On Reserve Funds and Fund Balances

At the candidates forum I asked if the candidates supported Warrant Article 5, which creates a reserve fund, and if so, how would they decide how much of the unexpended fund balance to retain to add to the fund every year. The fund maxes out at 2.5% of "net assessment" whatever that is. I've been calling the article "permission to take a million dollars out of taxpayers pockets," but Chairman Barth informs me it's closer to $770,000.
 
Kenny Rotner and Tom Newkirk made apple-pie statements supporting the fund. Carl Piedmont declined to answer. Both Tom and Kenny parroted the board's line that if we had had the fund for this year, we could have used it to lessen the impact of the looming 4.6% FY14 tax increase.  (YouTube of Meet The Candidates Night, article 5 question.)

I like and support Tom and Kenny, and the board as a whole, but I think in this case they're misunderstanding what's going on. Inflation and cost-shifting from the government is only part of the reason your taxes are going up more than usual. The other part is that we've been using our fund balance like a reserve fund, spending it down to shave about 1.7% off your tax bill annually for the last three years.  That well has just about run dry.


No one answered the second part of the question, which was how the board should decide how much of the fund balance to give back to taxpayers versus how much to keep for the district in the reserve fund.   It's an important question because your taxes will directly increase by the amount the board decides to retain.  The only way a reserve fund can be used to lower your taxes is if they're raised first.

What's a fund balance?

Every year the taxpayers vote on the warrant to raise and appropriate money for schools.   The warrant only authorizes spending for the current year, and what's left unspent is called the fund balance.   Since there has been no reserve fund, the practice is to budget extra money just in case, which hopefully remains largely unspent.  This unspent money, the fund balance, is returned to the taxpayers, lowering next year's taxes. 

Currently our fund balance plays much the same role as a reserve fund would.  In fact it can be much larger than $770,000.  It was $2.2 million in June, 2010.  For the last three years we've been spending down our fund balance at the rate of about $650,000 (1.7% of the budget) per year.

In other words, the taxpayers of 2009 paid a total of 4 points (4% of the one-year budget) in extra taxes so the taxpayers from 2010 to 2013 could pay less.

Why was the fund balance so high in 2010?  Because the FY10 budget was overly conservative, overestimating expenses.  I saw a comment that the mistake came from overestimating insurance costs, but I'm not really sure.   Why did we gradually reduce the balance instead of doing it all in one year?  Beats me.  But presumably we could budget for a large fund balance on purpose if we like.

I dug out the fund balance numbers from the MS-26 forms the district files annually.


You can see how we've steadily been spending down our fund balance, and how that, even without the reduction in money from the federal and state governments, our taxes would go up more without that 1.7% wind at our backs.

The same thing happens with the reserve fund. If we spent it down and get another shock the next year, it obviously can't help. That's where we are now. If the goal is to smooth tax rates the fund should only be filled when rates are projected to be low. None of the candidates answered the question about when they thought the fund should be replenished.

I understand the need for the schools to have a rainy day fund. I'm just irked by the argument that I need to hand over taxes to the district now so that at some future date they can spend the money to "smooth out" my tax rate. I'd just as soon hang on to my money, thank you very much, and deal with the bumps as they come.

At this point I'm planning to vote YES on article 5, but I'm not all that happy about it.

We Met the Candidates

Meet the Candidates Night could have been done in 40 minutes.  It took three times longer because the answer to each question was repeated three times as the candidates repeatedly agreed with each other.

Carl Piedmont

I finally met Carl Piedmont (www.carlpiedmont.com). Nice guy. He's a salesman from Madbury with two children in the district. I'm sure he and his wife are really proud of the way his children were there supporting him, dressed so nicely and sitting so respectfully through the meeting.

I went in to the meeting worrying that Mr. Piedmont was Jim Kach redux.  Rumor had it he was recruited by board member Megan Turnball.   I suppose you can't really be sure, but Mr. Piedmont seems quite reasonable.  Like many of us he moved to the district because of the schools.  I think he understands that if the quality of the schools were to decline, everyone's property values would fall.  Not to mention the effect on his children's future.

