Accounts committee hears Department of Revenue concerns about school shortfalls and CARES Act deficit

The accounts committee reviewed a Department of Revenue (DOR) letter and pressed the auditor and finance staff for the status of school‑related deficits on May 7.

Chair asked about a DOR citation of a $3,791,387 deficit in a special revenue fund tied to CARES Act funding that the auditor said was on the school side. The auditor said negotiations were ongoing between the CFO and the schools and that the city will have to resolve how to cover the amount before the tax rate is set. "We're gonna have to cover it somehow before we even set the tax rate," the auditor said.

The committee also discussed a separate FY26 shortfall the superintendent reported: $4.6 million needed for non‑net school spending this year. The auditor said reserves are depleted from prior years' use, and the city may have to rely on the circuit‑breaker program for some special‑education and transportation costs. When asked about the circuit breaker account, the auditor said Munis currently showed about $3,200,000 in the account but cautioned that budgeted encumbrances can make available cash appear lower than budget figures imply.

Members flagged that free cash must be certified before the FY27 tax rate is set and that investment‑income estimates used in the tax recap (budgeted at about $5.3 million) are unlikely to materialize; the auditor estimated realized investment income closer to $2.3–$2.5 million because of lower cash on hand.

The committee asked to be updated by the CFO and mayor’s office as negotiations continue and emphasized the need to reach a resolution before the fiscal year end.