SHIRLEY -- At Monday night's Finance Committee meeting, committee Vice Chairman Mike Swanton suggested "resetting" the required local contribution (RLC) portion of the Ayer-Shirley Regional School District budget to a more practical formula at the state's target as a means for alleviating the district's current budget woes.
Swanton said that he had recently shared his latest proposal to aid Shirley with its current fiscal crisis regarding the school district assessment with ASRSD Superintendent Carl Mock, Ayer Finance Committee Chairman Scott Houde, and Shirley Selectman David Swain.
Dubbed "Plan B," Swanton cautioned that his latest proposal had yet to be vetted by all of the members of the two towns' boards of selectmen and finance committees, as well as the School Committee.
As a result of the changes in the Department of Elementary and Secondary Education's formula for calculating each community's RLC toward its school district assessment, the RLC portion of the assessment for Shirley increased by $260,699, bringing the total increase in the fiscal 2014 assessment for Shirley to $555,591.
The change in RLC is due to a move by the state to expedite the movement of towns below the state RLC target closer to that target. That increase in RLC, combined with the gradual five-year increase in Shirley's contribution toward net school spending (NSS) over the RLC to equalize its share of the per pupil costs with that of Ayer, has created a budget-busting situation for Shirley.
"The short answer is that we cannot afford that. It well exceeds the growth in our taxes," Swanton said.
If Shirley were a stand-alone district, it would make no difference if the increase were in the RLC or the NSS>RLC, said Swanton, "but because of our (regional agreement) formula, it aggravates the situation.
Some say Shirley doesn't contribute as much to school costs as other towns ... but we are exceeding the targets," Swanton emphasized. His reasoning, he said, was that the combined Shirley RLC and NSS>RLC for fiscal 2012 and fiscal 2013 both exceeded the fiscal 2014 DESE RLC target.
The problem, he said, was that the money was not put into the RLC line, and because of the DESE formula, "we started out behind the goal. When they changed the formula, and we saw what everyone was assessed for RLC, we saw that we were below target with regard to the RLC portion. Now that we are a region, it makes a difference."
How Plan B would work
Because Shirley cannot afford the $556,000 increase in its assessment, Swanton's "Plan B," he said, would be to "hold the amount of the RLC." The effect would be to reduce the district's budget by $335,000, and reduce Shirley's share by $208,000, bringing the increase down to $348,000. Ayer's assessment would drop only slightly.
The problem is that, besides the fact that the school district would still be $335,000 below the proposed budget, that would change the percentage of NSS>RLC for a year and tack a year on the end (of Shirley's five-year plan to increase its NSS>RLC until it reached par with Ayer on a per-student basis.)
Swanton said some in Ayer were not thrilled with his proposal. "One of their issues was that the RLC would still be below the RLC goal by about $200,000, so when does this all get fixed? You don't have a plan for how this will get better," he said, paraphrasing the Ayer response thus far.
Looking at the total RLC between the two towns, he said, "If we take an additional $202,000 out of 'above RLC' and move that to the RLC line, we will be at target and so will Ayer. The RLC will change over time, but since both Ayer and Shirley would be at target, you would think we would move in a similar fashion.
"Then we just need to rationalize some of it above RLC. If we took the position to move the $202,000 above RLC to the RLC line, we still can't afford to pay more than the $348,000 (Shirley assessment) increase. The difference is the amount above RLC, $491,000 for Shirley," he said.
The regional agreement
The regional agreement states that Shirley will gradually increase the NSS>RLC until it reaches a 45/55 split in student population with Ayer by fiscal 2017. "Plan B" would require the regional agreement to be amended to reset the "rationalization" schedule, extending it to fiscal 2019, Swanton said.
Moving the RLC to meet the state target would still increase Shirley's school assessment as compared to fiscal 2013 by $348,000, and, although the Ayer RLC would not change from the current district proposal, the NSS>RLC split would go from about $1.3 million to $1.9 million.
That $585,380 disparity in NSS>RLC is something Shirley would have to make up by paying only 20 versus 32 percent of the NSS>RLC split with Ayer, the latter the share Shirley would have to pay in fiscal 2014 given the current assessment. The town would need five years to do that, Swanton said.
Swanton noted that, with the state determining the amount of the RLC the towns must pay to Nashoba Valley Technical High School, the two towns would need to determine if the plan could be legally carried out if they decided to move forward with it.
When he asked DESE School Finance Programs Administrator Roger Hatch if it would be possible to take legal action to carry out his plan, Hatch's response was that no one had ever asked the DESE to do that before, so he was unsure, Swanton said.
If the two towns did decide to move forward with the proposal, their citizens would need to vote at their respective town meetings to insert language into the regional agreement that would say that for the purposes of the agreement, the RLC would be equal to the greater of the RLC determined by the DESE, or the target RLC less any RLC paid to other districts, including but not limited to the regional technical school.
The plan would rationalize that Shirley is now at the state's target RLC, pushing $200,000 out two more years. That would require Shirley to "throw in another $117,000 each year given the current RLC, and about $200,000 assuming that the state target for the RLC continues to climb," according to Swanton.
The bottom line, he said, is that Shirley's assessment would be reduced to the more manageable $347,928, the school district would have to decrease its budget by $207,663, and Ayer would not be asked to spend more.
A member of the original Regional Planning Committee, Swanton said the committee had anticipated some 95 percent of the conditions the district would face with regard to short-term budget planning, but that it had not realized that the district should have been putting more of its funds specifically in the RLC line of the budget.
"On a $24 million budget, this is some tweaking," he said.
He concluded by stating that he would suggest to Mock that there be another joint meeting between the towns' boards soon, and that there be public hearings before the towns' warrants were finalized.
A ray of hope, he said, was that Houde "didn't say 'this was the craziest thing I have ever seen.'"
When asked how the town would make up the difference each year, Swanton replied, "I am not saying this is easy. It still would require some ongoing work to figure out how to do that.
"But the $555,000 increase was a nonstarter, and $348,000 is still a huge chunk of change, but with free cash and whatnot it will not be easy. It will be challenging, but doable.
"If we can weather the next five years, then a fair amount can be achieved," he said.
How do we come up with the money for the $348,000? That's the Finance Committee's and Board of Selectmen's job."