School Budget vs. Town Budget

[AlanJReiss]

On December 15th, 2008 the FinCom presented the financial state and plan for Wayland in a public presentation and provided a PDF presentation. That presentation is attached to this thread.

Slide 20 of that presentation shows FY10 Estimated Expenditures by Function. In this slide the 'Schools' are shown to represent 50% of Wayland's budgetary expenditures.

When I was in office, it was commonly known and believed (as of April 2008) that the 'Schools' represented 69.1% of the total. Some of the difference was in the 'Unclassified' which is shown (in this slide #20) to be 14%. Even if we add the full 14% to the 50% we would only get 64% which falls short of the 69.1% ( ~ 70%) that was understood. So this slide cannot represent reality?

An email that has come to my attention reads as follows:
From: DiPietro, Michael
Sent: Tue 12/16/2008 1:43 PM
To: Turkington, Frederic
Cc: Dept Heads; Sam_Peper@bio-rad.com
Subject: FY10 Budget & Reduction of State Aid - Cuts

Fred, last night the Fincom approved a motion to seek expense reductions to cover an expected 10% or 500,000 cut in state aid from the submitted FY10 Department budget requests.

The school portion of the budget excluding insurance and debt accounts equals 70% with the town making up the remaining 30%. This represents $150,000 of expense reductions on the town side.

We understand that you are still in the middle of your review and consolidation of the new dept of public works, DPW.

With the anticipated savings from this consolidation and possible other cuts throughout the town side of the budget, both selectman and other boards, we are looking for you to achieve 150,000 of savings.

Once you have finished your review please forward to me your proposed reductions of $150,000 ASAP.

I have cc'd department heads so they are aware that you may recommend reductions to their respective departments from their submitted budget requests for FY10 once the consolidation review has been finished if necessary.

If you have any questions please let me know.

Mike

Michael DiPietro
Finance Director
Town of Wayland
508-358-3611

Although the above email was forwarded to me, it carried no legal restrictions on its usage and it does, in fact, cover material which either is or should be in the public domain and was discussed in open meeting on 12/15/08.

In this email, our finance director uses a 70% school related cost factor for the schools which leaves 30% for the town. This does, in fact, fit with what I understood while in office. But the 70% excludes insurance and debt accounts so the 70% is actually a low figure and must be somewhat larger.

The crisis mentioned in this email is the reduction of $500K (or 10% state aid) of which $150K (30%) would have to be borne by the town side and should be extracted via DPW savings + any other departmental savings.

The 70% balance or $350K would have to be borne by the schools.
One way to make up this shortfall would be from FREE CASH but this option was not approved at the April TM when $300K was asked to be taken from FREE CASH such that Loker would not be reconfigured.

I also feel that slide 20 needs to retooled to show reality.

[Jeff Dieffenbach]

A few years back, I took a stab at calculating the percentage of overall spending accounted for by the schools. As Alan points out above, it's not a straightforward calculation because of the way that items such as health insurance and debt payments are reported.

I started with the school budget and added a portion of health insurance (based on school versus municipal employee head count), a portion of medicare (ditto), nursing (whose cost resides in the Health Department budget), and a portion of debt and interest.

• FY99: 63.8%
• FY00: 63.2%
• FY01: 64.0%
• FY02: 65.2%
• FY03: 64.0%
• FY04: 66.3%
• FY05: 65.8%

There are at least two other school expenses on the municipal side of the budget for which I did not account at the time: (1) pensions for clerical, cafeteria, and custodial workers (this should be a reasonably small number, as teachers and administrators fund their own pensions) and (2) crossing guards (also reasonably small). My estimate is that with these items added, the school share could reasonably accurately be called two-thirds.

[AlanJReiss]

My estimate is that with these items added, the school share could reasonably accurately be called two-thirds.

Yes, another data point was our conversation last year that you felt it was 2/3rd's and I felt it was up to you to mention your own opinion on this; so I didn't reference it above.

