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Monday, February 13, 2017

FY'17 Anticipated Town Assessments

The school committee was provided anticipated town assessments at their February 8, 2017 meeting. Please note that the budget increases only by 1% yet, given changes in revenue, the overall assessments are up by 2.71% with three towns showing a decreased assessment for next year compared to this year (Blandford, Middlefield, and Montgomery) and one town showing only a 1.38% increase (Chester) under the statutory method.

Given the discussion in the past regarding alternative assessment methods, the school committee was given three assessment scenarios - statutory (what we currently use under the law), regional agreement method (as outlined in the regional agreement whereby all assessed costs are broken down simply by population), and a five-year rolling average method (based upon the average student numbers over a five-year period and applied to above-minimum and non-foundation assessment amounts).
There are significant differences between each towns' fiscal obligations under these three methods (see the assessments by type below). I briefly reviewed these differences in a Superintendent's Corner as follows:

Overall state revenue remains fairly stable but given the ongoing lawsuit with Worthington over funding owed the district that hasn’t historically been paid; we reduced anticipated revenue for that item. In addition, the state decreased minimum contributions across all towns resulting in an increase in the above minimum contribution. When everything is considered, we anticipate that the overall assessment for the six towns will be up by 2.71% or $245,688. If we had Worthington’s contribution for what we feel they owe for retiree costs, the overall assessment increase would only be $160,298 – essentially one percent.

You’ll recall, as projected in earlier correspondence (and posted on the website and superintendent’s blog in the beginning of January); the overall expenditure budget is up approximately one percent (1%) from the current budget ($159,386). The projected budget for next year is $1,787,006 under the FY’09 budget, does not include a number of items that have been recommended by various groups, and includes nearly a million dollars in increased costs to the district (major cost increases come from insurance, out of district tuition, and meeting the needs of students that require specialized services).

While all of our towns’ face various financial challenges, the current assessments vary dramatically from town to town based primarily on the percentage of students each town has in the district. Thus we have three towns with decreases in overall assessments (ranging from a negative 1.76% to a negative 5.94%) and three towns with increases in their overall assessments (ranging from 1.38% to 9.51%). Once again this shows the inconsistency over time of the existing formula for determining town assessments and the rapid swings that often occur when student numbers change from year to year.

The district does have a currently available option under the regional agreement. This option takes the overall assessment and breaks it down strictly by student percentage (i.e., as long as each town meets the state’s ‘minimum’ spending, there is no other relation to the state’s formula). This year that would make the town assessments even more disparate giving the three towns with decreases under the statutory method even greater decreases (increasing the decrease in assessments by up to 12 times the current assessment) and the three towns with increases, even larger increases (for example, Russell’s increase would grow from $194,664 to $698,285). Given that all six towns would need to agree to the alternative assessment method, it would be unlikely that Russell and Huntington would agree to this scenario (Huntington’s assessment would increase by over $90,000).


We’ve also heard much discussion about using a five-year rolling average for assessments, despite this not currently being an option under the regional agreement. However, this option does appear to make some sense as two towns would experience an increase over the existing method but still see an overall decrease from the current year (Blandford and Middlefield), two additional towns would see higher assessments (Chester and Montgomery) over the prior year than with the existing method, and Huntington’s assessment would drop $68,231 from the current model but would still increase from the current year by $57,747 and Russel’s assessment would drop $74,285 from the current model but still see an increase of $120,379 from the current year. As we move forward through the next several weeks I’m sure that we’ll see some ongoing discussions regarding this option.

Friday, January 13, 2017

Fiscal Year 2018 Expenditure Information

The school committee (and therefore the public) received a line item budget (draft as of early January) for fiscal  year 2018 (School Year 2017-2018). The committee also received an overview of the budget information as follows:

