PROVIDENCE, R.I. (WPRI) — Providence has already started paying off money owed as a result of a $15 million settlement with the R.I. Department of Education over increased funding to the Providence Public School District, Target 12 has learned. The settlement, which was signed by both sides late last month, was approved by the city's Committee on Claims and Pending Suits on Monday night. Mayor Brett Smiley spokesperson Anthony Vega told Target 12 the first payment of $4 million, which covers the school district’s deficit for fiscal year 2024, has already been made. The remaining $11 million will be paid in monthly installments over the next seven months, according to Vega. Before the settlement agreement, the city implemented a freeze on hiring, over-time and non-essential spending for the rest of the fiscal year, totaling about $2 million. Smiley also said the city would use $1 million dollars from a recent payment-in-lieu-of-taxes (PILOT) agreement. Last week, Providence City Council’s Committee on Finance voted to reallocate the city’s remaining federal COVID-19 dollars, totaling about $4.4 million. Councilwoman Helen Anthony, who chairs the finance committee, talked about the need to move quickly on approving the reallocation of funds in a special City Council meeting Monday night. "These funds have to be encumbered by the end of December -- this month -- and then spent by December 26th," Anthony said. "We cannot hesitate, and we need to take the action.” The 10 councilors present unanimously approved the reallocations. The council has to pass the matter for a second time at its final meeting of the year, which is scheduled for Thursday. Providence is also using $5 million from its legal fund. As part of Providence's annual audit, the city is required to "accrue legal settlements that are likely to resolve in the near future," according to Vega. An outside consultant determines how much the city will need to set aside to pay for settlements prior to proposing the annual budget. The city will also be assigning about $3 million in unused energy credits to the school district’s electric accounts. As part of the settlement, the city has also agreed to increase its annual contribution to schools moving forward. This year, the schools received $135.5 million from the city, a $5.5 million bump and the largest increase to the school system in 17 years, according to Smiley. The mayor said in 2026, Providence will earmark $147 million for schools, an $11.5 million increase. The schools would get $147 million in 2027, plus the percentage required by the Crowley Act, should the district still remain under state control. If both sides didn't come to an agreement, they city could have been liable for up to $55 million, according to city lawyers. Alexandra Leslie ([email protected]) is a Target 12 investigative reporter covering Providence and more for 12 News. Connect with her on Twitter and on Facebook. Close Thanks for signing up! Watch for us in your inbox. Subscribe Now Daily Roundup SIGN UP NOW