Newport Looking at Possible $1.2m School Budget Deficit

The Newport School Department is looking at a possible deficit of $1.24 million this year.

School officials notified the state Auditor General this week that the school district “may experience a possible deficit” and in response, a hiring and spending freeze has been put into place.

At the same time, both employee unions are working under expired contracts and the school district is negotiating with both collective bargaining units in the hopes of reducing retiree benefit costs, according to the notification.

The issue was discussed at Tuesday night’s School Committee meeting during which Superintendent Colleen Burns Jermain outlined the next steps.

Jermain noted that the fair market value of the district’s trust accounts for other post-employment benefits (OPEB) and extended benefits have increased since June of 2014. The difference is about $1.8 million.

“I recommend the School Committee speak with the City Council to access these funds to help address the projected budget gap for this year as part of a corrective action plan,” Jermain said in a memo to the School Committee.

Jermain also recommended the School Committee’s finance subcommittee and the school administration team work together with the city to create a three- to five-year comprehensive expenditure plan to “help address any possible further gaps by identifying any outliers in expenditures to help increase efficiencies and reduce costs.”

Jermain is also recommending the district seek alternate revenue sources through grants, partnerships and “other opportunities.”

The three largest drivers for the budget gap are retiree benefits, transportation costs and pension contributions. For retiree benefits alone, the district has incurred $862,683 in extra costs. For transportation, the cost overrun is $256,426. Pension costs are $57,643 over budget.

The district began this fiscal year after making aggressive cuts to close a $2 million budget gap, much of which were to be realized through contract negotiations.