A confluence of funding that has not kept up with costs, cost increases with unfunded mandates, and volatility in external costs are the circumstances that helped create an $8 million deficit in the school system’s FY2026 budget, says Superintendent of Schools Neil Cavallaro.
In a series of email exchanges and questions, Cavallaro attempted to put the overruns into perspective for city taxpayers and school families.
When asked about the extra costs incurred by the system, Cavallaro quickly pointed out the system is running on a spending plan that has not seen more than contractual increases for the last several years. Though the system was allotted $93.8 million in the budget this year, some unexpected costs appeared, especially in special education expenditures.
“We have been flat funded by the city for many years. In recent times, we’ve been able to offset the increases in special education and other areas using federal and state funding,” Cavallaro said.
Increased costs for students who study outside the district were a big part of the cost increases, and the system has no control over those.
“For the most part, we have no say when outside agencies or transportation companies increase their rates,” Cavallaro said.
Outside tuition costs were budgeted for $9.037 million, and topped out at $13.5 million, while transportation costs were budgeted for $1.3 million, and ballooned to more than $3 million. But another reason for the increased costs was a new mandate.
“One thing that hurt us in recent years was the unfunded mandate passed by the state legislature that increased the age for educating students with disabilities from 21 to 22. To date, this has cost the city an additional $4 million,” Cavallaro said.
He said while the new costs are part of the picture, cost pressures go beyond that. In commenting on the accuracy of the overruns, he tries to give perspective.
“The cost, while accurate, does not paint a total picture. As these mandatory service requirements increased, we could not sustain them. Another example are raises for teachers and administrators. Both, for example, were approved by the council and supported by the past and current administration. Raises initially were covered by the Alliance Grant and federal funding, however, not taken into consideration when the city appropriated its operating amount to us,” he said. “While Mayor Borer did increase funding to us in her first two budgets, the amount fell short of what we needed to sustain a status quo budget. I would make the case that our services have not increased nor have the manner in which we operated. Frankly, we have not been funded properly to maintain them.”
Alliance funding is a grant given to districts that are designated “distressed” and are meant to cushion education costs over and above the Education Cost Sharing allocated by the General Assembly’s biennial budget.
The departure of long-time Business Manager Matthew Cavallaro (no relation) also put some added pressure on funding as some bills were overpaid. A manager has replaced the immediate successor to Cavallaro, and things are back to normal. But one big mistake was made by the replaced replacement of Cavallaro.
“One thing that I recently found out was that the December 2024 payroll was not posted to our accounts until April. While I am certainly no accountant and am not familiar with procedures, I believe that this caused her to believe we had more funds than were available. In the end, it still comes to not having resources available to us that we had in the past,” he said.
The flux of new personnel to replace Matt Cavallaro also upset longstanding review and reconciliations that were sent to the Board and the Municipal Accountability Review Board (MARB) before its exit last year.
“Our new business manager has put procedures in place to keep track of where we stand. For example, she will be giving monthly reports to the Board. Matt used to provide that information regularly to MARB and then to the Board. Unfortunately, when he left, and the office was in flux, it did not occur as it should have,” Cavallaro said.
When asked about special education costs and their volatility, Cavallaro was curt.
“Special Education can fluctuate dramatically,” he said. “In addition to tuition increases, families of students who are placed in a facility outside the district and move into the city, we become responsible for their education. Just last week, a child in DCF custody was placed in a foster home in West Haven. We are now responsible for paying that child’s tuition. While we try to anticipate these events, it is not an exact science.”
Cavallaro said, finally, he is doing his part to soften the burden of the taxpayers, but in the end, increases will have to be considered and eventually made to keep the system operating.
“As someone who grew up in this city, I understand the burden placed on the local taxpayer. If you look at my track record, which includes closing schools and turning back several buildings to the city during my tenure, I believe I have managed the money well,” he said. “I have already begun to look at potential cuts for the next school year and have spent time this year working on ways to increase state funding. I believe, however, that the city must do its share. I have concluded that future cuts will hurt the district and that realistically, there are very few options that will save money but protect the integrity of the school system. That includes, most importantly, hiring and retaining a high-quality teaching staff.
Meanwhile, Mayor Dorinda Borer wanted to amplify the board and city are working together to help stem difficulties that were shown in recent months, and point some mutually agreed changes that will take place.
“Critical attention is needed by the Board of Ed to improve the management of finances so that budget-to-actual is tracked in real time and there is better controls in place which can result in better decision making. Even though the BOE is finally making good progress with the help of the city finance director working with the BOE new finance director, there was very limited budget monitoring in place. As a result, the BOE could not confirm they had a deficit until this past Dec.-6 months after the books closed on June 30. Even though we saw BOE expenses running high (the city pays BOE bills) and kept inquiring, Neil responded that they were balanced,” she said.
The new procedures are taking effect and bearing fruit, the mayor said.
“The first budget/actual report was finally provided a few weeks ago. This is the first budget to actual report the Board of Ed members have received in almost a year. The $100M FY 27 budget presented to the Board of Education members in February requesting a $5m increase in funding from the city was provided and voted on with no report of status of current finances,” she said. “When asked in the last BOE meeting who is monitoring the budget it was confirmed that the managers were never trained on MUNIS (the City & BOE budget system) so that they can monitor their budget and look for flags or over runs. They are being trained now.”
Mayor Borer said one point has to be understood when discussing the BOE and financing.
“One final note, please keep in mind, the city provides funding to the BOE but by law we can not tell them how to spend it. There are very limited ways to hold BOE accountable,” she said. “There is a state law and our Charter however, which I reminded everyone of which states the superintendent should be providing to me and the Board of Ed members the budget/actual status report and should be posting their information online. It also states any transfers or over runs need to be reported to the city. This is starting to change albeit slowly. If I had to guess, in many years previously the BOE balanced and had surpluses but this year they hit a cliff because of rising costs and are now having to get organized.”