Budget Overview - January 11, 2017

Factors driving the 2017-2018 Gateway Regional School District Budget
  • The overall budget changes staff resources only slightly by altering some positions (off setting increased days for Pupil Services by not having a curriculum director, changing staff positions in the district, replacing an adjustment counselor with an autism specialist) and adding a half time nurse position for the MS/HS due to increasing student health needs.
  • Major cost factors impacting increased costs in the budget ($923,814):
    • Additional needs by students that require services (both existing students and new students to the district) that are required under federal and state law;
      • PSV Contracted Services ($25,000)
      • District ELL Salary ($38,512)
      • District Autism Specialist ($62,765)
      • GMS Nurse Salary ($16,313)
      • GHS Nurse Salary ($14,934)
    • A significant increase in the cost of health insurance
      • Health Insurance Active Employees ($119,526)
      • Health Insurance Retirees ($42,918)
    • Changes in transportation costs
      • Regional Transportation ($18,661)
      • In-District Transportation Costs ($25,600)
    • Increases in out-of-district tuition costs including special needs and charter schools
      • School Choice/Charter Tuition ($234,618)
      • Tuitions to Collaboratives ($78,211)
    • Negotiated pay increases for staff (average of 1.5%)
      • $129,584
    • Contractual obligations (County Retirement, Separation Costs)
      • ($20,601)
    • Textbook replacements
      • MS/HS ($17,350)
    • Heat
      • Chester Heating Oil ($5,411)
      • Littleville Heating Oil ($4,512)
      • MS/HS Heating Oil ($23,911)
    • Making up for the loss of revenue from revolving funds:
      • Food Service Director Salary ($20,429)
      • Athletic Trips ($24,958)
  • This budget does not include the following identified needs (estimated total cost $450,000 to $550,000) but after reviewing these items the leadership team has some ideas of how to develop teacher leadership, work with the communities, and develop alternatives to support students without completely filling or funding these positions. In terms of cost avoidance and meeting growing student needs, it was agreed that the most pressing issue at present is creating new opportunities in the life skills area.
    • Filling the position, either part or full time, of curriculum director
    • Establishing a stabilization fund for long-term capital needs
    • Creating a new life skills class for 18 to 22 year old students
    • Funding the OPEB trust
    • Evaluation Team Leader
    • Filling the position, either part or full time, of technology director
    • Filling math and ELA coaching positions
    • Data/Portfolio Coordinator
    • Replacing retired English teacher at the high school
  • The budget also does not include:
    • Undertaking a search for a  new superintendent ($10,000 to $60,000 - National Average $30,000)
    • Factoring in separation costs for superintendent ($40,000 to $48,000)
  • Other factors to consider:
    • Inflation (Overall 1.7% as of 11/16 for prior year)
      • Oil prices increased from 12/15 to 1/17 by an average of 25%
      • Electrical charges per kilowatt hour up by over 14% in past 5 years (.1426 to .1653)

Overall change in budget as of January 4, 2017 ($159,386 or 1%)

  • This was made possible by a coordinated effort in the district and by the leadership team to cut costs (major items listed equal $519,864):
    • Reduce out-of-district placements of special education students (-$345,865)
    • Reduce the use of electricity (-$38,392 despite increase in rates)
    • Replace staff based upon student needs (essentially a wash)
    • Special Education Transportation (-$99,403)
    • District Internet Service (-$15,064)
    • Long Term Debt Service (-$21,140)

  • The current projected budget for FY’18 ($16,095,514) is $1,787,006 less than the FY’09 budget ($17,882,520) despite the fact that a decade has passed.


Assessment Methodology

Over the course of several years the topic of how assessments are determined have been discussed. This includes the currently available statutory method and the method outlined in the regional agreement. Another potential way to determine assessments is to use a five-year rolling average and this seems to be rising to the level of potential action this year driven by town officials and potentially being a major topic for the Gateway Towns Advisory Committee this year. I outlined some of the issues in the Superintendent's Corner as follows:

Superintendent’s Corner                                                                      January 9, 2017

In a previous column dated December 5th (and still available on the district website), I looked at the potential changes in town assessments for the 2017-2018 budget year based upon the number of students sent by each town and the required minimum contribution as set by the state. This showed that changes in town assessments do not necessarily correspond to changes in the school district’s budget, i.e., the budget could remain level but some towns would see increases in their assessments while others would see decreases.

There are currently two ways to calculate town assessments, or the share each town pays to Gateway. One is the statutory method (which we’ve used since it started) and the other is based upon Gateway’s regional agreement. The statutory method uses the state’s minimum contribution amount for the foundation assessment and then uses the percentage of students enrolled for the above minimum and non-foundation budget amounts. In the regional agreement, the entire amount of town assessments would be based upon the percentage of students enrolled, with the caveat that the total assessment any town paid could not be below the state’s calculation of their minimum contribution. The assessment method outlined in the regional agreement would likely make the swings in town contributions even greater than they have been under the statutory method.

