City Avoids Appointment of Overseer, Moves Forward with Plan to Correct WED's Fiscal Problems

Woonsocket has avoided a state takeover of city finances... for now.

At a meeting last Thursday State Revenue Director Rosemary Booth Gallogly, Superintendent Dr. Giovanna Donoyan, and officials from the Auditor General's office spoke with with city administration to address the $2.7 million education deficit from FY 2011 and discuss how the city can avoid a repeat performance in 2012.

Stacey Busby, the Education Department's business manager at the center of the issue, was not invited to Thursday's meeting. Busby reported a surplus in education spending well past the close of FY 2011, and came under fire in early December when a showing the spending deficit. City officials, who had enacted their own during 2011, including taking out a $11.5 million in hopes of improving Woonsocket's credit rating, have been critical of the education business manager. 

"The School Department cannot provide reliable year to date reports," said the city's finance director, Thomas Bruce. According to Bruce, cashflow reports presented by Busby just last week lacked both a starting and ending balance.

At the meeting, the group outlined a corrective plan to state officials in hopes to avoid appointment of a financial overseer. Gallogly named Rhode Island State Police Maj. Stephen Bannon as East Providence's fiscal overseer just last month when the city faced a similar crisis.

First, Woonsocket will appoint Dina DuTremble, a retired business manager with experience both here in the city and in Cumberland, Burillville and North Providence, to quickly clean up what state officials view as a reporting problem in need of immediate resolution.

"To figure out where we're overspending, if we are, the school department needs to provide reliable data," said Bruce.

DuTremble would report directly to the mayor and would be paid for with city funds - a departure from the current arrangement in which the department maintains relative fiscal independence. The retired business manager would be contracted for a specified term and given full access to the department's books.

"She's highly regarded," explained Bruce of DuTremble. The School Committee is expected to hold a special emergency meeting this Wednesday to authorize the temporary hire.

The plan, hashed out early last week through a collaboration between city and school officials, also involves retaining the accounting firm Braver PC to provide a cash flow statement and bank reconciliation for the year. An additional firm, Kasha Care, will handle general bookkeeping. The firm will also report to the mayor rather than Donoyan- and will be paid for with city dollars.

The level of cooperation between the city and school departments on the issue shows a marked departure from years past. In 2011, the city had to file a lawsuit against WED to force the department to balance their budget. The School Department's appeal of the lawsuit was not dropped until after the 2011 election cycle, when new committee members took their seats.

This year, Donoyan, Committee Chair Anita McGuire Forcier and Committee member Christopher Roberts joined Council President John Ward and council members Daniel Gendron and Christopher Beauchamp in devising a plan.

"The City Council and the School Committee are working together so well right now," said Bruce. "It's great."

According to Bruce, Gallogly was willing to accept the plan, but suggested that if the department could not provide accurate year to date reports by Jan. 31, the difference should be taken from administrators' pay.

"Rosemary suggested instead of having administrators get their paychecks, they pay creditors if they can't get the information in," he explained. "She used it as a very harsh, but very real possibility. The Attorney General couldn't believe that while accounts payable wasn't adding up, payroll still went out."

The harsh reaction, Bruce explained, is relatively mild in lieu of what's at risk.

"If a deficit is discovered this year, it's not just going to hurt Woonsocket," Bruce said. "It could hurt the entire state."