School board proposes reduced spending plan
The School Committee and Town Council met March 28 to discuss the school district’s $11.1 million budget request for the fiscal year that starts July 1. Their talks began with the new spending plan, but then broadened to delve into issues about paying long-term obligations for retirement benefits.
Beginning with the school budget proposal, Superintendent Marcia Lukon presented a slideshow summarizing the key points about the total spending package. The budget is $233,372 less than the current year’s operating expenses, but the numbers are based on the current school population. Lukon said the financial picture could change if new military families with high school students move into town or if additional special needs children enroll. Other uncertainties include the impact of the federal government’s sequester and possible reductions in state aid.
Lukon said the budget isn’t etched in stone because of what it assumes from state and federal aid. “That probably will not be the case,” she said.
Federal funds to compensate communities for educating military children, worth about $45,000, and Medicaid reimbursements, worth about $90,000, are among the types of aid that could be decreased or lost due to the sequester.
Otherwise, she said, this budget cuts spending by 1.69 percent as compared to the current year. The savings are due to $249,507 less for tuitions and $260,409 less for special education.
Lukon said the budgeting process is “sound,” and has enabled the district to continue improving school programs while being “fiscally responsible.”
Next year, the district will hire one additional middle school math teacher, she said. Other personnel cost increases are for two crossing guards, who will be on duty two hours a day, and a part-time athletic director, who will be paid a stipend.
The new hires are being made to support changes for next year, which include rolling out a new English and math curriculum, offering more science and social science instruction for seventh- and eighth-graders, improving safety during arrival and departure at Melrose Avenue School, and providing more oversight of middle school athletics.
Councilor Blake Dickinson asked if the School Department would be open to passing on the tuition savings to the taxpayers. He also questioned the department’s annual contributions to its surplus fund. Those yearly contributions average $250,000 and the fund is up to about $2 million, he said.
Over the past four or five years, Dickinson said the schools have “celebrated a very strong, robust reserve.” He suggested they received more revenues than school operations actually required.
Dickinson said he wanted to know why the taxpayers “do not realize some of the savings.”
“What is the benefit of that?” he asked.
“I’m inferring from what you’re saying, you’re looking for some give back from the fund or a commitment to having a smaller fund,” School Committee Chairwoman Cathy Kaiser said.
Kaiser said the $2 million represents required savings toward $6.5 million in other post-employment benefits, which the schools ultimately will have to pay retirees. Until last December, when the Angell Pension Group provided the current estimate of OPEB liability, the School Department had anticipated owing $14 million. It’s been saving toward that target.
Meanwhile, the School Committee’s efforts to switch retirees from Health Mate insurance plans to Medicare have paid off and effectively cut the OPEB liability in half. At this point, said Kaiser, the school board is waiting for guidance to decide the next step from Interlocal Trust, the town’s insurance and risk-management provider.
Town Administrator Bruce Keiser agreed the School Department should not draw down money from its surplus fund until Interlocal Trust has been consulted. He said the School Department should continue to contribute to its surplus fund until it knows how to mange the funds “more precisely.”
Keiser said the town also plans to meet with actuaries to plan for an OPEB issue with the Police Department.
However, the actuaries from Interlocal Trust have not been available to meet. When they are, Keiser said, the effort would likely take several months. But the question about the balance of the School Department’s surplus fund might come up at a later date depending on the proposal. He said the town plans to pay OPEB obligations as employees retire and not save up the money in advance.
“You’re suggesting we do sort of a homemade brand of pay as you go?” Kaiser asked. “We’re not allowed to do that anymore. We have to have a plan to have this paid off. We have a closed system. We’re not going to be incurring new costs after a certain point.”
She cited federal regulations.
“I didn’t know that,” Keiser replied. He said the municipal government is not being required to amass funds to pay OPEB liability but only to show it has a plan to pay.
Councilor Eugene Mihaly suggested the next step should be to start the process with the actuaries and develop a more accurate picture of the town and the school OPEB liability. He would like Keiser to be able to announce a meeting with the actuary by the time of the Financial Town Meeting in June.
Keiser said he would work with both Tina Collins and Jane Littlefield on a meeting with the trust actuaries. Collins is the finance director for the municipal government and Littlefield controls finances for the School Department.
“It will take at least six months,” Collins predicted. Keiser indicated it would have to wait until next year to resolve the OPEB questions.
Mihaly said it would be great to have the data in a year’s time.