Blueprint : Commission Suggests Stronger Spending Controls, Mayor Becomes a Voting Member of School Committee

Though it was the City that took the heat, in particular Mayor Carlo DeMaria, for the School Department’s budget meltdown in 2018, a Blue Ribbon Commission that has been looking into Everett’s school finances for the past 18 months determined that it was the School Department that created the problems by overspending significantly after their budget had been approved.

In early 2018, the School Department suddenly revealed they were as much as $7 million in deficit – that coming after the City had provided $2 million already the previous summer as a supplemental expenditure. It culminated in a rocky and raucous meeting at City Hall in which former Supt. Fred Foresteire and a long line of parents and school staff/teachers sounded off against the hesitation of City officials and Mayor DeMaria to unlock more funding without any controls.

It turns out that skepticism by City officials was warranted.

The Blue Ribbon Commission is set to unveil their recommendations publicly at a meeting tonight (Sept. 4) in City Hall with the School Committee and City Council. However, the Independent has learned that the report has nine recommendations, and that it determines the School Department caused the problem by hiring 97 employees without the proper funding – along with structural educational funding issues at the state that have plagued the district for the past four years.

“A significant contributing factor to the School Department’s financial problem in fiscal 2018 was the addition of 97 employees to its payroll without first assuring that sufficient funds were available to support those positions,” read the Commission’s report.

A key piece of the problem was also former Supt. Fred Foresteire, whose management style was identified as one in which few felt they couldn’t say ‘no’ to him when making risky budgetary decisions.

“Supt. Foresteire’s long tenure as head of the School Department and his administrative skills combined to make him a commanding force in the School Department and the City of Everett,” read the report. “He also showed that he was willing to use his influence to gain an educational objective he wished to achieve and associates were reluctant to say no to him. This resulted in the hiring of 97 positions in fiscal year 2018 that were not budgeted in order to, in the superintendent’s words, ‘see what would happen.’ As such, Supt. Foresteire and his management style were factors in the financial problem experienced in fiscal 2018.”

A deep dive into the controversial and rocky 2018 period in the relationship between the Schools and the City showed several factors at work. First, the state funding formula changes several years ago resulted in a loss in 2018 of $6 million in monies the Schools would have expected to get. That was the case for several years and resulted in the City allocating an extra $1.5 million to the schools in 2016 and an additional $2.7 million to the schools in 2017.

But something more happened in 2018.

The Commission wrote that after the budget had been approved by the School Department, the mayor and the City Council, some 25 students had expensive out-of-district placements approved at a cost of $3.6 million.

At the start of the school year, while there were ongoing discussions with the City about finances, it was learned that 65 employees had been hired without funding authorization for a cost of $3.4 million. Then, it was later learned that 32 more employees were hired without funding for $2.2 million.

All combined, it left the district in deficit by $9.2 million, and it turned to the City – which gave them some ($5.5 million in total) but not all of the deficit.

The Commission – made up of four experts not associated with Everett – was brought on in the wake of that crisis by Mayor DeMaria to make sure that such a meltdown did not happen again. They have studied the City and School Department finances for more than a year, and finally came out with their report now. In it are seven key recommendations, one major suggestion, and two secondary recommendations relating to the use of casino revenues (see associated story).

One key finding in the report was that the crisis and a change of school administration had brought about a much better working relationship between the City and School Department. That meant many of the recommendations and suggestions were already implemented or would easily be accepted upon public release.

“The budget situation in fiscal 2018 has led to an improved spirit of cooperation and communication between Mayor Carlo DeMaria and his senior team and Interim Supt. Janice Gauthier and her senior team,” read the conclusion to the report. “A few steps recommended in this report are being implemented now. We are encouraged by the more collaborative environment and the changes that have been take so far. Nevertheless, the complete set of recommendations should be given serious consideration by all parties.”

Of those first seven school-related recommendations, first on the list was making sure the School Department used the same accounting system as the City. That would prevent the schools from being able to hire employees without funding being in place. The City’s accounting and auditing software requires funding for any position to be in place before an employee can be added – unless a waiver is issued by the City Auditor. However, the schools bypassed that system for hiring employees.

It was recommended that end.

“The City’s payroll and accounting systems require multiple steps and approvals before a position or salary change can be entered…and this process should equally be required of the School Department,” read the recommendation.

A second recommendation was that the City Finance Department add a new position that would be solely a budget liaison between the schools and the City. That person would also become an expert on school finance and state laws governing school finance.

“The financial impact of the School Department on total city operations is a key factor why an analyst whose charge is school research is needed at City Hall,” read the report. “The School Department budget in fiscal 2019 represents 39 percent of the total City operational budget and the 827 School Department employees account for 64 percent of all City employees.”

A key suggestion by the Commission – but not a recommendation – was that the mayor become a full voting member of the School Committee. During the Charter change in 2015, the mayor was made an ex officio member without voting power. However, the Commission noted that in 29 cities the mayor is a voting member of the School Committee, including Malden, Medford, Melrose, Methuen, Revere, Salem, Somerville, and Waltham.

“If these recommendations are not implemented and/or unexpected budget challenges with the School Department resurface, the impact of the School Department’s operations on City Government and finance is too large to leave with weak controls,” it read. “In such a case, the Mayor of Everett should be authorized to be a voting member of the School Committee through a special act of the Legislature.”

Three of the recommendations involved the School Committee, and called on them to take more responsibility for budgeting and following the approved budget. The recommendations called for the School Committee to better manage administration spending, upgrade its budget software to be more transparent to parents/public, and members of the School Committee should take more precautions in regard to conflicts of interest due to family members working in the system (it was noted that two-thirds of the Committee has family on the School payroll).

A recommendation for the School Finance Review Commission – which was created alongside the Blue Ribbon Commission – place more emphasis on monitoring school spending and employee hiring.

Finally, a recommendation was made to about budgeting in a more timely manner, something that has already begun to be implemented with this year’s School Department budget.

All in all, the Commission said they felt the School Department and City were on the right path now, and could repair the situation if they follow the Blue Ribbon Commission’s blue print.

“We believe that the new collaborative environment…, combined with the changes already made, and the implementation of the recommendations in this report above should increase the transparency of the school budget process, improve its management, and prevent any repeat of the 2018 budget situation,” read the report. “We believe that these reforms should be given the chance to work.”

Members of the Commission included:  Dr. Jon Fullerton, executive director of the Center for Education Policy Research at Harvard University; Barry Sloane, CEO of Century Bank; Dr. Dwayne Byron Thomas, founder of Thomas Leadership Solutions; and Sam Tyler, former president of the Boston Municipal Research Bureau.

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