ACSD budget creeps above state threshold

In looking out how far we could be over the threshold, if everything continues as normal, it would not be surprising to me to be $750,000 to $1 million over by next year.
— ACSD Business Manager Brittany Gilman

MIDDLEBURY — The Addison Central School District board is reviewing a first draft 2021-2022 preK-12 budget of $40,171,572 that reflects a 0.51% increase in spending and the elimination of seven teaching positions at the elementary school level.
But the budget would also require $19,239 in spending per equalized pupil, which is $450 above the state’s $18,789 per-pupil spending threshold.
If the spending plan isn’t lowered, taxpayers would feel an additional hit. School districts that spend above that threshold must pay a penalty to the state.
With ACSD schools predicted to serve a combined total of 1,730 equalized pupils next year, the current budget plan runs an estimated $508,968 over the state’s excess spending threshold. Under Act 68, a district with an education spending amount per equalized pupil greater than the excess spending threshold incurs a double-tax for the amount over the threshold.
The state has customarily allowed school districts annual increases of 2-2.5% in equalized per-pupil spending, ACSD Business Manager Brittany Gilman noted. But the state is holding next year’s increase to just 0.18%.
“It’s essentially level, for all intents and purposes,” Gilman said.
So ACSD leaders during the next few weeks will decide on cuts and/or using money leftover from last year to whittle down the $508,968 problem, which they fear will only create a bigger issues for district taxpayers if allowed to grow into the future.
The ACSD delivers preK-12 public education to children in Bridport, Cornwall, Middlebury, Ripton, Salisbury, Shoreham and Weybridge.
ACSD board member James “Skip” Malcolm summed up the district’s budget quandary.
“There’s no way out of this that’s particularly comfortable,” he said during a recent Zoom meeting.
“We’re making a tremendous effort at this point to try to be forward-thinking, relative to the facilities master plan and those types of things, and these issues are not small. They’re horrendous, quite honestly,” he added. “It’s a frightening time for both the country and us as we try to decide how we manage this budget.”
In addition to a reduction of seven licensed positions — associated with the impending move of district sixth-graders from their elementary schools to Middlebury Union Middle School — the draft budget calls for:
•  Eliminating seven elementary school support staff positions through attrition.
•  Eliminating one secondary school support staff position through attrition, and adding 1.4 full-time equivalent licensed positions — also driven by the sixth-grade move to MUMS.
•  A 15% bump ($138,777) in transportation services. Gilman explained the district is in the third year of a five-year busing contract that features annual increases.
•  A 47% ($156,992) decrease in debt service. Mary Hogan and Shoreham elementary schools both retired bonds this year. This is consequential, because a district’s debt is exempt from its per-pupil expenditure calculations.
“It’s a good thing our debt expenditures are down, but we don’t get those exemptions anymore,” Gilman said.
•  A 9.8% increase in health insurance premiums.
•  Contracted wage increases.

District officials said the current budget draft would produce an equalized education tax rate of $1.7948 per $100 in property value, up around 11 cents.
But few of the seven towns would see an 11-cent hike. Their education property tax rates will fluctuate based on each of their Common Level of Appraisals (CLA) — a formula that adjusts the assessed value of property to bring it in line with fair market value.
ACSD towns that have recently conducted property reappraisals will have CLAs at 100% or more, thus reducing their education tax rates below the district rate. Towns with lower CLAs will see their education tax rates increase.
An 11-cent bump on the district education rate would add $357 to the annual school tax bill on a $300,000 home. For those who pay education taxes based on income, the tax increase would add $264 to the bill of a household with an annual income of $80,000, according to Gilman.
Fortunately, the ACSD has an (unaudited) fund balance of $2,224,703. Around $1,173,000 of that is left over from fiscal year 2020, along with $850,959 in the education reserve fund and $200,000 that’s accrued in the district’s Health Reimbursement Arrangement account.
The district typically relies on fund balance to bridge future deficits and/or finance capital projects. But the surplus is now looking like a one-year financial life preserver for the ACSD. But Gilman cautioned that propping up the budget with one-time revenue would only postpone the problem.
“If we were to use this fund balance to get below the excess spending threshold or reduce the tax burden, we would be inputting this as a ‘fake revenue,’ I guess,” Gilman said. “So you have to come up with (the same revenue) the following year, or reduce expenses.”
How bad will it get?
“In looking out how far we could be over the threshold, if everything continues as normal, it would not be surprising to me to be $750,000 to $1 million over by next year,” Gilman said. “It’s the nature of the way things roll up.
“Once you go above the excess spending threshold, it’s really hard to get it back down below — just by the nature of the fact that budgets go up 3% a year, basically,” she added. “When you look at health insurance and wages, that’s over 80% of our budget.”
Gilman displayed a chart showing how applying fund balance could lower the district’s education tax rate and soften the impact of being $500,000 over the state’s per-pupil spending threshold. In essence, the projected tax rate would go down a penny for each $100,000 of the fund balance used.

The board will have clearer picture when it revisits the budget on Jan. 4. Meanwhile, officials are also weighing additional budget cuts. For example, some board members asked if the district should consider transitioning to part-time principals — or “teaching principals” — at some of its  smaller schools.
Superintendent Peter Burrows discouraged that idea.
“Reducing to a half-time principal would make the school a really challenging place to support all students,” Burrows said. “When you don’t have a full-time nurse, full-time counselor or full-time anything, the principal is the one constant in a school, along with the administrative assistant. They keep all of the aspects of the school moving.”
As it is, the budget reduces teaching staff by seven. Per the district’s collective bargaining agreement, a Reduction In Force affects teachers with the least seniority — regardless of the ACSD school at which they are teaching, Burrows explained.
Teachers who are laid off would have first dibs on any vacancies for which they are qualified.
“There are still a lot of unknowns going into next year,” Burrows said. “We don’t know if we’ll have any retirements or other open positions.”
Board member Peter Conlon is also a state rep serving on the House Education Committee. He suggested the board comb the budget for any and all possible savings.
“I would say given the prognostications for the next couple of years, we need to not be afraid to look at those small items that can add up,” he said.
“There’s no easy solution.”
Reporter John Flowers is at [email protected].

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