So, I welcome Mr. Piedmont's participation.   His website says "Running for the School Board is something I have thought about for some time since arriving into the area. "  I admired Mr. Piedmont's willingness to say he didn't know and pass on answering questions.  But it does indicate that Mr. Piedmont hasn't been sitting at home "for some time" watching DCAT intently, in preparation for his Candidate's Night debut.  But he's here now, and I hope he continues to participate in school district even if he's not elected.  He could join some committees, and maybe in a year or two he'd be ready to serve on the board.  

I told him I was supporting his opponents.  He took the news well.  I said I'd be willing to reconsider if he would make large cash donations to the district.   That doesn't seem like it's going to happen, so I'm sticking with Kenny and Tom.

It does seem that one faction of our formerly bitterly divided community might be more inclined toward Kenny Rotner while the other toward Carl Piedmont.   (We're still a little divided, but it's much less bitter.)   Given the closeness of the vote in the Deliberative Session, this may turn out to be a close race.

Marijuana

I thought the starkest contrast between the candidates came in the question about marijuana.  Carl Perkins repeated "zero tolerance" several times.   Tom Newkirk came out against police dogs sniffing lockers.   Kenny Rotner stressed the problem was larger than just the school, indicating that some approaches to suppressing use at the school would simply shift the use to other, even more problematic places.  No one mentioned the nationwide trend toward increasing liberalization of marijuana laws, which made the discussion rather incomplete to me.

Enrollment and Tuition 

Much of the discussion centered on declining enrollment and tuition students.  Probably the best stuff was Kenny Rotner's concerns and suggestions about integrating a large number of tuition students into our community.  Tom Newkirk made the important point that any town with a large number of tuition students in the district should be given a non-voting seat on the board.

I'm going to make two geeky math points about cost per student that seem obvious to me, but appear to be widely disputed in the community.  They both have to do with the fact that there's just alot of overhead opening the doors for four schools, before you add any teachers or students.

First, on declining enrollment.   As enrollment declines, the overhead means that cost per student increases, even if you cut teachers in proportion to the decline.   But the total cost still decreases, and thus the burden on the taxpayers decreases.   So taxpayers, be happy about declining enrollment -- fewer students to educate means your taxes will go down.  They just don't go down as fast as they would if there was no overhead.

Second, on tuition.   There is a complaint that the tuition rates are set below the district's cost per student.   Doesn't that mean we're losing money with every tuition student?   No.  Besides the apples and oranges problem (tuition doesn't include food service or transportation) there's the issue of overhead.   Imagine (I'm simplifying to make the math easier, but the story is something like what I'm telling) that it costs $30 M for everything except teachers and $8 M in teachers for 2000 students.   The cost per student in this story is $19,000 ($38M/2000).  But we make money if we charge $12,000 tuition because our marginal cost per student is $4,000 ($8M / 2000).  Each tuition student in this story saves the taxpayers $8,000.

Henry Brackett

I have to take issue with something that Tom Newkirk said, words to the effect that no one appreciated what the previous board had accomplished.   On Election Day in 2012, I thanked the outgoing board and listed many of the same accomplishments Tom mentioned today.

But the good stuff doesn't cancel out the generally awful tenure of Chairman Henry Brackett that the district had to endure until last March.   Despite his spectacular failure as school board chairman, Mr. Brackett is running for Selectman in Lee.  This troubles me deeply, because it means I'm going to have to go back on my word, and again write about the tweets and lawsuits.

Let me just say that in addition to dividing the community by supporting the evil tweeter Jim Kach, Chairman Brackett was found guilty of violating the Right To Know Laws by two New Hampshire courts.   The second time, the harshest penalty available was imposed.  The main concern was secret meetings and secret votes for superintendent hiring and firing.   Citizens of Lee, I'm supporting Scott Bugbee for Lee Selectman, and I urge you to do the same.   Anyone thinking of voting for Henry Brackett should be sure to read my essay from last year first.

Conclusion

Carl Piedmont seems like a decent guy and may eventually be ready to serve on the school board, but for now I'm sticking with my decision to support Kenny Rotner and Tom Newkirk.

Meet the Candidates, tonight, 2/20 7pm ORHS

It's Meet the Candidates night at the high school tonight, 7pm.   I hope to see everyone there.

There are three candidates running for the two at-large seats, and voters in the district get to vote for two on Election Day, Tuesday, March 12, 2012.

I'm supporting Kenny Rotner and Tom Newkirk this time around.

Kenny has a website at kennyrotner.wordpress.com.

