1. East Greenwich School District
Independent Budget Analysis
Gayle Corrigan
Linda Dykeman
May 15, 2017

2. Assignment
Determine the financial status of the East Greenwich Public Schools:
Estimate surplus or deficit of Fiscal Year 2017 budget
Weigh in on the proposed Fiscal Year 2018 budget
Recommend improvements

3. Methodology Review source documents Interviews school personnel
Payroll report
Collective bargaining agreements and other contracts
Tuition and transportation invoices
Interviews school personnel
Dr. Mercurio, Superintendent
Finance, special education, and facility personnel
Discussions with school partners
West Bay Community Health (self-insured health care provider)
Baxter Dansereau & Associates (auditor)

4. Fiscal Year 2017 Estimated Budgeted Revenues
Description
FY17 Budget
FY17 Estimate
Variance +/-
Local Revenue
34,018,906
State Aid
2,748,841
Reappropriated Fund Balance
525,000
Tuition
142,000
94,970
-47,030
Other Revenue Sources
386,296
414,440
28,144
Miscellaneous Revenue* -
529,603
Total Revenues
37,821,043
38,331,760
$ ,717
*Miscellaneous Revenue includes a one-time National Grid refund ($261k) and a one-time RIDE Wireless Initiative payment ($250k).

5. Fiscal Year 2017 Estimated Expenses
Description
FY17 Budget
FY17 Estimate
Variance +/-
Salaries
22,231,969
22,646,731
-414,762
Benefits
7,840,113
7,927,441
-87,328
Purchased Professional & Technical Services
1,575,600
1,640,785
-65,185
Purcased Property Services
660,414
601,463
58,951
Other Purchased Services
3,256,620
3,787,770
-531,150
Supplies
1,314,599
1,148,229
166,370
Property
887,473
667,479
219,994
Micellaneous Expense
54,255
54,352
-97
Total Expenses
37,821,043
38,474,251
$ -653,208
SPED

6. Fiscal Year 2017 Deficits Description FY17 Budget FY17 Estimate
FY 17 GAAP
FY 17 Structure
Local Revenue
34,018,906
State Aid
2,748,841
Reappropriated Fund Balance
525,000
Tuition
142,000
94,970
Other Revenue Sources
386,296
414,440
Miscellaneous Revenue -
529,603
Total Revenues
37,821,043
38,331,760
37,806,760
37,277,157
-1,054,603 
Salaries
22,231,969
22,646,731
Benefits
7,840,113
7,927,441
Purchased Prof & Tech Services
1,575,600
1,640,785
Purcased Property Services
660,414
601,463
Other Purchased Services
3,256,620
3,787,770
Supplies
1,314,599
1,148,229
Property
887,473
667,479
Micellaneous Expense
54,255
54,352
Total Expenses
38,474,251
Total Deficit
-142,491
-667,491
-1,197,094

7. Projected Fiscal Year 2017 Results
Type of Deficit
Amount of Deficit
Budgetary Deficit
-$142,291
GAAP Deficit
-$667,491
Emerging Structural Deficit
-$1,197,094

8. Use of Fund Balances to Offset Deficit
Description
Cummulative
West Bay *
Capital**
Technology
Ending Fund Balance 2016
718,264
1,549,443
959,027
134,758
Estimated 2017 GAAP Deficit
-667,491
Reappropriate for 2017
-453,349
-184,142
-30,000
Ending Fund Balance 2017
264,915
104,758
Amounts Available for 2018
$ ,673
25,000
*West Bay Community Health’s Benefits Project Agreement technically allows $513,600 withdrawal for but doing so would result in a recalculation of health care premiums to increase the reserves to a three-month recommended minimum. A fiscally prudent amount would be $25,000 from the dental fund.
**The district’s capital fund is for one-time capital expenditures. To use these monies to offset a deficit would require the school to change its fund policies.

9. Fiscal Year 2018 Estimated Fiscal Deficits
Description
FY18 Budget
FY18 Estimate
Variance +/-
FY 18 GAAP
Local Revenue
35,379,970
34,018,906
-1,361,064
State Aid
2,658,616
2,649,616
-9,000
Reappropriated Fund Balance
919,955
394,673
-525,282
Tuition
137,000
94,970
-42,030
Other Revenues
550,934
Total Revenues
39,646,475
37,709,099
-1,937,376
37,314,426
-2,332,049
Salaries
23,218,118
23,367,375
-149,257
Benefits
8,191,657
Purchased Prof & Tech Services
1,823,001
Purcased Property Services
538,294
Other Purchased Services
3,725,582
Supplies
1,284,109
Property
812,832
Micellaneous Expense
52,883
Total Expenses
39,795,733
Total Deficit
-2,086,634
-2,481,307

10. Recognizing the emerging structural deficit
Relying on one-time revenue sources
Raiding general fund reserve balances
Creating a deferred maintenance backlog
Scaling back programs such as sports and arts as one-time solutions
Concluding agreements without understanding fiscal implications
Taking an annual deficit approach to solving a structural problem
Over-relying on declining revenue base to meet increasing needs of growing populations

11. Eliminating the emerging structural deficit requires implementing structural solutions
School and Town considered as a whole
Broad and structural solutions
True consolidations of administrative services
Revenue strategies (e.g., increased Medicaid billing)
Service delivery model changes (e.g., special education)
Expenditure controls (e.g., contract reviews)
Shifts and service reductions (e.g., class and transportation scheduling)
5-year School and Town Plan

12. A Tale of Two Cities Central Falls, RI - circa 1987
Emerging school budget structural deficit
1992 state takeover schools and CBAs signed reducing police and fire years to serve to receive pension
8/1/2011 file for bankruptcy with a $6.2m structural deficit
East Greenwich, RI – 2017
Emerging school budget structural deficit …

13. 2006 Enrollment : School Appropriation : $25,706, Enrollment : School Appropriation : $34,018,906 Change: 75 Students Change: $8,312,036 Residential and Commercial Property Tax Rate has Increased 68% since 2006 EG Property Tax Rate is: 30% Higher than Barrington, 50% Higher than Portsmouth, 53% Higher than S. Kingstown, 35% Higher than Smithfield, 219% Higher than Westerly On April 4th, School Committee Approves Budget of $35 Million. On May 15th, School Committee is Presenting a Budget of $39 Million May 15, 2014 Fiscal Impact Statement for the Certified Teachers Contract States a 3 Year NET FISCAL IMPACT of $1,671,589. True Fiscal Impact of this Contract was $3,842, Teachers Contract Fiscal Impact Statement Dated April 25, 2017 states a 3 Year Fiscal Impact of $1,266,067. True Fiscal Impact of this Contract is Approximately $2.8 Million New Contract Awards over $3.4 Million in Salary and Pension Benefits, but does not include the hiring of a much needed Director of Curriculum.

14. Moving Forward
Recommending Expansion of Providence Analytics charge to look at the Town Budget
Work strategically to eliminate the School Department’s Structural Deficit, focusing on a corrective action plan