2017-03-24 / Front Page

School budget numbers are in

By Wm. Duke Harrington Staff Writer.


RSU 21 Director Matthew Fadiman, of Kennebunk, who also chairs the district’s finance committee, presents the proposed $45.9 million budget for the 2017- 2018 school year, during its first reading at the March 20 school board meeting. (Duke Harrington photo) RSU 21 Director Matthew Fadiman, of Kennebunk, who also chairs the district’s finance committee, presents the proposed $45.9 million budget for the 2017- 2018 school year, during its first reading at the March 20 school board meeting. (Duke Harrington photo) KENNEBUNK — While RSU 21’s proposed $45.9 million budget for the 2017- 2018 school year has been circulating for weeks, the public got its first inkling Monday of what that might mean to local property tax bills.

The spending plan, which is up $2.8 million from the current year, includes $44.62 million for operation of the public schools, $1.33 million in new debt payments on the $56.5 million school renovation bond approved by voters in 2015, and $116,678 for adult education. The total represents a year-to-year increase of $2.8 million, up 6.5 percent.

“That is not a small number,” finance committee chairman Matthew Fadiman, of Kennebunk, said during his March 20 presentation of the budget to the school board.

“I was taught that when there’s a 600-pound gorilla in the room, why not say there’s a 600-pound gorilla in the room,” Fadiman said. “That is a large impact.”

However, Fadiman pointed out that absent of the new debt payments, spending is up 3.41 percent.

“I’m not going to poison the well saying whether that’s a large or a small increase, but I think it’s very important and very salient to recognize the difference — that it’s with the new debt that we are looking at a 6.5 percent increase,” Fadiman said.

With the $1.3 million increase in payments for construction work at Kennebunk High School, Kennebunkport Consolidated School, and Mildred L. Day Elementary School in Arundel, RSU 21 will pay $3.89 million in principal and interest this year toward those projects.

Annual bond hikes will continue to escalate through 2020, when they begin to decline, on the way to eventual payoff in 2037. However, this year’s increase is mitigated by declining payments on previous borrowing for work at Kennebunk Elementary School and the Middle School of the Kennebunks, as those bonds approach the end of their own lifespans.

Still, Fadiman admits, that does little to put his gorilla pal on a starvation diet. Will all bonds combined, debt service in RSU 21 is up $1.26 million, or 26 percent.

“The debt service is the biggest single driver to the overall budget,” Fadiman said. “Not that it makes it any more fun to see that, but these numbers are not different than we anticipated. They are no different than what was projected to the public over the last few years as we contemplated the new construction bonds. We’re right where we anticipated we’d be.”

However, toward the end of his hour-long presentation, Fadiman noted that voters will see an additional question on this year’s budget warrant, designed to help prevent the need to take out such sizable renovation bonds in the future.

“We as a community are investing heavily in our buildings, and we have a responsibility to maintain those, to honor the debt we’ve taken on,” he said. “Rightly so, there have been questions over the last few years as to, how did you, as a [school] board, and we, as a community, let our buildings get in the condition that they are?

“Well, one of the ways that got there is we deferred maintenance,”

Fadiman said. “We as a board, we as a community, deferred maintenance well beyond what we should have, and that led to some of the examples you saw, at the high school where our disabled students could not get to the bathroom properly, and windows being used as a fire escapes. Well, we as a finance committee, are committed to not letting that happen again.”

For that reason, voters will be asked to appropriate $200,000 from RSU 21’s undesignated fund balance, which as of June 30 contained $1.74 million, according to district business administrator Bruce “Rudy” Rudolph.

That’s not as much as should be allocated, Fadiman said. The Maine Department of Education recommends that school districts bankroll 2 percent of the total replacement cost of all buildings each year. With replacement cost for RSU 21’s six building pegged at $100 million, that would mean setting aside $2 million. Another methodology is to set aside two to three month’s worth of total operating costs, but RSU 21 uses about $4 million per month.

Still, Fadiman said, $200,000 is a start.

Currently, RSU 21’s capital reserve account has about $1.02 million, but the school board has already earmarked $250,000 of that to rebuild the KHS track, with another $450,000 dedicated to the current building reconstruction project — an allocation made to help shave some dollars off the bond request sent to voters.

Revenue

One of the things driving up the local assessment for school funding is a drop in state aid.

As currently proposed by Gov. Paul LePage, a recalculation of how the state divvies up subsidies for public education, will carve about $527,000 from the $4.6 million RSU 21 got last year.

