HOW DID THE FAILED OVERRIDE IMPACT THE SCHOOL DISTRICT’S BUDGET?
In February the School Committee for the Manchester-Essex Regional School District approved an operating budget of $20,456,476. Essex and Manchester accepted this budget and voted to authorize tax assessments for their respective towns to fund this budget based on the apportionment formula in the Regional Agreement. A portion of each town’s appropriation was contingent on overrides in each town, as presented in the chart below.
Amount Contingent on Override
Total FY12 Appropriation
Note: The difference in the amount the towns’ approved assessments and the total approved budget is accounted for by revenue sources already held by the District or that flow directly to the District (reserves, school choice, chapter 70, regional transportation, circuit breaker, etc.)
As a result of the override not passing and in order to keep the apportionment between the towns equal under state law and the apportionment formula in the Regional Agreement , the towns can only provide that funding that was not subject to the override, or a total of $16,815,635 (column 1 minus column 2 in the chart above). In short, for the District to receive any of the specific amounts that were contingent on passage of the overrides, the overrides had to pass in both towns. Failure of the override put the District’s available funding for FY 12 under the approved budget at $19,984,981 [$16,815,635 (town funding) + $3,169,346 (real and projected revenue direct to the District)].
WHAT OPTIONS ARE AVAILABLE TO THE SCHOOL DISTRICT?
Based on guidance provided by the Massachusetts Department of Elementary and Secondary Education (“DESE”) and the District’s counsel, the District may adjust the other sources of revenue that are available or projected to the District (reserves, chapter 70, regional transportation, circuit breaker, etc), in order to fully or partially compensate for the override amounts up to the approved budget of $20,456,476.
Whether the District adjusts the revenue amounts for the budget or not, the MERSD School Committee is the body that determines the final FY 12 budget up to the previously approved $20,456,476, and there are no additional financial implications to the towns.
The current scenario allows the District to credit as revenue additional amounts of the projected Chapter 70 funding from the State. Since the budget was developed, approved and submitted to the towns, the Massachusetts House and Senate have maintained the Governor’s recommendations for an increase in Chapter 70 funding for Manchester-Essex as a result of increased enrollment in the District. Thus, the likelihood of the District actually receiving the increased Chapter 70 funding has become more reliable. If approved in the final FY 12 budget for Massachusetts, the increased Chapter 70 funding would be sufficient to fill the gap left in the District’s budget due to the override not passing.
WHAT HAS THE SCHOOL COMMITTEE DECIDED TO DO?
Based on the circumstances explained above, at it’s the June 28, 2011 meeting the School Committee voted to amend its original operational spending budget to $20,238,446. The budget spending amount was adjusted down by half of the projected Chapter 70 funding (approximately $250,000). This is consistent with the District’s practice during the budget season as more information on the Chapter 70 picture was learned from DESE and other reports. Prior to town meetings and in anticipation of the possible increase in Chapter 70 funding due to enrollment, the District had increased revenue to reduce the original assessments to the towns to help facilitate an override vote. In keeping with this approach, the District will split the projected Chapter 70 revenues between spending and reserves as outlined prior to the town meetings. This results in a total budget of $20,238,446, an increase of only 1% over FY 11 spending.
WHAT IS THE IMPACT ON THE TOWNS?
No Financial Implications / No action needed unless the towns oppose the amended budget. Each town would have to conduct a special town meeting for the purpose of disapproving the amended budget. If after 45 days neither town takes action to oppose (i.e., neither town calls a special town meeting), the amended District budget becomes a legal budget.