2016-01-08 / Front Page

RSU 21 budget up 7.5 percent

Preliminary look at 2017 budget includes $1.3 million in pay hikes
By Wm. Duke Harrington Staff Writer

KENNEBUNK — A preliminary look at the coming fiscal year for Regional School Unit 21, provided to school board members at their Jan. 4 meeting, shows spending is due to spike 7.5 percent.

And that prediction is based on just two key drivers – the first $2 million bond payment toward the district’s $56.5 million building renovation project, and $1.3 million in increases to salaries and benefits.

“In terms of overall spending, this 7.5 increase in spending, that doesn’t even take into account any other budget items,” said Jeffrey Cole, a school board member representing Kennebunk.

According to Superintendent Kathryn Hawes, the $2 million bond payment by itself represents a 4.5 percent increase in the district’s current $40.2 million budget.

The salary hikes, which include a projected 10 percent increase in the cost of health insurance premiums, is up 3.2 percent.

Those numbers are not final, however. While the district did recently finalize a new three-year contract with the unions representing teachers and bus drivers, it is still negotiating with custodians and education technicians. Hawes said the recently completed contracts include pay hikes of between 1.5 and 2 percent, with allowances for longevity and obtaining advanced degrees making up the rest of the increase, Hawes said.

Also included into the salary line is an increase in special education, caused by new students.

“Child Development Services has told us we are getting kids with really complex needs coming into our district in the fall,” Hawes said, predicting the need for eight new ed techs, as well as an additional bus run, to service those students.

RSU 21 Business Manager Bruce “Rudy” Rudolph said the cost of the extra bus run is not yet know, but a ballpark estimate on the ed techs is they will each be paid about $35,000.

“This is all very preliminary,” he said. “Once we get to the budget [review in March] we’ll have that screwed down tighter, and we’ll know where those kids live and exactly what their needs are.”

The presentation made by Hawes at Monday’s school board meeting was intended only as a broad overview. School directors were scheduled to get a more complete briefing at a joint “dine and discuss” meeting to be held with selectmen from the district’s three member towns on Thursday, Jan. 7.

The numbers to be provided at that meeting were expected to include some bright spots.

Before joining RSU 21 in 2009, Arundel gave school choice to its students, because it has no middle or high school. Many students chose to attend Thornton Academy in Saco, and several still do. However, Hawes said she anticipates that between 12 and 18 students from Arundel’s Mildred L. Day Elementary School will pick the Middle School of the Kennebunks (MSK) next year over the Thornton option they still retain. Because RSU 21 believes it can educate those students for less than the $7,400 in tuition paid to Thornton Academy, and with the savings on transportation, the district stands to save $100,000 next year, Hawes said.

Also saving roughly $100,000 is a new contract on heating oil – “We locked in a good rate,” Hawes said – while a restructuring of debt service on past MSK construction projects will save another $100,000.

School director Matthew Fadiman of Kennebunk, who chairs the school board’s finance committee, said the district also did well on the $56.5 million construction bond.

Rather than work through the Maine Bond Bank, the school district worked with Kennebunk Town Hall and bond adviser Joseph Cuetara to facilitate a private sale. That project ended up netting the district a 2.7 percent interest rate, as opposed to the 3.4 percent expected from the bond bank.

“That will save the taxpayers $2.4 mil- lion over the life of the loan. That’s a big chunk of savings,” Hawes said.

Fadiman said the winning bidder at the bond sale, Citigroup Global Market, also offered a $4 million bond premium in addition to its interest date. That additional money will be put in reserve and used to “even out the impact of interest payments in the first couple of years of the loan,” he said.

Hawes said an additional area of savings may spin out of a facilities plan to reconfigure elementary schools. Currently in the review stage, that plan is scheduled to be previewed at the Jan. 25 school board meeting, with a full report due “in May or June.” Previously, there has been talk of closing the Sea Road Elementary School.

However, one looming unknown is the state’s general purpose aid for education subsidy, as well as federal grant money. If those dollars come in significantly higher or lower than expected, it could shift the anticipated budget increase accordingly.

Last year, RSU 21 got about $600,000 more from the state than had been anticipated when voters weighed in on the budget in June. That money could not be spend, because voters had not approved any appropriations from it, and will be carried over into the district’s undesignated fund balance, Rudolph said. From there, it will likely he tapped in the next budget to help reduce the need from taxes. In each of the last two years, Rudolph said, the district has taken $1.2 million from surplus to help mitigate the hit to taxpayers.

Finally, Hawes said there may yet be one additional area of savings.

“I would just remind you that we are really working hard to do a full review of [the state’s] essential programs and services [funding model] to see what we are doing that is above and beyond that,” she said, suggesting that changes in programming could be a part of the new budget.

When the school board, selectmen and residents see the first official draft of the new school budget, they will notice the school construction bond has been taken out of the operating budget to be considered separately.

“The voters have directed us to spend $56.5 million and they understand the way to raise that, plus interest, is through tax revenue,” Fadiman said. “That’s why we are parsing, or separating, those two out, so the board can understand what the normal operating costs are and what the capital project costs are.”

For that reason, when Fadiman, Hawes and others school leaders speak of a 3 percent increase in the school budget for the coming year, they are only talking about the operating costs less the $2 million bond payment.

“We chose not to include the new debt service [in operating budget numbers]” Fadiman said. “That’s a required obligation. We don’t have the ability to say, no, we don’t want to redo our schools.”

At Monday’s school board meeting, directors voted unanimously to back a finance committee recommendation, which calls on Hawes to present three versions of the upcoming budget for consideration.

One will be a “zero-percent” budget, which will predict what jobs and services would need to be cut next year to leave tax rates in the three RSU towns unchanged, in order to accommodate contracted salary hikes and other cost increases.

The second would be a so-called “carry forward” budget, which would hold the lineata 3 percent increase–the hike in spending currently anticipated, minus the bond payment.

The third would be Hawes’ own recommendation, which, Fadiman said, could be higher or lower than the 3 percent increase.

“I want to make note of the fact I was one of the individuals who was strongly in favor of seeing what a zero-percent budget would look like,” Fadiman told his fellow board members, “but I can tell you here and now I would not be in favor of that, because it would mean obliterating all of the programs and services that make us an exceptional school district.”

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

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