Once a desirable middle class destination, Warwick now faces financial stress
WARWICK — After serving in the Army in World War II, Earl Corley returned home to Providence, went to school on the G.I. Bill and moved, with his wife, Dottie, to a ranch house in Rhode Island’s version of middle-class heaven: Warwick.
It was a land of above-ground swimming pools and the Rocky Point amusement park. They raised five boys and a girl in one of the first houses built in a neighborhood across from Bishop Hendricken High School. On Fridays, the kids paid 50 cents to ride all night at Rocky Point, screaming on the Cyclone roller coaster.
“When I listen to Bruce Springsteen’s ‘My Hometown,’ it brings me right back to being 13 years old,” one of Earl Corley’s sons, Rick Corley, said in retracing his family’s Warwick journey.
But just as Springsteen sings of “troubled times” coming to his hometown, Rick Corley now has a front-row seat to troubled times in Warwick as a member of the City Council.
This city of some 80,000 people has reached a rocky point in its history — riven by bitter budgetary battles between city and school officials, facing mounting costs for municipal retirees, closing schools amid plunging student enrollment, and struggling to close budget gaps.
The Boston Globe obtained a draft document projecting multimillion-dollar budget shortfalls. Meanwhile, school officials are now warning that they’ll have to cut all school sports if the city doesn’t boost funding. All this comes as Warwick schools just made national news for a since-revised policy of giving sunflower-butter-and-jelly sandwiches (instead of hot meals) to students who owe lunch money.
But Warwick is hardly alone. Providence and municipalities throughout the state are facing staggering amounts of unfunded retiree costs, and schools in many cities are struggling with financial problems.
“The reason why my mom and dad moved here was to get out of the city because they had better schooling and better rec facilities in Warwick,” Corley said. “And that is what people are complaining about now: schools and recreation fields.”
The turmoil was evident last week when more than 200 high school students, parents, teachers, and other citizens descended on a City Council meeting to protest the prospect of cutting all school sports, all clubs, all new textbook purchases, and all teacher training. One parent said children were playing on “dangerous” fields in “deplorable” condition. At one point in the six-hour meeting, an audience member yelled at council members: “Shame on you!”
School officials say the city has been level-funding the schools since 2010, leaving them $7.7 million short next year — and with nothing but lousy choices. But city officials question the $7.7 million request, they note that they can’t dictate school spending, and they blast school officials for funneling $4 million more than required into a pension fund while slashing money for janitors and mentoring. At one meeting, a council member told the school finance director, “If I were in your shoes, I would feel nothing but shame.”
Along with shame comes blame.
After 18 years on the City Council, Mayor Joseph J. Solomon gave a State of the City address earlier this year, saying he inherited a big budget deficit. “Our community had been led to believe that we were sailing along on calm, tranquil waters,” he said. “The reality is that we have headed straight into a fiscal storm.”
His predecessor, Scott Avedisian, who became CEO of the Rhode Island Public Transit Authority after 18 years as mayor, said (in essence) that he’s being thrown under the bus. Avedisian, a Republican, said he proposed a tax increase in 2017 but the City Council’s nine Democrats adopted a budget with no tax hike while pulling millions from the city surplus. “They spent all the money, and now they want to blame me,” he said.
But City Council President Steven Merolla said Avedisian is being “disingenuous” since Avedisian proposed no tax increase the following year, despite raises in a three-year teachers’ contract, and the council ended up raising property taxes. “He went to the banquet and sent us the bill,” he said. “Then he takes the job with RIPTA.”
While it’s easy to point fingers, it’s harder to put a finger on the city’s audited financial report. The fiscal year 2018 report was due Dec. 31, but after three extensions, it’s now due June 30, state Auditor General Dennis E. Hoyle said. Solomon said the city finance director decided to retire just three days after he took office, but the new administration is catching up.
The Boston Globe obtained a copy of a July 12, 2018, draft document, addressed to Merolla, in which an accounting firm estimated a five-year budget shortfall of $52.8 million — and up to $130.7 million including anticipated increases in retiree health care costs.
The document was written just before the City Council voted on two union contracts. Merolla said the draft was never finalized because it lacked key information, including audited financial numbers. He said he did not share it with the mayor or most other council members “because it’s inaccurate.” In any case, he voted against the union contracts, he said.
Solomon dismissed the draft five-year projection, saying, “You can blow your nose with it. It’s a guesstimate. Five-year plans are guesstimates.” Still, his administration projects the structural deficit for the fiscal year 2020 budget at between $10 million and $13 million.
So what’s driving the financial difficulties?