Mike Di'pietro is clearly trying to balance a shortfall of $500K based on 70/30% and the other items not accounted for could send this to 72/28%.

Additionally, another source (who shall remain nameless) but would have detailed data said that (he/she) thinks it is 72/28%

BTW: 2/3rd's to 72% is about 5% or $25K of shouldered shortfall for the schools so this is 'more than splitting hairs'.

The purpose of my post was not to call out that the schools account for at least 70% of the budget, because this (I believe) has always been true (for decades) and other peer towns most probably have the same type of split. In fact for a town like ours this may be a perfectly natural ratio of expense.

My purpose(s) was as follows:

1. To bring to light that slide 20 is bogus and has always been bogus since its been like this for years but I can't seem to get it changed. The slide should reflect reality. Its a pivotal slide of the FinCom and it should show people what the true ratio of expenses are.

2. The schools have the burden to make up for at least $350K of shortfall and, short of an override in April or short of a RIF prior to FY10 then where would the $350K come from?

3. If the reconfig really did save >$350K then this would have been the logical place to take it from.

So I offer this Dipietro email and its resolution as sort of a proof.
If the reconfig actually did save >= $350K in real tangible dollars then this $350K would now be accounted for and there would not need any other RIF, tax levy or services cutting type action.

So Jeff, what are your thoughts on this?

[Paul Grasso]

It's interesting that a $500K increase in state aid from FY 08 to FY 09 ultimately resulted in the consolidation of an elementary school, and a $500K decrease from 09 to 10 requires another $350K in school savings. Is the $500K in state aid a general cut or is it more specific?

I take your points about free cash usage and reconfiguration savings, Alan. In fact, the savings have been advertised as over $600K so the problem is solved, then.

[Jeff Dieffenbach]

Paul, it's not clear to me which problem you think is solved.

State aid comes to the town as a whole, not directly to the schools. That state aid includes Chapter 70 funds (for education), highway funds, and probably others. Overall, state aid is back at roughly 2002 levels following a decrease during the intervening years.

Even Chapter 70 funds don't come directly to the schools. Rather, the schools budget based on need for a given year subject to limitations in available funding.

The School Committee has stated that the decision to reconfigure the elementary schools was driven in large part by *actual* declining enrollment and the desire last spring to reduce the amount of the operating override--the decision was essentially disconnected from state aid movement at the town-wide level.

[AlanJReiss]

Paul, it's not clear to me which problem you think is solved.

I don't want to speak for Paul but...
I think what he was saying was that since the *calculated* reconfig savings has been published by you to be ~$600K (and one would assume that these are real dollars and not some accounting 'vaporsave' ) then the 70% of the $500K (or $350K) which the schools must now *cut* would be easily covered by the touted $600K due to the reconfig.

Paul is this right?

And for my curiosity, I would like to understand a crisp answer to this chain of events.

Does the $350K shortfall which must now be covered on the school side get covered by part or all of the reconfig savings that you have previously calculated?

In other words, do the schools have this shortfall covered already and if not why?

Thanks.

[Paul Grasso]

I don't want to speak for Paul but...
I think what he was saying was that since the *calculated* reconfig savings has been published by you to be ~$600K (and one would assume that these are real dollars and not some accounting 'vaporsave' ) then the 70% of the $500K (or $350K) which the schools must now *cut* would be easily covered by the touted $600K due to the reconfig.

Paul is this right?

And for my curiosity, I would like to understand a crisp answer to this chain of events.

Does the $350K shortfall which must now be covered on the school side get covered by part or all of the reconfig savings that you have previously calculated?

In other words, do the schools have this shortfall covered already and if not why?

Thanks.

That's pretty much it, Alan (minus the sarcasm). If one was to believe the $600K figure is accurate, then one would intuit that since the SC had estimated and budgeted the $300K "saved" due to the reconfiguration, the "fact" that this figure is now $600K would mean that most of the FY 10 $350K shortfall targeted by the FinCom was already identified.

