2015-05-01 / Front Page

Board barely passes school budget

By Duke Harrington Staff Writer

If the split on the RSU 21 Board of Education is anything to go by, this year’s school budget validation vote could be a real nail-biter.

After lengthy debate Monday, the school board adopted a $40.5 million operating budget for the 2015-2016 school year, squeaking it in just under the wire by a 6-5 vote. The decision to then sign the warrant for the May 12 district budget meeting passed by a similarly slim margin, with the same five school board members opposed.

In a pointed comment, one of the naysayers, Kennebunkport director Robert Domine, accused municipal leaders of conspiring to drive up the school budget in an alleged effort kill a $56.5 million building bond that will be on the June 9 ballot alongside the school budget validation question.

“Quite honestly, it feels to me like the school board is being squeezed by the towns to make our operating budget look as high as it can at the same time we are asking for a bond,” he said.

At issue is a $1.18 million refund to the RSU from the Maine Public Employees Retirement System (MainePERS). The school board had planned to apply that entire credit to the FY16 school budget, reducing assessments in Kennebunk and Kennebunkport to the point where the latter would actually see a lower tax bill from the school department in the next budget.

However, selectmen in the two towns, fearful that a credit next year means a even bigger bill the year after, asked to have the credit split over three years, starting in FY17.

“I like that plan, I’m just not sure it’s contemplated under Title 20-A as something we can do,” said school board member Lionel Menard of Kennebunk, referring to the state statue which governs school budgets.

Although district Business Adminstrator Bruce Rudolph said the RSU would be “on firm ground” so long as it used the retirement refund to reduce assessments, qualifying it as an “educational use” of the money, some questioned if lack of a plural — year, instead of years — meant the district should not dole out unanticipated revenue over multiple budgets.

The debate made the fi- nal votes close enough that school board Chairman Maureen King had to break out a calculator to figure out the final tally.

By law, each school director’s vote is weighted to reflect the population of his or her town and the number of people he or she represents. The vote of a Kennebunk director is actually worth 98 votes toward the 999 that make up every school board decision. Meanwhile, Arundel and Kennebunkport directors get 69 and 68 votes each, respectively.

Under the weighted vote method, the final tally in favor of the proposed budget came to 470-431.

Retirement riddle

What seemed to irk those who voted against the budget was not the $1.13 million increase in spending. Instead, it was the loss of an expected $1.19 windfall on the revenue side of the ledger.

According to interim Superintendent Kevin Crowley, the former SAD 71 towns of Kennebunk and Kennebunkport overpaid into the retirement program for school staffers from 1992 to 1999. Maine- PERS invested that overpayment “fairly aggressively,” he said, such that the school district, even after transmogrifying into RSU 21, was able to make its annual retirement contributions from earned interest, while the principal continued to swell by nearly

$600,000.

However, in October, MainePERS advised the school district that changes in accounting rules meant it could no longer maintain the fund. The money had to be returned to the district.

The one hiccup came when school board member Jeffrey Cole, of Kennebunk, pointed out that Arundel had benefited from payments made from the MainePERS fund since it joined the district in 2008. Because that payment came from an account to which Arundel never contributed, school officials calculated Arundel should repay $33,722 in retirement payments made on its behalf over the past seven years.

In late March, Crowley sent town managers an agreement for splitting the MainePERS refund, to be approved by selectmen, as well as a letter asking how each town wanted to deal with the amount due by Arundel.

Kennebunkport selectmen took up the Maine- PERS issue at an April 9 meeting, while their peers in Kennebunk followed suit on April 14. However, neither addressed the bill to Arundel.

In Kennebunkport, that seemed an oversight, as selectmen seemed more interested in the town’s $458,240 refund, based on the 61.5/38.5 percent split proposed by the RSU. Meanwhile, in Kennebunk, which was due $731,678, selectmen seemed to sense a trap when taking up the issue April 14.

Budget board member Edward Karytko intimated the school board was trying to make selectmen of the Kennebunks the heavy when it came to demanding money out of Arundel taxpayers.

“The word on the street as to why the school board doesn’t want to take charge of this and get the money back from Arundel is that it’s political,” he said. “With the bond vote coming up, they don’t want to make any waves out there.”

