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Minutes of Board of Finance, 03/07/2016

AGENDA: Board of Finance

RECEIVED 03/14/2016 8:30am

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Minutes

Board of Finance: Alvarez (Chairman), Clark, Dolan, Mazzucco, O’Donnell, Yonkers

Also present: Finance Director Gniadek, Treasurer Meehan, First Selectman Pemberton, Selectmen Karvelis & Thompson, Redding Board of Education Chair Sobel, School Superintendent McMorran, School Finance Director Sullivan, 17 members of the public, representatives of the Redding Pilot, Danbury News Times & Hello Redding, and the videographer

Chairman Alvarez called the meeting to order on March 7, 2015 at 7:30 pm in the Hearing Room of the Town Hall.

DELIBERATION ON 2016-17 BUDGET

Redding Board of Education Budget

The discussion began with Mr. Mazzucco presented a statement he and Ms. O’Donnell prepared. A copy is attached to these minutes. The statement concluded that we are living beyond our means in terms of education, and encouraged the Redding Board of Education and administration to consider a reset of the proposed budget.

Discussion followed on the following areas:

  • Salary issues: Dr. Yonkers noted that there is a considerable difference between the total of teacher salaries for Easton and Redding. The difference, about $2,700,000, is the result of a more experienced and senior staff. She recognized that these are fixed costs, and that further reductions in the operating budget cannot make up for the difference. The current teacher contract includes a 12 step system; most other schools districts have 16 steps, with some at 20 steps. Mr. Mazzucco questioned why, if the teachers are so experienced, are all the specialists needed.
  • Cost per pupil: School Superintendent McMorran noted that comparing per pupil cost with other DRG A or area schools is not always a fair comparison. School districts budgets do not all include the same services or conditions.
  • Capital Request: Mr. Alvarez noted that in addition to funding the operating budget, the Town is also being asked to approve $5,000,000 in capital costs for the HVAC systems at the two schools.
  • Program reductions: Dr. McMorran noted that further reductions in the budget would be programmatic reductions, but he acknowledged that he would seek other cuts as a higher priority.
  • State & Federal mandates: Dr. McMorran commented on the numerous state & federal mandates. Over the last five years, these have almost doubled and require manpower to assure compliance.
  • Class size: Mr. Alvarez questioned the class sizes and asked what the impact would be if class sizes were increased. Dr. McMorran responded with an explanation of classroom management problems that could result with a larger class size as well as the impact on student education.
  • Transportation: Ms. Clark questioned the 14% increase in transportation costs. Mrs. Sullivan responded that the increase is due to an increased need for transportation of students with special needs. Dr. McMorran added that, in some cases, an aide or a nurse may be required to accompany the student.
  • Impact on real estate values: Mr. Dolan expressed a concern that a “below zero” budget could have a negative impact on the real estate market and the value of homes in Redding.
  • Mr. Alvarez noted that refinancing BANs with bonds will result in an increase in interest rates and principal repayments totaling several hundred thousand dollars a year (depending on the precise amount actually borrowed) starting in two years. He also noted that the $5,000,000 HVAC bond, if approved, would cost about $250,000 per year, by itself. Thus, he cautioned that the Board of Finance should be very cautious about large future budget increases.

Following the long discussion, Mr. Mazzucco suggested the Board of Education sharpen their pencils and revisit the budget. Mr. Alvarez added that the Board of Finance is not mandating a number, but is asking the Board of Education to discuss the budget and capital requests further and come back with some suggestions.

Board of Education Chair Sara Sobel responded that a special meeting will be scheduled to discuss the Board of Finance concerns. She added that the enrollment in elementary school is a moving target, currently above wheat was originally anticipated.

PUBLIC COMMENT

Dana Gray, Lamppost Drive: Mrs. Gray suggested the reduction of administrators, noting that Ridgefield’s lower schools share their vice principals. She also commented that while the enrollment at the elementary school level appears to be higher than anticipated, the enrollment at the middle school is decreasing.

