Methuen Council eyes probe of 2018 school deficit

·4 min read

Jun. 20—METHUEN — On page 38 of the city's 48-page, $186 million annual budget is a line item under "Bonds and Interest" that reads, simply: "Deficit — $458,000."

That six-digit expense — which will be in every budget until 2030 — has a complex, and some might say dark, story behind it.

In 2017, the School Department overspent its budget by $4 million. In 2018, when the error was discovered, havoc ensued and the city had to borrow $4 million to shore up the deficit.

As part of the deal, the state implemented a takeover of the city's finances, which includes having a fiscal overseer from the Department of Revenue watching every money move the city makes.

The city's finance department was overhauled. Other measures were put into place that should keep the deficit from happening again while the loan is being paid back over 10 years.

During a recent City Council meeting, Councilor James McCarty sought clarification from the city's Chief Administration and Finance Officer Maggie Duprey, about that expense that started going out the door in 2020.

"So the $4 million deficit by the School Committee is going to cost $4.5 million, with interest?" he asked Duprey, whose job was created as a result of the finance department's 2018 overhaul.

"Yes, that's correct," she confirmed, adding that the cost will "be with us another eight years."

In a "Perfect Storm" scenario, the high cost of the city's Superior Police Officers' contract came into sharp focus at around the same time. Estimates at the time put the cost of the raises at around $4 million the first year — 2018.

Now, some city councilors — fresh off the success of an in-depth audit of the police department, a pending review of the Public Works department and the Finance Committee's report on COVID-19 relief funding — want to reopen that chapter in the city's financial past and look at how it all happened.

"For me, that's a lot of money," said Councilor D.J. Beauregard, chairman of the council's Budget and Finance Committee. "It's larger than the budget for Elder Affairs and almost as big as the Veterans Services budget. It's money that's not going to our schools, or providing tax relief to residents."

McCarty agreed, noting, "It's dead money in the operating budget. It would be nice if we could use this money for another department, or a division in another department."

Councilor Joel Faretra asked the city solicitor during a recent meeting how the city might go about auditing or investigating the financial disaster.

The solicitor said he would have an answer by the council's first meeting in July.

Faretra said in a text message Friday: "I don't feel the taxpayers ever got the answer they deserve" about how the deficit happened and where the money went.

Not everyone agrees.

Council Chairman Steve Saba said he thinks an investigation into what caused the $4 million deficit would be a "waste of time."

"As chairman, I want to keep the Council focused on bettering our city," he said. "We have many challenging issues ahead. It doesn't make sense to go back four years to something when no new information has come up. All of the sudden we want to go back four years and investigate something we already dug into when it happened?"

City Councilor Nicholas DiZoglio, who was on the School Committee during that tumultuous time, including serving as vice chairman in 2018, said there were several reviews and audits, all of which found that the school department was cut by around $2 million and then overspent another $2 million — creating the $4 million shortfall.

"The state did their own investigation on this," he said, adding that "10 cities and towns in Massachusetts deficit spent that year, due to special education costs."

He added that the school deficit was created in 2017 under then-Mayor Steve Zanni's budget. He linked the shortfall in the school budget to the high cost of the police superior officers' contract.

"When we cut the schools, it was the same year we were signing the police contract," he said. "I can correlate. It all happened in the same year."

Beauregard agreed, saying the years 2017-2018 amounted to a "pillaging of the taxpayers."

He added, "I can't confirm the issue with the police contract, or the correlation, but I think as the oversight body, we should look into it."

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