Date:              1/06/06

TO:                    school committee

From:             Robert Hicks

With this memorandum is the recommended budget for the South Kingstown School Department for the fiscal year beginning July 1, 2006 and ending June 30, 2007. At this time the district is in the midst of significant change driven by several factors, including: an enrollment decline, new state and federal mandates with respect to student performance standards and high school proficiency based graduation, a local imperative to bring a consistent curriculum and instructional plan to each of our schools providing greater equity to educational opportunity, a statewide initiative to focus spending on urban districts with greater student need resulting in a decreasing share of revenue from state aid, the establishment of charter schools in the community whose students are removed from our enrollment but whose costs mostly remain in our budget thereby increasing per pupil cost, and increased spending pressure related to pensions, health care and utilities.

The combined result of these environmental changes is a school budget that is squeezed between increased requirements and fixed costs and restricted revenue, forcing difficult prioritizations of need. This budget attempts to balance those priorities, recognizing that costs increase by more than some want and program priorities of others remain unmet. In recent years, to deal with declining state aid and enrollment, a significant budget cut, and increased benefit costs, the district has not improved its program base. Any necessary positions, such as high school literacy, were taken from existing staff reallocations. In this budget several critical program and support elements are detailed and included. Which among them are affordable is an open question, and the School Committee’s budgetary guidance is sought. This document provides a framework for such decisions, based on the impact of including or not including them in the budget. In distilling this format down, it comes down to a simple question: Should the establishment of full day kindergarten be funded through additional dollars or reallocated resources? That is an important policy question and one that will guide the budget adoption process. Of course, that question applies to other initiatives as well, but the scale of full day kindergarten makes it the most critical and visible issue.

 

Budget Summary

The priorities addressed in this budget focus on students as they enter and leave the school system. Students entering the system will receive, under this budget recommendation, a full day kindergarten program enabling the teachers to fully address the components of our literacy program and state grade level expectations. Students leaving the system, in high school, will see improvements that are part of the proficiency graduation system in addition to a disciplinary alternative that reduces time out of school for suspensions and provides an educationally productive alternative.

School systems are about teaching and learning, which involves teachers in classrooms with students – that is personnel. Accordingly, the bulk of the school department budget is devoted to supporting teachers, in direct and indirect ways. Two-thirds of all salary costs are for classroom teachers, and the balance supports classrooms with principals, therapists, paraprofessionals, custodians, etc. Fifty-seven percent of the district’s budget is devoted to salaries and another 23% to benefits, combining to 80% of the budget for personnel. Another 16% of the budget provides for contracted services, including transportation and tuition (special education, vocational, and charter). The remaining 4% of the budget provides supplies for classrooms and the entire system; other objects such as contingency, liability, fees, and dues; and capital items, mostly technology and maintenance.

 

Enrollment

Our enrollment continues to decline. As can be seen in the historical data, we reached a peak enrollment in 1999-2000 and have dropped as an almost mirror image of the prior increase.

Three data pieces are correlated to the enrollment decline and can reasonably be seen as explanatory. First, births declined. In the early 1990’s there were approximately 270 births per year, with more recent cohorts averaging about 250. Second, enrollment in non-public and charter schools increased, more then doubling over the last decade and lessening the potential enrollment by over 400 students. Third, growth management has worked. Single family building permits declined by nearly 60% between 1999 and 2005. The most recent birth records (2003) show a 10% increase over recent years. The 272 births recorded in 2003 are the most since 1996, and are the first indicator of a swing in enrollments and the beginning of a period of increase.

Recent and projected enrollments are shown in the table and graph below. In addition to total enrollment, it is also displayed in grade cohorts, elementary (K-5), middle (6-8) and high school (9-12). As can be seen, the elementary grades have already faced their decline, and smaller grades are now moving into the middle schools. The high school will not face the significantly smaller grades for several years.