Len Berry, Picketts Ridge Road: Mr. Berry thanked the Board of Education for the information they provided. He suggested reducing the number of sections in each grade by one section.

Keith Rich, Putnam Park Road: Mr. Rich commented that his daughter has 25 students in her 4th grade class and that the teacher was asking parents to help their students with assignments and homework.

Board of Selectmen Budget

Debt payment: First Selectmen Pemberton noted that the original budget has changed as a result of Board of Finance’s actions on bonding. Financial Director Gniadek presented scenarios of BANS and bonding options over the next two years for planning purposes. This was discussed, no decision was made. Mr. Alvarez commented that the intent is to smooth the impact of debt and debt reduction as best they can.

The Selectmen’s budget was reviewed, including:

Grant for $10,000: Mrs. Pemberton indicated this is an allocation to various area social service agencies that provide services to Redding families. The grants are decided at the end of the fiscal year.

Mark Twain Library contribution: Mr. Alvarez questioned the amount requested for the Mark Twain Library in light of other budgets coming in with a zero % budget increase. Discussion of the amount of the contribution followed, with Mr. Dolan presenting an analysis showing operating surpluses, underestimated revenues, and larger amounts of reserves.

Representatives of the Library Trustees indicated that the surplus in revenue is building reserve funds for the repair and improvement of the library facility. At least $60,000 in capital expenditures are already planned for this year. They related some of the needs, the roof is in need of repair, interior/exterior repairs, drainage problems and a new boiler is needed. In addition, the functionality of the library facility is being re-envisioned, with extensive ADA improvements likely.. The fund raising events have been profitable, but they are often weather dependent, and there is no guarantee of that revenue. The suggestion was made to have regular annual discussions with the Mark Twain Library Trustees outside of the budget season. These discussions would help the Board of Finance understand how the revenue and expense estimates are determined. Mr. Alvarez summarized the discussion questioning to what level the Town should support the Library’s reserve fund.

The Board of Selectmen will finalize their budget at the March 14, 2016 meeting.

PUBLIC COMMENT

None

ADJOURNMENT

Motion: move to adjourn the meeting. Dolan, Mazzucco Approved. Unanimous.

The meeting was adjourned at 9:57 pm.

Submitted by Mary Maday, Recording Secretary

 

Attachment 1:

REDDING BOARD OF EDUCATION BUDGET REQUEST

2016-2017

The Board of Education provided a good deal of information this year, and some of it was quite helpful. Unfortunately, we seem still to lack a detailed and comprehensive template of data that can aid the BOE and BOF year-after-year in assessing exactly how funds are expended and what results are achieved. So, as members of the Board of Finance, we stepped back and resorted to more general figures from reliable sources. This does not necessarily reflect the views of all members.

To begin, BOE figures show that, from peak enrollment in 2006-07, the number of K-8 students dropped from 1,287 to 914, a decline of about 29%, while the budget increased from $17,715,913 to a proposed $21,300,000, which is about 20%. We doubt this is a sustainable trend. With more enrollment declines ahead, even the current 0% change in the proposed BOE budget appears troublesome.

In the latest year reported by the Connecticut Department of Education, the per-pupil cost in Redding was $20,431. For the rest of DRG A, the average was $18,659, a difference of $1,772 per pupil.  If there are about 1,000 students in the Redding system, we’d have to reduce the Redding BOE budget by roughly $1,770,000 in order to spend what our peers would spend. We are not proposing such a reduction at this time; we are only making a comparison. And, we fully recognize that accounting differences and other factors make any comparison imperfect.

Here is another telling comparison. The per-pupil cost in Redding was $20,431, while in Easton it was only $17,645, a difference of $2,786 per student. And, Easton reports fewer students, so it enjoys even fewer economies of scale than Redding.  Again, assuming about 1,000 students in the Redding system, we’d have to reduce the Redding BOE budget by roughly $2,786,000 in order to spend what Easton would spend. Again, we understand that Redding has a more senior staff and that some items are included in Easton’s town budget that Redding places in its education budget. Nevertheless, those factors fall well short of explaining the entire difference.

