas. However, one could make the same assessment of his statement that a $4.9 million pending lawsuit could have a negative effect on the city’s bond rating, leading to higher interest rates and too much risk for the city to release bond funds.

Mr. Merolla is also quite aware – and has spoken to great length – about the unfunded pension liability in the area of $100 million facing the city and the financial threat that this poses. He is also aware that the city’s rainy-day fund is reportedly much lower than was shown in the FY18 audit – although we don’t know exactly how much lower at this time.

Certainly, if the city turns out to have half as much in its reserve fund as previously advertised, like has been stated by the mayor, and if the city’s OPEB liability continues to grow at a rate of clear instability, then an approximately $5 million lawsuit – where the schools are by no means guaranteed to emerge victorious – is not likely to have been a significant factor if there is indeed a downgrade to Warwick’s bond rating looming.

Adding more complexity to the mess is that, if the mayor and the city council get what they want from the new school committee and the suit is dropped, it opens the door wide open for the Auditor General to come in and look at every single possible area for cost savings, since the schools can’t operate without a balanced budget. That could include examining recent collective bargaining agreements, specifically any pay increases held within.

There’s a classic rock and a hard place situation for new committee members who want to please both the council and the teachers’ union.

Once again, as we have seen all too many times in Warwick, the district’s students are the ones who will suffer from the inability of the adults in the room to negotiate in good faith. While we don’t profess to have all the answers, holding safety improvement projects hostage for mendacious reasons and refusing to show negotiable flexibility will not do anything to find a solution either.

Comments

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richard corrente

I've been following this painful situation for several years now and I have a few observations.

1. Anthony Ferrucci is not the problem. His job is to take whatever the School Committee decides and present it to the general public and the City Council in the most acceptable terms possible. We need to remember that Anthony doesn't create the data. He just reports it. Maybe he sugar coats it but that's part of his job.

2. This problem goes back years. The classic "rock-and-a-hard-place" was created by the decisions of past School Committees, not the current one.

3. The current School Committee hasn't been as involved in these negotiations as I feel they should. (maybe I'm not seeing it, as these discussions are understandably private).

4. If the matter goes to court, I can't possibly see the City losing.

What's the solution? Either the two sides communicate or they go to court. Either way, I feel the City will win. Merolla and the Council are only trying to protect the 80,000 taxpayers that are paying the tab. Good for Merolla. $165 Million PLUS another $40 million is a lot of taxpayers money. Maybe Warwick should take a lesson from former Mayor Joe Walsh and lock both sides in a room until they solve this!

Happy Valentines everyone.

Rick Corrente

The Taxpayers Mayor

That's just the way I see it.

Tuesday, February 5
DannyHall82

Richard can you please explain to me how past School Committees are at fault? 15-20 years ago this current situation was predicted. We needed to start closing schools 20 years ago....It was predicted by Former Chair Chris Friel and Mr. Cushman, the council and the teachers union fought it.

Tuesday, February 5
DannyHall82

Also that bond money was approved by the Voters of Warwick, the City has zero right to hold that money and to use the kids as a bargain tool. Now we have a committee who are in the pockets of the council but also are indebted to the teachers union....These people all campaigned that they are for the kids but yet they stay silence over this? Instead knees start knocking together and eventually cave.

Tuesday, February 5
richard corrente

Dear DannyHall,

You're right. I should have said "decades" instead of only "years".

Thanks for the correction.

Happy Valentines Danny and family.

Happy Valentines everyone.

Rick Corrente

The Taxpayers Mayor

Tuesday, February 5
Bob_Cushman

Thanks Danny. from 5 years Ago:

Providence Journal

By Robert Cushman

Posted Dec 10, 2013 at 12:01 AM

Tonight, the Warwick School Committee is slated to vote on a controversial proposal to close schools. With secondary schools operating at almost half their capacity and student population predicted to decline...

Tonight, the Warwick School Committee is slated to vote on a controversial proposal to close schools.

With secondary schools operating at almost half their capacity and student population predicted to decline further, a panel of stakeholders has recommended a consolidation plan that Supt. Richard D’Agostino estimates will save the district more than $4 million annually.

Besides the short-term emotional arguments against the plan by students, parents and teachers who really do not understand the long-term implications of rejecting it, one would hope the elected representatives on the School Committee and city leaders understand hy this is necessary. However, that doesn’t seem to be the case given the grandstanding antics of some officials in recent days.

