Wednesday, October 22, 2014

FY16 Budget Preview

Over the summer of 2014, the Manchester Essex Regional School Committee and Leadership Team met to discuss its strategy to address what some might deem a “perfect storm” of circumstances. On one front, our school population has increased by 24% or 281 students over the past seven years. At the same time, our member towns have asked for and received a plan from the district that accounts for and begins to fund a looming debt related to retiree benefits. Often referred to as OPEB or unfunded liabilities, the district has embarked on a long-term savings plan that will fund these liabilities, but will require steadily increasing payments out of already precious resources. Add to this that the district no longer has the reserve funding that has offset town assessments in the past. Our communities face a difficult, but not onerous, decision in terms of school funding.

Where are we now?
  • Our students and faculty continue to succeed in spite of difficult circumstances:
  • Our elementary schools continue to address the needs of all learners, focusing efforts on reaching a broad spectrum of student needs in spite of buildings experiencing system failures and inadequate learning spaces
  • Our middle school is stretched to the max with a student population of 376. In 2014, because of budget constraints, the district had to cut a total of two teaching positions and four custodial positions. Going into 2015, we cannot afford to lose more staff and sacrifice educational quality.
  • Our high school continues to compete academically with the best high schools in the state. Yet, given our budget forecast, the possible reduction in staff that may occur in 2015 could have a dire impact on the high school.

Significant challenges
  • Continued use of the reserve funds is not possible. 
  • Our two elementary schools will have large capital investment needs in the near future.  Though we have begun planning to replace/renovate these facilities outside the operating budget, we may have to invest substantial operating funds in the near-term to safely maintain them while the process moves forward.
  • We have already made significant cuts in the FY15 budget, including the layoffs of four staff, choosing not to fill two teacher retiree positions, and increased fees to families. Severe cuts to program or staff will be necessary should a funding increase not occur.
  • Students will bear the burden of continued cuts, with possible reductions in access to arts, music, drama and/or athletic programs.
  • Average class sizes at the Middle School are projected to be 27-28 students for the next five years.

·  Where are we in the budget process?
  • Discussions with our member towns continue as we try to find a solution that keeps the budget within the confines of prop 2½. Should that be impossible, the district plans to move forward with a proposed override that should sustain us through 2024.
  • The district’s public budget process will begin early this year, with the district proposing its annual budget in November.  The preliminary budget will be presented at the November 4th School Committee Meeting. 

Enrollment growth requires more resources
  • Our student population has grown 24% (281 students) over the last seven years. At the same time, 22.8% or 336 students (the size of the ME Middle School) have been identified as “high need.” A student is designated high need if he or she is categorized as low income, ELL (English Language Learner), former ELL, or a student with disabilities.

We are struggling to balance our student population’s needs with towns’ fiscal restraints
  •  From 2012 through 2014, the annual increase in MERSD’s operating assessment to the Towns has averaged only 1.97%.  Since 2008, the operating assessment per pupil has risen just 0.2% per year.
  • Low assessments have been achieved despite a large reduction in School Choice revenue.  Once generating approximately $875,000 annually, the District currently receives only $350,000 in school choice dollars.
  • MERSD’s budget has been managed without an operational override since 2005.
  • While the district has tightly managed its budget and kept assessments low, the School Committee and administration have begun to address the district’s unfunded liabilities (retiree health care benefits or OPEB). MERSD has begun to fund OPEB with an initial $50K out of the FY14 operating budget and is currently in the process of implementing its roadmap to full funding.

Measures taken in 2014 to close the gap
  • Reduction of two Classroom Teacher Positions.
  •  Reorganization/outsourcing of evening custodial support (four custodial position lay-offs).
  • 10% reduction in building level instructional supplies budgets.
  • Elimination of funding for out-of-state student travel (e.g., athletics and co-curricular competitions).
  •  Institution of Student Transportation Fee for riders residing less than 1.5 miles from school.
  •  Increase in Athletics fee to maintain current operational budget/user fee ratio.

Low per pupil expenditure—how do we compare?     
  • MERSD’s spending is driven by enrollment.  On a per pupil basis (i.e., excluding enrollment growth), spending has risen just 1.0% per year since 2008.
  • In 2013 Manchester Essex spent $14,317 per pupil, placing us below our Cape Ann neighbors.
  • The MERSD per pupil cost is 14% lower than other high-performing districts.
  • Overall, MERSD per pupil expenditure ranks 174th out of 326 school districts statewide.
  • MERSD’s total assessment to Manchester represents 45.4% of total town spending, down from 48.4% in FY-11. In Essex, the school district assessment is 52.4% of town spending, down from 54.13% in FY09. For both member towns, school expenditures have declined as a percentage of total town taxation each year

Data Source:  DESE