2017-12-22 / Front Page

School budget on track for 3 percent rise

By Wm. Duke Harrington Staff Writer

KENNEBUNK — Regional School Unit 21 directors have kicked off the annual budgeting process a bit earlier than usual this year, but the head start probably won’t translate into lower tax bills.

Matthew Fadiman of Kennebunk, who chairs the school board’s finance committee, made that clear from the onset of his Dec. 4 presentation of the numbers. Even if the board drew a hard line and refused to add a single new dollar to the current $45.9 million budget, spending will still climb 3 percent, just on fixed costs.

Those areas beyond the reach of budget hawks account for 79 percent of the bill. Out of reach are contracted salary increases (49 percent of all district spending), staff benefits including health insurance costs (15 percent), and debt service (15 percent).

“I don’t much like that term ‘uncontrollable,’ but we haven’t come up with a better one,” Fadiman said of these expenses, which he also referred to as “legally binding.”

“For example,” Fadiman said, “I hate to say ‘whim,’ but we really are at the whim of the MEA [Maine Education Association] Trust. They tell us what our insurance costs are going to be based on our employee count.”

Another 9 percent of the budget is tied to tuition costs — the money paid by RSU 21 to other districts who take on local students, whether because of special education needs RSU 21 is not equipped to provide, or school choice. Arundel students can pick which high school they wish to attend, while middle school students still have two more years with a Thornton Academy option before all will have to attend the Middle School of the Kennebunks. Then there are utility bills and building maintenance, which accounts for another 6 percent of spending. “The district can look for efficiencies here, but utility costs — such as electricity, heating, etc. — are largely fixed,” Fadiman said. “Some maintenance can be deferred, but that may impact our ability to maintain and protect the taxpayer’s $100 million investment in the physical buildings.

“The board tried deferring maintenance before and we now see the result,” Fadiman said, referring to the $56.5 million school renovation bond approved by voters in 2015, on which work is now nearing completion.

With so many “uncontrollable” costs, the school board really only has about 6 percent of the operating budget it can work with to try and offset the anticipated budget hike. Things on the table include textbooks, office supplies, materials for theater, band and science classes, cafeteria costs, computers and technology outlays, testing costs, software upgrades, athletics, busing costs and field trips.

“If the desire is to make the budget increase smaller than 3 percent, then most likely programs and supplies must be eliminated, or staffing cut,” Fadiman said. “If any new programs, staffing, or services are introduced, the budget increase will likely be greater than the ‘roll forward’ of 3 percent.”

One bright spot, however, is the plan to introduce a preschool program next year. The state will provide RSU 21 with $1.1 million in start-up funding for the initiative. Meanwhile, first-year costs to launch the program, initially ballparked at $1.54 million, have been squeezed to $1.03 million. That means RSU 21 could actually make a $71,036 profit by adding willing 4-year-olds to its enrollment.

But part of the larger budget issue, Fadiman pointed out, is that the state only subsidizes about 9 percent of RSU 21’s needs. That’s because, even if the state ever met a 2004 voter mandate to cover 55 percent of the cost of local education, that share would be averaged statewide. Even now, some school districts do get well above the 55 percent threshold. But general purpose aid (GPA) dollars are divvied up based on a perceived “ability to pay,” using a formula largely centered on local property values.

The GPA money also only covers costs baked into the state’s essential programs and services (EPS) funding model, which predicts the number of teachers and administrators each school district should have per pupil, and does not include money for most extra-curricular activities, including athletics.

“There aren’t any school districts in the state that are only providing an EPS level of service,” Superintendent Katie Hawes said.

Of the spending not covered by the state, about 4 percent is paid using so-called “carry forward” dollars — money raised from local taxes in prior budget years that did not get spent, which can then be applied to the next budget. According to RSU 21 Business Manager Bruce Rudolph, the district currently has about $1.3 million in its undesignated fund balance of money left over from previous budgets that has not already been committed to some specific spending item.

Finally, various fees and other revenue sources are generally enough to fund another 1 percent of the budget.

Still, the upshot is that 86 percent of RSU 21’s $45.8 million budget lands squarely on the backs of local residents and businesses, as the lion’s share of their property tax bills. That was a concern for one of the youngest members of the school board, student representative Max Leblanc.

“We’re already seeing people kind of shy away from Kennebunk because of our high taxes,” he said. “What happens when that gets too high?”

“Taxes are impactful,” Fadiman agreed. “When they go up it means there’s something else that we can’t do. But I think Kennebunk, Kennebunkport and Arundel are in a more advantageous place than most of the state. Our mil rates are lower. That’s not to say I don’t mind my tax bill. I do. It hurts when I pay it. And, quite frankly, I know there are others in our three towns who it hurts more. We need to be ever mindful of that. But I think we need to be equally mindful of the fact that the impact in Kennebunk, Kennebunkport and Arundel is much less than in many, many other parts of the entire state.”

Others on the board, meanwhile, disputed that the school tax bill drives current and potential residents from the district.

“I’d add there are a lot of people moving to these towns because of the schools. I think that’s a draw,” Kennebunk Director Rachel Phipps said.

Even so, the coming budget is unlikely to include only the previously contracted spending hikes. Among the “wish list” items tossed out at the board’s Dec. 4 budget workshop were an assistant principal at Kennebunk Elementary School, a communications manager and expanding the new Kennebunk High School auditorium manager job to a full-time position.

Still, even if the budget does go up 3 percent (about $1.4 million) or more, that does not necessarily mean property taxes will track in all three towns at a similar 3 percent spike. Key elements in the soup Fadiman referred to as “the 1,001 variables,” include how much “carry-forward” money school board members might choose to apply to next year’s budget to mitigate the tax hit, as well as how much the state elects to send RSU 21’s way — a number the board can never count on and, in most years, doesn’t even know for certain when it votes on the final plan.

“Also, keep in mind the tax burden is split across all three towns using a complex cost sharing formula based on property values and pupil count,” Fadiman said. “To keep things simple, this year Arundel bears about 12 percent of the tax burden, Kennebunkport about 26 percent, and Kennebunk 62 percent. That formula is all worked into the specific town valuations and municipal mil rate and, voila, out comes a tax bill. Simple, isn’t it?”

And while much of the coming budget is fully cooked, school board chairman MaryBeth Luce, of Arundel, reminded her peers that they will have an opportunity in the coming months to rein in annual spending hikes for the next three years.

“One thing I want to make sure we have on our radar screen is that we are in a negotiation year for our teachers union, which also covers the nurses. And for the bus drivers — we’ll also renegotiate that contract this year,” Luce said. “So, when we talk about that natural 3 percent increase, because 50 percent of the budget is salaries, this is our opportunity. This is the time when we leverage any control we have. The only time we have access to any of those levers is during these negotiations.

“We employ 475 people and we want them to make a livable wage,” Luce said. “But we are also taxpayers and we don’t love our tax bills and we all want to lower or [make] stable our taxes. So, it’s a really fine line to walk. But I just want to make sure we are all thinking about that this year, that it only comes every three years that the board actually has this opportunity to do some longer-range planning and to know what those increases are over time that make up half of our budget.”

Hawes is slated to present her draft budget to the school board’s finance committee on Feb. 7. That group will present its recommendation to the full school board on March 19. A public forum will be held April 2, with a final school board vote expected April 30. The district budget meeting is set for May 15 and the annual budget validation referendum vote June 12.

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

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