“What If” Budget Letter to Town Council

     

We just posted the message below to our Town Council, which is holding a workshop on the school budget tonight at 7 pm.  I asked if public comment would be taken, and the answer was ‘no.’

======================================

Points to Consider in Budget Deliberations for the 2013/2014 Budget Year

· Let’s begin with this: “it’s all about the spending.” Everything else derives from the spending, and the increases in spending. Distractions like the Harpswell charter school barely make it to rounding error relevance.

· For sake of discussion, FY 2000 (99-00) will be used as the baseline for what follows.

· In that year, the school budget was $21,992,000, and the student population was 3,356. Per student expenditures were $6,553.

· In that same year, the municipal budget was $12,890,000, and with 21,000 residents, equating to $614 per resident.

· At present, we have on the table a School Department proposal to spend $35,700,000 in the coming budget year. Student population has declined to a department projection of 2,318 at the start of the new year (October 2013). We have lost 31% of our students since the baseline year.

· Over this same period, we’ve closed down 3 old and inefficient schools, and replaced them with one super-efficient new one.

· The school budget proposal equates to a per student annual expenditure of $15,400. By any measure, this is an astonishing increase in spending. $15,400 minus $6,553 is an increase of $8,847, or 133% in 13 years.

· I have calculated a ‘what if’ scenario that looks at how much the school budget would be this year if per student spending had increased by 3%, 4%, and 5% per year since the FY 00 baseline. The data is attached.

· The results are as follows:

If per student per year spending had increased by 3% annually since the baseline year, we would be proposing $9,912 per student per year, for a total budget of $22,976,000. This is $12,649,000 less than the proposal before us, for a reduction in property tax demand of 42%.

If per student per year spending had increased by 4% annually since the baseline year, we would be proposing $11,348 per student per year, for a total budget of $26,304,000. This is $9,321,000 less than the proposal before us, with a reduction in property tax demand of 29%.

If per student per year spending had increased by 5% annually since the baseline year, we would be proposing $12,974 per student per year, for a total budget of $30,075,000. This is $5,550,000 than the proposal before us, with a reduction in property tax demand of 17%.

· Considering that CPI growth in recent years has been in the range of 2% or less per year, the above figures are all quite generous.

· In fact, the budget proposal of $35,700,000 currently on the table works out to an average increase in per student spending per year of about 6.25% since the baseline year. This very high growth in cost, especially when viewed in the context of a near-stagnant economy, especially at the state and local level, and anemic per capita and household income growth figures, is irresponsible, unsustainable, and unaffordable.

· Can you imagine what we would be looking at in budget and tax growth if the rosy projections provided by Planning Decisions Inc had come to pass? They would have us recovering to the peaks of a decade ago, with 3.000 students or more! We’d need two schools more than we currently have, and at the proposed per student costs, the school operating budget alone would be in the range of $50 million (without capital program consideration), calling for a 46% increase in property taxes beyond anything considered at the moment.

· Remember the ‘good old days’ of Jim Ashe, who was quite fond of pointing out how many school districts in Maine spent more per student than Brunswick, even though Brunswick was in the sweet spot on the bathtub chart of efficient school district size and operating cost?

· Now that our per student expenditures are on a steep trajectory through the roof, the tactics have switched to talking about total budget, rather than per student costs. This works out very nicely when enrolment is sinking. In particular, School Board member Rich Ellis is fond of generating numbers that distract interest away from the ‘cost per unit’ of our school system. One of his products is this, suggesting that school budget growth is modest, and on a par with municipal budget growth. He shows that total town costs have increased more than total school system costs.

· Ellis points out that “The compounded annual growth rate for both the Municipal and the School budgets over the last 10 years are just about equal at 3.3% and 3.2% respectively,” with no mention of the “population” served by each. He has decided that clarity is shown thru budget totals, regardless of the population size provided with services.

· While school population has declined precipitously, and is expected to continue declining, town population has remained more or less flat. If you were raising a family of 6 kids, and 3 of them reached adulthood and went out on their own, would keeping your household budget growing modestly be something to celebrate?

· Here’s another Ellis product. It tries to divert attention from the details undergirding the totals with another distraction. His message is that we fall somewhere in the middle of the pact for budget growth in the coming year among a selected group of our ‘peers.’ No mention of school enrolment trends; you can be pretty certain none has declined as badly as ours. No mention of per student cost growth over the last ten years or so. No mention of per student cost. Just how much the budget is increasing over the current year. All in all, this provides to the non-critical thinker exactly what they want to see. “We’re just like everybody else; what’s the big deal? Nothing to see; just move along.”

· Brunswick’s property tax rate was $21.20 in FY 00. Now we could easily be seeing a rate of $30.00 in the next two years or so. If the sales tax rate and the state income tax rate increased by the same proportion, we’d be paying 7% in sales tax and more than 11% in Maine income tax. In addition to the property tax increase. And if I could adjust this for a revaluation during the period discussed, it would look far worse.

· I’ll conclude with this: “it’s all about the spending.” Everything else falls in place in service to the spending, and the increases in spending. Thinking this can just keep going on and on without serious consequence to everyone’s future is folly beyond belief.

======================================================

Pasting in the excel spread sheet ‘what if’ computation backup was a bit too challenging because of the size.  If you’d like to see it, or any other data we have in our archives, send us an email and we’ll pass it along.

Technorati Tags: Brunswick,school budget,town council,schools