Why I Approve the Reduction

The July 14 referendum vote has generated a lot of heated debate over the past few weeks. I have been asked many times about the real effects to the district, and I’ve honestly struggled to separate the facts from the rhetoric. It is hard for some to understand how one can be a supporter of the schools and not approve the full appropriation, so the discussion has devolved into personal attacks, many fueled by professional political organizers.

All involved in advocating on these issues care very deeply about our children and simply disagree on how to best support their education

I hope this article clarifies why I think the budget reduction makes fiscal sense and can be the start of a new way to fund both school operations and facility and program improvements that benefit all our children.

Moving the goalposts …

The goalposts of this debate have moved several times but we have now landed in the home stretch with some consensus on what we are talking about. Regardless of the July 14 vote, the district will have access to the same funding for the current budget year (FY21). The difference is in FY22, when the starting point for the town’s property tax transfer (PTT) will be either approximately $56 million (current plan) or $55 million (referendum). I repeat, WE ARE TALKING ABOUT THE STARTING POINT (not the destination).

Those who oppose the referendum assume that the district always requires a 2% increase over the previous year’s appropriation, as has become customary. The Town Manager described this as “Inflation-based need” at his April 28 budget presentation. This is simply not a valid assumption. In short, while known savings related to falling enrollment will persist (and likely accelerate), state aid stability will provide flexibility to move us away from unsustainable increases. Ideally, the town could and should transition to a new funding model related to enrollment levels that will allow the town to invest more in facilities and programs that benefit all our children.

State Aid Formula

In 2010, the state made a change to its funding formula that caused a large reduction in aid to South Kingston and several other districts. In order to blunt the impact, the state instituted a 10 year transition which distributed the decline over time. That transition, coupled with additional decreases due to enrollment declines, caused SK’s annual aid from the state to drop from about $10 million to its current $4.5 million.

If SK’s enrollment had remained stable, our current formula aid figure would be approximately $6.7 million, over $2 million per year more than we currently receive.

Over the past decade, the town increased its property tax transfer to the schools despite falling enrollment primarily to make up for this substantial loss of state aid. The current 2% increase in the FY21 budget will fund only a 0.76% increase in budgeted spending, with the majority of the increase needed to replace a $750k decrease in state aid. Funding need is related primarily to state aid, enrollment based savings, and contractual increases (e.g. salary growth). Over the last decade, enrollment declines have resulted in about an 18% drop in FTEs (e.g. teachers), savings which have covered contractual salary, benefit, and other cost increases. The town’s increased funding has primarily covered the loss of state aid.

The final year of the aid transition is FY21 (the current budget year). In a meeting last year with our town council, state representatives explained that the next changes (if any) to the funding formula will not take place for at least 3 years. There may be a short term reduction in aid due to COVID, but the long term funding plan has not (to my knowledge) been changed. Starting in FY22, aid will flatten and the town should no longer need to supplement its appropriation beyond the difference between enrollment based savings and contractual increases. Based on enrollment projections, this would result in near level funding for the next several years. Enrollment based savings for the next few years are basically set in stone, because we will require fewer sections each year as smaller early elementary cohorts advance, and these savings are sufficient to cover the vast majority of inflation based needs over the next several years.

Toward an Enrollment Based Model

The chart below shows what per-pupil town appropriation (total town appropriation per student) plus 2% inflation would look like going forward. Funding amounts for this model were calculated by multiplying the FY20 per-pupil tax transfer (~19k) by the projected enrollment (NESDEC) and then adding 2% for inflation. This model would provide for inflation based need on a per pupil basis. It would also allow the district to plan for the future, knowing which years might be flat and which years will require increased expenditures to support the students we will likely have.

Enrollment based funding would save nearly $50 million over the next 10 years

The cumulative savings over perpetual 2% increases is about $50 million over 10 years, enough to fund the entire facility project under development in just half the time.

Coupled with today’s ridiculously low bond interest rates, this model would allow the district to afford nearly twice the facility investment we are currently proposing, allowing us to afford an actual new high school and needed improvements to our elementary schools. Please note that although funding for the next several years would be flat, this enrollment model yields increases in the out-years when enrollment is projected to stabilize. Increases in enrollment related to facility improvements and other factors would yield even larger funding increases.

Additional investments in the schools should be included and requested on a yearly basis to supplement this baseline PTT, especially if they have the potential to improve the education and well being of the students. These investments should be proposed with concrete metrics so we can track their progress and adjust as time goes on. The superintendent has proposed some of these this year, such as an expansion of coteaching and increase in early elementary special education, which is why enrollment based FTE reductions in the budget are smaller than they normally would be. I believe the town would agree to fund forward looking investments and are mainly concerned about perpetual increases not tied to any level of performance or accountability. I reiterate that the proposed funding model above is a floor, not a ceiling.

The budget referendum on July 14 is a step in the right direction.

The move to level funding for the FY22 baseline is in line with our current understanding of budget realities, given that the projected drop in enrollment (2.1%) is very likely an underestimate. If State aid decreases, or COVID related cost skyrocket, the town will clearly agree to cover the additional expenses. Assuming state aid stabilization for at least be next 3 years, this is the right baseline to work from in FY22, to be adjusted as events warrant. The July 14th referendum is an opportunity to move to a sustainable funding model that respects reality, fosters accountability, and provides flexibility for investments in our facilities and our students. Our children deserve to be the focus of our efforts. If we work to streamline our district budget, we can invest in making this town and district an amazing place to learn, teach, and live. The first step, as hard is it may be for some, is to vote for the referendum on July 14th.

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