Melrose Schools Close Out 2022 Budget After Major Shortfall

MELROSE, MA — The Melrose Public Schools this week closed out its 2022 fiscal year budget, according to Superintendent Julie Kukenberger, having scrambled to fulfill financial obligations after discovering a $2.2 million budget shortfall back in July.

As the district eyes next steps, frustration and some questions are lingering about how the schools ended up in this situation with their budget. The topic will now be back before the School Committee and the City Council for a pair of meetings in the coming weeks.

Though learning about the shortfall in July, Kukenberger announced the situation publicly in a presentation to the School Committee last week. She confirmed that the 2022 fiscal year budget, which was initially set to close months ago, remained open.

READ: Melrose Schools Address Major Budget Shortfall

The district had eased its shortfall down to $775,000 after drawing on multiple funding sources to cover obligations. The $775,000 cost remained, though, with Kukenberger telling the School Committee that she and district staff would be meeting with an outside financial consultant to navigate lingering issues.

Writing in a letter to the Melrose school community on Wednesday, Kukenberger said officials met with their consultant on Tuesday and successfully closed the budget.

She said the district accomplished this without using funds from the current 2023 fiscal year budget. Instead, she said, Melrose pulled from remaining grant funds, including federal Elementary and Secondary School Emergency Relief Fund dollars. The schools also received a batch of funding through the American Rescue Plan Act (ARPA).

Kukenberger said last week that she took full responsibility for the budget shortfall. She said, though, she had no knowledge of the situation before July 12, discovering the issue as part of a transition process between the district’s outgoing director of finance and an incoming replacement.

The shortfall arose, Kukenberger said, from a combination of costs, of which she said several were related to the COVID-19 pandemic.

School transportation expenses spiked beyond district expectations. Teacher absences due to the coronavirus racked up substitute coverage costs. And lower enrollment in Melrose’s Early Childhood Center decreased revenue from tuition payments, according to Kukenberger.

An accounting practice that ended up double counting the value of some grants coming into Melrose added to the shortfall, Kukenberger said.

Reactions came quickly after recent revelations.

“The big question for me as a member of this School Committee is, ‘How could we not have known this?” School Committee Member Ed O’Connell said.

The City Council is now gearing up for a special meeting next week where a lone agenda item will call for “information on the budget shortfall of the Melrose Public Schools.”

The planned meeting has surfaced new files related to the shortfall, including an Aug. 29 letter from Melrose Mayor Paul Brodeur to Kukenberger.

In his letter, Brodeur said he was “shocked and dismayed” by the shortfall and a need to use ARPA money to offset lingering obligations.

“Having to use federal relief funds for this purpose obviously represents a lost opportunity to make significant investment in other areas of need,” he wrote.

While he said he was prepared to authorize the request for ARPA funding, Brodeur provided a series of conditions, calling for an explanation of the shortfall and a plan to prevent a similar one from happening in the future.

He noted school budget issues in the past before discussing current conditions, acknowledging Melrose's proposition 2 1/2 override vote in 2019 to help shore up funding for the city's schools.

“This is not a COVID issue, it is a budget issue, and it is fiscally unacceptable,” Brodeur said in his Aug. 29 letter.

“We have invested record amounts of funding in the Melrose Public Schools in recent years, and it is critical that we be able to demonstrate that these funds are being spent wisely and within our means," Brodeur later continued.

Kukenberger responded to Brodeur with her own letter, laying out some of the same information from her later presentation to the School Committee. She also responded to Brodeur’s final comments about COVID-19 and its budget impacts.

“The evidence clearly shows that COVID-19 has accounted for a significant percentage of the deficit and there is no evidence of a district leadership-manufactured structural deficit,” she said.

Kukenberger wrote in her message to the school community this week that officials are monitoring several key areas as they now move through their current 2023 fiscal year budget.

Brodeur responded to recent developments with the budget in a statement to Patch on Thursday, in part reiterating his “shocked and dismayed” reaction to the initial overruns.

“It is imperative that the MPS administration and new Director of Finance and Administrative Affairs continue to work closely with the City’s Chief Financial Officer as well as our financial consultant to determine how this happened, why it happened, whether there will be future impacts, and how we will ensure that this situation never happens again,” Brodeur said.

The City Council will hold its special meeting about the Melrose Public Schools on Tuesday, Oct. 11.

Kukenberger is then scheduled to be back before the School Committee on Oct. 18 for an updated report on the school district’s financial status and next steps.