CLASH OF THE TITANS E MAIL EXCHANGE

Mr. Caron, 

Thank you very much for not only responding, but for your extremely detailed explanation.  Let me first clarify that I am not attempting to assign blame, I am merely asking what I consider to be a very basic question about how Lynn got into this mess.  That said, as unfortunate and unfair as you and others may believe it is, as head of the city of Lynn and Lynn Public Schools, the Mayor and Superintendent are ultimately responsible for anything that happens in the city and schools.

I am not interested in the decisions made and the actions taken by people over the past 20 years.  I am interested in the decisions made and actions taken by people over the past 2-3 years.  We do not have this shortfall because of decisions and actions that were made 20 or even 5 years ago.  We have this shortfall based on decisions and actions that were made over the past 2-3 years, which were discovered in a recent audit.  I do not recall ever saying the Mayor, Dr. Latham or anyone else had prior knowledge that these costs were being incorrectly included, nor do I recall ever saying there was deliberate actions taken to shortchange the school children.  What I have stated and will continue to state is that the Mayor, Dr. Latham, and others should have known these costs could not be counted.  As I mentioned, the restriction for not counting retired teachers' health care costs is well-documented.  The restriction clearly states, "Insurance for Retired School Employees will count toward the net school spending requirement only if it was reported on the FY92 End of Year Report Schedule 19 for FY93."  My understanding of the situation is that Lynn did not include these costs on the FY92 EOY report.  Based on your response, as well as what others have stated, it sounds like these costs have been included over the past few years merely because predecessors included them.  If this is the case, I think that was irresponsible and reckless to do.  Each year, or at any point, why didn't someone take the time to do a little research and find out if Lynn reported these costs on the FY92 EOY report, before they just went ahead and included them year after year?  If I am mistaken, and Lynn did include these costs on the FY92 EOY report, please let me know.      

Again, I appreciate you taking the time to respond.  The fact that no one else cared enough or bothered to respond, particularly elected officials, is at best unfortunate. 

 

Thank you,

Lori D'Amico

THE RESPONSE

Mr. Caron's Response:

It is with interest that I read your email today. I am glad to see that you are engaged in this issue, because it has the potential to be the most serious financial issue facing the City since the recession of the late 1980’s and early 1990’s that eventually led to levy ceiling budget cuts mandated by proposition 2-1/2.

Unfortunately, in your attempt to assign blame, your concerns are premised on an assumption that is completely false and without merit: i.e., that it is the Mayor who is responsible for the submission of the information upon which the DOE relies to set the City’s net school spending figure each year. The Mayor has ZERO input into that process. It is the School Department, specifically Kevin McHugh, the business manager, who puts together all the numbers for submission. The only involvement from City Hall is that certain departments, specifically the Comptroller and Treasurer, as well as the retirement board, produce information on school related spending, as requested by Mr. McHugh, which he requires to complete his submission to the DOE for the calculation of net school spending. The Mayor neither supplies information in the process, nor does she have any sign-off or influence on the numbers submitted to DOE. That oversight rests solely with Dr. Latham and Mr. McHugh. It is they, and not the Mayor, that have unknowingly included the teacher retiree health insurance as part of the submission during their tenures, and it was fully within their power not to include it if they were aware that it was not appropriate. Trying to assign blame to the Mayor is totally unsupported as she had no participation, active or otherwise, in the submission of the numbers to DOE.

As near as City Hall and school department personnel can determine, the inclusion of the retiree health insurance has been occurring since at least the 1990’s, and could go back all the way to the very start of education reform. In fact, we can find no records of any year dating back to the start of education reform where retiree health insurance was not included in the City’s submission, which includes both the Clancy and McManus administrations. I challenge anyone to produce any evidence to support your contention that the Mayor, or for that matter, Dr. Latham, Mr. McHugh, myself, City Treasurer Richard Fortucci, City Comptroller Stephen Spencer, sitting or former City Councillors, sitting or former School Committee persons, or any other local official, had any prior knowledge before last fall that the school department was incorrectly including teacher retiree health insurance in its net school spending submissions to the DOE. It was not until then that we were alerted by our independent auditor of the problem, and even the auditor had only been alerted for the first time a few months earlier to be on the lookout for this issue, not only in Lynn, but in all communities they audited, as this is an issue not isolated to Lynn. This issue only became an issue because a box was checked twenty years ago that was counter to what the school department was apparently doing then, and has continued doing going forward, and because the DOE in the last year began having auditors check for inconsistencies between the box checked and the actual practice of the community with their submissions. In fact, even DOE officials, though now enforcing the statute as written with regards to the inclusion of retiree health insurance, never challenged the accuracy of the City’s submissions in prior years. In addition, DOE realizes the inequity that that requirement has created for many communities in the commonwealth in recent years, with most communities including the number while others cannot, and is supportive of legislative efforts to make all communities make their calculations under the same rules going forward.

Arriving at a number to include in the City’s overall budget for the school department is a difficult endeavor each and every year. The biggest problem is that the school budget number must be arrived at each May without knowing what the key number, net school spending, will be. That number is not arrived at until seven months later, in December, five months after the start of the fiscal year. The Mayor relies on Dr. Latham and Mr. McHugh to provide their estimate of what the net school spending number will end up being, and the corresponding budget appropriation that will be needed to meet that estimate. The Mayor has typically budgeted with the expectation that she would make a supplemental appropriation to the schools during the fiscal year to cover any shortfall in the original budget once net school spending had been determined. This was the case for FY2014. Dr. Latham provided the Mayor with what turned out to be an incorrect estimate of net school spending that included teacher retiree health insurance as an allowable cost, as she had in previous years and previous superintendents had also done in previous years. So what was initially anticipated to be a budget shortfall of between $3M and $4M, based on the historic calculation method of net school spending, suddenly became a $8M shortfall with the revised calculation. This increased shortfall only came about because Dr. Latham unknowingly provided the Mayor with an incorrect estimate of the anticipated net school spending figure.

In conclusion, the extent of the Mayor’s involvement in the calculation of net school spending is no greater than that of any past or present school committee member: it was the committee who oversaw the school administrators who compile the numbers and submit them to DOE (and as it turned out, incorrectly). Furthermore, neither Dr. Latham or Mr. McHugh acted any differently than any of their predecessors, i.e., they were submitting the same figures to DOE in the same way as had been done long before they assumed their positions. For someone to infer that anyone involved in this issue, be it the Mayor or school officials, acted with deliberate intent to shortchange the school children of Lynn without any factual evidence to support such a conclusion is at best unfortunaBOGUS numberste.

Peter M. Caron, MAA

Director of Assessing

Chief Financial Officer

3 City Hall Sq. Room 202

So all of this means that it's NOBODY'S FAULT,  certainly not the MAYOR'S . Those peopleat the SCHOOL DEPARTMENT are to BLAME. No wait they were only just guessing cause it is a essed up system.

GUESS WHAT? It doesn't matter cause they control the perse strings were going to have to ante up and come up with some sort of strategy going forward. Bottom Line - It was the MAYOR's BUDGET so essentially it's her PROBLEM. Maybe those SCHOOL people gave her BOGUS numbers. How could she have KNOWN? It doesn't matter cause she should have - SORRY.

I agree with her the formula is inherently UNFAIR but the time to WHINE and complain was before you find out there is a problem.