Joint Selectmen’s meeting, School Committee meeting, and Joint Town Meeting:

 

Joint Selectmen’s meeting, School Committee meeting, and Joint Town Meeting:

There has been a lot of local board and committee action over the past two weeks in Westminster and Ashburnham, centered 90%+ on the school funding issue.

The issue is that Ashburnham Westminster Regional School District does not have an approved operating budget for the upcoming school year (fiscal year 2014). The reason it does not have a budget is because although Westminster approved the budget on the second time around, Ashburnham voters defeated the $177K override necessary to provide ‘level services’ in the school district for the upcoming school year, and the School Committee, rather than make cuts to school services, decided to call for a Joint Town Meeting (JTM) to “break the tie”.

More details are available by clicking here to read a previous story, which explores why we are in this fix, but before simply blaming Ashburnham for this state of affairs since they defeated the override, it should be noted that Westminster was able to pay for the AWRSD’s budget request out of available funds, while Ashburnham, not able to raise the money any other way, had to put the request to the voters as an override (also known as a “self imposed tax increase”), and the voters said “no”.

When the School Committee calls for a Joint Town Meeting, which can happen after two failed attempts to pass a certified budget, the power to decide the school funding situation passes from the towns and their Boards of Selectmen, to the individual voters who attend the Joint Town Meeting. The only formal authority the Selectmen have in this process is to appoint the moderator who will run the Joint Town Meeting.

For the purpose of appointing a moderator, as well as to generally discuss the matter, a Joint Board of Selectmen’s Meeting was held on July 8, 2013.

There wasn’t much suspense as to who the moderator would be. Last time we had a Joint Town Meeting, in 2003, the honor of moderating what turned out to be an acrimonious and lively meeting fell to Westminster’s longtime Town Meeting Moderator, John Bowen. This time, in the interests of sharing the glory or perhaps more accurately, the hassle of being moderator, Ashburnham resident William Weber was chosen. John Bowen, who was in attendance for the Joint Board of Selectmen’s meeting, did not seem too crestfallen at not having to serve as moderator again.

Who would be the moderator was a foregone conclusion, and the William Weber appointment was unanimously approved. However, the rest of the meeting was more interesting. Again, the prior article is worth reading for all the details, but the key to understanding how events are proceeding is to note that if Ashburnham has to pay an additional $177K, they’ll have to pull it from some other town department that is already funded, since they simply do not have the money because the override has already failed.

For Westminster, they’ve already budgeted for, and have the money to pay for, their share. So although both towns have plenty of ‘skin in the game’, since the financial health of the Ashburnham Westminster Regional School District is critical to educating the children of both towns, Ashburnham has by far the more difficult task were they to have to fund an additional $177K for the schools.

The second part of the Joint Selectmen’s meeting centered around two areas:

1.       What exactly is the shortfall now, given that state funding levels have shifted?

2.       What’s with the E&D fund (Excess and Deficiency fund), which ended up considerably higher than expected?

There were a lot of questions asked, and they all remained civil if somewhat repetitive, but rather than go into the questions, which were only answered based on what was known at the time, we’ll skip to the School Committee meeting the following evening, July 9, 2013, when the questions were answered.

School Committee Meeting of July 9, 2013:

The AWRSD School Committee covered topics besides the budget, but that was certainly the major part of the meeting. Important to note is that the budget has two parts. Part 1 is for the district’s operating expenses, a point that shouldn’t be overlooked even though a major goal of the meeting was to make funding the schools seem revenue-neutral to Ashburnham. Part 2 is paying for the expenses. There is a big difference between the schools’ expenses, which are in the operating budget, and how those expenses are funded.

This is why, despite changes to state aid, and other sources of revenue that will lessen the impact on the towns, the District’s operating expenses are only slightly changed going into the Joint Town Meeting, because funding doesn’t affect expenses—rather, it pays for them. The school has its operating budget, and it has its funding sources, which consist of state funds and local funds.

The certified budget that was approved by Westminster but defeated in Ashburnham was $28,668,033. The newly certified budget, which could still be subject to change prior to the Joint town Meeting, is $28,601,847. In other words, the certified budget that the School Committee will be asking the Joint Town Meeting to approve is nearly the same as the one Ashburnham rejected—it is reduced by just $66K.

