WARWICK, R.I. — Given another chance to resolve the current budget dispute in Warwick, Mayor Joseph Solomon has instead done things to make it worse.
The latest example: Solomon’s decision to walk away from mediation on the 2018-19 school budget that ended June 30, and his apparent refusal to discuss anything other than sports and extracurricular activities for FY20, which began Monday.
While calling the public statement issued by school officials this week “rumors” and “grossly inaccurate,” Solomon nonetheless said that mediation on the FY19 budget “has been put to rest.”
On Tuesday, City Hall spokesperson Courtney Marciano emailed WarwickPost to say that Solomon “is not limiting mediation talks to just sports/extracurricular activities” despite his previous statement that his “priorities will continue to be that of the schoolchildren, and the sports and extracurricular activities that they deserve.”
It’s pretty clear why Marciano had to issue the follow-up statement — Solomon’s original press release did not mention the list of educational programs that would be cut if an estimated $7.7 million shortfall in the school budget is not resolved, and the school committee stated in its press release that they were “advised by the mayor” that he will not “entertain any mediation for the 2019-2020 budget other than sports and clubs.”
The mayor also contradicted himself by saying that he would “not allow the emotions of our students, parents, faculty or staff to be used as pawns,” after responding to the student protest at City Hall last month with a vague but camera-friendly promise to restore sports and after-school clubs.
Instead, Solomon keeps pushing the idea of an illegal pension withdrawal and continues sending out conflicting messages while the school department faces a combined $12 million deficit — primarily due to budgets he submitted as mayor and approved as city council president.
Unfortunately, in the absence of anyone or anything that could stop him, Solomon is getting away with it so far, although the school committee announced on Monday that they won’t risk violating the law and subjecting the WISE pension fund to taxes simply because Solomon and the city council refuse to provide more city funding to the schools.
City’s gamble faces long odds
That “so far” above is important, because the school committee may still file a lawsuit against the city for failing to provide adequate funding, also known as a Caruolo action, if mediation ultimately fails.
What Solomon and the city council appear to be counting on is that a judge would look at Warwick’s financial condition and rule in favor of the city.
To this point, Solomon’s defense has been that the mediated agreement to use the WISE pension funds is a done deal, and that the school department has been irresponsible in its budgeting.
Solomon argued in his FY20 budget statement [pp. 7-8 in the linked document] that since the WISE pension payments were “school department dollars (not employee contributions),” the school committee could somehow just take them back.
As the school committee proved by presenting a legal opinion to the city council, that’s not how that works.
Supt. Philip Thornton also pushed back against Solomon’s earlier attempt to say that bond funding for school improvements and additional state aid should relieve the city from increasing its contribution for education. (Thornton’s response shows that’s not how that works, either.)
So while Solomon and Council President Steve Merolla have been accusing the school department of having what they call “overfunded” pension and health care funds (amounting to about $6 million in a $170+ million budget), they’ve undercut their own supposed authority — and potentially their legal standing — in fiscal matters.
On the health care issue, the school department keeps a reserve fund to cover expenses related to processing claims. In FY17 that number was about $1.5 million, which was then reduced to about $600,000 during FY18.
Endorsing a plan to take money from a pension fund despite violating tax law, failing to produce a city audit until seven-plus months after the state deadline, and putting millions of dollars in a paving budget that may not be spent (within a public works budget that is not following city ordinances) are all signs of poor financial management on the city’s part — whatever the mayor and city council may argue.
Courts may fix problems that city officials won’t
City officials could be excused for not understanding how a Caruolo lawsuit works, since there’s never been one in Warwick that made it to court before — except they’ve already witnessed the first steps toward one.
After the city council first approved the FY19 budget, the school committee petitioned the state commissioner of education to waive state mandates that could reduce the education budget; at the same time, the school board hired two former school administrators to conduct a “program audit,” where the educational offerings of the district are compared to state regulations.
(These are the specific steps outlined in R.I. General Law 16-2-21.4, commonly known as the Caruolo Act.)
For FY19, the program auditors found that, in order to meet state regulations, the school department would need $4 million more than the city gave it. Solomon and the city council responded by ignoring their ruling and rushing out of mediation this spring with what they claimed was an air-tight agreement.
It’s hardly out of the question that a court might size up the two sides — a school department that has followed state law in requesting more funding two years in a row and a city trying to micromanage the school budget (a major legal no-no in Rhode Island) while mismanaging its own books — and conclude that the city is on the hook for millions of additional dollars in education funding, plus the legal costs of fighting the school department’s funding request.
City officials will have a tough time crying poverty, the typical defense in Caruolo cases, based on the decisions that Solomon and the council have made in the last few years, including their decision in FY17 to use the surplus instead of raising taxes that would have put $7.1 million into the budget that year.
Conclusion: If Warwick’s budget issues should make it to court, a possibility that grows every time Solomon and the city council refuse to fund the schools, city officials will be under more scrutiny than they may expect — and Warwick will end up in far worse shape than if they’d taken the tough steps to fix the budget problem themselves.