How Woonsocket Ended Up in Fiscal Trouble

In the proposed budget Woonsocket advertised to its citizens, the city says it expects to spend $122,095,051. But the actual number, said Budget Commission Chair Bill Sequino, will likely be at least $6 or 7 million more than that because of a deficit on the school side of the ledger that was just discovered several months ago.

“We know the ad is inaccurate,” said Sequino, noting that his budget commission and the town council have until July 1 to make the numbers work. “At some point there could be some draconian cuts.”

He said people have talked about lay-offs, pension cuts and across the board pay cuts.

While whatever cuts occur will likely affect the entire city, the deficits are on the school side of the ledger.

“On the city side, they may not have been okay by much,” said Sequino, “but they were in the black.”

In last year’s budget, the school district planned to spend about $59 million. Sequino and others expect they will spend closer to $66 million, if not more.

How the schools ended up spending so much more than they expected is a question Sequino said the budget commission is eagerly anticipating an answer to.

Property taxes were kept low in Woonsocket when Susan Menard was mayor and state aid was plentiful. Then, according to Woonsocket teachers’ union president Jeffrey Partington, then-Governor Don Carcieri threw a money-wrench into the system.

“He gave a tax break to everyone making more than $250,000 and off-set that by taking money away from cities and towns,” Partington said.

Since then, according to information from current-Gov. Linc Chafee, who has recently railed against Carcieri cutting money to struggling cities, Woonsocket has lost out on some $12 million.

For the past several years, the city has been raising property taxes at or close to the maximum amount allowed under state law, but it wasn’t enough to make up for the loss from the state. Meanwhile, the schools kept expecting more education aid from the state. They’ll get an additional $6 million under the new funding formula that goes into effect this year, but the additional money isn’t expected to be fully phased in for at least another seven budget cycles. Woonsocket and Pawtucket are currently suing the state saying that isn’t soon enough.

Partington said the schools initially used ARRA funds to mask the ensuing deficits. This proved to exacerbate the problem.

“We were running expenses higher but we didn’t know it yet,” he said.

In 2011, the town council called for an audit of the school department’s budget and investigators identified a $2.7 million hole.

The newly-hired business manager Stacey Busby convinced the council auditors were seeing something that didn’t exist. But a closer look this year proved her wrong, and the deficit was said to be as high as $7.3 million. In March, the she was fired though the school committee voted against pursuing a criminal investigation.

“I guess she misrepresented what was there,” Partington said. “Everyone is interested in having a balanced budget. Sometimes you just put something down and pray it works out.”