COVENTRY, RI — As the town catches up on long-overdue fiscal audits, RI Auditor General David Bergantino calls for a meeting with officials to discuss a corrective plan for an estimated cumulative $5 million Coventry schools deficit.
That’s the latest estimate in a series of updates on the Coventry Schools deficit, showing the cumulative deficit larger each time. In Coventry Schools Finance Director Chris DeVerna’s Sept. 10 letter to Bergantino, shared with town officials and Council members, he explains, “We have been working to get the FY 2022 audited financial statements issued, while simultaneously working on the FY 2023 audit and working to close FY 2024 to prepare for the FY 2024 audit. We’ve worked to strengthen the Finance Office by hiring a Senior Accountant to fill a vacancy. We have also been regularly meeting with the Auditor General’s Office, Town Administration, and our auditors in an effort to get caught up on the audits following a period of significant turnover in both School and Town Administration.”
“The $5 million number referenced is a cumulative “unaudited” amount through June 30, 2024,” Bergantino said. The surprisingly large number, updated periodically by the school department since April, shows the importance of timely audited financial reports, he said.
Town Manager Dan Parrillo and Town Finance Director Robert Civetti, fresh hires in early 2023, are still catching up on the audits. Former Town Manager Benjamin Marchant was fired in January 2023 due to “a pattern of negligent performance,” including failures to properly supervise town departments and file required financial documentation.
The town just filed its 2022 financial audit with the state. “So that’s extremely late,” Bergantino said. The 2023 audit is on track to be delivered by Thanksgiving. Then, hopefully, he said, delivery of the 2024 audit will put the town back on a punctual schedule. Neither Parrillo nor Coventry Schools Superintendent Don Cowart could be immediately reached for comment on the fiscal reports or estimated deficit.
Meanwhile, the lack of up-to-date numbers makes assessing the town’s financial situation difficult, Bergantion said Tuesday. Nonetheless, the Coventry School Department’s recent deficit update shows the town has some tough decisions concerning taxes and cost-cutting lie ahead.
Hillary Lima, Coventry Town Council president, said the Coventry Schools deficit, and its continually upticked updates to it, are troubling signs.
“The over $5 million cumulative deficit recently disclosed by the Coventry School Department is more than just concerning—it’s symptomatic of a deeper, systemic failure in financial management. This isn’t just a blip on the radar; as the largest department in town, absorbing nearly 65 percent of the entire town’s expenditure budget, the School Department’s inability to get a handle on management of its finances directly jeopardizes the fiscal health of Coventry as a whole,” Lima wrote to Warwick Post Wednesday.
In May, before the 2022 audit had been filed, Town and School Department estimates pointed to a cumulative deficit of $610,036 for the School Unrestricted Fund, Bergantino said. Then, the town’s Q2 financial report indicated a projected Coventry Schools has an $822,165 operating FY24 deficit. Then, the Sept. 10 letter from the Schools further updated the estimate to $5 million.
DeVerna told Bergantino that part of the deficit was the result of accrued salary and benefits from prior fiscal years paid to teacher pensions over the summer.
“Ultimately, a decision was made to update the accrued salary and accrued benefits calculations to include teacher’s pension amounts paid over the summer. This decision impacted several years as the FY 2022 audited financial statements had yet to be issued. The updated accrual calculations resulted in a prior period adjustment to the School’s FY 2022 Beginning Fund Balance. It also led us to post updated accrual entries to FY 2022, FY 2023, and FY 2024. Finally, we have been working to quantify and prepare adjustments to eliminate accumulated deficits in various other funds by consolidating them with the accumulated deficit in the School’s general fund,” he wrote.
Coventry Schools Deficit FY22 Payoff Plan
“We acknowledge the Town has proposed to address the fiscal year ended 2022 cumulative deficit in the School Unrestricted Fund with an annual appropriation of $140,000 for fiscal years 2025, 2026, 2027, 2028 and $50,036 for fiscal 2029. While the proposed Town appropriation takes into account the existing cumulative deficit from fiscal 2022, it does not take into account current projections by the School Department for fiscal years 2023 and 2024 either by appropriation, cost savings measures, or surplus development.
The inability to have current audited financial statements and accurate School Department projections restricts our ability to make meaningful judgements about the Town and School Department finances and the sufficiency of a deficit reduction plan,” for the Coventry Schools deficit, Bergantino wrote.
Coventry Schools Deficit: Lima Wants Accountability, Auditor Seeks Meeting
“The town will not accept the wildly fluctuating financial reports it’s been handed month after month. These structural deficit numbers have varied to a degree that calls into question the integrity of the School Department’s financial management and reporting process. Make no mistake—accountability will be demanded. Coventry taxpayers deserve to know where their money is going, and the town will take every necessary step to hold the School Department accountable for their financial mismanagement,” Lima wrote.
Bergantino hopes to get town and school officials working together on a plan promptly. He said the law allows towns to address deficits over the course of future fiscal years, so the problem won’t need to be settled in one year’s time. Also, when asked about whether the situation was similar to those such as in Woonsocket, which the stat placed under a budget commission for a number of years, he said taking action now will prevent the state from taking that sort of action in Coventry.
“We felt it was urgent to encourage the Town and School Department to compromise on a plan to be incorporated into the fiscal 2025 budget that includes additional funding by the Town and identifiable cost savings by the School Department to close the current structural deficit. Failing to achieve a 2025 budget that attempts to address the School Department’s structural deficit could result in a significant cumulative deficit if current budget to actual projections for fiscal 2024 are realized and a 2025 budget is adopted without addressing the known deficiencies and ensuring that School Department commitments are funded,” Bergantino wrote.
In Coventry Schools’ letter to the auditor, DeVera acknowledged the need for a Coventry Schools deficit plan, and described steps they’ve taken so far, including Cowart’s school consolidation plan, which was poorly received earlier this year. In January, Coventry School Committee Chairman James Pierson said that plan was intended to meet a $1.5 million deficit.
“We understand that we will need to update and prepare corrective action plans to address the accumulated deficit. We will work internally and with the Town of Coventry to update and formulate such plans. The School made significant cuts in personnel at the end of FY 2024 (27.3 FTE’s from the CTA Union and 12.6 FTE’s from the SRP Union).
The School has also formed a committee to explore cost-saving opportunities that may be possible through potential consolidation or modification to school configuration. We have been meeting regularly with the Town Administration to provide updates, ensure progress on the financial statement audits, and discuss the school’s financial position, including potential opportunities for cost savings. We have also been discussing an RFP for our Health and Dental with the hopes of reducing these costs. The new school administration has been putting in considerable time working on our FY 2025 Budget and understanding the budget shortfalls from recent years,” DeVerna wrote to Bergantino. Coventry-Schools-Deficit-Letter-Auditor-09-2024
Author: Rob Borkowski
Rob has worked as reporter and editor for several publications, including The Kent County Daily Times and Coventry Courier, before working for Gatehouse in MA then moving home with Patch Media. Now he's publisher and editor of WarwickPost.com. Contact him at [email protected] with tips, press releases, advertising inquiries, and concerns.
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