The Warwick School Committee voted unanimously on Tuesday night to reduce their anticipated contribution to the school’s locally-administered pension fund from around $1.8 million to $1 million for the upcoming budget year FY20, resulting in close to $800,000 in savings for the department.
As a result, when the school department presents their budget to the Warwick City Council this upcoming Tuesday, they will be asking for a contribution from the city totaling $7,753,255 – compared to the original ask of around $8.5 million when their budget was passed by the committee in April.
“I really don't see any other way around this. We're still going to the city for seven and a half [million], which is...” said committee member David Testa, letting his comment trail off, indicative of skepticism that the schools will receive that amount. The schools are projected to receive an approximately $500,000 increase over last year’s funding in Mayor Joseph Solomon’s proposed budget.
The call to reduce the contribution to the pension fund comes in light of controversy surrounding a recent binding mediation award brokered by attorney Vincent Ragosta, which concluded that the schools would have to fund their existing budget deficit of around $4 million with funds from the same pension account, which had received contributions above the maximum Annual Recommended Contribution (ARC), as indicated by their actuary, for at least the past few years.
As of July 1, 2018, the pension fund sat at about 93 percent funded, according to actuarial reports. The maximum ARC for this upcoming budget, as put forth by the actuary USI Consulting Group, was $1.24 million, while the minimum was set at $1 million. The schools had budgeted $1.8 million.
School finance director Anthony Ferrucci, citing correspondence from USI regarding upcoming developments in how pension plans will be changing in the coming year due to an alteration of “mortality charts” – which reflect how long people are expected to live and serve as a basis for how long a pension must be paid out to a retiree – cautioned that next year’s ARC might be as high as $1.9 million because of these changes.
“They were advising us that we shouldn't be surprised to see that our program, even though it doesn't change significantly, will have an unfunded liability increase of some significance,” Ferrucci said.
City Council President Steve Merolla, who was highly critical of the school’s contributions to the pension fund in light of the financial issues they encountered throughout this school year, had mixed emotions regarding the news.
“Am I happy they did that? Yeah,” he said on Tuesday in regards to the reduction in contribution. “Am I pleased they made those overcontributions and misrepresentations over the last few years to the city council? No, I’m not.” He added that the students “suffered” as a result of the school department’s misplaced priorities of funding their pensions while they claimed to be unable to afford second shift custodians and various school programming.
“It's kind of hard for me to look at that and imagine what the kids were going through last year while they were representing that they didn't have enough money,” he said. “It’s unfortunate that it had to get to this point.”
As a result of the savings, the school committee was able to address an issue of concern that had cropped up among teachers and parents regarding the district cutting funding to allow seniors access to summer school so they can graduate without coming back for an additional year to make up credits.
For a cost of $20,000 the schools will be able to implement a “bare bones” program, as described by director of secondary education Bob Littlefield, where students will be supervised as they work through an online summer school curriculum. The program will only be for senior students.
School committee members were unanimous in their support to bring back summer school.
“I was visiting Toll Gate last week and the number one concern I found there was teachers were concerned about summer school, especially regarding seniors,” said treasurer Nathan Cornell.
“Unfortunately, with the money constraints that we're having, I hate to do it [cut the pension contribution], but I really do think we need to bring summer school back and be very careful about how much we put in,” said committee Vice Chair Judy Cobden. “As much as it's the best funded pension, I think we have to cut back a little bit.”