[Jeff Dieffenbach]

I don't want to speak for Paul but...
I think what [Paul] was saying was that since the *calculated* reconfig savings has been published by you to be ~$600K (and one would assume that these are real dollars and not some accounting 'vaporsave' )

The savings are real dollars.

then the 70% of the $500K (or $350K) which the schools must now *cut* would be easily covered by the touted $600K due to the reconfig.

...

Does the $350K shortfall which must now be covered on the school side get covered by part or all of the reconfig savings that you have previously calculated?

In other words, do the schools have this shortfall covered already and if not why?

The schools do *not* have the purported $500k state aid shortfall covered.

As I attempted to explain in an earlier post, the Finance Committee's FY10 guideline for the schools assumes (1) that the elementary schools have already been reconfigured and (2) that there will be no reduction in state aid.

Put another way, to fund a three-school configuration, the Finance Committee would have to *add* the savings amount to the guideline. And, to pay a 2/3 share of the suggested state aid reduction, the schools would have to cut another ~$330k from the FY10 budget that it is developing.

[Paul Grasso]

The savings are real dollars.

The schools do *not* have the purported $500k state aid shortfall covered.

As I attempted to explain in an earlier post, the Finance Committee's FY10 guideline for the schools assumes (1) that the elementary schools have already been reconfigured and (2) that there will be no reduction in state aid.

Put another way, to fund a three-school configuration, the Finance Committee would have to *add* the savings amount to the guideline. And, to pay a 2/3 share of the suggested state aid reduction, the schools would have to cut another ~$330k from the FY10 budget that it is developing.

What? $600K are real savings, according to you. The FY 09 budget recognized $300K from the reconfiguration. So where did additional $300K go? You expect the FY 09 budget to come in under by $300K, yes? So if the FinCom is expecting savings from the Schools they would be basing that off the FY 09 budget, not where you think you'll be in actuality ($300K less than that).

I don't understand the obfuscation here. If the reconfiguration savings are more than the FinCom expected, why aren't those savings being applied into FY 10? Further, Alan's forwarded email indicated that the FinCom approved a resolution to find the state's $500K shortfall. Your point about the FC not requiring further savings from the schools seems incorrect now. If they are now requiring additional savings from the schools in proportion to the size of the budget (67%), the $350K needs to be saved. But from what? You've already exceeded the $300K of reconfiguration savings.

This is math, not calculus. If the savings are real, the FY 10 budget presented tonight should be based on the FY 09 budget less an additional $300K. Finally, I continue to take exception to the allegation that having 3 full elementary schools open costs $600K more than the current 3 schools that are open now.

[AlanJReiss]

Jeff, I know that the shortfall is $500K and the schools portion is $350K... thats what Dipietro said to Turkington (in reference to the town's $150K portion).

Paul is correct, this is not differential equations (I mean calculus)... this is simple + and - stuff.

1. The schools *saved* $600K in the reconfig - Jeff you said it !
2. The schools *need* $350K due to the shortfall - Diepietro said it in effect!
3. This means that you should be shouting that the schools have a net $250K this year and this is close to the $300K that was needed so I contend that Loker could be opened in force, once again next year for a tidy sum of $50K !

QED

Also, one man's sarcasm is another man's humor.
I thought that 'vaporsave' was a humorous new word that I would like to get credit for.

[Jeff Dieffenbach]

Jeff, I know that the shortfall is $500K and the schools portion is $350K... thats what Dipietro said to Turkington (in reference to the town's $150K portion).

Paul is correct, this is not differential equations (I mean calculus)... this is simple + and - stuff.

1. The schools *saved* $600K in the reconfig - Jeff you said it !

Actually, the School Committee said this. Of the $613k, $107k is on the municipal side, and the original savings on which our FY09 budget was based was $400k, leaving about $106k in "available saved money" (at present--transportation will eat into this, perhaps among other things).

