The East Providence School Department — assuming a maximum 4% increase in funding from the city and $2 million in additional aid from the state — is projecting a $3.7 million budget deficit for the fiscal year that has yet to even begin, according to a presentation from Superintendent Dr. Robert Perry and his financial team during budget workshops of the East Providence School Committee on Sept. 1 and Sept. 8.

“The structural deficit in East Providence is primarily due to the fact that revenue increases, including state aid, local aid, and federal pandemic recovery funds, are insufficient to cover the rising cost of district operations,” Perry told the committee on Sept. 1. “This is not a proposal that I wanted to make in my second budget workshop to you as the new superintendent.”

The $3.7 million projected deficit is for the fiscal year that runs from Nov. 1, 2026 through Oct. 31, 2027 (FY27). Perry reiterated during the Sept. 1 workshop that the district still expects to experience a deficit of around $1.3 million for the current fiscal year, which ends on Oct. 31, 2026 (FY26) and is currently going through the state auditing process. The FY25 budget, he said, is expected to be balanced once its audit is completed.

In order to still pass a balanced budget as required by law, the financial team placed a revenue line item in the FY27 budget proposal nestled under the “Miscellaneous” category called “Budget Savings to be Determined” in the amount of $3,749,334 — a placeholder intended to transparently show the school committee the mountain ahead that must be climbed to get back to a healthy place financially.

The financial team was clear that actually “finding” $3.7 million in additional revenue simply through cuts to the budget was not realistic.

“Our objective is to lower it [the deficit] as much as we can,” Mark Piccerelli, the district’s interim finance director, said. “I can’t say that $4 million is going to be eliminated in 2027.”

According to Piccerelli, the the district should be able to remain in good standing with the state at the end of this fiscal year (at least on paper, in accounting terms), due to the district’s $2.5 million fund balance (which, importantly, is not the same thing as cash reserves or cash on hand, but merely an indicator of financial solvency).

However, that positive fund balance won’t survive the projected $3.7 million deficit in FY27.

At the end of next year, Perry said the district will need to enact a corrective action plan with the Rhode Island Auditor General to get the district’s finances stable.

“If the corrective action plan is appropriate, then we will have five years to make that happen,” Perry said. “If it is not, then that’s when budget commissions come in. And we are not going to do that.”

Expenses outpacing revenue

Each budget workshop was accompanied by a proposed budget summary that detailed anticipated expenditures for the remainder of the FY26 fiscal year and sets proposed revenue and expenses for the fiscal year to come; to which Perry offered an important caveat.

“One thing to keep in mind is that the [FY]2025 calculations have not been finalized by the Rhode Island Auditor General,” he said. “Usually, when a budget is presented, that process would have been completed. Fortunately, we have taken steps in the last six weeks to get closer to the end of that process, and we feel more confident in the projections.”

Regardless, what the financial team has learned as they examined the past few budgets was that certain budget items set at the beginning of FY26 appeared to be significantly underestimated below what those expenses actually amounted to over the course of the year.

An example could be seen in the line item for electricity. Although the district spent $1,238,012 in FY25, it budgeted only $1 million in FY26. The district has spent (as of Aug. 31, 2026) $1,219,591 on electricity. Similarly, in the transportation line item, the district budgeted $7,465,500 for FY26 despite spending $7,305,911 in FY25. The actualized amount spent on transportation for this year, as of Aug. 31, 2025, was $8,519,534.

Joseph Crowley, one of the district’s hired financial consultants assisting in the budget process, said that these were examples of the kind of “under-budgeting” that have contributed to the significant structural deficit.

“If you take a look back at prior years, it was not a case of over expenditure, it was a case of under-budgeting,” Crowley said. “If you budgeted it properly, then you would have been much closer to it as you went forward. Basically, what happened last year was the amount of revenues were known. They created a budget that fit within those revenues. But that did not reflect what the actual expenses were going to be.”

Crowley added that, while the school committee should have been notified of this situation sooner, it reflects a difficult financial reality faced by school districts statewide — where revenue is being considerably outpaced by unavoidable, fixed, and steadily rising expenses.

“The revenues are constrained,” Crowley said. “The city can give us 4%, the state gives us some money. But what the state gives us and what the federal government gives us does not grow at the same rate the expenses grow, which is why all these different districts are in the same boat. They’re just not getting enough money. You need to pay your teachers, you need to pay the transportation bill, you need to pay the electricity…There is nothing in here [the budget] that’s superfluous that you really don’t need.”

Crowley said that one of the key drivers of this imbalance is that the federal government has not held true to its promise to help share the costs associated with out-of-district placements for students with IEP needs that cannot be met by their public municipality. Those students must be educated in a district that can meet their needs, no matter the cost, at the expense of their home district, as dictated by the Individuals with Disabilities Education Act (IDEA).

In East Providence, the costs for educating special needs students in private, out of district schools amounted to over $5.6 million as of Aug. 31, 2026; a key driver of the deficit now being faced as the district only budgeted $3.9 million in FY26.

“When it [the IDEA law] was first introduced some 20 years ago, the idea was that the federal government would pay 10% of what this would cost, and ultimately the federal government would pay 45%,” Crowley said. “That was over 20 years ago. The federal government has never paid more than 15% in all of that time. So, if the federal government was paying 25%, we probably wouldn’t have the situation that we have.”

Committee members digest the news

Dr. Perry reiterated on Sept. 1 that approximately 82% of the nearly $107 million proposed FY27 budget is tied up solely in contractual costs for employee salaries and benefits. The district is also unable to make changes to staffing after June 1, 2026 due to the timing of its fiscal year, meaning there will be no possible budgetary relief in the form of laying off school personnel.

But looking at staffing as a means to close the deficit was something the school committee seemed to have no appetite for anyways.

“Before I cut a teacher, I’m shutting off every air conditioner in the district, including your office,” at-large committee member Anthony Ferreira said.

Ward 1 school committee member, Ryan Queenan, said that the presentation revealed to him that there was an inherent problem with expenses versus revenue, as the city has consistently (at least in recent years) provided maximum or close to maximum increases in local aid as requested.

“In fairness, the current city council in full, and the mayor, for the past three years have approved that max increase,” Queenan said. “The reality here is that the cost of transportation and healthcare, and electricity and gas, basic services, are going up so greatly that that 4% increase isn’t covering any of it. It’s not necessarily a finger-pointing witch hunt of ‘Where did this money go?’”

Ward 4 committee representative, Jessica Beauchaine, said she was “distraught” to see the state of financial affairs in the district, and wondered what it meant that other districts are experiencing the same challenges.

“All these school districts are all in the same boat. That means something is wrong. We’re not doing anything wrong,” said Beauchaine. “I can see where we could cut some money and do some little things, but we can’t cut personnel. We can’t cut salaries, benefits, busing, and there’s no way in hell we’re ever going to cut sports again. I don’t understand how other districts are in the same boat.”

“There’s only one common denominator,” she continued. “We’re all in Rhode Island…Somewhere along the lines, there needs to be more money. And it’s not our taxpayers. It has to come from the state. I just don’t understand.”