LYNN — School Business Administrator Kevin McHugh told the School Committee Thursday night that the city must provide an additional $900,000 to the district for Lynn to meet its net-school spending requirement for fiscal year 2022 (FY22).
McHugh said he became aware of the deficit over the holiday break, through discussions with the city’s Chief Financial Officer (CFO) Michael Bertino.
The major reason for the spending shortfall, McHugh said, was that the city’s health-insurance costs had decreased and were lower than what Bertino had anticipated for the current fiscal year.
“This is a fluid situation,” McHugh said. “We believe the city might be a little short.”
McHugh told the committee that Bertino will ask the City Council on Jan. 25 to transfer $900,000 from the city budget to the school-department budget; as a result, he said the district would be able to meet its net-school spending requirement.
Net-school spending is what each school district is required to spend on education each year. The Commonwealth’s school-finance statute, or Chapter 70, establishes an annual net-school spending requirement for each Massachusetts school district. Failure to comply with this requirement may result in non-approval of a municipality’s tax rate, enforcement action by the attorney general or a loss of state aid.
At the end of each fiscal year, the district is required to report its net-school expenditures, said McHugh. Major contributing expenses towards meeting that requirement are health care for staff, building maintenance costs, and custodial-related services. Since health-insurance costs came in at lower than Bertino projected, this put the city short of its requirement, McHugh said.
School Committee Vice Chair Donna Coppola said she wanted to ensure that the school district did not find itself in the same predicament as in past years, when the city failed to meet its spending requirement.
“We paid the price for that in quite a few budgets,” Coppola said. “It hurt our students and it hurt our staff as far as paying that back.”
Failure to meet net-school spending in fiscal years 2013, 2014 and 2015 resulted in penalties that were ultimately waived by former Gov. Deval Patrick, but was a contributing factor to the city’s failure to balance its budget in recent years without the help of a state loan.
McHugh and Mayor Jared Nicholson, who chairs the School Committee, assured Coppola and the rest of the committee that the City Council was likely to approve the budget transfer, which would ultimately satisfy the spending requirement.
“Nobody wants to get in that position again,” said McHugh.
“That’s why we’re addressing it now and staying on top of it,” added Nicholson.
McHugh said he would typically receive a letter from the state Department of Elementary and Secondary Education (DESE) in December when there is a deficiency. While such a letter would detail the exact deficiency, McHugh said Bertino’s projections have put the shortfall at $900,000.
“If we are short every year they add how much we are short to this year,” said McHugh. “The CFO is willing to go to the City Council on Jan. 25 and then appropriate $900,000 to the Lynn School Department ”
The school administration is also beginning to formulate a timeline for developing the FY23 budget. Superintendent of Schools Dr. Patrick Tutwiler said the district is awaiting the governor’s state-budget proposal, which will include Gov. Charlie Baker’s proposed aid allocation to the Lynn schools. He said he is also anticipating a potential amendment to the Student Opportunity Act, which could change how the district allocates funds to student services.
As always, Tutwiler said the goal is for the school budget to be completed by May. The budget has to be approved by June 30, as the next fiscal year begins on July 1.