The school committee, GTAC, and the district administration have also been looking at a third way to set town assessments: using a five-year rolling average of the percentage of students enrolled from each town. By doing this, the swings in annual town assessments would level out eliminating much of the difficulty our member towns face in meeting their district assessment, even when the budget stays level or decreases.

This third method came up for discussion at a recent meeting with the Blandford finance committee and the chair of the Huntington finance committee as a potential solution to the difficulties some towns face when their district assessment increases dramatically from year to year. As pointed out by the Huntington representative, town tax rates are increasingly different in our member towns based upon overall budgets and the total value of property in each town. By moving to a five-year rolling average, towns may find their tax rates stabilizing, at least as they relate to the school district assessments.


Using any assessment method other than the statutory requires unanimous agreement from all member towns every year, while passing the budget requires a positive vote from only four of the six towns. Technically, a five-year rolling average should be in the regional agreement before it can be implemented, but an agreement by the six towns for using this might not be challenged by the state. It’s true that getting six towns to agree to a five-year rolling average when potentially four of the six towns could pay slightly more than they would under the statutory method might be difficult to achieve, but the Blandford finance committee (Blandford being one of the towns that most likely would pay more under the five-year averaging method rather than the statutory method) indicated that this was worthwhile to pursue. This may be an item that the towns should consider and we can start that conversation with the towns through the Gateway Towns Advisory Committee (GTAC) as we begin discussions surrounding the 2017-2018 district budget.

Information on Allocation of Town Assessments

The allocation of town assessments is based upon a number of items, not all of which are under the district's control. This was reviewed in the following Superintendent's Corner.

Superintendent’s Corner                                                                                  December 5, 2016

As Gateway moves forward with developing the budget for fiscal year 2018 (July 1, 2017 to June 30, 2018) there are some changes in student enrollments that may impact individual town assessments. For purposes of explanation, it should be noted there are two ‘official’ enrollment counts: one in October and one in March. These dates are set by the state and become the basis for funding decisions revolving around school choice and state aid to schools (Chapter 70). The enrollment counts on these dates also help establish each town’s contributions to the schools. The October census data provides an estimate of student numbers from each town as assessments are first calculated, with the March census finalizing student enrollment numbers for the final calculation of town assessments, as voted upon at annual town meetings.

You may recall that there are three distinct parts of a town’s assessment. The first is commonly referred to as the ‘Minimum Contribution’ that is set by the state using a complicated formula that factors in the relative ‘wealth’ of a community (in both property value and resident income) to determine much each town must pay for educating its children. The second part is referred to as ‘non-foundation’ and covers the costs of transportation and approved debt. As transportation is required under state law and all district debt has already been authorized by the towns, this assessment is also usually viewed as a required cost to the towns. The last piece, the so called ‘above minimum’ consists of the additional amount of money needed to run the district that is ‘above’ the state’s estimated costs (minimum contribution) of running schools, but is not tied to any specific program or activity. One of the most admitted shortfalls in funding schools is the notion of above minimum because the state has recognized, and has a blueprint for fixing this issue from a state-funded task force, that the state funds education far below what it actually should. As just one example, Gateway pays about a million dollars more in health insurance than the state formula allots, despite Gateway having significantly outperformed the state in holding these costs to a minimum (thanks to our participation in the Hampshire County Health Insurance Trust). What this example shows is that the formula for setting the costs of educating students (set decades ago under the auspices of educational reform) is far out of date and unrealistic. This is one of the reasons for the dramatic shift of financial support we’ve seen since 2003 that completely flipped the percentage of costs paid by the towns to educate their children (in 2003 the state paid approximately 60%, now the towns pay approximately 60% of the costs). So, even though the district’s budget hasn’t grown over the last decade and a half, the total assessment for the towns has grown.

How do student census numbers impact town assessments? The last two portions of a town’s assessment (non-foundation and above minimum) are driven by the percentage of students enrolled in the district from that town. Therefore as a town’s student numbers increase relative to the other 5 towns, so does its assessment. As noted earlier, the district bases the estimated assessments on the October student census and then corrects this after the March census. The census taken this October shows that student percentages for both Russell and Huntington have increased, which means that even if the combined assessment to all six towns remained identical to last year, both Russell and Huntington would see an increase in their assessments while the remaining four towns would see a decrease. As expected, if the total district assessment increases, this disparity in what each town pays will grow.

