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Minutes of Board of Finance – Special, 04/07/2014

AGENDA: Board of Finance – Special

RECEIVED 04/10/2014 4:27pm
Michele R. Grande – Redding Town Clerk


Present: Alvarez (Chairman), Clark, DeSalvo, Dolan, Mazzucco, Yonkers
Also present: 23 members of the public, a representative of the Redding Pilot and two videographers were present.

Chairman Alvarez called the Special Meeting on April 7, 2014 to order at 7:30 pm.

School Superintendent Josefsberg and Director of Finance Sullivan presented the updated Redding Board of Education 2014-15 budget. The Redding Board of Education approved the operating budget of $21,396,502, which represents a decrease of 1.61% over current year operating budget, at their meeting on April 1, 2014. The only change in the proposed budget (since the last meeting) was an increase of $30,000 for the removal/demolition of the two demountable classrooms at Redding Elementary School and a $10,000 increase in the Health Insurance Reserve Fund. The addition of $40,000 was made to bring the budget request in line with the MBR (Minimum Budget Requirement).

Discussion of the MBR followed. Mrs. Sullivan noted that bondable capital expenses are not included in the calculation of the MBR according to the State Department of Education. Large capital expenses, those over $50,000, which are not bondable and are included in the calculation. The budget includes some smaller capital expenditures.

The Board of Education attorney, Christopher Tracey of Shipman & Goodman, was present and clarified issues regarding MBR. He discussed the process that would occur should the operating budget not be MBR compliant.

Board members discussed their concerns about the continuing trend of declining enrollment and need to reduce the operating budget to meet those declining needs. They asked the Board of Education what was being done to address the declining enrollment, including the potential of closing a school, combining with Easton or other options. The Board of Education is in the process of establishing a 5-year planning committee to explore the long-term impact and prepare options for consideration. That committee membership and charge will be determined at their next meeting.

Mr. Mazzucco read his statement into the record. A copy of the statement* is attached to these minutes.

Dr. Josefsberg, in response to Mr. Mazzucco’s letter, commented on some of the differences between the Easton and Redding schools, specifically some of the programs that are offered in Redding that are not available in Easton.

Mr. Mazzucco and Mrs. Clark noted that the per pupil spending for Redding is about $900 greater than the average for DRG A schools and suggested that the Redding Board reduce expenditures to be in line with the average.

Board of Education member, Sara Sobel, commented that the Board is aware of their need to reduce expenditures to meet the decline in enrollment and they intend to explore all options. She could not support the suggestion to reduce the current budget request.

Mr. Mazzucco suggested a further reduction in the proposed budget of $300,000, to start the process of budget reductions that reflect the declining enrollment.

Motion: move that the Redding Board of Finance recommend to the Redding Board of Education a 2014-15 operating budget of $21,096,502. Mazzucco, Yonkers.

Further discussion followed. Board members discussed the concept that the budget would be in violation of the MBR and the process of requesting a waiver. The cost per pupil for Redding is above the average DRG A and the intent of MBR is to assure educational expenses are protected.

Public comment:
Bill Walsh, Ledgewood Drive: Mr. Walsh suggested the cost of the School Resource Officers be moved into the school budget rather than stay in the Police Department budget. He also suggested that use of retired police officers could be a less expensive option. First Selectman Pemberton noted that there is legislation pending that would allow for retired CT police officers to be in the schools.

Caroline Hunter, Chestnut Woods Road: Mrs. Hunter stated that the Board of Finance action would be in violation of the law and their action would be a dereliction of their duties to protect the town’s welfare.

Peter Bonfanti, Umpawaug Road: Mr. Bonfanti stated that he is against anything that would reduce the effectiveness of education, but the schools are on a path of declining enrollment and that must be addressed with reductions in expenditures. He supports the proposed reduction.

Michael Thompson, Great Pasture Road: Mr. Thompson asked if the Board of Education’s proposed budget, with a decrease of 1.61%, was in violation of MBR. Mrs. Sullivan noted that, although the budget proposed initially this year by the Board of Education was not in compliance with the MBR, the latest proposed budget was compliant with MBR.

