Winchendon superintendent rips town manager over deficit claim

Winchendon superintendent rips town manager over deficit claim
By Paula J. Owen TELEGRAM & GAZETTE STAFF

WINCHENDON — School Superintendent Salah E. Khelfaoui alleges Town Manager James M. Kreidler Jr.'s claim that the School Department is facing a $2.6 million deficit is false.

Mr. Khelfaoui said it's the town manager's fault that the deficit got so big in the first place, since the bulk of it developed in a health insurance account managed in Town Hall. Moreover, he said, Mr. Kreidler kept school officials in the dark about looming problems with the account's solvency.

The superintendent also alleges the town failed to transfer more than $450,000 owed to the schools from a trust fund earmarked for education.

Mr. Khelfaoui said Tuesday Mr. Kreidler's announcement to selectmen in their meeting Monday night that the state Department of Revenue had reported that the School Department had a $2.6 million deficit is false. He said a DOR official told him Tuesday it had made no such claim.
The town manager's announcement came after the state agency notified the town late in September it is facing a possible $3 million to $5 million deficit this fiscal year. Much of the deficit stems from the town's annually underfunding the health insurance trust, according to the DOR. (The town is self-insured.) The agency is still going through fiscal 2015 figures.

Mr. Khelfaoui said the School Department hired a consultant in March when problems first arose, but Mr. Kreidler refused to allow the consultants access to financial information until July.

Mr. Khelfaoui alleges Mr. Kreidler also withheld information from the state.

Andrew Paquette, president of The Management Solution, the schools' consultant, said information provided to the School Department by the town in fiscal 2013, which ended June 30, 2013, showed a balance of $460,000 plus $2,000 interest in the Murdock Trust — a revolving "gift" account earmarked for children and schools. Mr. Khelfaoui said that balance was not carried over into fiscal 2014 by Town Accountant Donna Allard as had been done in previous years by the former town accountant when the trust had a balance.

Though the schools' business manager sent the town accountant many emails saying what the School Committee believed was the balance and its intentions to spend $280,000 of the money on iPads, Mr. Khelfaoui said, the School Department received no reply from the town disputing the balance or saying it would not be carried over.

In fiscal 2014, the School Department believed there was still a $460,000 balance carried over from fiscal 2013 in the trust. It then received fiscal 2014's annual gift to the trust of $160,000, bringing the balance it thought it had to $620,000, and bought iPads for students in the belief the money was available, Mr. Paquette said.

"We could not find any communication back from the town accountant advising against proceeding with this plan or advising that the balances were incorrect," Mr. Paquette said.

"He is claiming the schools overspent the money in the trust because he omitted fiscal year 2013's balance of $460,000 in the meeting with the DOR," Mr. Khelfaoui said. "There was a $620,000 balance (at the end of fiscal 2014). What happened to the balance? The former town accountant transferred the balance at the beginning of every year into a new account, but Donna Allard never did it and we have no idea what she did with it. They are giving us no explanation of where the money is."

Additionally, the superintendent said, Mr. Kreidler did not provide the DOR with the School Department's current amended budget, which the School Committee cut to reflect a decrease in special education funding from the state. Mr. Kreidler's using the previous budget gave the appearance that the School Committee overspent money in that account, Mr. Khelfaoui said.

Mr. Kreidler said the School Department is responsible for $1.7 million of the deficit in the health insurance trust.

Under the current system, the town pays 60 percent of what goes into the health care account, and employees, including teachers, pay 40 percent. The School Department has more than 70 percent of the employees who contribute into it. The amount going in each year proved not to be enough when the town was hit with 13 major health bills in 18 months.

According to Mr. Kreidler's report to selectmen Monday night, the town is responsible for $530,000 of the deficit in the health insurance trust and the School Department is responsible for more than $1.7 million, based on the 30-70 percentage split.

Mr. Kreidler's preliminary estimates show the town having a $1.23 million deficit and the School Department a $2.64 million deficit, making a local solution out of reach, he said.

"This was made somewhat more difficult given the fact that while the superintendent had committed to support (though he stated that he could not guarantee a vote of the School Committee) a school contribution toward the deficit of $250,000 in my meeting with him and the Finance Committee Chairman on Monday September 22, 2014, I learned via his comments at the School Committee two days later that he no longer believed that the School Department should assist at all," his report said.

"Then, as of Thursday, I became greatly concerned that with the addition of this $1,000,000 FY14 School Budget Deficit added on top of our already existing deficit that a 'local only' way out would now appear to be out of reach," he added in his report.

Mr. Kreidler said he spoke with local legislators regarding the possibility of pursuing a revenue deficit bond through the Legislature that the town would have to pay back.

Selectman C. Jackson Blair, the board's chairman, said a special joint meeting with the town accountant, Finance Committee, Board of Selectmen and School Committee on the issue is planned for at 7 p.m. Oct. 15 at Town Hall.

"This all confuses the citizens," Mr. Blair said. "They are obviously and rightfully astounded over the amount of money we have to come up with to get the town back up and running, and they are not sure how it happened. That is leading to finger pointing. Part of the reason is no one is talking as a group. For people who want answers, the Oct. 15 meeting is their best opportunity."

Contact Paula Owen at powen@telegram.com. Follow her on Twitter @PaulaOwenTG