PVRS district deficit: The back story

  • Pioneer Valley Regional School. ANDY CASTILLO

Recorder Staff
Friday, June 29, 2018

NORTHFIELD — As the Pioneer Valley Regional School Committee continues to wrestle with its roughly $1 million deficit in the district’s bookkeeping, there are plenty of questions on how this happened and what can be done for the future.

Answers, however, remain elusive.

Count School Committee Chairwoman Pat Shearer as shocked when an emergency meeting had to be held to announce that auditors from the state Department of Revenue had discovered this deficit.

The deficit accumulated over the course of the 2017 fiscal year (the 2016-2017 school year) and the current 2018 fiscal year, which ends today, June 30.

“The majority of us did not have any idea until Mary Jane Handy came out from (the Department of Revenue) and spoke to us (in May). At that point, I became aware,” Shearer said. “I’m not sure if other people on the committee knew or not, but as chair I did not know.”

In retrospect, Shearer said, poor communication with former Superintendent Ruth Miller, who also served as the district’s business manager, had a strong hand in creating this situation.

Miller has since left her job with the district.

“We knew we weren’t hearing things,” Shearer said. “But when we asked for things,” they were told, “‘Oh, I’ll give them to you next time.’ And that information never came forth. … None of us are financial people. When we hire somebody to be a business manager, you expect that they will know how things work.”

The district’s deficit spending has basically been caused by overestimating revenue and underestimating potential expenses, said the district’s accountant, Tanya Gaylord, who is now a candidate for the business manager position.

“Basically, what happens is, you have a balanced budget — you have your revenues on one side that are equal to (about) $14,077,000 and change for (fiscal year) ’19, and your expense budget equals (the same),” Gaylord said. “When your revenue doesn’t come in where it’s expected, that creates a shortfall, because now you don’t have enough money to cover what you originally budgeted for expenses. … Even if they follow that budget to a T and don’t illegally overspend, we can still end up with a deficit at the end of (the year) if your revenues don’t come in where they were budgeted. At the end of the day, the deficit is simply your revenues minus your expenditures.”

The overestimation of revenue was largely due to lower enrollment, which leads to less financial aid from the state, Gaylord said. Estimates for local aid are determined in December and are based on the prior year’s numbers; but the real numbers for the upcoming year aren’t finalized until the end of June. Plus, town meetings, where the towns finalize their own financial obligation to the district for the year, are customarily held in May or early June.

“The timing for the system itself is almost broken,” Gaylord said.

Expenses were also higher in the 2017 and 2018 fiscal years than expected, mainly due to the district’s health and life insurance programs. The problem has been that the district budgeted only enough money for the number of employees that were already enrolled in the insurance program — but employees can enroll in the program at any point during the year. In the current 2018 fiscal year, the district budgeted for only the four employees that were enrolled at the beginning of the year. By the end of the year, nine more had enrolled.

“There has to be additional plans budgeted so that when new people come on, or staff changes, or someone’s husband loses his job and he now needs to come on the school’s insurance, we need to have the exposure for that,” Gaylord said.

In trying to address the deficit that had apparently been accumulating last year, Miller cut at least 10 employees from Pioneer Valley Regional School, Shearer said, but the School Committee doesn’t know exactly how many employees were cut.

“We never could get a straight answer,” she said.

Getting back on track

Over the last few weeks, the committee has had to make significant reductions in spending in the coming year. This has led to committee members investigating the possibility of closing one or both of the district’s two smaller elementary schools — Warwick Community School and Leyden’s Pearl Rhodes Elementary School.

The committee voted to borrow money and spend at a deficit through the coming school year, rather than make even more cuts on June 19. Legislation introduced by Reps. Paul Mark, D-Peru, and Susannah Whipps, I-Athol, will, if passed, allow the district to legally spend at a deficit while it gets its finances in order. The bill also suspends the district agreement’s requirements that elementary school students go to school in their home towns.

“It is what it is,” Shearer said. “We have to move on. We have new people and we’re going to make it work.”

Contact Max Marcus at mmarcus@recorder.com or 413-772-0261 ext. 261.