Dana Gray, Lamppost Drive: Mrs. Gray stated that she was disappointed the Board of Education had not begun the MBR “waiver” process already. She added that she believes there are other reductions possible, and the board needs to balance enrollment and expenditures. The Board of Education attorney noted that the “waiver” process cannot begin until the budget is in violation of MBR.

Allyson Florkowski, Old Stagecoach Road: Mrs. Florkowski commented on the loss of the ECS (Excess Cost Sharing) funding and impact on budget.

Dr. Yonkers noted that the budget is not the only item of funding that must be considered. The Board of Education has presented a request for capital expenditures for fiscal 2014-15 totaling about $1,800,000. They are protecting capital expenditure request for 2015-16 of $3,519,000; 2016-17 of $72,900, and 2017-18 of $204,800. She also noted that it is difficult for the Board of Finance to entertain requests for capital improvements when the Board of Education does not yet know whether RES or JRMS might be subject to closure.

Mrs. Sobel noted that in addition to the operating budget, future capital expenditures will need to be addressed. Regardless of how the school buildings are used, they must be maintained, they are a town asset and the Board of Education has the responsibility to keep them safe.

Board members discussed various ways to avoid the impact of the MBR penalty, as well as the possibility of foregoing state aid alternatives.

Vote on MOTION
Motion APPROVED, 4-2. Voting for: Alvarez, Mazzucco, Yonkers, Clark. Voting against: Dolan, DeSalvo.

Motion: move that the Redding Board of Finance meeting be adjourned. Dolan, Mazzucco. Approved. Unanimous.

