The mayor may “accelerate” some cuts to city services after learning of a new $2.6 million budget hole due to delayed state repayments on school construction projects.
Mayor John DeStefano, Jr. said he found out Monday that the city is short another $2.6 million in this fiscal year budget, bringing the shortfall to $11 million. Until this week the gap had been projected at $8 million.
The new shortfall stems from the mayor’s $1.5 billion effort to rebuild or renovate nearly every city school. From 1995 to 2010, the city built or rehabbed 34 schools, according to the schools website; four more schools remain. The initiative is paid for almost completely with state funds.
The city had been expecting to receive a total of $2.6 million this fiscal year for the John C. Daniels and Harry A. Conte/West Hills Magnet school construction projects, according to schools Chief Operating Officer Will Clark. Daniels opened in 2006 on Congress Avenue; Conte/West Hills in Wooster Square was completed in 2000.
Unlike the newer school construction projects, for which the state reimburses the city as the buildings go up, older projects like Daniels and Conte are repaid long after their completion. The city issued bonds to cover the construction costs, and the state reimburses the city when those bond payments come due. The repayments fall on a schedule determined by the state, Clark said.
On prior state schedules, the city was slated to receive $2.6 million this year for those schools this fiscal year.
“On the latest schedule these payments are not there,” Clark said.
At times, state auditors have ruled certain school spending ineligible if it does not fit state requirements. For example, the city had to pay back $1.75 million to the state for construction costs associated with High School in the Community on Water Street.
Clark said he has no reason to believe that is the case for the Daniels or Conte schools.
“It does not seem like there is any reason to suspect that they have deducted other reimbursable costs from these payment amounts,” Clark said, “nor do we have any reason to believe that is the case.”
“Essentially we believe that the payments have been put on hold and we believe the funds will eventually be released,” Clark said.
Tom Murphy, spokesman for the state Department of Education, said he is looking into the issue and does not have an explanation yet. In general, changes to the payment schedule could stem from a wide number of factors, including auditing issues, eligibility for certain expenditures, or the need for more information before paying the city back.
“It’s going to take some time to research because of the volume of projects” the state supervises, Murphy said. “We have to see just what this is about.”
Four more schools remain to be rehabbed as part of the school construction initiative: Hill Central, East Rock Global Magnet, and Davis Street are in progress. The city also plans to build a home in West Haven for the new Engineering and Science University Magnet School (ESUMS); that project has yet to begin.
Service Cuts
Mayor DeStefano said the $2.6 million is “part of a larger budget gap that we’ve experienced since the beginning of the year.” Efforts at closing that gap have focused on three goals, he said: maximize property tax collection, “aggressively collect revenues and fines,” and the “continued re-engineering of expenses.”
At the same time, DeStefano said, “we will look at the possibility of the sale of assets where appropriate, and reduction in services.”
DeStefano said he “might accelerate service cuts that we expected to take place” in fiscal year 2012, and implement them instead during the current fiscal year.
He declined to name an example of one such cut. He said he will do so next month.
While the current fiscal year presents “a challenging environment,” DeStefano said “the more challenging issue will be closing the fiscal 2012 gap,” which is projected at $52 million.
Why are we still building schools? Because Johnny Boy thinks the citizens of New Haven are ATMs. He's correct.