03/24/2011

School Board adopts $21 million school budget for 2012

The School Board on March 22, 2011 adopted the superintendent's proposed $21 million school budget for 2011-2012.

The adopted budget includes a $447,719, or 2.2 percent, increase in spending over this year's $20.6 million school budget, and a 33-cent, or 2.6 percent, hike in the $12.89 tax rate for school services.

The increase would add $85.19 to the tax bill of a home valued at $253,800, increasing the total bill for that home by 1.9 percent.

The Town Council Finance Committee will review the school budget, along with a $1.07 million budget for Community Services also adopted March 22, in a workshop meeting April 6, 7:30 p.m. at Town Hall.

Interim Superintendent Ken Murphy identified a $406,000 increase for salaries and benefits as a primary "driver" in this year's school budget budget, a figure that would have been higher if not for a tentative agreement with the teacher's union. "That line is a little bit lower than it would be in most years," Murphy said, and board members credited the union for helping keep the tax increase down while maintaining quality services.

The School Board voted unanimously to adopt the budget, the same budget proposed by Murphy in February. The board met three times to discuss the budget proposal, a discussion that included projected revenues and expenditures for the next three years.

Three-year plan

Murphy compared school budget planning to using a crystal ball, "and there's nothing precise in my crystal ball," he told board members at their March 15 workshop.

The three-year budget projection for Cape Elizabeth, however, builds upon a recent board decision to retain federal Jobs Bill revenues in anticipation of future needs. Rather than spend Jobs Bill funds last year when they were awarded, the board opted to retain $452,534 to use in the upcoming fiscal year. The saved revenue cushions the end of funding from the American Recovery and Reinvestment Act (federal stimulus), which accounted for $925,170 in the current year's school budget.

Similarly, the three-year plan looks to hold off spending Medicaid reimbursements for special education services to fiscal years 2013 and 2014. None of the typical $125,000 annual Medicaid revenue is budgeted for 2012, but $480,000 from Medicaid is slated as revenue for fiscal 2013, when the Jobs Bill money will be gone. The budget projection for 2014 includes $250,000 in Medicaid revenues.

The plan anticipates a flat state subsidy at $2.3 million a year over the next three years. On the expenditure side, the plan projects 2-percent salary increases plus an additional $80,000 per year for increases in fuel and other annual costs. Expenditures, in the plan, would increase by $760,000, or 3.6 percent, in 2013 and $770,000, or 3.5 percent, in 2014.

The three-year plan anticipates tax increases of 2.9 percent in 2013, and another 3.9 percent in 2014, to the total bill of a home valued at $253,800.

Murphy called the projections "conservative", allowing for maintenance school budgets through 2014. "There's not room to fund a lot of major improvements and still keep that tax rate down," he said at the March 15 workshop.

Increases, decreases for 2012

Reducing Pond Cove staff by 1.5 positions, due to declining enrollment, is another factor keeping the salary line down next fiscal year, Murphy said.

Increases in the 2012 budget were made to cover the costs of oil and fuel for transportation; costs of property insurance; instructional support (special education); and, buildings and facilities. The $32,000 budgeted to lease new boilers at the High School would have been higher if not for the Town Council's agreement to contribute $200,000. "We remain appreciative of that," Murphy said. "That allows us to keep that (total) building and facilities line to about a $100,000 increase over what it was last year," he said.

The 2012 increases are offset by a $34,000 decrease in debt service, a $8,000 decrease in other operating accounts, and decreased contingency. "The contingency fund is back down to where it was been historically - about $70,000," Murphy said. Cape Elizabeth was able to beef up contingency with unanticipated state revenue last year, but he recommended a contingency of two to three times that amount when the economy improves. "In a $21 million budget, having a $70,000 contingency is asking anyone to be way too precise at this point in the year. It's a really skinny contingency," he said.

Board members thanked Murphy for his straight-forward budget presentation, and thanked others, including the teachers union and administrative team, for diligence in cost reduction.

Adoption was unanimous, but one board member said he was reluctant at first to approve a tax increase he believed was too low. "I am concerned about the future, given the vast uncertainties," said board member David Hillman. "If there are significant changes in Medicaid and other significant changes in cost for the schools, we will be looking for the only other revenue source we have, which is town taxes."

John Christie, the board's vice chairman and head of the finance committee, added that the three-year budget plan does take precautions to cushion anticipated losses in revenue. "I am eagerly supporting this (2012) budget, which I think strikes a very careful balance between the needs of the taxpayers and the needs of the district," Christie said.

The adopted budget is banking on a $3 per gallon price for heating oil and diesel fuel, but if that price cannot be secured, the board will be looking to postpone $130,000 replacement of High School gym bleachers to cover the higher cost of oil.