Monday, October 21, 2013

Newmarket Negotiates

In this post I try to analyze the financials of the tuition deal from Newmarket's perspective.  The conclusion I get, which is that Newmarket's budget estimates imply that it has local costs of over $7,000 per tuitioned-out student (on top of the tuition) makes it hard to see how they'll agree to any tuition deal.

I went to Newmarket's school board meeting Thursday (Foster's).  I made a public comment where I tried to make these points:

  • I want my 6th grader to go to a thriving high school, so send us your kids.
  • In 11/12 Newmarket HS and ORHS's Cost Per Pupil were about the same, $16.2K and $16.3K respectively.
  • The $14,500 tuition is a good deal.  The last time Newmarket paid this little (inflation adjusted) to educate a high schooler was 07/08, eight years earlier than the first year the tuition students will arrive, 15/16.   
  • Oyster River's Cost Per Pupil will be around $17,000 for F14/15.  You are getting a 15% discount.
  • Even if you do decide to build a high school, you can send your students to one of the best in the state right up the road during construction.
  • I think the review period should be every two or three years instead of waiting 10 years.
The Newmarket board did not approve the tuition framework at their meeting.  They plan to go back to the negotiating table to aim for a lower tuition, some guarantees about student opportunity and to fix some loopholes they see in the framework.

Newmarket Student Survey

Newmarket School Board's student representative, Ashley Hodgdon, reported on a self-initiated survey she did on tuitioning attitudes among current students in grades 6 thorough 12.  Of 287 students surveyed, 75% would prefer to build a new school in Newmarket, 10% would choose to attend Oyster River and 15% were undecided.   Reasons given by those who chose to build: keep the teachers jobs, less expensive, changing is a big gamble, bullying at Oyster River, don't want to get up earlier, Oyster River doesn't like us and loss of class rank.  Reasons from those who prefer ORHS: More opportunity, nice school, more to offer, better for the community, not enough kids to build a new school, less hallway traffic.

It's too bad the students aren't more open to Oyster River.  However, the question itself reveals a deep problem with the thinking in Newmarket.  The question is framed as a choice between tuitioning and building a school.  Newmarket's actual choice is between tuitioning and fixing their old school up enough to keep the students home.  The issue of whether or not to build a school is separate, and largely independent.

Second Class Citizens

The chairman of the Newmarket School Board, Kelly Foster and other board members expressed concern over how they felt Newmarket students were or would be treated like second class citizens.  There was much concern over how Oyster River was not allowing Newmarket students to be valedictorian or salutatorian during the transition.  There was resentment to the proposal that separate class ranks be maintained for Newmarket and Oyster River.  An Oyster River board member's remark about reporting separate averages for tuition and local scores was repeated as evidence of Newmarket's second class status.  There was concern that this could impact college acceptances and scholarships for the tuition students.  There was some disdain over an Oyster River tuition forum described as the parents and teachers complaining what the Newmarket kids would do to their wonderful school.

To the best of my knowledge we've always treated tuition students identically to local students. If we need a policy that covers how a student that transfers to Oyster River can be integrated into the rankings and awards, let's get it done.  I think we owe it to the Newmarket students to treat the influx as a merger of high schools, where each student has the chance to flourish and achieve as before.  If it helps the negotiations, I would support a clause that assures Newmarket students of equal opportunity.

I think what starts out as normal parental concern about a big change in the schools gets transformed into Newmarket thinking we think their kids are somehow less than ours, or vice versa.  I suppose this is bound to happen.  These worries are being stoked by people that don't want the tuition deal, but I suppose that's bound to happen too.

Apples to Apples

Chairman Foster repeated an argument against tuitioning I'd heard: that the community would spend $14,500 per student for 15 years and have nothing to show for it.  I talked to her at the end of the meeting and said that Newmarket would get the same thing they'd otherwise get: 15 years of high school graduates.  She didn't respond to that, switching instead to the argument that Oyster River is making a profit (the implication being this is somehow immoral).  I said at $2M cost for 250 new students, that's $8,000 additional cost per new student.  It's much lower than our $17,000 CPP because the heat is already on and the principal, custodians and so on are already hired.  Shouldn't part of the tuition cover a share of the fuel or existing staff?