According to Superintendent Katie Hawes, about $25,000 of the reduction is due to LePage’s efforts to reduce spending on school administration. The rest is due to the state funding formula.

The formula cuts up the subsidy pie based on a three-year average of local property valuations as of the most recent state numbers divined from property sales at least 18 months old.

Based on those numbers, the state calculated $100 million in property values — not counting lots sheltered in TIF (tax increment financing) districts — for the three RSU 21 towns. According to Rudolph, a rough breakdown of the valuation spike saw the state adding $8 million to Arundel, $49 million to Kennenbunk, and $43 to Kennebunkport.

That annual growth in the state’s eyes puts RSU 21 second only to Scarborough in terms of annual growth, Hawes said, and resulted in the drop in state subsidy, based on the theory that, with higher property values, Kennebunk area families can afford to shoulder a greater percentage of cost for public education.

Although many school boosters readily recall a 2003 statewide referendum that called on the state to cover 55 percent of the cost of local schools — a demand the legislature has never met — that was aggregated statewide, Fadiman said. In RSU 21, the expected $4.1 million state subsidy only covers about 9 percent of the budget, he said.

Hawes said the increase in valuation is, in many ways, good news, despite the hit it presages for state funding.

“I think that [growth in property values] is a direct result of the work that we are doing to continue to thrive as a school,” Hawes said. “Our schools, students and staff are continuously making local, state, and national news. We are continually winning recognition and awards. And so, time and again people tell us they have moved here for the schools.”

Hawes noted that student enrollment has plateaued in RSU 21. While down from 2,784 students in 2010, this year’s school-age population in the three RSU 21 towns of 2,533 is essentially the same as the year before, 2,532. Meanwhile, the shift of Arundel students from Thornton Academy Middle School to MSK helped drive the number of students educated in district up from 2,258 to 2,290. And next year, Hawes said, all but five fifth-graders at MLD will attend Middle School of the Kennebunks.

“So, our numbers are running counter to the declines we are seeing elsewhere across the state,” Hawes said.

What may be counterintuitive, however, to anyone not already well-acclimated to state math, RSU 21 stands to actually lose more money if the state Legislature reverses LePage’s cuts and increases the overall funding pie.

“Should the Legislature put money back in for system administration, we would actually realize a $77,000 loss, in addition to this $527,000,” Hawes said. “We are essentially going to pay for the other districts who are spending more money [on administration] that we are.

That estimate is based on how any increase in funding would be shifted to towns with lower property values, Hawes said.

“So, while I obviously believe system administration is important, I’m not lobbying anybody in Augusta to have anything from that cut put back in,” Hawes said.

Hawes said the new budget contains “no significant changes” to programming, and only minor alterations to staffing. Most of the $1.14 million growth in district payroll is due to contracted raises and changes in health insurance enrollment, she said. It also includes a 10 percent “placeholder” for a potential spike in health insurance premiums. However, that number will change, and may even go down within the next few weeks, once the actual premium hike is set in stone.

Tax bills

Based on how the local share of the RSU 21 budget is divided based on a cost-sharing agreement approved by the three towns, the 8.26 percent increase to $39.33 million will translate to a 5.42 percent in crease in Arundel property tax bills, adding $82 per $100,000 of assessed value.

In Kennebunk, the increase is 5.22 percent, where tax bills will go up $83 per $100,000 of value, while in Kennebunkport, the new budget results in a 6.28 percent hike, adding $52 per $100,000 of value.

Thus, the median single-family home in Arundel, assessed at $200,000 can expect to pay at extra $164, amounting to $3,188 of the local property tax bill. That number does not count that portion of the tax bill directed to municipal and county allocations.

In Kennebunk, the median single-family home has a $250,000 assessed value. There, homeowners can expect $4,183 of their tax bill will go toward the schools, up $208.

Finally, in Kennebunkport, the median home is assessed by the town at $300,000. That means $2,640 of the tax bill is dedicated to schools, up $156.

Public hearing

A public hearing on RSU 21’s proposed $45.9 million budget for the 2017-2018 school year will be held at 6 p.m. on Wednesday, April 12, at Kennebunk Elementary School. The district budget meeting, at which voters will get to weigh in on 11 budget articles, will be held at 6 p.m. on Tuesday, May 16, at KES. Voters then go to the polls in their respective towns for the annual budget validation referendum on Tuesday, June 13.

Staff Writer Duke Harrington can be reached at news@kennebunkpost.com.

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