Officials Discuss Coventry Schools Deficit Oct. 9

COVENTRY, RI — When officials meet to discuss remedies to the $5 million Coventry Schools Deficit Oct. 9, they’ll be catching up with audits, otherwise sound fiscal standing, and five years to fix it.

RI Auditor General David Bergantino said he and town officials scheduled the meeting during a call Tuesday.

During that call, he said, they also discussed the status of the FY23 audit, which he said is still on track for delivery in November as reported by WarwickPost.com Sept. 18.

Hillary Lima,  who’ll attend the meeting, said she wasn’t aware of possible remedies aside from cuts in services, adopting Superintendent Don Cowart’s district restructure plan reportedly saving $1.5 million, or adding the balance to the multi-year pay-down plan  proposed for the FY22 Coventry Schools deficit.

“I certainly am not comfortable agreeing to fund any deficit reduction plan until I see some more consistency and confidence in the deficit numbers being shared from the school department. Right now, the goal post is moving every month so it’s tough to be collaborative when we don’t know what we’re working with,” Lima said.

Bergantino said two things in Coventry’s favor tackling the problem are the town’s $16 million fund balance (Bergantino stressed he is not suggesting the fund balance be used to pay the deficit, it just distinguishes the town as operating from an otherwise sound basis compared to communities in similar situations) and the ability to pay for whatever plan they iron out over the course of the next five years, according to state law. He declined to suggest specific plans to tackle the deficit until after the meeting.

Bergantino also noted that no one in the process has suggested that Coventry’s predicament can or should be solved by a state takeover and appointment of a budget commission, as with the City of Woonsocket in 2012. Bergantino said that situation involved a city-wide fiscal crisis, whereas Coventry’s dilemma concerns only the School Department.

Bergantino said that the issues leading the town to this point occurred under the watch of previous town and school administrators. Town Manager Dan Parrillo and Town Finance Director Robert Civetti, are fresh hires made in early 2023. They and Coventry Schools Finance Director Chris DeVerna, also a new hire, have been making the progress on fiscal reports that uncovered the problem.

Whatever the plan officials  devise, some elements will need to be signed off on by Coventry Town Council vote during the upcoming FY25 budget season. The council’s vote on the budget, likely to incorporate the deficit reduction plan, will be the second such vote in the town’s history relying on Council representatives rather than a Financial Town Meeting. Local voters made that change to the town charter by a 57-to-43-percent margin in 2022, replacing the Financial Town Meeting with a supermajority of four out of five town councilors.

Lima said the attendee list includes leadership from town administration and Coventry Town Council, School Department administration and Coventry School Committee, RI Department of Revenue leadership, RI Department of Education (RIDE) representatives, and Bergantino, according to the Outlook calendar invite sent to officials.

“I know for a fact that (Town Manager) Dan Parrillo, (Finance Director) Bob Civetti, (Town Solicitor) Stephen Angell, (Dist. 3 Town Councilman, VP) James LeBlanc, and myself will be representing the town side,” Lima said.

Coventry Schools Deficit: How Did The Town Get Here?

When future budgets get passed without a clear picture of the prior year results (due to inaccurate financial reporting and late audits) that can lead to deficits compounding over a few years, Bergantino said.

“Audits are designed to identify material misstatements in financial statements.  In instances where audits are late, deficits can result from audited results which was the case in Coventry’s 2022 audit.  As the Town worked to provide an accurate fiscal close and the audit progressed and prior misstatements were being corrected through audit adjustments, the school deficit grew.  In instances where the true results for the year were suggestive of an operating deficit (revenue exceeded expenditures) in the school, future budgets passed likely did not address the shortfall and deficits could persist in future periods.  With those audits also being delayed, the shortfall could go undetected for some time,” Bergantino continued.

“Since I became Auditor General in January 2023, I have met with town officials monthly and their auditors to get the financial statement audits completed.  There was an extensive amount of work needed to get the reconciliations completed and the financial records closed and ready for audit for the fiscal year ended June 30, 2022.

This is even more challenging when new finance directors start and need to get their bearings and begin addressing any inherited backlog in reconciliations and transaction posting.  The Town manager and finance director have worked diligently to complete accurate financial closes ready for audit, it has just been a time-consuming process. It is that effort that has led to more accurate financial reporting and a clearer picture of the school deficit,” he said.