BANGOR, Maine — Many Maine school leaders got unwelcome news last week when the state released funding projections for the upcoming school year.
On Friday, the Maine Department of Education issued preliminary state subsidy printouts meant to give school districts an idea of how much money from the state they can expect to receive for the 2016-17 year. The projections serve as a guideline for formulating budgets. Most administrators expected to see around the same amount they received last year. Many instead were surprised to find they’ll be getting less, and in some cases, a lot less.
The state’s largest school system was hit hard. Portland Public Schools received about $16.9 million from the state for the current school year. Next year, based on this first projection, that aid could plummet by $2.7 million, a 16 percent loss.
Bangor’s school system could lose $744,000, a 4 percent cut from the nearly $17 million the district received in state aid for the current year. Almost across the board, communities surrounding Bangor also took a hit.
“Next year’s budget is currently being built and is scheduled to be reviewed with the school committee in March,” Bangor Superintendent Betsy Webb said. “The potential loss of revenue from the state is concerning, considering that the Bangor School Department’s average annual increase over 7 years has been held to under 1 percent.”
The reasons for the projected reductions are a complex mixture of changing valuations, decreasing numbers of students and increasing costs of education and other factors.
Now, school officials are grappling with how to maintain education and school services without asking taxpayers in their respective communities to shoulder more of the financial burden.
The news wasn’t all bad. Some districts, such as Regional School Unit 25 in Bucksport — where the shuttering of the Verso Paper mill sent the town’s valuation into a nosedive — got a much needed injection of state funding that could help soften a very severe blow.
Maine school districts started crunching numbers to build their budgets for the 2016-17 school year weeks if not months ago, under the assumption that they’d have about the same amount of state money to work with this year.
“Most of us expected flat funding,” said James Stoneton, superintendent of Alternative Organizational Structure 47, which includes the towns of Orrington and Dedham.
Then came the Jan. 29 projections.
“This would be devastating for the Portland schools,” Jane Crocker, interim superintendent of the largest school district in the state, said Tuesday of the projected $2.7 million loss in subsidy. “We’re definitely looking at our internal data to make sure all the information input is accurate. We’re hoping there is a mistake there somewhere along the line.”
Several factors played into the decline of subsidy in Portland. The district paid off about $60,000 in debt service last year, its student headcount dropped by about 110 and fewer of those students were labeled economically disadvantaged, according to the Department of Education.
In Orrington, the town’s valuation increased by about $4.9 million in the past year, meaning the state expects that Orrington will be able to cover a larger share of its education costs. So, its subsidy dropped by $478,000 — or 16 percent.
“We’ve been working on this budget for a couple months now,” Stoneton said. “This was a real surprise on Friday.”
That sort of valuation increase was relatively rare in the state this year. On average, Maine municipalities saw their valuation fall by 1 percent.
RSU 25, centered in Bucksport, was among the “outliers” that saw a substantial increase in its state subsidy, according to Superintendent Jim Boothby. Bucksport lost $270 million in tax valuation when Verso closed its paper mill last year. That triggered the state’s “sudden and severe law,” which boosted state aid.
In the current year, RSU 25 received $3.68 million. Next year, that’s projected to increase by more than $2 million, a roughly 56 percent increase.
Without the boost in revenue, the results could have been “catastrophic” for schools and taxpayers, Boothby said. He’ll be presenting a school budget to town councilors next week, which “maintains the status quo” of schools, but the town still faces a trying financial situation with the closing of its largest employer and tax generator.
“There are going to be a lot of conversations about what’s happening,” he said.
More is less
Part of the reason so many school districts entered their budget process thinking they’d have about the same amount of state money to work with as last year is that the pool of money the state has available to dole out next year is slightly larger.
The state has about $986 million available in school subsidy money for 2016-17, a slight bump from the $983.6 million schools received this year.
Why did so many districts see a loss in subsidy?
One common thread for schools is that the education mill rate — the property tax rate required to raise the statewide local share of education costs — is expected to jump next year to 8.44 from its current rate of 8.23, meaning local towns and districts must foot more of the bill.
The mill rate jump stemmed from several factors, according to Suzan Beaudoin, acting deputy commissioner of Maine’s education department. The statewide cost of education is projected to increase by about $12.2 million in the coming year, the bulk of that being in the area of special education. That increase well exceeded the $2.3 million increase in available subsidy money. Coupled with a decline in state valuations, this prompted the mill rate hike, Beaudoin said.
When the state calculates subsidies, it uses a complex, and at times controversial, formula meant to determine the amount of money a school district needs from the state in order to provide students with basic educational needs — known as essential programs and services.
Schools provide the Department of Education with annual data including student headcount, how much debt they’ve paid off or accumulated, their town’s tax valuation data and more. The data are dropped into the formula, which determines what share of the subsidy pool that school district should get.
Many Maine districts fell victim to the state’s demographic challenges. The state’s population of school-age children has been on a steady decline for years. Comparing the 2005-06 school year and the current one, Maine has about 25,000 fewer students in its classrooms, Beaudoin said.
On average, districts across the state lost 1 percent of their student headcount over the past year. Districts that lost a higher percentage than average likely saw it hurt their subsidy because in theory it is less expensive to educate fewer students.
Decreasing education subsidies could play a big role in budget debates in towns across the state, as officials weigh whether to make cuts or increase property taxes.
“There were some districts that had a hard time passing a budget last year, and this could raise those issues again,” Beaudoin said.
The Department of Education urges districts that question their subsidy projections to double-check the data.
“What they should be doing right now is looking at this year’s printout versus last year’s, making sure everything’s accurate and they’ve submitted everything correctly,” Beaudoin said during a recent interview.
Local concern also could fuel a Legislative push to find more money to pump into education. State statute requires that the state fund 55 percent of education costs, but that threshold has never been reached. In the current year, it sits at 47.5 percent, according to Beaudoin.
Lawmakers siphoned additional money to schools last year, but only after most school districts had passed their budgets. Some towns used the new revenue to help reduce the impact of property tax increases, while others set it aside for difficulties that might crop up in the future.
Bangor, for example, used its additional subsidy received last spring to keep its education funding on par with the previous year. The remainder, about $355,000, went into a reserve account to help in fiscal year 2017.
Several groups are calling for new funding mechanisms to pump money into education. Maine’s casinos already send a portion of their gambling revenues to the Department of Education. Supporters of a third possible casino in southern Maine used raising money for education as their primary pitch during their controversial, highly criticized signature gathering efforts.
Another effort, called Stand Up for Students, aims to push the state closer to funding 55 percent of education by establishing a 3 percent surcharge on income taxes paid in Maine households that earn more than $200,000 per year, and funneling that money to Maine schools. That group recently submitted 75,000 signatures for review in August 2015 in hopes of getting on the November ballot.
In a statement reacting to the subsidy projections, Maine Education Association President Lois Kilby-Chesley put her support behind the Stand Up for Students initiative, arguing it would provide property tax relief for almost all Mainers, in addition to benefiting students.
“The only way to ensure all students receive equal opportunities is to make sure our schools are funded properly,” Kilby-Chesley said, “and that can’t happen with flat funding and ever changing mill rates.”
Follow Nick McCrea on Twitter at @nmccrea213.