So, the District’s expense budget didn’t change much, as would be expected given that they are looking to provide ‘level services’, a term which means that the learning experience, vis-à-vis the last school year, will not degrade. Put more succinctly, level services often equates to ‘no layoffs’.

However, what is of the utmost importance to the towns’ budgets and taxpayers is how much they must pay towards the schools, and that’s where the problems arise.  In general terms, the state pays a large chunk (in the case of AWRSD it is less than half) of the school budget, and the towns pay the rest. If the state pays more, the towns pay less, and vice versa (the usual state of affairs). The fact that the state of Massachusetts is almost always unable to pass a budget in a timely manner, with this year being no exception, makes it very difficult for the School Committee to come up with the towns’ assessments. The expense side isn’t affected by the how much funding the state provides, but how much the towns must pay definitely is.

The two main areas in which the state contributes to our schools are:

1.       Chapter 70 funds, which is direct funding for schools

2.       Transportation reimbursements—this is always a sore spot since the state promised to pay 100% of regional transportation costs, as an incentive to regionalize in the first place, and then proceeded to not do so. How much they will actually pay tends to run well below 100%, but the actual percent/amount is always a wild card. For the fiscal year 2014 budget (the budget for the next school year), transportation was reimbursed at 65%, which was up from the 60% that AWRSD expected.

Other factors that affect revenue available to our district, but which are too convoluted to explain here, include:

·         School Choice and Charter School Tuitions—when children choice into AWRSD we receive funds from the sending school district (via the state). When our students choice out of AWRSD to either a Charter School or another district, the state pays money to the receiving schools or districts, and deducts money from the sending Districts. These funds are held in some sort of ‘revolving fund’ so don’t directly impact town assessments (for some reason).

·         Special Education reimbursements—in the long history of unfunded mandates, the special education requirements stand out as among the most expensive. These laws, originating at the federal level, require that all students be educated regardless of their special needs. That’s certainly an admirable goal, but unfortunately very little if any funding accompanied the law, so the costs fall squarely on the local school systems. This is not trivial, as the cost to educate students who requires an educational experience outside what our district can provide can easily reach $300,000 per student. Some reimbursements (i.e. circuit breaker funds) are available, but they come nowhere close to covering the cost.

The graph below shows the differences between the original budget Governor Patrick proposed (which was DOA almost immediately, and was indirectly responsible for Westminster’s failure to pass the school budget the first time around), the House budget, and the final “Conference Committee” budget, which just was passed a week or so ago. The prior presumed assessments to the town were based on a combination of Deval Patrick’s and the House budget, so the changes from the conference committee, which happily were generally positive, reduced the assessments to the towns.

So, all in all state funding increased over what would have been expected, but only by approximately $70K, including the cost of school choice. Without the school choice cost, the district received an additional $122K for transportation, compared to Governor Patrick’s budget. This reduced both Westminster’s and Ashburnham’s school assessment, with Westminster getting the larger reduction because they have more students in the school district. Although Westminster pays more per student than Ashburnham because of the aggregate wealth model (AWM) calculation instituted last fiscal school year, these reductions are so far based on the discretionary piece of the budget, so are per pupil. Not to get too technical or to editorialize, but any normal refunds to the towns, for instance those from E&D, should take this AWM into account as well, either proportionally or completely, as those excess funds come from the entire budget.

A large part of the School Committee meeting was devoted to showing that because of ‘unexpected’ refunds coming to the towns from the school district, plus the reduction in costs of $66,000, Ashburnham should be able to pay for the most recently certified budget using the money coming back to it from the schools, particularly now that the assessments are reduced. Here are the refunds:

The Chapter 70 resolution refund is because the School Committee promised to refund the approved amount ($91K) to the towns, if the towns approved funding for two additional teachers and chapter 70 funds came in higher than budgeted, which they did. At the point this was decided last year, the state had not finalized the amount of Chapter 70 funds that would go to schools in Massachusetts.

The E&D (excess and deficiency) refund is because of the 5% rule—no more than 5% of the year’s operating budget can be held in the E&D fund.

The upshot of all this is that with Ashburnham’s share of the cost reduction of $65K, the increase in the transportation reimbursement, and the two refunds shown above, the net savings/rebates to Ashburnham should cover the increase in school costs to provide level services, allowing them to preserve their current funding for town departments and pay for a level services School District budget.

