The School Committee, School District officials and the Town Manager sat down on Wednesday evening for their long awaited meeting about the indirect cost agreement. Town officials and the school district have been at odds over the agreement since the Special Town Meeting in December, when school officials raised concerns about how the two parties should reconcile their budgets at the end of the year.
Concerns have also been raised about the portion of funds the school pays for municipal accounting, auditing, data processing and financial services. These expenses fall into the administrative category of the agreement. At the meeting, officials started the process of addressing these concerns. The meeting was, however, somewhat strained as Town Manager Jim Kreidler has been instructed by the Selectboard to not negotiate terms of the agreement, but simply be available to answer questions. “That’s not a reasonable request,” said Superintendent Salah Khelfaoui.
The conversation was also limited due to ongoing talks between Mr. Kreidler, Dr. Khelfaoui and Department of Elementary and Secondary Education School Finance Administrator Roger Hatch about reported issues regarding the town’s minimum contribution to the school. To respect those conversations — which both parties said were going well — officials opted to not discuss the administrative expense component, leaving the group to focus on reconciliation.
At the beginning of the meeting, Mr. Kreidler distributed a seven page document detailing the history of the agreement in Winchendon. He also included dozens of pages of back up documentation including past emails between himself and previous superintendents, the state and the school committee. During his presentation, Mr. Kreidler proposed a new way of filing the reconciliation.
Currently, at the annual town meeting a portion of the school’s budget is kept in the town’s accounts. This money — which is approximated six months before the start of the fiscal year — is used to pay for indirect cost such as health insurance, unemployment insurance and the administrative fees. At the end of the year, if the school district has gone over the budgeted amount for indirect costs, the school has to find a way to pay the overage back to the town. If the district came in under budget, the town has to pay the school the difference.
Mr. Kreidler said the current method gives Mr. Hatch “nightmares.” Under the new method, all the money would be put in the school department’s budget at the start of the school year. Officials would still project anticipated dollar amounts for indirect costs six months before the start of the fiscal year, and that money would be encumbered. The town accountant would give the school access to the money as needed to pay the bills. “You have the ability to monitor in real time, notice if you’re going to make it or not make it, and do course alterations in real time,” said Mr. Kreidler.
While the new method gives the school department greater control and allows them to make adjustments, it does come with an added risk, Mr. Kreidler noted. Under the current system, if the school district went over budget the town would temporarily float the bill. In this new system, the school district would have to come up with the funding immediately.
Hearing this, School Committee member Michael Barbaro suggested an alternative proposal. In his plan the town would hold some of the higher risk items in their budget and the items less likely to go over budget would be part of the school budget. Other members of the School Committee said they wanted more time to think about the plan and wanted to know if other communities use this formula.
Dr. Khelfaoui has reservation about the plan, namely that the new plan provides no protection to the school budget if an expense, such as unemployment insurance, was to unexpectedly rocket. He said the school’s do not have the ability to use a stabilization fund or raise taxes, and suggested the town find a way to create a stabilization fund for the school.