And, our “peer” towns (including Easton) are much wealthier. The average of the median household incomes in the other DRG A towns is $253,932. The median household income in Redding is $158,879. This is markedly lower than any other DRG A school. Clearly the school budget commands an outsized portion of the money that Redding residents earn.

The attached chart reflects the most recent figures provided by the Connecticut Economic Resource Center. Redding residents spend a much higher portion of their overall budget (73.8%) on education than other DRG A towns (56% to 70%). Redding also spends about 7.95% of median household income on the education budget, but other DRG A towns spend somewhat less. This suggests that we are living well beyond our means, in terms of school spending.

Some observers have argued that the per-pupil cost is very high in Redding because it is a small town. The average per-pupil spending for the five towns closest to us in population is $15,353. Yet, we pay $5,078 more per pupil. If we wanted to spend what those comparable small towns spend, then we would have to reduce our budget by more than $7,500,000. Again, this is not a proposal; we are only making a comparison, and we understand its limitations.

As a community, we value education highly, but educated students are not merely the result of spending ever-increasing amounts of money. Scarce town resources have to be allocated wisely, and every component in the budget must be justifiable. At this point, we think that the BOE should consider a “reset” of the budget, still reflecting Redding’s values but also the financial reality of what we can afford.

Respectfully,

Ward J. Mazzucco
Margaret O’Donnell, CPA

Attachment 2:

Copy of Copy of Comparison of School Costs 030616

Data is from 2012 from CERC Median HH Income Education Expenditures Other Expenditures Total Town Expenditures % of Expenditures that are for Education Actual Mill Rate Median Home Price Median Taxes Paid Median Education Taxes Paid Percentage of Median HH Income used for Education
Redding 120,223 35,106,197 12,485,084 47,591,281 73.766% 22.79 568,500 12,956.12 9,557.21 7.950%
Other DRG A Towns:
Darien 200,724 86,509,642 36,741,888 123,251,530 70.190% 12.20 1,225,000 14,945.00 10,489.82 5.226%
Easton 142,434 26,784,954 14,871,434 41,656,388 64.300% 22.95 590,000 13,540.50 8,706.51 6.113%
New Canaan 167,037 79,172,586 49,325,523 128,498,109 61.614% 13.85 1,413,750 19,580.44 12,064.25 7.223%
Ridgefield 148,104 87,248,296 44,205,936 131,454,232 66.372% 20.61 627,500 12,932.78 8,583.69 5.796%
Weston 213,423 50,570,007 17,929,633 68,499,640 73.825% 23.93 784,500 18,773.09 13,859.27 6.494%
Westport 152,586 113,131,404 85,351,670 198,483,074 56.998% 17.43 1,025,500 17,874.47 10,188.09 6.677%
Wilton 161,906 80,058,760 37,937,871 117,996,631 67.848% 20.85 786,000 16,388.10 11,119.05 6.868%
Other Nearby Towns:
Bethel 88,024 42,185,635 23,402,766 65,588,401 64.319% 23.24 338,750 7,872.55 5,063.53 5.752%
Danbury 66,281 129,949,781 96,613,000 226,562,781 57.357% 21.69 257,500 5,585.18 3,203.49 4.833%
Greenwich 129,588 152,486,555 192,113,688 344,600,243 44.250% 10.11 1,550,000 15,670.50 6,934.24 5.351%
New Fairfield 98,209 33,498,893 18,695,029 52,193,922 64.182% 23.95 316,500 7,580.18 4,865.08 4.954%
Newtown 116,024 74,459,845 36,319,325 110,779,170 67.215% 24.34 384,250 9,352.65 6,286.35 5.418%
Average % of Median Household Income used for Education in DRG A 6.543%
Times median HH Income= education taxes based on average DRG percentage 7,866
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