Town and School Budget 101

A historical and strategic review of Dracuts Budget Situation

Overview
Who are we?
Reviewing history
Budget process: theory & practice
Lets look at the numbers
Local revenue approaches
Is that enough (state aid, school spending law)?
Next steps

History: 2011-2013 (DHS)

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

History: 2011-3 (Voke)

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

History: 2011-3 ($2.9M Override)

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

Reasons for failure of $2.9M

Proposed in a climate of distrust of government distrust

(and lack of selectmen support)

Not enough lead time, consensus, to build public support
Overconfidence: amount of $2.9 million chosen without plan
Shifting fiscal picture from DPS undermined support
No side painted it as a much larger increase than it was
Accusations yielded unfavorable local press coverage
$2 million campaign (restoration of cuts) more justifiable
Any override might require 2 votes to gain enough support

A Broader Historical View

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 levels
1993 state court decision (McDuffy vs. Secretary of Education)
Result: 1993 Education Reform Law
State aid boost to local Dracut education funding
Funding levels caught up in mid-90s to other communities
Around 2004, this positive trend was reversed

Net School Spending

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

Net School Spending Trend: Dracut

Must Dracut use NSS to Set Budget?

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

Is meeting NSS each year ok or not?

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

What goes into NSS has changed!

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

Is this happening everywhere?

To some extent, but more pronounced in Dracut
Unusual 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

Do other depts need more funding?

Schools are accused of taking 65% of the budget
True but this funding is not the percentage of tax revenue
30% of the budget is funded by state aid for Dracut Public Schools
School expenses also include costs outside of NSS

What are the costs outside of NSS?

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

A spending problem?
Superintendent has role in contract negotiations, but...

salaries have not spiked and are well below average

Total investment in classroom teachers below norm
Selectmen have a bit more control as they participate in the
health insurance negotiations
Lack of spending results in unforseen costs
Don't be penny wise, pound foolish

Penny Wise - costs

Lack of spending on new roof increases energy costs
Lower-than-needed SPED budget results in lawsuits
Low 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

Result: a more transient town

Dracut has 80% more kids age 0-4 than Westford
Westford has 3% higher school age population (5-19)
(source: city-data.com)

Spending deficit in Regular Ed?

Small Cost Reductions Possible

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

Cost Savings Don't Fix This

(source: DESE)

More revenue still needed

Town Meeting Can Repurpose some Stabilization Funds

Town 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

What is a reasonable goal?

12% above NSS (as in Tyngsboro) may not be attainable
Infusion of funds does not guarantee funding above NSS levels
McNamara proposal: fund schools at 5% above NSS
3% above NSS would get us up to the 5th percentile

Other towns can do it!

Proposed Long-Term Approach?

Make an override modest and saleable
All town departments deserve to be at 5th percentile and above!
Benefits Structure can be reformed
High 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

Parents May Need Representation

501 (c)(3)
501 (c)(4)
PAC
Legal 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

Questions
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