Jul 28, 2014
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City Considers Fiscal Year Change

Move could allow school officials to create annual budgets with knowledge of state funds.

City Considers Fiscal Year Change

Officials in Woonsocket are considering changing the start of the fiscal year from July 1 to Sept. 1.  The largest benefit to the change would be the ability for school officials to examine the state budget and plan accordingly, according to Finance Director Thomas Bruce.

The current fiscal year begins July 1 and the school committee is forced to guess how much money is going to come from the state while designing their annual budget.  Changing the fiscal year would allow school officials to know exactly how much money the state will be providing and formulate their budgets accordingly.  During the recession, state funds have dwindled and left shortfalls in the school budget that had to be accounted for later.

“[The change] would give us a map as to how much money we actually have before we hand in a budget,” said School Committeewoman Vimala Phongsavanh.  “We handed in a budget on March 1 and we didn’t have an idea of what the state would cut.”

The state office of the budget is required by law to submit the governor’s budget by the third week of January, but that can be delayed.  This year the governor’s budget was submitted in March.  The budget is then evaluated and edited by the General Assembly.  The official budget is normally approved between the middle and end of June.  Only after that do cities and towns know the exact amount of education funding that they will be receiving from the state.

All other municipalities, except for East Providence, have fiscal years which begin on July 1, and face the same guessing game with their school budgets as Woonsocket.  East Providence’s begins on November 1.

“It’s absolutely terrible,” said Bruce regarding trying to plan without knowing how much the state is going to provide.

Last year, there was a $2 million budget shortfall in the school’s books because the state cut $2 million from the normal $45 million provided to Woonsocket.  The school committee had to meet again to re-balance their budget.

Bruce said that if the school committee had known while they were writing their original budget that the $2 million had been cut, they would have been able to plan accordingly and avoid the controversy that occurred as a result.

“$45 million is a lot of money that we get for aid,” said Bruce. “Cuts of $1 or $2 million just throw everything off.  The school department [budget] is so tight, they definitely don’t have the ability to design a budget that has enough flexibility in it that later on it’s not going to hurt them.”

“They need every last dollar to do their job,” Bruce said.

Rhode Island law requires school committees to submit balanced budgets one month after the state revenues are released, according to Bruce.

At Thursday night’s meeting, Thomas Gray, a commission member, asked why this hadn’t been done before, considering that the state budget has been released after the city budget for years. Councilman Bill Schneck informed him that the process to do so is complicated.

First, it has to be approved by the state’s auditor general, according Bruce.  Then the charter has to be changed.  Changes to the charter must be first recommended by the City Council, then approved by the Mayor, then rubber-stamped by the General Assembly and lastly voted on by the residents.  Only after that can the fiscal year be changed.

Undertaking the change will create one extended year in which Woonsocket will be responsible for planning for 14 months instead of 12.

The state auditor’s office may be hesitant to change the fiscal year because of the record-keeping nightmare it may present.  If Woonsocket does change the year, they’ll have a two-month period that will be oddly reported.  Bruce said that the books would show an extended fiscal year, causing the need to add footnotes to financial data relating to the city.

“What do you do with a 14-month year that has an extra tax bill,” said Bruce.  “How are they going to count that?”

The extra tax bill would need to be sent out to collect taxes for the two months before the change to the fiscal year beginning on Sept. 1. 

When the state looks over whether to approve this change, the accounting for the 14-month year will be an important consideration.  With all the other municipalities on the same fiscal schedule except East Providence, the change could cause state comparisons of Woonsocket to other municipalities to become difficult, something the state may not be willing to accommodate, according to Bruce.

“I’m very cautious in saying that we should change the fiscal year because I think there’s some more information that is required,” said Bruce.

He said he will be calling the auditor general’s office to discuss the matter with them.  The auditor general could not be reached for comment for this story.

Phongsavanah said that the school committee will be submitting a proposal to support the measure to the Charter Commission soon.  The Charter Commission is currently debating the matter and will consider adding it to their list of charter revisions to be submitted to the City Council at the end of April. 

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