2018-03-23 / Front Page

Local cost of schools up 6.4 percent

By Duke Harrington Staff Writer

Even in a budget year that is, in the words of its chief presenter, “not at all surprising,” spending in RSU 21 is up 5.15 percent.

“That is not small. That is large. But it is largely driven by debt that we have already incurred,” said Matthew Fadiman of Kennebunk, chairman of the school board’s finance committee, as he unveiled a $48.13 million budget for the upcoming 2018-2019 school year.

And the local hit is larger still. After subtracting for state subsidies and other revenue, the cost to local taxpayers for the new plan — approved unanimously in its first reading, Monday, March 19 — will come to $41.16 million.

That’s an increase of $2.48 million, or 6.41 percent.

Based on the cost sharing formula for various aspects of the school budget, $25.81 million of the “local share” will be covered by Kennebunk taxpayers, $10.2 million by those in Kennebunkport and $5.13 million by residents and businesses in Arundel. As currently drafted, new budget would add $89 per $100,000 of valuation to property tax bills in Kennebunk (an increase of 5.38 percent), as well as $83 per $1,000 in Arundel (up 5.35 percent), and $15 per $1,000 in Kennebunkport (up 1.72 percent).

Still, Fadiman argued, the increase is not as large as it seems. Of the year-to-year increase, $743,953 comes in the form of a bump in the annual bill on a $56.5 million bond approved by voters in 2015 to rebuild three local schools — Kennebunk High School, Kennebunkport Consolidated School and the Mildred L. Day School in Arundel.

That debt payment tops out in the FY 2019 budget at $4.64 million, accounting for 9.63 percent of all school spending for the fiscal year that starts July 1.

“This is the most painful year,” Fadiman said. “From next year going forward to the retirement of that debt 20 years from now, our debt payments each year will decline.”

And there is other good news. By the time the school board conducts its final vote on the budget April 30, the numbers will reflect a savings of sort in health insurance rates.

For numbers presented to the school board Monday, the hike in the bill from Anthem was penciled in at 10 percent. However, word came late Monday afternoon that the actual increase will be “no greater than 9 percent,” Fadiman said. That’ll knock about $50,000 off the final numbers.

Fadiman also pointed out that RSU 21 stands to make money by launching a voluntary pre-kindergarten program for 4-year-olds next year at Kennebunk Elementary School.

That program will see the addition of eight pre-K teachers and a program director, as well as associated ed techs, at a cost of $837,600. The draft budget presented by Superintendent Katie Hawes called for seven pre-K classes, but in the one edit made to her proposal at its March 16 meeting, the finance committee added one more class, at a cost of about $90,000. But even with that, RSU 21 will reap $77,312 in profit as the state will add $915,072 to the district’s General Purpose Aid (GPA) subsidy for public education as part of an incentive created by legislators last year to encourage the establishment of pre-K programs in all school districts statewide.

That windfall is doubly fortuitous, Fadiman said, as, the GPA subsidy is otherwise flat, at $4.73 million, even with the $915,072 infusion.

“Absent that new pre-K program, we would have seen a very precipitous drop of nearly $1 million in GPA,” Fadiman said, noting that this $1 million would have necessarily shifted onto the shoulders of local taxpayers, creating an even bigger spike in property tax bills.

Fadiman said the drop in state dollars, pre-K notwithstanding, comes down partly to increased property values in Kennebunk, Kennebunkport and Arundel — which means the state kicks in less, relative to other districts — as well as a drop in enrollment, particularly at Kennebunkport Consolidated School.

Districtwide, enrollment is at 2,339 students, up from a low of 2,258 in 2016. The increase is driven primarily by population growth in Arundel and the rampdown of a school choice deal for Arundel middle schoolers, which has steadily shifted those students to the Middle School of the Kennebunks from Thornton Academy Middle School (TAMS), in Saco. That change will save RSU 21 $285,000 in tuition fees next year as 18 Grade 8 students come in from TAMS, although, conversely, that influx also requires the addition of three new staffers at MSK.

“An increase in enrollment is a good problem to have in Maine,” Hawes said. “When we see declining enrollment, then we start to see inefficiencies and program cutbacks.”

“Yes MSK is part of it,” Fadiman said, “but I would also attribute (enrollment growth) to that fact that we are a very attractive area and we now have very attractive buildings.”

That said, Fadiman pinned plummeting subsidy dollars to declines at certain schools.

“It’s driven almost exclusively by declining enrollment in Kennebunkport,” he said.

There are currently 174 students enrolled in Grades K-5 at Consolidated. Projections show that number falling to 159 students next year — a drop of 8.6 percent.

“I know we intend to spend a good deal of time over the next year studying that and developing a strategy for the declining enrollment in Kennebunkport, because certainly a decline from 174 to 159 is not a sustainable or favorable development,” Fadiman said.

School board chairman MaryBeth Luce of Arundel pointed out that the percentage drop is actually even greater in Kennebunk. The largest town in the district has two primary schools, Kennebunk Elementary which currently serves Grades K-3 and Sea Road Elementary School, which houses Grades 4-5. The addition of pre-K next year will shift Grade 3 from KES to Sea Road. Not counting the expectation of between 97 and 128 new preschoolers next year, Kennebunk currently has 673 elementary school students. That is expected to drop to 611 next year, between the two schools. As Luce pointed out, that is actually a larger decline of 9.2 percent.