Newmarket Board Member Nathan Lunney told me my numbers weren't "apples to apples."    We eventually agreed on what's included in NH Cost Per Pupil and what isn't.  He pointed out that tuitioned Newmarket students would have a dedicated special education coordinator employed by Newmarket, have $100,000 in increased transportation expense and still require a share of the central office resources.  Let's try to work out Newmarket's local expense for a tuitioned student.

Our ABC says about 8% of our budget is the district office -- if we guess Newmarket has about the same ratio, that's around $1.1M.  So, back of the envelope, the local cost for a tuitioned Newmarket HS student is:

Newmarket Expense  $HStotal $/HSstudent
SPED Coordinator        .1M         400
Additional Busing       .1M         400
(1/3) District office   .4M        1500
TOTAL                   .6M        2300

Adding $2,300 to the $14,500 tuition make $16,700, which is about what Newmarket pays now for a High School student.  It's easy to imagine cutting some of this local expense.  The additional bus charge is enough for a group of students to afford a taxicab to school every morning.  The district office expense seems high -- hopefully Newmarket can tighten that up too.

Newmarket Junior High

Newmarket's real problem is that once their high school students are tuitioned out, their Junior/Senior High building is not closing, it's becoming a Junior high alone.  At a previous Newmarket SB meeting the expense estimate I heard to implement this change was that the middle schoolers (grades 6, 7 and 8) could be served in the building at 60% the cost of serving the old population.  This works out to an increased cost per junior high student of .6/(3/7)=1.4 times.  (3/7 is the estimate of the reduction in the student population as the building would serve three grades instead of seven).

A 40% increase per junior high student would turn Newmarket's FY12 CPP (latest available) from $16.2K to $22.7K per student.  That would have made it the most expensive middle school in the state.  Only Profile (Bethlehem) and Sunapee Middle Schools come in close at $21.6K and $21.0K respectively.  Every other middle school in the state costs under $20K per student, with the state average at $12.6K.

I think this gets at Newmarket's real problem with tuitioning.   If Newmarket's cost per middle school student goes up 40%, their cost per high student has to go down 30% to break even.  Assuming their FY16 HS CPP would have been $17K (about where ours will be if there's no additional tuitioning), that means Newmarket needs a HS CPP of $12K.  Given the local expense estimated above, ORHS would have to charge under $10K per student.  That's not going to happen.

There's not much particular to Oyster River in this analysis.  A 40% increase in the cost per middle school student when tuitioning occurs would make any tuition arrangement expensive in Newmarket.

Newmarket doesn't necessarily have to break even on a tuition deal, they just have to end up better than they would have been if they kept their kids in the local school.  The estimate I saw for bringing their school up to code was $2M, about $4,600 per junior/senior high student or $8,000 per high school student alone.   Even if Newmarket gets a tuition deal that lowers their cost per high school student, the increased cost per middle school student means that an extra $2M will be spent in two years.   If money is the only concern, keeping all the students local in the old building (and not building a new school) seems to be Newmarket's best option.

 All this assumes (my interpretation of) Newmarket's budget estimates of what happens locally when they tuition out are accurate.  These numbers however are a bit hard to swallow.   The local cost of $2,300 per tuitioned high school student and an increase of $6,500 per middle schooler both seem high.  It's hard to see how Newmarket can do any tuitioning with these costs.

If we apportion the increased middle school cost to the high schoolers, that works out to about $4,900 per.  Adding in the estimated local expense of $2,300 means that Newmarket is essentially claiming it costs them an outrageous $7,200 per tuitioned high school student on top of any tuition.  Obviously with these estimates no tuition deal is going to be attractive.

Well this has turned out to be a pretty depressing analysis for someone like me who wants the tuition deal to succeed.

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