A local budget watchdog, former City Council and School Committee member Robert Cushman, said the main factors are pension and retiree health care costs that accounted for 19 percent of the 2004 city budget but close to 29 percent today.
“If you look at a lot of cities and towns, you would see the same thing going on: The big picture is that the legacy costs are unsustainable,” Cushman said. “It’s taking more and more dollars away from other priorities.” As a result, city roads, schools, and recreation areas have deteriorated over the past decade, he said.
Cushman noted the state Supreme Court just upheld a ruling allowing neighboring Cranston to suspend the cost-of-living increases of police and firefighter retirees for a decade to maintain the city retirement fund’s solvency. Warwick should consider similar steps, he argued. “People need to stop pointing fingers,” he said. “They need strategic long-term thinking.”
Brian M. Daniels, executive director of the Rhode Island League of Cities and Towns, said the state’s locally administered pension plans have some $5 billion in combined obligations for pensions and retiree health care costs, and Rhode Island has the country’s sixth-highest property tax burden.
“So municipalities don’t want to keep raising taxes,” he said. “Pension and retiree health care costs are crowding out other things. That is when you see tension between schools and municipalities.”
That tension is palpable in Warwick. Last week, a City Council committee voted “no confidence” in schools finance director Anthony Ferrucci, questioning the size of school budget requests and the decision to “overfund” a pension plan.
But Schools Superintendent Philip Thornton said city support for schools was $124 million this school year — up a mere $14,000 from a decade ago, essentially level-funded. While state funding has risen, the state continues to provide less education aid than many states, he said.
In recent years, Warwick has closed one high school, two junior high schools, and three elementary schools, Thornton said. Since 2010, the number of teachers has dropped from 1,038 to 880, and the number of students has fallen from 10,196 to 8,734, he said, attributing the drop to fewer school-age children and students attending private schools or out-of-district vocational schools.
“We are at the tipping point,” Thornton said. “We can’t close any more schools.”
Without $7.7 million more from the city, Warwick schools will need to cut $1.36 million for all middle and high school sports, $382,486 for all teacher professional development, and $240,000 for all new textbooks, according to a May 31 preliminary budget cut sheet.
“It’s pretty sobering to look at the list,” Thornton said. “This is not an idle threat. This is a reality. We have to balance the budget by law.”
But city officials say school officials have created their own problems.
“They overfunded their pension plan by over $4 million, and I didn’t think it was a wise move to be serving kids sun-butter sandwiches because their parents didn’t pay a bill,” City Council President Merolla said. “It’s one issue after another. You can’t come before us and create your own hardships and then claim you are innocent.”
Merolla said overall school funding, including state aid, has grown by millions while student enrollment and staffing levels have plunged, and the council just approved an additional $500,000 in school funding while agreeing to pick up $1.7 million in principal and interest payments. “To say the reason for all these problems is because the City Council is level-funding is disingenuous,” he said.
The schools sued the city last year, claiming it had not met its obligations to fund education. A mediator said the city didn’t need to contribute any more money because the schools were going to take $4 million from a pension plan funded beyond actuarial required contributions. But now the schools have a legal opinion saying it would violate the law to withdraw that money.
So what now? In a news release last week, Solomon said, “I am hereby extending to the School Department a continued mediation process that can assist us in determining how best to provide for the students, teachers, and staff of our city and balance our ability to do so financially.”
On Saturday — five days after angry students and teachers thronged City Hall to decry budget cuts and defend school sports — Warwick residents celebrated an earlier act of rebellion.
Gaspee Days harken back to June 1772, when Rhode Islanders set fire to a British customs schooner named the HMS Gaspee — an act of Colonial defiance a full year and a half before the Boston Tea Party. Thousands turned out for the Gaspee Days Parade, slurping Del’s lemonade as bagpipes wailed, Clydesdales clip-clopped down a red-white-and-blue centerline, and the air filled with acrid clouds of musket smoke.
Amid the beat of bass drums and blasts of cannon fire, the mayor and City Council members marched behind the city’s Pilgrim High School band. “This is Warwick’s day to shine,” Councilman Corley said.
But the picture-perfect day was clouded by the budget battle. Corley said some people along the parade route had shouted at city officials: “Fund our schools!” and “Save our Sports!” Pointing to his Pilgrim High School polo shirt, he said he recognizes the need to maintain the hometown athletic programs that he and his children enjoyed while growing up in Warwick.
Referencing another Springsteen song, Corley said, “My goal as a councilman is to make sure that my grandchildren will be saying that Warwick is a place where they can live out their glory days.”