Hopefully those distractions will be ignored. A decision should be made based on factual data, and an understanding of a trend in allocating tax dollars that has developed over the last decade in Warwick.

Since 2007, the local appropriation of new tax dollars to the city budget has increased 55 percent from $63.9 to $99.6 million. For schools, it increased 4.8 percent from $113.1 to $118.6 million. That translates to an 87 percent allocation of increased revenues to the city.

Sixty-four percent of local tax dollars supported schools six years ago. Today the ratio is 54.4 percent to schools and 45.6 to the city. According to the school finance director, a 65/35 or 60/40 split is more the norm.

Of every new local tax dollar spent in the city in the last decade, 52 cents has been allocated to retired employee benefits. Less than 6 cents remains for non-personnel expenditures.

The long-established practice, by which the city paid borrowing costs to maintain school buildings that it owns has ceased. Now, in what may be an unprecedented requirement in Rhode Island, Warwick schools are responsible for annual capital-improvement expenses paid out of their operating budget.

In 2006, voters approved referenda authorizing the city to borrow funds to finance city and school projects. The next year, all projects were suspended indefinitely because large liabilities threatened the city bond rating.

While city leaders have authorized $2 million in borrowing from that same bond fund to build a new fire station in Potowomut for public-safety reasons, they don’t seem to have a problem with school buildings that continue to deteriorate and fail to meet fire-safety standards.

As frequent critics of school spending, City Council President Donna Travis and Mayor Scott Avedisian, who have both served over 20 years in office, fail to recognize and accept their culpability for the unsustainable record growth in the size of the city budget.

Meanwhile, schools have operated on practically a net-zero budget increase since 2008 by streamlining operations through staff reductions, outsourcing transportation and closing elementary schools, saving millions of dollars annually.

Clearly, this School Committee should realize that no significant rise in revenue is going to flow from the city into schools. School consolidation will be the only means of investing savings back into the system.

It is pure hypocrisy for any city leader to criticize a proposal that would save the School Department millions in one breath and rail against any requested increase in the school budget. Come budget time in May, are city leaders prepared to increase the school budget by the millions required to keep all schools open and make the necessary repairs if consolidation is rejected? I doubt it.

Yet, how long can consolidation be the answer in providing the funds to meet long-term educational needs?

Without reform, all data indicate that city spending will continue to spiral out of control. For example, last year a plan was submitted to the state that will require $314 million in additional local tax dollars to be paid over 14 years to increase the funding ratio of just one pension plan from 22 to just 25 percent. The plan’s accrued liability will be reduced by only $4.6 million while its unfunded liability will remain well over $200 million; the estimated cost to build a brand new, state-of-the-art city-wide consolidated high school, $120 million.

Warwick needs a sustainable vision that will require tens of millions of new local tax dollars to be invested in the school system. That will require a long-term plan to control spiraling city-employee retirement benefits. Unfortunately, current city leaders have shown little desire to propose these reforms.

Clearly, all facts point to the conclusion that, without consolidation now, educational services in Warwick will suffer greatly.

Hopefully, the School Committee will realize that fact and unanimously approve the proposed consolidation plan.

Robert Cushman (cushmanr@cox.net), is a former Warwick city councilman and School Committee chairman.

Monday, February 11
Bob_Cushman

2006 Call to close schools, cut spending:

http://warwickonline.com/stories/op-ed-prospective-on-the-warwick-school-department,25042?

Monday, February 11
Patient Man

Mr. Cushman is clear. There was no warning or way of knowing that a financial disaster awaited our schools or town.

Reminds me of my Environmental Problems class in college back in the late 80's.

My professor put a satellite photo up of New Orleans and explained that you couldn't put a major city between a major tidal body of water, a major river and a large lake and not to expect problems. Oh, and to build much of that city below sea level. She was clear, New Orleans was a ticking time bomb.

After the storm politicians repeatedly said there was no way to see this coming. There was. Every year the Army Corps of Engineers would request X amount of money to repair infrastructure. Every year, Administrations from both parties would give them 5-10% of what they requested. This is the problem when politicians ignore the advice of material experts for political expediency. This is on Avedisian, the school committee, the city council, the teachers union and the parents that selfishly advocated for their interests instead of the entire community.

If you're a member of one of those constituencies and you weren't advocating aside Mr. Cushman you were a part of this problem. Shame on you

Monday, February 11