When New Orleans Mayor LaToya Cantrell backed out of a $90 million legal settlement with the Orleans Parish School Board earlier this year, her administration pointed to the city’s own troubled finances.
In public appearances, her top deputies — particularly Chief Financial Officer Romy Samuel — warned of a coming crisis, claiming that the city’s spending is “out of control” and that “financial instability is imminent.”
But at a Thursday (April 17) meeting of the City Council’s budget committee, Chief Administrative Officer Gilbert Montaño acknowledged that with data for 2024 now finalized, the city’s financial situation is “less dire” than previously projected. However, despite this, Montaño said that he could not provide any information as to whether this more optimistic outlook changed the city’s position on whether to support the schools.
“Given that the financial situation is stable, has there been an offer made to the school?” asked Councilmember Joe Giarrusso.
“I’m not aware, but I would defer to law and legal,” Montaño answered.
“I would like to get the answer to that, because my understanding of this situation … was that part of the reason for not doing the deal is that we had a financial crisis,” Giarrusso said, noting that the administration has claimed it might be interested in an alternative offer.
The news of the city’s stable financial outlook comes after months of drama between the New Orleans City Council and the Mayor’s Office over whether the city could afford the settlement with the school board. That settlement would’ve provided $20 million to the district before the end of the school year, helping to alleviate the impact of an estimated $50 million budget shortfall for the city’s schools. The remaining $70 million was to be given to educational programming over the next 10 years.
Cantrell maintained that the settlement, which her top deputy — Chief Administrative Office Gilbert Montaño — was involved in drafting, would be too costly to the city. In response, the School Board and the council took Cantrell to court. But a judge ultimately ruled that the city was not obligated to carry out the full terms of the settlement — just the first $10 million payment, which had been appropriated to the school board during hearings on the city’s 2025 budget.
In recent weeks, the council has passed a series of ordinances designed to fulfill the terms of the settlement anyway: appropriating an additional $10 million to the district and eliminating the city’s practice of charging fees for tax collection – a practice that had been at the heart of the case that partly spurred the proposed settlement in the first place.
Though the officials who appeared before the council said that the city’s finances are currently stable, they did caution that the financial environment could change, citing the potential of cuts to the city’s bottom-line through reduced revenues, the spend-down of American Rescue Plan Act dollars and external risks, including the potential of further funding cuts from both the state and federal governments.
Both Samuel and Montaño presented a slate of options to reduce the city’s spending and generate more revenue, including potentially issuing revenue bonds to pay out the city’s unpaid and outstanding judgments, which currently total $88.1 million.
When asked after the meeting why and how the administration’s perspective on the state of city finances had changed since their initial warnings of imminent “financial instability” two months ago, Samuel denied that there was any meaningful change.
“My position hasn’t changed,” Samuel told Verite News, saying that the city’s reserve funds are not where she would like them to be.
Montaño also said that despite some reporting suggesting otherwise, his office and the finance department were working cooperatively.
“I want to reiterate that the CAO and Finance are working together, and we will continue to work together,” he said. “We’re teammates, we’re partners, and I have great respect for the cautions that finance does provide, and we’re going to manage the city accordingly.”