Commission: Lax Rules Caused Warwick Schools Deficits

WARWICK, RI — The Warwick Schools deficits, $1.2M from FY23 & FY24, $5M in FY25 and $2.2M in FY26, were the result of lax fiscal controls and practices, according to the  Warwick Schools Budget Commission‘s review.

“This problem, from a high level, was not a problem based on lack of revenue. It was based on lack of controls,” said Budget Commission Chairman Ernest Almonte during Monday night’s Warwick City Council meeting. He and the Commission’s vice chair, Sherri Kuntze, presented a summary of their findings during the Council meeting Monday.

“It was great to hear the budget commission on Monday evening validate the School Committee’s findings from our consultant back in December, said Warwick School Committee Chair Shaun Galligan, “As expected, and stated previously by our elected body, financial controls were lacking, poor financial accounting practices used, and there was no financial vision for the district; it was also apparent that we never had the financial expertise the district required. I am pleased that the budget commission came in and independently agreed with all expenditures approved by the school committee during the FY26 budget process, and our actions of late to draw down the FY25 deficit. The Budget Commission ultimately passed a budget greater in size than ours (the School Committee). I will have further comments after I do a deeper dive into their other recommendations that support our existing actions.”

The city must decide how to handle the FY26 deficit, which Almonte said does not necessarily require an additional $2.2 million, which would be added to the city’s ongoing state-mandated “maintenance of effort.” The city will also start paying off the $5M FY25 deficit in FY27 in $1 million dollar installments, per the deficit reduction plan drafted with the state. The full amount of the FY25 deficit will be confirmed following an audit due about Dec. 31.

But the salaries for Almonte and Kuntze, at least, won’t be part of those burdens.

“The chairman and I are obviously very committed to the community, so we decided that would like to donate our salary,” Kuntze told the Council at the end of their presentation.

Warwick Schools Deficits: Now

Almonte told the Council that the Budget Commission’s recommended FY26 Budget is $201,442,834, and currently under-funded by $2.2M. Getting there required:

• Took $2 million from the insurance fund to offset the deficit. “This is recurring expenses and you’re using one-time money to do that.”
• City used $152,000 in opioid settlement funds for other occurring expenditure, again using one-time funds.

“And then, keep in mind that, going into the (FY)27 budget, you won’t have the $2 million again from the insurance company to take out of the savings, and then we’ll have to spread the $5 million deficit over five years, that’s another $1 million, so you’re basically going to walk into year 27 with approximately $3,152,000 deficit before you event address payroll increases and things like that.”

Warwick Schools Deficits: Then

Kuntze said their assessment of the Warwick Schools deficits focuses on fiscal responsibility. School budget deficits are caused by several recurring factors.

“Rising personnel costs, unfunded mandates, the absence of timely and accurate financial data, a lack of strong financial oversight and financial skill and decisions made without the benefit or reliable, long-term forecasting,” were among several factors contributing to recurring Warwick Schools deficits. Short-term solutions failed to address the problem long-term, she said.

“Just as these issues developed over time, they’re not going to be corrected overnight,” Kuntze said.

Necessary corrections include strengthening internal controls, rebuilding fiscal discipline, and changing financial culture, she said, which will require, “a sustained effort, leadership and accountability.” She said the district will need strong policies and procedures, routine reconciliations, clearer accountability for payroll and staffing changes, and standards for reporting.

“That’s what we think will build a stronger financial foundation for the school department,” Kuntze said.

“The biggest component and biggest thing that we saw that contributed to this issue, was a lack of internal controls,” which help ensure accuracy and reliability in financial reporting. Internal controls also identify discrepancies early, “That allows prompt, proactive management,” Kuntze said.

“In our review, we found that key areas such as payroll reconciliations, position control, and expenditure tracking do not have the level of oversight and documentation that best practices would require.”

Warwick Schools deficits: Details, Future Fixes

For example Kuntze said, the School Finance Director discovered discrepancies between Human Resources and the payroll listings. “Two separate listings by two separate departments that’s supposed to list everyone that’s being paid by the department, did not agree,” she said.

That had to be reconciled. “At the end of that process, that resulted in approximately $5 million dollars in additional compensation and related expenses that needed to be added to the Fiscal 26 budget. So just let that sit in.” That means, she said, that historically there’s been inaccurate data used to prepare the city’s budgets. “So its no surprise that you’ve had overruns.”

Kuntze said the Commission has recommended the necessary controls to prevent such discrepancies going forward, which the district has begun adopting.

Similarly, she said, grant-funded positions in the district have not been accurately tracked. “What we’ve seen, historically is that grant-funded positions were continued even as the grants approached expiration, without sufficient analysis by the administration to determine how to absorb these costs within the department’s budget.” She said the district has since implemented a spreadsheet to track grant-funded positions.

Finally, Kuntze said, the district lacked accurate forecasting tools to avoid the Warwick Schools deficits.

Almonte said that since they were not allowed to review personnel, they recommend the city hire a third party performance audit of class size, utilization of buildings, redistricting, and employee count relating to declining student population.

“If you had the right controls in place, it would have developed this trust between the Council, the city side and the school, even the School Committee. The School Committee, in fairness to them, they weren’t getting the right information presented to them,” Almonte said.

Responding to a question about what the School Department needs to focus on for the future, Kuntze noted the controls and procedures being put in place have to be maintained continuously. “It’s not a set it and forget it,” she said. Also, she praised the new Warwick Schools Finance Department, including Schools Finance Director Craig Enos, hired in April 2025.

“You have a very good department. I audit a lot of organizations and your finance director is one of the best I’ve worked with. So, maintain your finance department.”

Almonte added that will require mentoring, leadership and training to ensure the personnel and practices remain in tune. “You had great young professionals who really stood up and did great things with little. With a little training, I think they’re going to be super stars. I think they already are.”

In response to another question from the City Council, Kuntze said quarterly reports from Enos would greatly improve transparency, and they would recommend it.