PORTSMOUTH — The School Department is expected to finish the fiscal year with a surplus estimated between $500,000 and $1 million due to cost savings in services not being provided during the Covid-19 pandemic, a district official told the Town Council Tuesday night.

Although distance learning has kept the academic year rolling along with virtual classrooms, many services and programs have necessarily been suspended due to the shutdown of school facilities. 

During an online budget workshop Tuesday on Town Administrator Richard Rainer, Jr.’s proposed $66.73 million municipal spending plan for 2020-21, Christopher DiIuro, the school district’s director of finance and administration, said the biggest savings are in bus transportation costs. Other services and programs that have been put on hold, he said, include spring sports and physical and occupational therapy services for students.

He’s still crunching the numbers, and the School Committee has not yet had an opportunity to formally discuss what to do with any excess funds. “There are a lot of unknowns, a lot of uncertainties,” Mr. DiIuro said.

On Tuesday, council members and school officials debated the use of surplus funds going forward. Should they be used for building improvements, to reduce the district’s request for taxpayer funding next fiscal year, or be put into an emergency contingency fund that may come in handy during an unsteady budget situation caused by Covid-19? 

A recently completed audit, meanwhile, revealed that the town finished the 2018-2019 fiscal year with its own surplus of more than $920,000, and council members and Mr. Rainer have tentatively earmarked that money for an emergency fund and other expenses. (Read further on for more.)

In previous years, Mr. DiIuro said any school surplus would typically be used for capital improvements as a one-time expense, 

This is not a typical year, however, said Council Vice President Linda Ujifusa. Town officials are worried about the impact the coronavirus pandemic will have on the bottom line, especially due to lost revenues. Ms. Ujifusa suggested that any large school surplus for this fiscal year could be used to reduce the district’s requested town appropriation for next year. The district is seeking an appropriation of $34.68 million, which represents a $1.18 million (3.53 percent) increase over the current amount.

“Can we ask to have the School Committee and Mr. Rainer to re-work this number so some of the surplus may be reflected in lowering the ask?” Ms. Ujifusa queried. 

Council member Keith Hamilton also supported a school board review in hopes of lowering the appropriation request. “We all want to make sure we have some kind of safety net going forward,” he said.

Council member J. Mark Ryan, meanwhile, asked if it was legally appropriate for a portion of any school surplus to be made available for the town’s use “if we run into trouble.”

Mr. DiIuro said according to state law, no. “Once money is appropriated for the School Department, the School Department cannot give it back to the town, even if the School Department has a surplus,” he said.

It would be more appropriate, said School Committee Chairwoman Emily Copeland, to place some of the surplus funds into a Covid-19 emergency contingency fund, which Mr. Rainer first proposed for a portion of the town’s fiscal year 2019 surplus on Monday night. 

Mr. Rainer said due to precautions over the pandemic, he recommended the town approve the full school appropriation request, but knocked off nearly $40,000 from the district’s capital improvement ask, bringing it to $514,000. The full amount requested by the district, which includes federal and state aid funding, local revenue as well as the capital improvements funding, is $41.16 million, which the council provisionally approved by unanimous vote.

Council President Kevin Aguiar reminded everyone that provisional approval leaves the door open for any budget adjustments, as more information comes to light, before final adoption 

No bond issue

The School Committee recently voted to withdraw its Stage II application to the R.I. Department of Education (RIDE) for a proposed $65 million-plus renovation project on all four schools.

Besides dealing with the pandemic, the district was missing final documentation showing a land transfer at Melville Elementary School, which likely would have led to the application being denied anyhow. The application withdrawal means a referendum will not go before local voters in November as planned.

Superintendent Thomas Kenworthy said the Stage II application is on hold for now, but the district hopes to reapply later this year. Only by receiving a master plan approved by RIDE will the school district be eligible for reimbursements, he said.

Town surplus, too

The town finished the 2018-2019 fiscal year with a budget surplus of $922,730, according to an audit presented to the council Monday night. Mr. Rainer said that gave the town some flexibility during an uncertain budget season caused by the pandemic. 

To avoid possible “whipsawing of our budget to the maximum extent possible,” as he wrote in his budget report, he proposed establishing an emergency contingency account to be partially funded by the FY2019 surplus. “This account would be drawn upon under strict council oversight and approval to plus-up revenue streams which fall short of projections due to Covid-19,” the administrator stated in his report.

“This is normally swept into the fund balance,” also known as the “rainy day fund,” Mr. Rainer told the council Monday night. But due to the pandemic, he said “it’s raining every day” for communities that are trying to get a handle on their municipal budgets, since revenue streams will probably be reduced. An emergency fund would help offset any impacts felt by the pandemic, he said.

“Portsmouth is probably in the top tier of preparedness and the ability to absorb this,” Mr. Rainer said. “I think we’re in good shape.”

He proposed using $253,600 from the FY19 $922,730 surplus for the Covid-19 emergency fund. Another $488,340 would be used toward cash payments for capital improvement items, $110,532 would go into the fund balance and $50,000 toward the warrant deficit. The council provisionally approved the request in a 6-1 vote. 

Council member Daniela Abbott voted against the motion, saying she was concerned about how some of the capital improvement requests were prioritized. Funds to make more improvements to the Sandy Point Beach bathhouse, for example, were left out of next year’s budget, she pointed out.

Ms. Abbott argued that since families are stuck at home and school is likely to be canceled for the rest of the year, there’s a greater demand to use the town’s recreational facilities.

“We could show them, now more than ever, we care about their well-being and quality of life,” she said, adding that more thought needs to be put into the town’s longterm needs.

Although she voted against the motion on how to utilize the surplus, Ms. Abbott joined the rest of the council in provisionally approving the overall capital improvement budget.

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