The meeting adjourned at 9:37 pm

Respectfully submitted,
Mary Maday, Recording Secretary

* Statement from Mr. Mazzucco

April 7, 2014
I am writing this to organize my own thoughts, but I am incorporating some observations from fellow board members. This statement does not necessarily reflect their views.
There are many ways to look at the Redding Board of Education budget. Everyone wants excellent schools, of course, but the effects on taxpayers, especially over the long-term, must also be considered.
Redding and Easton share a regional high school. So, they pay the same amount per pupil, by definition, at Joel Barlow. Redding and Easton feed into that school, so they invite comparison. Throughout grades K-8, Redding pays more. Much more.
In the most recent proposed budgets, Redding would spend $20,515 per pupil. Easton would spend $16,031. The difference ($4,484) is large, and it is growing. Over the last five years, the per pupil cost in Redding rose by about 36%. In Easton it rose by about 33%. (Incidentally, the figures in Redding do not include the $180,000 or so that would fairly represent the cost of the dedicated police presence in the schools.)
This trend is largely produced by declining enrollments. Since 2007, RES and JRMS have lost about 20% of their students. Further and sharper declines are expected for years to come. The Board of Ed’s demographer expects that, from 2007 to 2023, the population of students in K-8 will fall by about 50%. This is extraordinary.
As fixed costs are spread among fewer and fewer students, the per-student cost will inevitably rise. It is noteworthy that Easton has about a hundred fewer students than Redding, so its fixed costs are spread among an even smaller student population. Thus, Easton should be even more susceptible to the declining enrollments than Redding.
Here is another way to look at this. Taking into account that the districts have different numbers of students, Redding spends about $4,500,000 more than Easton would spend to educate its students. Can the administration truly justify that entire differential?
Some of the differential can be explained by program differences, higher cost structures, and other factors. Some cannot. Further, Easton has slightly higher median family income than Redding. So, we can safely say that Easton is not spending less on its lower schools because it is a poorer community.
As a community, Redding seems willing to pay more per pupil than Easton, in grades K-8. The question is how much more. A budget reduction on the order of 3% to 5%, for example, strikes some people as Draconian. Nevertheless, such a reduction would still have Redding spending about $3,500 more than Easton would spend on each student. For our 1,060 students, a reduction of 3% to 5% still yields a budget which is about $3,500,000 more than what Easton would spend. A differential of $3,500,000 should not be considered inadequate.
Of course, no particular figure tells the whole story, but the disparity between Easton and Redding is nevertheless one metric to consider. Even among its peer schools in DRG A, which are the best-funded in the state, Redding spends almost $900 more, per student, than the average. (It is noteworthy that Redding also tends to have the lowest class sizes in the DRG.) Just to get down to that average per-pupil expenditure would entail a budget reduction in Redding of about $940,000, which is a little over 4% of the proposed budget.
The declining enrollment in Redding is partly a matter of demographics. People are having fewer children. The declining enrollment also reflects the simple fact that fewer families are buying homes in Redding. Is it because of high property taxes? Is it because our schools, despite all that we spend, are not as attractive as we had thought? It is impossible to know.
We do know that many families in Redding are still hurting. People are out of work. Several foreclosures are still pending in town, and several families have had to turn to the government and to charitable institutions for assistance. In the recent town meeting, seniors showed that they are wary of any additional limitations on tax relief for the elderly. Clearly, the recession is not over.
State law imposes a reduction in state aid when municipal education budgets fall below a certain level. By all accounts, this law was introduced to make large urban school districts support their schools, or else suffer the loss of state aid. At the time, no one apparently considered the possibility that, in wealthy school districts, the law might inhibit the reduction of very generous budgets, despite dramatic enrollment declines.
No one wants to thoughtlessly suffer an avoidable loss of state aid. Nevertheless, the tail should not wag the dog. If the minimum budget requirements are met every year in the future in which enrollments decline, we will soon be spending well over $30,000 per pupil. At some point, substantial reductions in enrollment must lead to equitable reductions in the budget.
One way in which state law does allow us to reduce budgets dramatically is by closing a school. We have a regional high school, and our communities could decide, at some point, to close a lower school. Then, we might join with Easton or other communities in forming another regional school. This is precisely the solution that the State Department of Education would encourage. It may or may not be the solution that Redding residents would want. We should be mindful of the possible closure of RES or JRMS as we consider capital improvement requests for those buildings.
Thus, if the Board of Finance, representing the community, should determine that the school budget ought to be lower, we must determine what can be done to avoid or minimize the loss of state aid. Our focus should be on spending the proper amount to retain our excellent schools without overburdening taxpayers. And, recall, too, that the state aid we have been discussing does not grow on trees; it is also funded by taxpayers.
The community has been conducting a healthy dialogue about the appropriate levels of school expenditures. The Board of Education has been conscientious and zealous in advocating for its budget and its constituents. This intrepid group of volunteers has been laboring hard on the budget, as they also deal with everything else from curriculum to contracts and from transportation to expulsions.
In my view, we should be guided by the Easton/Redding comparisons and the DRG A average expenditures. Both would suggest a budget reduction on the order of 3% to 5%.
I do acknowledge that accomplishing the necessary reductions in a single year could be disruptive, but it’s unfortunate that the administration missed opportunities to manage the budget reduction process more aggressively as soon as enrollments started to decline. And, it’s unfortunate that the administration did not fashion earlier budgets with the minimum budget requirements in mind. Even if we did make the full adjustment in a single year, however, our budgets would still have to chase declining enrollments for about the next decade. Having said all that, I would consider a program of substantial declines to be implemented over the next few years.
So, what about the minimum budget requirements? Litigation now pending in the courts could end the current system of state aid to education as we know it. And, Redding is not the only community to feel the impact of declining enrollments. Perhaps our legislature will come to the rescue. The Board of Education may also be able to demonstrate “good cause” for the budget reductions, and that could also preserve state aid. And, there may be other one-of-a-kind expenditures that we may be called upon to make. These, too, could address the shortfall and avoid the MBR.
It is also noteworthy that state aid supplies about $670,000, or about 3% of our budget. It would not make financial sense to pay, each year, amounts far in excess of that amount just to preserve that benefit. If worse comes to worse, the better course of action may be to forego the state aid. It is just too early to tell.
I conclude that, in one way or another, we should be able to minimize the impact of the MBR as we address the declining number of students in our schools.
When all is said and done, our community will continue to provide a high quality education, and it will do so at a cost the town can afford over the long term.
Thank you.
Ward J. Mazzucco