In other words, Karytko said, with a $56.5 million bond proposal on the June 9 ballot — pared down from a building bond rejected by voters last year — school officials don’t want to risk losing votes from Arundel should people there become angered by burgeoning tax bills.

Meanwhile, Gayle Spofford, a member of the RSU finance committee, said application of the full Maine- PERS refund toward the coming school budget, as anticipated in Crowley’s proposed budget, would make the assessment for Kennebunk and Kennebunkport “artificially low.”

In fact, with the refund, the school portion of property tax bills in Kennebunk was slated to go up just 0.47 percent, or $7.03 per $100,000 of assessed property value, while Kennebunkport tax bills would actually drop by 1.91 percent or $14.59 per $100,000 of valuation.

“Then next year we’ll get slammed in the face, because we all know it doesn’t matter how many times we ask them to cut, the voters always vote the budgets in, which means it’s going to go up,” Spofford said.

In Kennebunkport, selectmen had already done that same math. Faced with the prospect of the 2017 school budget growing another million or more, to something approaching $42 million, but without the $1.18 million from MainePERS as an offset, and with the possibility of the payments coming due on the building bond, selectmen decided they’d rather take their MainePERS refund and squirrel it away for future use, rather than apply it all to the 2016 spending plan.

At their April 14 meeting, with urging form Spofford and Karytko, Kennebunk selectmen hatched the same idea.

“Send us a check,” Selectman Al Searles said, summing up the town’s response, which pointedly avoided addressing the Arundel refund.

However, in an April 17 memo, Crowley said the check would not be in the mail.

“Please note, RSU 21 is not obligated to return the money to the former SAD 71 towns,” he wrote. “The only restriction on RSU 21 is that the funds must be used for educational purposes.”

It appears that, in being asked to take aim at Arundel, selectmen in Kennebunk and Kennebunkport thought they were being offered a gift that was not the school department’s to give. At their April 24 meeting, Kennebunkport selectmen did an about face and agreed to Plan A — application of the full MainePERS refund to the 2016 budget. However, Kennebunk was not finished trying.

At Monday’s school board meeting, Kennebunk Town Manager Barry Tibbetts and Finance Director Joel Downs asked the school board to consider doing as the towns had planned, and placing the MainePERS refund into a reserve account, to be applied to assessments a bit at a time in the 2017-2019 fiscal years.

“What we want to do is smooth out the mil rate,” said Tibbetts. “One thing we don’t want to see in a municipal mil rate is a drop and then a large increase. That’s very disruptive to the residents and the business.

Kennebunk would get a $243,893 credit in each of those three years, Downs said, while Kennebunkport would enjoy $152,745.

That was the scheme school board members agreed to, along with a plan to work out an annual repayment deal with Arundel, the exact details of which are still to be determined, Crowley said.

However, without the full MainePERS refund applied to the FY16 budget, the 0.47 percent increase in Kennebunk tax bills will become a 2.88 percent increase, Crowley said, while the Port’s 1.91 percent decrease will instead become a 1.27 percent bump.

Meanwhile Arundel residents can expect a 3.08 percent increase, good for $44.62 per $100,000 of valuation, on the school portion of their tax bills. And that’s before the $33,722 bill is dealt with.

Still, a larger increase this year, followed by a commensurate spike next year, is better than a minimal rise chased by a gaping chasm, at least in the eyes of selectmen.

“They want to smooth out the mil rate, which is something we don’t think about that often,” Crowley explained to the school board.

Even so, not every school director was content with that explanation, and Domine, at least, was willing to toss bon mots.

“The selectmen are just trying to throw roadblocks in the way of the school district. They should be embarrassed and ashamed of themselves,” he said, to a smattering of applause from the audience.

“I have no personal interest in dealing with the selectmen of Kennebunkport in this genteel way,” he said, seeming to find fault with his fellow directors for not putting up more of a fight to apply the full MainePERS refund to the FY16 budget proposal. Not doing so, he said, only allowed selectmen to “unnecessarily” increase tax bills next year.

“The honest truth is, we got a refund and we ought to spend it as the state intended us to,” he said.

Next up

• District budget meeting — 7 p.m. Tuesday, May 12, at Kennebunk Elementary School.

• Budget validation vote — 8 a.m. to 8 p.m. Tuesday, June 9, at polling places in each town.

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