Schools face loss of state funding

Posted Feb. 17, 2011, at 9:01 p.m.

For weeks, school superintendents around Maine have been waiting to hear how much, or how little, money their districts are likely to get in state subsidies during the next fiscal year.

When the Maine Department of Education released its preliminary General Purpose Aid for Local Schools budget Wednesday, it seemed clear to school administrators absorbing the numbers that most districts will be scrambling to make ends meet.

“We’re going to have to make some very, very difficult choices,” James Boothby, the superintendent of RSU 25 in Bucksport, said Thursday. “Everything is on the table. I think it’s going to be rough for everybody.”

According to the figures released Wednesday, his district is slated to receive $3.6 million in state subsidies for the 2011-12 fiscal year. That is $890,000 less than the district received this fiscal year — representing a reduction of nearly 20 percent in state and federal subsidies.

“I think as the state is reducing its share, they’re putting more and more pressure on local communities,” Boothby said. “One of the big challenges is that we’re striving to improve student performance at a time when resources are becoming more and more scarce. It’s challenging for the staff. It creates an uneasiness.”

That uneasiness may well be justified.

“There will certainly be reductions in personnel,” Boothby said. “We will do the best we can with what we receive, but very quickly, this will impact unemployment rates.”

Fallen off the ‘funding cliff’

RSU 25 is far from the only district to be facing such drastic cuts in its funding. For the last three years, Maine schools have benefited from an infusion of federal stimulus funds intended to stabilize their financial situations during the recession. During the 2010-11 fiscal year alone, Maine schools received $59 million in stimulus funds.

But that money has run out, just as it was scheduled to do, and many school districts have fallen off the “funding cliff,” said David Connerty-Marin of the Department of Education. However, some eleventh-hour relief was provided when Gov. Paul LePage released his biennial budget proposal last Friday, complete with an extra $22 million for general purpose aid to schools.

“It’s still a cliff, but a smaller cliff,” Connerty-Marin said. “This has definitely cushioned that, but it’s still a little less, at a time when costs have gone up, and it affects some more than others.”

The proposed budget calls for the state of Maine to pay for roughly 50 percent of the cost of education during the next fiscal year — five percent less than is required by law. The requirement never has been met, however. The local districts, in reality, have been paying for more than their 45 percent share since the law was passed in 2004.

“That’s the goal,” Connerty-Marin said of the state’s 55 percent target. “The reality is, we’re not getting there.”

Thanks to LePage’s extra $22 million for the next year, the Department of Education has $895 million to divvy up between all of Maine’s school districts. That money is divided according to the complex Essential Programs and Services funding formula.

Under that formula, the state determines a mill rate based on statewide and equalized property valuations. For the next fiscal year, that rate is set at $7.47 per thousand of property valuation — estimated by the state Department of Education to be the cost to provide an adequate education, Connerty-Marin said.

The amount of state education subsidy, or general purpose aid, given to a particular community varies according to its student population and its property valuation.

Some relief from the subsidy losses should come from the federal Education Jobs Bill, a $30 million fund intended to be used to keep teachers from getting laid off. The money was available for the 2010-11 and 2011-12 fiscal years, Connerty-Marin said, but most school districts chose to keep it for 2011-12 because “they knew the cliff was coming.”

On March 14, the Maine Legislature’s education and appropriations committees will meet to review the proposed budget, said Jim Rier, director of finance and operations for the Maine Department of Education.

Current estimates could change depending on what lawmakers do, but these preliminary numbers have been released so school superintendents can begin preparing their budgets.

Daniel Lee, superintendent for the Brewer School Department, wrote Thursday in an e-mail that it was premature to comment on the preliminary budget proposal. The Brewer school district is one of the few showing an increase in funding — $16,882 more than the current fiscal year — according to the state’s preliminary budget figures.

“Additional adjustments could alter outcomes dramatically,” Lee wrote.

But Gehrig Johnson, longtime superintendent of SAD 1 in Presque Isle, said he has seen many of these preliminary budget proposals.

“It usually holds pretty close,” he said.

‘Double whammy’

SAD 1 in Presque Isle is losing $1.2 million in state and federal subsidies, or more than 10 percent of the $13.8 million it received last year, according to the proposed budget.

Johnson said it’s a “big hit” for the district’s seven schools and that the number is based on declining enrollment and a property valuation that is much higher than the state average.

“The combination of those two things is kind of a double whammy for us in Presque Isle,” he said.

In the last three years, SAD 1 has lost $2.5 million in subsidies and has worked hard to balance its budget, Johnson said. The district has reduced 38 positions, most by attrition, in that time and has held the tax rate steady. In the last 15 years, the district has closed three schools, which he called an emotional and very difficult decision.

“We feel like we’ve been rightsizing our district as we’ve lost enrollment, doing things that need to be done, but it’s getting increasingly difficult,” Johnson said. “With these large subsidy losses, we are not going to be able to sustain the level of education for much longer with the same dollars. It stands to reason there’s some point of critical mass. You can’t keep producing the same product for less and less and less dollars.”

Foreign students, local money

While most schools are concentrating on cutting costs, one school district is working on a different solution — increasing revenue.

“We can stand more kids,” said Superintendent Kenneth Smith of the Millinocket School Department. “Obviously, we’re going after international students to fill ’er up.”

According to the proposed budget, Millinocket will receive $455,000 less in state subsidy than the $2.3 million it received last year. The nearly 20 percent reduction will be tough to take, he said, even with the proposed injection of dollars from international students.

“I’d say the General Purpose Aid was a big killer,” Smith said.

That’s why his district will use what he calls “zero-based budgeting” as a way to evaluate the need for everything from the superintendent down to custodians. Smith explained that the budgeting method essentially requires starting from scratch and having every department and program justify its funding.

“It’s a heavier method of scrutinizing,” Smith said. “You just don’t accept the fact that since you had it, that you have to have it now. Everything that we do, we look at.”

Although the superintendent believes that schools should be receiving a lot more assistance from the state, he’s trying to make practical decisions for his district.

“If they don’t have the money, if there’s not enough revenue … We’ve also got to look for more sources of revenue and not just complain about it,” Smith said. “It just doesn’t do any good to complain.”

‘Difficult decisions’

In Bangor, the school district is expected to lose about $1.59 million of the $18.2 million in state and federal subsidies it received last year, a reduction of 8.7 percent.

Including reductions in Medicare reimbursement and other federal funds, the district’s loss will be roughly $2.4 million for the next school year, according to Superintendent Betsy Webb.

“There definitely will be difficult decisions ahead of us,” she said. “It’s a large enough loss in the revenues, we’re going to have to look at paring back programs, staffing — we’re basically having to look at everything in our budget.”

Approximately 80 percent of its budget is personnel, Webb said.

Closing a school is not an option for Bangor, she said, because its K-5 enrollment is up, and neither is finding other revenue streams.

“We’re not really set up for finding different sources of revenues, being the public school system,” she said.

Bangor is “lean on administration,” according to the superintendent.

“By being a high-performing and efficient school system, basically, for the amount of money, we’re getting great results,” Webb said. “What I’m going to work on is paring everybody back a little bit.”

Over in the Bucksport RSU, paring back likely won’t be enough, Boothby said.

At a budget hearing Wednesday night, officials discussed the possibility of closing a school.

“Nothing is off the table,” he reiterated. “It’s a challenge, and we have to meet the challenge head-on.”

A spreadsheet of the state Department of Education’s Essential Programs and Services funding estimates for fiscal year 2011-12 is available for viewing at: www.maine.gov/education/data/eps/fy12/gpaprelima.pdf.

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