A historical and strategic review of Dracuts Budget SituationTown and School Budget 101

Who are we?Reviewing historyBudget process: theory & practiceLets look at the numbersLocal revenue approaches Is that enough (state aid, school spending law)?Next steps

Overview

Passage of Dracut High Reconstruction, June 2011Multi year process to gain approvalSignificant Tax IncreaseSpecial Town Meeting used to time vote for regular electionState reimbursement critical to approval (62% of $59.5 million)As a debt exclusion, does not hit tax bills all at once, follows a curveDesign capacity of 1150 unused under minimum funding

History: 2011-2013 (DHS)

Passage of Lowell Voke Renovation, December 2012Small Increase in Building CapacityVery Small Tax IncreaseSupported by DHS proponents; timing of vote in the winterState reimbursement even larger: 78%As a debt exclusion, does not hit tax bills all at once, follows a curveDanger in that the increase in Voke enrollment strains the budget

History: 2011-3 (Voke)

Proposed over objections of Board of Selectmen$2.9 million permanent increase in $41 million levy limit$279 increase on average tax billAverage home value was $268,200 at the timeDue to condos, median home value substantially lowerVote could have taken place in July 2013Delayed until September, No campaign got 72%

History: 2011-3 ($2.9M Override)

Proposed in a climate of distrust of government distrust(and lack of selectmen support)

Not enough lead time, consensus, to build public supportOverconfidence: amount of $2.9 million chosen without planShifting fiscal picture from DPS undermined supportNo side painted it as a much larger increase than it wasAccusations yielded unfavorable local press coverage $2 million campaign (restoration of cuts) more justifiableAny override might require 2 votes to gain enough support

Reasons for failure of $2.9M

The State Constitution (1880) establishes a right to public education.

[i]t shall be the duty of legislatures and magistrates, in all future periods of this commonwealth, to cherish the public schools and grammar schools in the towns. -Massachusetts Constitution, pt. II, ch. V, II.

A Broader Historical View

Dracut school system was historically funded at lower levels1993 state court decision (McDuffy vs. Secretary of Education)Result: 1993 Education Reform LawState aid boost to local Dracut education fundingFunding levels caught up in mid-90s to other communitiesAround 2004, this positive trend was reversed

A Broader Historical View

Minimum baseline all districts must contribute: Foundation Budget.Formula includes: enrollment, income, property valuationDoes not factor in funds from school fees or Federal GovernmentNSS = Town Contribution plus Chapter 70 aidNSS requirement can include make up funds from prior year

Net School Spending

Net School Spending Trend: Dracut

No; vast majority of towns spend more than NSSTyngsboro: 13.1% above NSS in FY14; area cities at 0%Dracut: Blue collar town with mandated regional vokeLack of Highway Access precludes high-value developmentCost of proximity to Lowell (charter, public safety expenses)

Must Dracut use NSS to Set Budget?

Worked well from 1995-2003Health Insurance (Retiree especially) has hurtFollowing chart shows Health Costs (Dracut) included in NSS

Is meeting NSS each year ok or not?

Schedule 19 (filed in October with DESE) shows the trend

What goes into NSS has changed!

To some extent, but more pronounced in DracutUnusual for towns in the bottom tier of school spending

Out of District costs are 6-7% of Net School Spending Insurance Costs are 22% of Net School Spending (FY14)Typical low tier district: 4% OD, and 15% Insurance

Is this happening everywhere?

Schools are accused of taking 65% of the budgetTrue but this funding is not the percentage of tax revenue30% of the budget is funded by state aid for Dracut Public SchoolsSchool expenses also include costs outside of NSS

Do other depts need more funding?

School Transportation ($2.2 million a year)Greater Lowell Voke ($3.8 million a year)High School and Voke and Englesby Debt ($2.4 million a year)Englesby Debt already paid for by the MSBA

What are the costs outside of NSS?

Superintendent has role in contract negotiations, but...salaries have not spiked and are well below average

Total investment in classroom teachers below normSelectmen have a bit more control as they participate in the

health insurance negotiationsLack of spending results in unforseen costsDon't be penny wise, pound foolish

A spending problem?

Lack of spending on new roof increases energy costsLower-than-needed SPED budget results in lawsuitsLow levels of educational performance may affect what businesses

choose to locate in Dracut Instability in staffing, rigid bus policies may drive exodus to charter

schools

Penny Wise - costs

Dracut has 80% more kids age 0-4 than WestfordWestford has 3% higher school age population (5-19)

(source: city-data.com)Spending deficit in Regular Ed?

Result: a more transient town

Parker closure was supposed to save money (incr. Bus cost)Some consolidation of admin building possibleMSBA energy upgrades (Brookside, Campbell)Fold some Buildings & Grounds duties into DPW?Finance operations consolidation?

Small Cost Reductions Possible

Cost Savings Don't Fix This (source: DESE)

Town Meeting Can Repurpose some Stabilization FundsTown finance office may be looking at this

Debt exclusions possible on debt already owed* Salt Shed* Fire Station* Town Hall

Override may become politically viable if the charter tuition problem gets worses

Changes in the Board of Selectmen, Finance may be needed

More revenue still needed

12% above NSS (as in Tyngsboro) may not be attainable Infusion of funds does not guarantee funding above NSS levelsMcNamara proposal: fund schools at 5% above NSS3% above NSS would get us up to the 5th percentile

What is a reasonable goal?

Other towns can do it!

Make an override modest and saleableAll town departments deserve to be at 5th percentile and above!Benefits Structure can be reformedHigh Health Benefits results in unnecessary costs, and those funds can

be redirected to employee salary where it is needed 60% of NSS going to Instruction would yield a better school system

Proposed Long-Term Approach?

501 (c)(3)501 (c)(4)PACLegal presence may be needed to provide push back

particularly regarding treatment of the health care expense (underfunding, repayment) as a part of school spending

Participation in town committees is important

Parents May Need Representation

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Questions

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