2. The schools *need* $350K due to the shortfall - Diepietro said it in effect!

That may well be, but I haven't heard this from the Finance Committee, nor the basis for their $350k number. Perhaps I will hear this tonight.

3. This means that you should be shouting that the schools have a net $250K this year and this is close to the $300K that was needed so I contend that Loker could be opened in force, once again next year for a tidy sum of $50K !

I don't follow this at all. To re-open Loker (hypothetically, of course), we would need the $400k original savings less whatever fraction remains of the $106k additional savings--call it $294k. It appears, however, that the Finance Committee may be asking us to cut another $350k, meaning that we're $294k + $350k = $644k short.

[AlanJReiss]

Jeff, just make it simple for me.

The SC has saved $600+K.. you agree and I agree that it was said.
If you are told tonight that the SC must find $350K to make up for 70% of $500K due to state underfunding then....
Will you agree that the $350K is included into the savings you have already realized, assuming the reconfig stayed the same in FY10?

And, if not then in simple terms... WHY?

Let us know tomorrow.

[Jeff Dieffenbach]

Jeff, just make it simple for me.

The SC has saved $600+K.. you agree and I agree that it was said.

Thus far. That number is subject to change.

If you are told tonight that the SC must find $350K to make up for 70% of $500K due to state underfunding then....
Will you agree that the $350K is included into the savings you have already realized, assuming the reconfig stayed the same in FY10?

I don't understand what you are saying. Which "savings you have already realized"? What does it mean to be "included" in this savings? Do you mean that we stay with 3 schools in FY10, or stay with the reconfigured "2 1/2 schools" in FY10?

Let me try it this way.

• Imagine that the Finance Committee FY10 guideline is $30,000,000
• Assume that this guideline fully funds the FY10 2 1/2 school configuration
• Assume that we end up with $50k in surplus in FY09 (reconfiguration savings realized after our FY09 budget was set)
• Assume that the Finance Committee lowers our FY10 guideline by $350k to $29,650,000 because of a state aid shortfall
• In theory, we might apply the $50k FY09 surplus against the FY10 $350k shortfall, leaving $300k in FY10 cuts still to be found

I apologize if I haven't been clear.

[John Flaherty]

Also, one man's sarcasm is another man's humor.
I thought that 'vaporsave' was a humorous new word that I would like to get credit for.

Alan,

"vaporsave" is a brilliant word that is very apt for this and perhaps much of what goes on in this town. You get full credit for it.


Carry on.


.

[Paul Grasso]

• Imagine that the Finance Committee FY10 guideline is $30,000,000
• Assume that this guideline fully funds the FY10 2 1/2 school configuration
• Assume that we end up with $50k in surplus in FY09 (reconfiguration savings realized after our FY09 budget was set)
• Assume that the Finance Committee lowers our FY10 guideline by $350k to $29,650,000 because of a state aid shortfall
• In theory, we might apply the $50k FY09 surplus against the FY10 $350k shortfall, leaving $300k in FY10 cuts still to be found

That's what I've been trying to say, Jeff. What I learned tonight is that whatever savings over and above what was incorporated in the FY 09 budget have been spent elsewhere, leaving no expected surplus. I realize that it was a "mistake" to use the $673/613K figure, but understand from my perspective that it was used repeatedly, especially at a very public curriculum forum on November 18.

I look forward to the detailed budget to be posted on-line, especially the trending summary. You know that I've been disrespectful of the $600K+ figure, and I'm still skeptical of the 2 1/2 savings that were budgeted. The teachers included in that list didn't appear necessary in the first pass of the FY 09 budget.

It's funny, the value of Weston's detailed budget was dismissed out of hand tonight and it didn't seem relevant to anyone tonight that the reason people want such detail or any kind of qualitative and quantitative coherence in the school finances is because the numbers put forth for the last year simply haven't been believable to many in the community. Now there is another $350K to be cut. I was told that, of course, the core values and priorities explicit in the SC charter will be followed in identifying these cuts. I'll be watching.