EAST PROVIDENCE — Getting a bond to temporarily cover the city’s projected $3.1-million deficit this year and selling three school buildings to repay that loan are two recommendations City Manager Richard Brown presented to the City Council Tuesday night.

His five-page deficit reduction plan lists nine suggestions that total about $11.1 million in savings if all were put in place and accepted by the council, elected school officials and the various unions who represent the municipal and school employees.

The council only received the report and agreed to allow Brown to begin discussions with the state auditor general, who must approve any deficit reduction plan the city chooses to use. A joint meeting with the School Committee has also been tentatively set for March 31 at City Hall. A time has not been announced.

Brown was assisted by Schools Supt. Jacqueline Forbes, city Finance Director James McDonald and school Business Manager William Capron over the last couple of months. He said he believes all will attend the joint meeting, as well as others, to answer questions and probe the recommendations with greater scrutiny.

“We first tried to answer why we are in this situation and there are three major cost drivers,” Brown told the council. Those are school personnel and salaries, health insurance and special-education costs.

In particular, Brown said the district’s health-care costs are expected to “increase by $1.8 million over budget in spite of plan changes designed to reduce overall costs,” his plan states. “Additionally, only the school’s custodians provide financial support for their health-care insurance.”

Yet he also said the anticipated deficit is “exacerbated by the downturn in Rhode Island’s economy.” Governor Carcieri has proposed mid-year reductions in state aid that could result in a $537,000 loss to East Providence.

In addition, Brown came to the realization that the “demands placed on our school system from higher authorities [such as federal and state mandates] may in fact trump some of the ordinances [city and state tax levy caps] we are dealing with.” He said the consequences for the district violating federal and state laws may be larger than the consequences for violating ordinances the city imposes.

“This is a problem we all have to solve and it should not be solely on the backs of our employees,” Brown said. “… In essence, there is no short-term fix and we can’t balance the deficit by the end of the fiscal year. We are going to try to manage it and recover…”

For an immediate solution to balance the budget, Brown suggests the city issue deficit reduction bonds in the amount of the total deficit for this fiscal year, which could be about $4 million with Carcieri’s mid-year state aid reduction and other budget changes. He said a $4 million bond — with a 5-year payback obligation and 5-percent interest rate — would cost East Providence about $5.12 million, or $1 million annually.

The nine savings to repay the loan and prevent future deficits include:

•Consolidate most noneducation administrative functions with their counterparts on the municipal side that Brown oversees, which are consistent with suggestions given recently in a feasibility study by the Roger Williams University Institute for Public Policy, which is based in Providence. The city hired them last summer to complete the study, which was given to city officials late last month and should be reviewed in depth at the planned joint meeting.

Brown said the city can expect by the third year a savings of about $1 million over current costs.

•Move the school’s administration offices to Martin Middle School and sell the Platt and Watters school buildings that currently house them. Brown said the properties could sell for $2 million, according to the city tax assessor and current real estate market.

•Sell the former Grove Avenue Elementary School, which is currently leased by the Montessori School. Brown said Montessori officials have expressed an interest in buying the property and the city estimates it could sell for $823,700.

•Teacher attrition due to declining enrollment over the next several years as well as replacing teachers who have retired with lesser paid teachers should result in a savings of nearly $1.8 million.

•Have all city and school employees pay 20 percent of their health insurance costs and give back last year’s salary increases. The co-pays will result in a savings of nearly $2.5 million. The salary rollback would save about $2.53 million, according to Brown. Yet any changes need approval from employees’ bargaining units.

“Municipal unions are adverse to this suggestion; largely because of the differences that exist between their insurance co-pays and those for the teachers, and their history of existing premium sharing,” Brown wrote. “…The teachers’ representatives have indicated that they would entertain exploring solutions within the context of good faith bargaining.”

•Reduce police staffing by eliminating the three school resource officers and five community police officers at a savings of $534,000.

Yet Brown also said he “has the least desire to move ahead with” the Police Department reductions. He didn’t comment further as to why.

“We have a process for managing it and I think ultimately we’re looking at paying the deficit back and getting our system back on track,” Brown concluded.

Only Councilman Robert Cusack emphasized concerns so far, which include disbelief that the three schools would sell at the price estimated by the tax assessor, and the notion of “borrowing your way out of debt” and the interest that it would cost to do it. Cusack said the assessor’s estimated selling prices for the schools were unrealistically high.

“Now if it’s the only choice, we have to consider this,” Cusack said. As for the ways to pay the loan back, he added, “It’s great if we could do [these suggestions], but an awful lot of this is just guess work and probably overstated.”

He said much more work and research needs to be done to confirm these potential savings before the council and School Committee decide how to move forward.

apina@projo.com