The school district responded to the enrollment decline with two specific actions. First, in 2004-05 an elementary school was closed to address the drop of 350 students in elementary population. This action saved the district approximately $450,000 in the 05-06 year. These savings will increase by $100,000 in the 06-07 year since one-time costs related to unemployment and moving do not recur. Additionally, this change resulted in more equitable and overall lower class sizes. This was applicable in grades 1-5, as there remains an issue in kindergarten class sizes that is proposed for addressing in the 2006-07 year.

Second, this fall the district engaged in a planning and analysis process to determine how it will address the decline in middle grade population. In that process the commitment to middle school education, primarily evident in the team structure, for its grades 6-8 students was affirmed. The district will maintain two balanced middle schools. In the 2008-09 school year, each middle school will contract by one team and have three teams serving grades 7 and 8. Grade 6 will remain with two teams in each school, contracting from 4 member teams to 3-member teams.

 

Expenditure History

In recent years it was noted that the school district had overspent its budget as appropriated at the Financial Town Meeting. Additionally, increases in funds made available to the school department after FTM were expended to expand programs or address increasing mandated expenditures. The School Committee has made consistent progress in keeping expenditures in line with appropriations and consistently returned positive balances. In 2005-06 the district projects keeping expenditures within the FTM appropriation, returning a surplus, and maintaining the handshake commitment as it also did in 2004-05.

Budget to Actual Expenditures and End-of-Year Balances

 

 

Staffing

The School Committee has reduced FTE’s in each of the last three years. While enrollments have dropped, the school district also faces significant new mandates from both state and federal actions and also to respond to unmet needs for curriculum and professional development. The School Committee has worked to become more efficient and reassign staff to meet these new requirements. In addition to meeting these needs, the School Committee also reduced class sizes, made them more equitable, and developed a plan to address declining middle school enrollment while maintaining our educational philosophy and quality. This year the district has created additional positions in response to specific student needs, but supported them within the FTM budget.

There are current pressures in the staffing plan for the district, most noticeable at the middle school self-contained special education and at the high school in special education self-contained and resource for collaborative teachers. However, the plan for special education is to address the pressures through reallocation of special education staffing and to work within the current FTE to address those issues.

 

Historic and Current Staff FTE’s

 

Additionally, there is an opportunity to collapse one section in sixth grade where our population is projected to drop from the current 334 to 304. There are now 13 sections of sixth grade averaging 26 students per class with a cap of 27. If we collapse to 12 sections the average would be 25+ per class, remaining at 13 sections would result in average class sizes of 23+. At this time, I recommend retaining the additional section; at least until the middle school districts are complete, so that the additional capacity remains to place students. The collapse should definitely occur in 2007-8 regardless, when the grade 6 enrollments will drop to 258, providing average sizes of 21.5 for the 12 sections. This remains, however, a place to capture an FTE if necessary. Potential program additions represent additional FTE’s in 2006-07.

 

Statewide Expenditure Comparison

With the availability of In$ite data showing relative expenditures of all the state’s school districts, it is possible to compare spending patterns in South Kingstown with respect to those of the state as a whole and individual districts. At this time, the Accountability Subcommittee of the School Committee is identifying like districts within the state for comparison. The following data is based on a comparison to statewide spending. In the attachments to the budget is a table detailing expenditures by function, education level, and program. It should be noted that differing from statewide averages is not fundamentally good or bad. There are important reasons why a district would spend more or less; for example a greater population of non-English speaking students would require additional services, geography impacts transportation costs, and facility utilization, age, and condition help determine upkeep needs. The comparative data should be used to create questions, not to determine judgments. Comparisons provided are based on 2004-05 data. Prior year data is available at the RIDE website which can be reached through skschools.net.

In the instructional area we spend more on personnel (teachers and paraprofessionals) than the typical district, a greater percentage of our spending is going to classrooms than average. By cross-referencing functional expenditure with program expenditure it can be seen that the additional staffing is primarily, but not exclusively, in special education. (These figures exclude out of district spending, which has been brought to a typical level.) In addition to teachers and paraprofessionals, special education spending for therapists and psychologists also exceeds that of other districts, both in terms of percentage and actual dollars. On analysis, that spending is heaviest in the elementary schools and it is evident that, to some degree, therapeutic staff is compensating for the lack of elementary guidance counselors.

