The City of Lowell has been recently learned that it failed to meet a state established level of school spending The Department of Elementary and Secondary Education (DESE) completed their annual review for the FY13 and it was noted the net school spending (NSS) was missed by $3.8M. To address this issue an action plan for FY14 and FY15 was released during the February 25, 2014 City Council meeting.
From the FY96 to FY08 Lowell had failed to meet its’ NSS requirement by as much of -4.9% (FY00) and often times came very close to exceeding the 5% deficiency allowed under law. It was not until FY09 that Lowell had met the requirements in place and from FY09-FY11, Lowell spent $9,798,817 over the NSS requirement. In actuality the City exceeded DESE projected spending each fiscal year from FY07-FY12.
The 2013 deficiency can be attributed to a number of factors that took place in the City that were difficult to fully project. The change in employee and retiree health insurance, which resulted in several million dollars which directly benefitted the students, and dramatic savings in utility costs for all facilities, contributed to the deficiency.
In order to address the net school spending deficiency the following actions were prepared:
• A transfer of $2M from the City’s Chapter 17 account to the Lowell School Department. These funds need to be repaid into the Chapter 17 account during FY15. At this point it is expected that there will be available Free Cash to transfer into the Chapter 17 account as there is an expected reduction in the FY14 Charter school assessment and an increase in the FY14 Charter School reimbursement
• Amended filing with the state for non-direct City spending for education for FY13 and full accounting of spending for FY14 based upon full capture of school maintenance costs and the health insurance costs of school nurses.
• An increase of $800K in direct spending on education spending for FY15 along with increased in direct spending for pensions and refined health insurance.
This action plan is intended to address the issue of the underfunding of our schools in a timely manner. If all recommendations are implemented, the accrued shortfall amount is projected to be $0 by the end of FY15.