Coventry council, schools face $5M-plus deficit; council issues statement, urges corrective action

Coventry — School officials told the Town Council on Jan. 14 that audited and closing procedures for fiscal years 2022 and 2023 uncovered an accumulated deficit in excess of $5 million, a number that has shifted as audits and prior-period adjustments were completed. The council voted 5-0 to authorize a statement expressing concern and requesting immediate corrective action and cooperation between the town and the school committee.

Superintendent Donna Cowart said the shortfalls were discovered while the district and auditors reconciled prior-year accounts and special funds left outside the general ledger. "We discovered ... an accumulated deficit of about $5,000,000 because what we discovered is not only did we have a shortfall in '22, but we also discovered ... accounts sitting outside of the general ledger," she said, describing retiree-benefit and other fund accounting issues that auditors flagged.

Chris Duverna, the school finance director, told council members the district first communicated an anticipated accumulated deficit to the auditor general in early September and has worked with auditors since. After subsequent drafts of the fiscal-year-2023 audit and adjustments that consolidated deficits from other funds into the general fund, the estimated accumulated deficit changed as the district implemented audit recommendations. "We first discovered ... an accumulated deficit that we anticipated through fiscal year 24 of, over 5,000,000," Duverna said.

Council members and school leaders described a series of contributing factors: late or delayed audits that left prior years unaudited while new budgets were built, transitions between accounting software, staff turnover, pandemic-era grant accounting complexities, and errors in how retiree-benefit and other special-fund transactions were recorded. School officials said they have instituted a spending freeze, restructured budgeting and reporting processes, increased Medicaid reimbursement efforts and rental revenue from facilities, and are strengthening oversight and monthly budget meetings.

The council approved a written statement to be released publicly, saying the council is "deeply concerned" about the persistent and escalating deficit and that the school committee must "acknowledge and rectify the significant management deficiencies within its administration." The statement also pledged cooperation: "The council is committed to collaborating with the school committee to find a sustainable solution," it read, while noting the council's limited role (appropriating funds rather than day-to-day school administration).

School leaders said a statutory deficit-reduction plan will be required and that the district is preparing corrective actions. Officials said they hope the audit cycle will accelerate now that auditors have issued fiscal 2022 and are completing 2023; the town and schools will need finalized audited financials to set long-term budget decisions and to seek credit ratings for potential school bonding.

What—s next: School and town staff said they will continue monthly coordination, finalize audits and prepare a deficit-reduction plan for approval on required timelines. The council's statement will be released with edits to ensure the most current deficit figures are accurately reflected.