Areas where our expenditures are less than statewide averages are technology, materials, and staff and professional development. In staff development, our new teaching contract moves much of that into basic teacher responsibility through Job-Embedded Staff Development, and consequently does not show up as a separate expense. If separated out as a professional development expense it would amount to approximately $35 per student, reducing but not eliminating the disparity. Additionally our food service, transportation, program management, and building upkeep costs are less than are typical, the latter most likely due to our energy management program.

Comparative spending data also looks at educational level, how much is spent of elementary, middle, and secondary schools. Here, our spending patterns show greater expenditure in elementary and middle schools compared to other districts and lesser spending at the high school. This is not unexpected. It is recognized that our neighborhood elementary schools are less efficient than larger schools and schools organized by grade level. However, this inefficiency was partially addressed in the closing of an elementary school, so the 2006 data should reflect this change. Our middle schools will continue to rise in per pupil cost until 2008 when we contract a team in each school at which time efficiency will be improved. One large high school is efficient, and ours is no exception. In six to ten years, when smaller enrollments enter the high school, we should expect to see some efficiency drop and our per pupil cost approach the state average.

 

Analysis of Increases

The increase to the school department budget is driven by several factors: contractual, operational, and programmatic. Programmatic additions to the budget are detailed in the following section. Below is a breakout of the area by area increases in the base budget. These are further detailed in an attached spreadsheet in the backup documents. In each budget line the dollar increase, percent increase of the line, and percent increase on the total budget are listed.

Salaries – Salary increases are driven by general wage and step increases. Step increases reflect the wage increases awarded based on time in service, and are a vehicle to move personnel from their entry wage to maximum. While some have criticized step increases as providing double increases, general wage plus step, it should be noted that without steps, the alternative is to pay the maximum wage upon entry, a far more expensive alternative. Step increases typically equate to 2% of the wage base. Total wage increases in the 06-07 budget are 6.2%, of which 2% is attributed to steps, 3.5% to general wage increases, and the remaining 0.6% to unforeseen positions added in the 04-05 year. Salaries increase the budget 3.6%.

Benefits – Increases in benefit costs are a matter of local, state, and national concern. Until recently benefit cost issues were focused on health care. More recently, pension costs are rising to the forefront. In 2005-06, significant pension increases were anticipated and budgeted, but later avoided through legislative action. The district chose not to spend those funds, but to reserve them. That decision is helping now, as the pension increase expected but not incurred in 05-06 is facing us in 06-07. In other words, last year’s legislative action did not eliminate the increase, but delayed it for a year. As a result, our pension contribution increase as compared to the budget is 6.4%, but compared to our 05-06 expenditure level is 27.3%. Had we spent the 05-06 pension savings, we’d be facing the larger increase against our budget. For health insurance we are projecting a 17% rate increase, commensurate with the town. Final rates typically are available in March or April. If rates increase by 10%, a percentage similar to recent years, our costs will drop by $382,283.

Purchased Services/Supplies – Several items have a significant impact on our purchased services and supply lines in 06-07.

·       Local charter schools reach maximum enrollment in 06-07, so this should be the last year of significant tuition cost increases. An analysis done last year showed that charter school students could be educated for several thousand dollars less than was paid out in tuition. Last year’s legislative action reduced by half, but did not eliminate the added costs to the district.

·       In transportation, we plan on two additional special education busses. The special education busses are needed for preschool and tuition placements.

·       There is $40,000 to transfer our student management system to SchoolMax, the system currently used in about half the state’s districts. RIDE is subsidizing half the cost of the transfer and is supporting data transfer and downloads to that program. The transfer is not required, but there is no assurance the funds will be available ongoing (there is no guarantee they will be available now, but our plan is so contingent) and we risk more difficult data sharing if not using the supported program.

