June 23, 2018
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Newport-area school district short at least $1.2 million; institutes spending freeze

Alex Barber | BDN
Alex Barber | BDN
Greg Potter
By Alex Barber, BDN Staff

NEWPORT, Maine — Due to errors involving the budget, Regional School Unit 19 may be out of money before the end of the year, according to new Superintendent Greg Potter.

Potter said the district is at least $1.2 million short of its $23,324,293 budget approved by the towns.

“I think we’re going to run out of money by November, easily,” Potter said Friday. “It’s that bad.”

An immediate spending freeze is in effect, he said. Teachers and administrators can’t buy their supplies until a solution is found.

“Right now, I can’t allow administrators to buy materials to start the school year. … I can’t,” said Potter. “I’ve said ‘zero’ for right now. I have to pay bills associated with the prior year and get them taken care of to get that prior year completely done and behind us.

“So I’ve told principals, ‘You can’t even buy a piece of paper for next year. Nothing. There is no money. You can’t do it.’ That’s how bad this is. It’s serious. It’s very serious,” he said.

Potter took over as RSU 19’s superintendent on July 2 after William Braun retired. Potter had previously been the superintendent for RSU 12 in Whitefield. He said the cash flow problem was brought to his attention not long after he first walked through the door on his first day.

“I hit the ground on July 2, and I was told we had to go to the bank [that day],” said Potter. “There were a lot of bills sitting here needing to be paid, and some of them had been sitting here for three months.”

Braun, who retired on June 30, didn’t immediately return a phone call seeking comment on Friday.

Potter discovered that the 2011-2012 school year had a budget line of $830,000 carried over from the previous school year, but that money doesn’t actually exist.

“I can pretty confidently say that that $830,000 is not a balance you had to bring forward,” said Potter. “It wasn’t there. So why did we plan it that way? That’s my question. You finish your budget year and you didn’t have $830,000 you thought you were going to use to help pay your bills?”

He said the balance forward for the current school year is $661,000, but that money also isn’t actually there.

On top of that, Potter said, a spreadsheet error led to the school district not collecting $362,916 from towns in the district for debt service. The RSU 19 towns are Newport, Plymouth, Palmyra, Etna, Dixmont, St. Albans, Hartland and Corinna.

“I see at least a $1.2 million problem. At least,” said Potter. “That would be a July 1, 2012, pre-audit guestimate. That’s the best way I can put it.”

He said that he didn’t see anything to indicate that any money was taken or missing.

“There will be options [on how to fix the cash flow problem], but the options will be fairly limited,” he said.

A couple of options, Potter said, were to seek public permission for a five-year loan from a lending institution or explore the Maine Municipal Bond Bank.

“They would require a pretty significant plan to even consider it, I’m sure,” he said.

A public referendum would be needed for any borrowing of that magnitude, he added.

“If the public is not amenable to borrowing over a period of time, then what do you do?” Potter asked.

Potter said a spending freeze may put a dent in the budget gap, but more will have to be done.

“I do think we can find savings in the next year’s budget, but it’s not going to be anywhere near enough to make up the problem that is there,” he said. “It will stem it somewhat, but my fear is that if this school district is not allowed to float some sort of a loan, it’s going to get miserable. It’s going to get miserable in terms of programs and offerings. We have to really start taking things away from kids big time, because that’s where we’ll be. It will be very, very difficult.”

A budget committee meeting will be held at 6:30 p.m. Tuesday, Aug. 14, in the cafeteria at Nokomis Regional High School in Newport. Potter has invited managers and selectmen from towns in the district and the public to attend the meeting.

Potter said he’s meeting with his administrative team next week in order to find cuts in the budget. He’ll bring those ideas to the Aug. 14 meeting.

“If we don’t come up with a very good plan in the next six to eight weeks to deal with this, we’re going to be in trouble. Big trouble,” he said, adding that bills and payroll might not be paid if the right plan isn’t in place in time.

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