This seems generally correct, despite there being some grey areas in the budget, but that’s the nature of the school budgeting process, particularly when it comes to estimating state funding levels. Should this budget pass, Ashburnham would have to use the refund money (which would go to the general fund, and probably needs certified among other things), and Westminster would simply take the refunds into their general fund and bank the money.

The E&D fund, described below, also plays a role in this, as the offset for some of the expenses that are being cut (band instruments and technology) will instead be paid for from the Capital Budget fund. So where does the money in the Capital Budget come from? It appears to be funded primarily from the E&D fund, which is funded from excess funds in the Operating budget, which are also increasingly used to fund the next year’s operating budgets.

So it is of interest to look at the E&D fund, and how it has changed over the past five years. Two things to note here—the E&D has become more important relative to the stabilization fund, due to state regulations, and both operating budgets and capital budgets are increasingly funded from this E&D fund. There is more flexibility with the E&D fund, and the Stabilization fund can no longer be funded directly from E&D. A good way to think of this is that E&D is similar to a town’s ‘free cash’, up to the 5% limit, while the stabilization fund can only be used for capital items. Prior to 2009, all unused E&D monies were moved to the Stabilization fund, but due to the new rules, this no longer happens.

For illustration purposes, they are combined in the graph below.

As noted, the E&D fund is essentially a contingency fund that also reflects how the school is doing managing to budget—it’s also sort of a Profit and Loss or maybe ‘retained earnings’ for the schools. If the schools do better (re controlling costs) than projected, then the E&D fund increases. This year the E&D fund was much larger than expected, largely due to an unexpected and impossible to anticipate decrease of $300,000 in the amount the district spends to educate students with special needs. Here is where the money in the E&D fund went from 2008 through 2013.

A question that will no doubt arise here is why did the district move so much money into capital expenditure rather than using the excess to offset next year’s operating costs? The answer to that depends upon how urgent the capital needs are—in this case the $400K is split into $250K for a major drainage fix at Oakmont, and $150K for normal capital requirements. The $100K miscellaneous capital is to improve safety, in light of the recent tragedies at schools such as Sandy Hook in Newtown, CT. The question of funding capital and operating expenses from the E&D is a question worth asking, but unfortunately no longer relevant to the funding for next year, since those monies are now unavailable to offset additional operating costs. According to Dave Christianson, Chairman of the School Committee, because of the unpredictable nature of the E&D fund, this fund is better suited for handling for one-time expenses. However, AWRSD, like most school districts in these economic times, has had to use the E&D fund to supplement state and town funds for the operating budget.

An Opinion: Just a few points here…..

1.       I actually like the idea of a Joint Town Meeting to decide school funding issues. It’s the fairest and most democratic way to decide how much to fund the schools. The school district does not belong to one town or the other, but to the residents of both towns. The Joint Town Meeting gives everyone, regardless of where they live, an equal vote.

2.       Although I hate taxes more than just about anyone, I’ll be voting to fund the schools in full. Most taxes I pay are money down the drain as far as I’m concerned. I have no interest in funding military actions in the Middle East, drug lords in Afghanistan, incompetently managed social programs or bankrupt solar plants, or ……I think I am ranting. However, I consider providing a good education for our children to be an obligation, and at least the money we dedicate to the schools benefits us directly, here in Westminster and Ashburnham.

3.       The budgeting process needs to be modernized and made more transparent. It’s a fact of life that we don’t know what the state will allocate to fund our schools, so therefore make the allocation piece of the equation a ‘what if’ number, continually updated to reflect the latest information. That’s what Excel is supposed to be used for. There is no reason to be using Governor Patrick’s numbers, which were DOA the moment they came out. Similarly, the Boards of Selectmen need to be in continual contact with the School Committee, so they know what’s needed, plus know what’s in the budget. There shouldn’t be any hint of sandbagging in these economic times.

4.       Lastly, everyone with kids in the schools better show up at the Joint Town Meeting. Despite the reduced cost to fund the schools (or more accurately, a more palatable way to fund the schools), there is no guarantee that the certified budget will pass. Remember that the school budget initially failed in Westminster by a tie vote of 41 to 41. There is no way 82 people should be able to decide the fate of our schools for all of us, and there is also no excuse if people do not attend. There were virtually no parents of school age children at the last Westminster Town Meeting when the budget initially failed, which in the interests of full disclosure I will note included me as absent, although my wife was in attendance. I was mowing the lawn.

See you at Oakmont on Tuesday 7/23 at 7:00 PM.