·       A change in state aid moved $67,000 from general aid to designated professional development aid (Article 31). While this did not change overall state aid, it removed $67,000 from aid available against the budget, in effect, a $67,000 decrease in general aid and a mandated, commensurate increase in Article 31 expenditures.

·       For electricity and heating fuel, we are projecting a 20% increase.

Educational Programs – Most of the increase in educational programs derives from a decline in federal grants that supported both our prevention counselors and GEMS-Net science program. Federal funding for these grants has diminished and is expected to be eliminated next year for South Kingstown. These are important programs, integral to the school system that we’ve been supporting through grant funds. Additionally, a $9,000 increase is provided for support of CARES, the district’s volunteer organization. This restores the cut made in 2004-05 and takes a first step towards addressing the expanded role of CARES and volunteers in the school system.

Capital Outlay – In recent years the district’s capital outlay expenditures have been the victim of budget reductions. (It should be noted that this does not refer to the bonded capital program, which addresses major building needs such as floors and roofs, has been fully funded, and is ongoing.) Major components of the capital outlay program provide for technology upgrades and vehicle replacement and add over $200,000 to the budget.

 

The 5.5% Budget

The town is subject to the state’s 5.5% cap. This cap applies to the annual increases in property taxes, not to budgets themselves. State aid is also a component in the cap as well, as the decreasing share of the budget supported by state aid increases reliance on local property taxes, so that the percentage increase of property tax appropriation is greater than the actual budget increase. At this time, the exact amount available under the cap is uncertain, and is part of the Town Manager’s budget, of which the school budget is part.

For illustrative purposes, following is a review of how the school department budget can be brought to a 5.5% increase. It should be noted that efforts are underway to reduce some items in the presented budget. For example, the elimination of one or both of the added special education busses through coordination with neighboring towns. Should this prove feasible, then those added busses will not be required and can be eliminated.

 

 

 

Program Additions

This budget includes additions that improve the educational opportunity available to the community. They include both program additions that will be immediately visible to the community and structural improvements that will build the capacity of the district. Taken in their entirety, these program additions add $778,105 or 1.5% to the budget. Each of them is described below. It is understood that the cost of these additions is substantial, to some more than affordable. I’ve described for the School Committee the impact of not moving forward with each of these items to facilitate the decision-making process. A summary of each item is below with a more extended description in the budget book. These items are carried in the contingency line of the budget until it is decided what the School Committee adopts, at which time costs will be allocated to appropriate lines.

Full Day Kindergarten – The implementation of full day kindergarten is more fully described in a memorandum in the attachments to the budget. In summary, it extends the district’s kindergarten program from 2.5 hours per day to 6.3 hours a day. Full day kindergarten increases the curriculum delivered to students, is now available to most students nationwide, and has been demonstrated to improve student outcomes. The cost is projected at $441,000.

Budgetary Priority – Full day kindergarten rose to the top of the priority list in the School Committee’s goal setting process. If a full day program is not implemented now, then in 2008, when the middle schools contract, we will have a strong opportunity to move forward.

Senior Network Technician – This request has come forward several times before and relates to both communication and accountability priorities of the School Committee. As we move to a more data intensive environment for student management, data transfer and reporting, personnel, and student achievement analysis, the data management is growing beyond our means. The senior network technician will have primary responsibility for database and web services. The cost is projected at $55,306.

Budgetary Priority – Our technological support has long been a weakness of the district. We have survived with current staffing, but make compromises now and will have to continue to do so.

Accounting System – The cost is projected at $70,000. We currently use the town’s accounting system but would like to move to on-line purchasing and integration with human resources. The HR integration would improve the weakness in our HR system that has been present since the directorship was eliminated though improved efficiency. This is a one-time, non-recurring cost and relates to the School Committee’s accountability priority.

Budgetary Priority – An integrated accounting/human resource package has been a priority of the office personnel for several years. The alternative is to continue with the status quo.

Portfolio Manager – The required performance graduation system includes an element of student proficiency portfolios as part of the graduation requirement as is related to School Committee priority of high school student success. The electronic portfolio system requires a dedicated part time person to manage it. The cost is projected at $27,600.

