2018-02-08 / Front Page

Saco has budget shortfall

By Grant McPherson
Staff Writer

SACO – The school department exceeded its 2017 fiscal year budget by more than $1 million and residents are awaiting action while school and city officials weigh their options for avoiding something like this in the future.

Runyon Kersteen Ouelette, a South Portland-based certified public accountants and business consultants firm, provided an independent audit of the city of Saco’s financial statements of governmental activities, business-type activities, major funds and aggregate remaining fund information for the fiscal year that ended on June 30, 2017. The firm performed the audit in compliance with government auditing standards and issued the report on Jan. 22. In the firm’s report, it notes that they do not provide a legal determination on Saco’s compliance. The audit was conducted as part of the city’s annual financial report.

The firm found that the Saco School Department exceeded its total budget by $1.2 million. Several factors contributed to the total amount. The school department recorded $760,000 owed to Thornton Academy that had accumulated during three years, spent $185,000 on additional staff and support for special education needs and $240,000 was used to transport students from Arundel. The Saco School Department contracts with Thornton Academy for $11 million annually.

School Department Director of Finances Jason DiDonato said the city has $170,000 budgeted to begin paying off its debt to Thornton Academy but the decision to pay it all off is up to city council. DiDonato said a large portion of the money owed to Thornton Academy came from an unexpected addition of 35 students in the 2016-2017 school year. The Saco School Department is also still carrying debt from its split with Regional School Unit 23, which it shared with Old Orchard Beach and Dayton. The Saco School Department began on July 1, 2015 with a $900,000 negative fund balance that it is still carrying over from being a part of RSU 23. That money is not owed to a particular entity, but rather is debt that the school department continues to operate with. The school department purchased four school buses and hired four drivers in the 2016-2017 year to bus students from Arundel to Thornton Academy.

“A couple things happened during budget season that became very controversial in an us versus them, city versus school way,” DiDonato said. “Our budget is larger than the city budget and in most municipal budgets that’s how it’s supposed to be. There’s a happy medium for how much taxes we need to raise to establish a quality education for our kids. With constant cuts in the budget, what happens is the margin is so small that one little thing can turn the budget upside down. My goal with this process now is to make sure the decision being made both on the school board and city council level is an educated decision, not just drastic cuts. Last year council just picked three different costs and just cut those programs. We can’t just arbitrarily cut this without an impact on the students.”

Budget discussions for fiscal year 2019 were held at the Monday, Feb. 5 council meeting; future cuts to the school department budget will beup to the council.

Saco Citizens for Sensible Government met Jan. 25 to discuss the city and school’s financial situation. Former city councilor David Precourt said there are ways the school department could spend its budget more efficiently.

“We’re spending almost $750,000 on technology and at some point how are we going to be able to control cost of classrooms if wages and benefits are killing us in this process,” he said. “How can we bring technology into the classroom? Is there a way we can integrate technology without giving individual iPads and spending most of our money?”

Committee members Barbara Coleman and Robert Dunn agreed that Mayor Marston Lovell should make the school’s debt a priority with the city council.

Lovell said the administration and previous council are aware of the problem.

“I spoke with Mayor (Ron) Michaud about it, he said they knew, the city administration had been informing them,” Lovell said. “During this last two-year period there were some spending variances that were coming up and so the amount when you finally see it is a cumulative total over a three-year period. We’re not talking about the school department as the department of the city not having its bills paid. It’s that they’ve run into a lot of unanticipated costs.”

He said the school system is one of Saco’s major draws but increasing property taxes will keep young families from moving to the area.

“The most important thing is to maintain the mil rate,” he said. “That’s going to be one of the things entrepreneurs and businesses look at when they’re going to locate a business within Saco, is how much property tax do they have to pay each year and how stable is it. And then after that is the school system and its strengths. So that’s those critical elements and why we need to be paying attention to the mil rate and why the school budget has to be looked at very carefully.”

DiDonato said city and school administration have increased communication in order to address the school’s debt and will continue to collaborate.

“There’s been great work between the city and school central offices to work together on this year’s budget process,” DiDonato said. “Hopefully it pays off on both sides of the tables as well as for the general public. I think the intent from the city side and school department is a fresh start. We haven’t had one since we started this journey. Maybe we can sustain positive growth as well as a positive fund balance.”

Contact Staff Writer Grant McPherson at news@inthecourier.com

Return to top