The school board should take pains to address declining enrollment at the elementary level district-wide and not place all of the blame on Kennebunkport, Luce said.

“I think we have to be very careful that we don’t characterize this as just a blip in the road,” she said. “I think we need to really look at that and I think we need to be very realistic about it.”

Future concerns

Meanwhile, there are other factors on the horizon that could impact future school budgets, making hits in 2020 even larger than next year’s increase.

Three years ago, it was discovered that before Arundel joined RSU 21, Kennebunk and Kennebunkport paid too much into the Maine Public Employees Retirement System. Those two towns got a reimbursement that municipal officials chose to dole out in property tax relief over three years. That’s $500,000 residents of those two towns will not have mitigating their property tax bills next year.

Also, RSU 21 purchased no school buses this year, thanks to a state grant that allowed it to buy eight last year, instead of the usual four. The district will be back on its regular replacement schedule next year.

And there remain concerns the district may not have as large a fund balance to draw on next year. This year, the district is applying $1.97 in so-called “carry forward” dollars — essentially money taxed in previous years but not spent and rolled into an undesignated reserve fund — in order to tamp down the tax impact of $2.36 million in new spending.

Some directors have also questioned what might happen if pre-K enrollment falls significantly short of expectations, given that the state is providing subsidy dollars for that program in advance, instead of paying in arrears based on actual enrollment, as it does with all other grades.

Business Manager Bruce Rudolph said there would be an “adjustment” in next year’s subsidy to reflect actual program numbers.

Finally, the district expects to once again ask voter permission to divert $200,000 from its $1.35 million fund balance into its capital reserve account, for future building maintenance needs. Several audience members at Monday’s meeting suggested that is not enough, given that the state would recommend setting aside $2 million each year, based on the $100 million replacement value of all RSU 21 property.

On that point, Fadiman agreed.

“That is a floor, that is not a ceiling. That is not adequate,” he said, although he did not that the operating budget does include $500,000 in yearly maintenance costs.

“We know how we got here, we don’t want to get here again,” Luce said, referring to the need for the recent $56.5 million renovation bond. “I think the board is committed to making that ($200,000) a much more reasonable number over time, but we feel like we are doing what we can at this point, taking everything into consideration.”

Staffing shifts

Although much of the staffing shifts for next year are attributed to the addition of pre-K and the move of Grade 3 from KES to Sea Road School, there are some other noteworthy changes.

 The athletics budget, which comes entirely out of local dollars, is up 6.5 percent to $912,412. Changes include the boost of a part-time assistant trainer to full-time, in hopes of doing more in preventing concussions, adding two two coaching stipends for cross country and skiiing, and adding $10,000 to the budget for new equipment, much of which Fadiman said will go toward new field hockey uniforms.

“They are no longer required to wear the H.M.S. Pinafore skirts from the 1950s,” he said.

 The cost to run the business management office is up 13.46 percent to $374,518, although most of that is tied to the transfer of a $30,000 administrative assistant from the adult education department, which will be eliminated. Starting next year, RSU 21 is out of the adult education game and those programs will be run by Kennebunk’s recreation department.

 The local cost of the school lunch (and breakfast) program is down 3.51 percent to $133,236 despite the addition of three worker hours per day at Sea Road School, to support the move of Grade 3 from KES.

Hawes said much of that reduction is due to the expectation of increased food sales to pre-K enrollees.

 The facilities budget is up 5.1 percent to $4.5 million.

Driving that increase will be the addition of one full-time and one part-time custodian.

Non-labor costs are up 5.01 percent. Although Rudolph said the new buildings are using less energy than in the past, utility costs are up, including an expected 15 percent jump in the cost of electricity.

 The special education budget is up 5.2 percent to $8.38 million.

Drivers in that realm include the addition of three new ed techs at a cost of $120,000 and $129,000 to cover tuition for two students whose needs are profound enough to require out-of-district placement. Additionally, one Grade 3 teacher at Consolidated School will be transferred to special education.

 In addition to the loss of one Grade 3 teacher, Kennebunkport also will see a Grade 1 teacher depart for Kennebunk Elementary School and a kindergarten teacher transfer into the guidance department, splitting time between Consolidated School and Mildred L. Day School Arundel. However, the school will see an instructional strategist boosted from 20 hours per week to 32, at a cost of $11,200.

 In addition to getting Grade 3 from KES, Sea Road will also see an instructional strategist boosted from part- to full-time. However, the school will lose one Grade 4 teacher, who will be reassigned to Grade 6 at the middle school.

 Besides changes already mentioned, the middle school can look forward to getting a part-time Spanish teacher (at a cost of $39,000), while its guidance secretary will be boosted from part-time to full-time (adding $9,500 to the budget).

 The only anticipated change at Kennebunk High School is the addition of a parttime drama teacher, at about 90 minutes per day, to lead one additional drama class per semester, at a cost of $13,300.

A public hearing on the proposed fiscal year 2019 school budget will be held at the school board’s April 2 meeting.

The annual district budget meeting is scheduled for May 15, while the budget validation referendum will take place with primary voting on June 12.

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

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