Budgetary Priority – Student portfolios are part of the mandated state proficiency graduation. This applies to the Class of 2008, now sophomores, and there is immediate need for students to assemble portfolios.

Athletic Trainer – The RIIL is recommending that high schools include athletic trainers in their program support structure. The cost is projected at $47,496

Budgetary Priority –While this is not a mandate, it is a safety improvement. Absent, we will continue with the status quo.

Child Outreach Coordinator (0.5 FTE) – This position will oversee the Hazard program and our community preschool placements. The School Committee approved this position two years ago, but the resources were reallocated elsewhere. This is budgeted at $45,000.

            Budgetary Priority –We face a surge in preschool placements and the program lacks direct administrative oversight. Absent, we will continue with the status quo

High School Suspension Alternative – The high school is developing alternatives to out of school suspension including both in school and after school options related to School Committee priority of high school student success. This is budgeted at $25,000.

            Budgetary Priority – One reason at risk students fail is repeated absence for discipline. Absent, we will continue with the status quo.

Charter School Bus – This would add an additional bus to transport charter school students at a cost of $57,661. There is still uncertainty if it will be necessary, but to implement our transportation policy, it is possible this will be needed.

            Budgetary Priority – If we do not budget it, and it proves necessary to add this bus, we would have to divert other resources.

Attendance Officer Upgrade – The administration has looked for several years to bring Truancy Court in house to be a part of our plan to address issues of student attendance and tardiness. In reviewing how other districts have gone forward, one component we are missing is adequate attendance officer support. This line will increase the time of the attendance officer to manage access to the court as is related to School Committee priority of high school student success. The cost is projected at $10,000.

Budgetary Priority –Without the additional Attendance Officer time, our Truancy Court implementation and utilization will be limited.

 

Revenue

Revenue for the school district has two major and other smaller components. State aid has become an increasing smaller portion of the district’s revenue budget, and property tax appropriation a correspondingly larger share. This budget is built on the assumption of level state aid for the coming year, although that is subject to change as the Governor and Legislature act. In the “other” category Medicaid has grown in its contribution to the budget. Medicaid reimbursements come to the district for non-educational services that are required for eligible children. In recent years, this revenue stabilized at $800,000, although it is vulnerable to federal budget cuts. Elimination or reduction of Medicaid reimbursements would not eliminate mandated services, but, rather, would force them into other revenue sources.

 

Additionally, the district has run surpluses in recent years and used portions of those funds to reduce local property tax appropriations. Caution must be used in application of undesignated funds, however, as they are not necessarily recurring revenues, their use risks greater local tax appropriations or program reductions in successive years. As a result of the most recent audit, the district has an undesignated fund balance of $497,945. The most recent projection for the current year, 2005-06, is for a fund balance in excess of $600,000, although the fiscal year is not complete and those funds cannot be regarded as secure at this point, as is the case with the audited 2004-05 fund balance. For the 2006-07 budget a conservative approach is suggested, consistent with prior years.

It is recommended that the School Committee apply $400,000 of undesignated funds to the 2006-07 budget, correspondingly reducing the property tax appropriation necessary. This amount is recommended because it is within the audited fund balance so is assuredly available, and, assuming a $650,000 fund balance in 2005-06, would utilize slightly more than one-third of the anticipated available reserve at the end of 2005-06, assuring a similar amount is available to apply against future budgets (see below). Also illustrated is a “worst case” scenario, assuming no funds are available from the current year, as there is yet no audited fund balance. This is provided to illustrate that the recommended funding plan is not premised on the expenditure of funds not yet available.

Anticipated Scenario		“Worst Case” Scenario
2004-05 fund balance	$497,945	2004-05 fund balance	$497,945
Anticipated 2005-06 fund balance	$650,000	Worst case 2005-06 fund balance	$0
Sum	$1,147,945	Sum	$497,945
Recommended to apply to 06-07	$400,000	Recommended to apply to 06-07	$400,000
Anticipated available in 07-08	$747,945	Anticipated available in 07-08	$97,945