Coupled with changes in the state’s calculations of the minimum contribution, this means that even with a level funded budget, town assessments may change significantly from one fiscal year to another, even though Gateway is not spending any more money. As one can imagine, this can make discussions about a town’s fair share difficult when some have significant increases and others significant decreases. The problem for the district is that these shifts are not controlled by us but are developed under the constraints of state law, regulations, and policies that we all must operate under. As the district continues with the budget development process, we’ll share the process in an open manner as we have always done with the continuing expectation that knowledge of the facts is a strong tool for encouraging meaningful discussion and informed decisions at annual town meetings.

Historical Information - Budget Process

The Gateway District has a wide range of information regarding the budget process that may prove useful to understanding how the administration and school committee put together the budget. These include the following items that were developed and published previously:


  • A Budget Primer providing an overall explanation of the process
  • A Chapter 70 Overview that provides a look at how Chapter 70 (primary state financial aid mechanism for schools) operates
  • Gateway Benchmark Study - a 2013 review of related districts compared to Gateway
  • Budget Page - A page on the district's website dedicated to providing information about the budget and budget process. Includes several years of historical information as well as current items related to the Fiscal Year 2018 budget (for the school year 2017-2018)
  • Timeline of Major Budget Processes

Tuesday, March 29, 2016

Joint Legislative Committee on Education

March 29, 2016

Representative Brian S. Dempsey, House Chair
Senator Karen E. Spilka, Senate Chair
Representative Stephan Kulik, House Vice Chair
Senator Sal N. DiDomenico, Senate Vice Chair
Representative Benjamin Swan, House Assistant Vice Chair
Senator Patricia Jehlen, Senate Assistant Vice Chair

Dear Members of the House and Senate Committees on Ways and Means,

As both the superintendent and a resident of a town in the Gateway Regional School District, Chapter 70 funding is critical to the success of not only our school district but also for the viability of our district towns. The loss of the town of Worthington to our school district has resulted in a significant decrease in revenue.  For FY 2016, the state provided mitigation funding of $630,000.  Even with this generous one-time funding, assessments for three of the six towns in the district increased well over 2.5%.

For FY 2017, after taking into consideration nearly $427,000 in budget cuts (from a budget that totals less than $16,000,000), assessments to three of the six towns are again projected to increase over 2.5%.

In reality, the FY 2017 budget is nearly $175,000 lower than the FY 2003 budget and reflects both increased efficiencies and a reduction in services. During that time period the share of the district budget supported by the state has flipped, in FY’03 the state supported over 60% of the total budget, that figure is now under 40%. So, despite holding the budget essentially level for the past 14 years, town assessments have increased dramatically. In truth this is due to the Chapter 70 formula and hold harmless provisions not reflecting reality as well as the lack of a consistent funding of regional transportation reimbursement. More than fifty years ago, the state promised our district 100% transportation reimbursement as an incentive to let go of our local school districts and enter into a shared educational experiment in order to provide a better quality of education for our children.  Gateway was formed and has been providing a quality education to our children for over fifty years.

As a small rural school district with a total 6 town population of less than 8,000, a total school population of less than 900, 171.9 square miles over which our children are bussed, and bus routes - despite significant reductions in numbers of busses - that cover the distance between Huntington, MA and Huntington Beach, CA 2.7 times a week, transportation costs represent a significant percentage of the FY 2017 school budget (Regular Transportation $933K and Special Education $677K).  The consistent underfunding of regular regional school transportation reimbursement and the fact that reducing our transportation costs also reduces our state reimbursement, strains not only the budgets of local towns, it takes away from the funding needed for vital services provided to the students in our schools.

Gateway’s six rural communities, where education costs represent more than 50% of a town’s budget, cannot  continue to sustain funding such increases without impacting other basic services provided to our residents. Furthermore, any additional reductions in the district’s budget will severely curtail student opportunities.


To that end, I am requesting positive action on three items:
  1. That you support a regional transportation reimbursement rate that is closer to its promised commitment of 100% reimbursement,
  2. That you support the Massachusetts Municipal Association’s (MMA) request in its letter of February 29th, to increase the “minimum aid” amount to $100 per student, instead of the $20-per-student amount in the Governor’s budget, and
  3. That you support the MMA’s recommendation to implement the recommendations of the Foundation Budget Review Commission.

Respectfully,


Dr. David B. Hopson
Superintendent


Pc: Senator Ben Downing
     Senator Don Humason
     Representative Smitty Pignatelli
     Representative Peter Kocot

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