Tom's website at tomnewkirk.wordpress.com so far seems unchanged from last year.  Tom served out the remainder of Ann Wright's term this year, and is now running for a full three year term.

Carl Peidmont didn't have a website up yet for ORCSD that I could find.   A quick search reveals pages at facebook, LinkedIn, 123people and MyLife.  I'm sure we'll find out what he stands for tonight.

Update:  Mr. Piedmont gave me his card at the event tonight listing his website as www.carlpiedmont.com.

Budget Unchanged in Contentious Deliberative Session

All warrant articles approved by the school board were left unamended in last night's deliberative session.  They will appear on the ballot Tuesday March 12, 2013 as is.  This was exactly the result we were hoping for.   I want to thank everyone for coming out.

I warned that a group of cutters might show up at the session.   That's kinda what happened.  Former board member Jim Kach and former chairman Henry Brackett were there.   All their usual supporters were there too.  (Except Roger Speidel, who I really miss.)   I was surprised they had come out, as they really hadn't been a big presence at school board meetings lately.

I called Ruth, who sent out the word we needed more votes.  Incredibly, as you'll see, the people who responded made all the difference.  I tried lamely to round up some votes from the basketball game across the hall.

Paul Gasowski , Sustainability Committee, speaks

For some reason, the focus of the meeting was Article 4, the Sustainability Committee.  I didn't expect that.  Probably because I'm a huge Paul Gasowski fan.

Bill Hall spoke strongly against the Sustainability Committee allowing students work to on the school's air conditioning. What?  He seemed pretty worked up about it.   Do I really need to say that the Sustainability Committee, an advisory committee to the school board, has neither plans nor authority to do this?

What Paul was saying was that the energy audit of the high school, the one that the Sustainability Committee proposed and paid for, recommended an overhaul that would save an incredible $91,000 annually in fuel.  And not dump an extra zilllion tons of CO2 into the air either.  The board and the superintendent followed through and we all reaped the benefits.  Congratulations to Paul and the committee - you did it without picking up a wrench.  

The discussion went on for a long time.  The $15,000 was attacked.   The $20,000 for coaches was really attacked.   "Why couldn't these be volunteer positions?"  "Shouldn't this money be used for real education, like math and science?"

What was odd was that people were speaking against the article at length, but no one was making amendments.   The moderator gamely reminded us that the purpose of the meeting was to consider amendments.  That regular school board meetings are a good venue for public comments.   Good points.  Nonetheless, the speakers continued to rail without proposing anything.

Former board member Jocelyn O'Quinn kept coming to the podium to ask for a secret ballot.   The problem was there was no amendment to vote on.    The moderator told her to come back later.

Board member Krista Butts reminded us that the point was to make amendments.   Today we just decide what goes on the ballot.

Someone proposes removing the $20,000 in stipends.   Finally, a real amendment.

Jocelyn O'Quinn is now first in line to speak, ahead of David Taylor and Henry Brackett.  Ms. O'Quinn asks again for a secret ballot.

The moderator asks, "are you calling the question?"  Ms. O'Quinn, non plussed, assents.  The moderator snaps into action.

He explains that calling the question requires a 2/3 vote to end discussion.   "Raise your card if you're in favor of calling the question."

There's confusion.  Ms. O'Quinn doesn't seem like she meant to end discussion.   Too late.  The vote goes forward.

It's close.  Mr. Brackett, waiting in line to speak, votes to cut off discussion.  The moderator has to count votes.   This requires an elaborate procedure of counting pink cards in each of six sections of the auditorium.  Oops, one more time around for "NO".  This takes a good 15 minutes.   Everyone would have been long done speaking by now.

It passes!  It actually exceeded the 2/3 margin.  The question is called.

"What about a secret ballot?" asks you know who.

This necessitated a little conference between the moderator and the district's lawyer.   She was making a writing gesture.  John Collins had already told me five signatures are needed for a secret ballot.

The moderator, who thought he was being clever getting Ms. O'Quinn to call the question, ended up wasting lots of time.   But he was just getting started on the time wasting.   Now he says, "You need five signatures.  I'll wait a couple of minutes."

Why couldn't we get a moderator who'd say, "You have not met the requirements for a secret ballot, so we will do this in public.  All in favor of the amendment raise your cards." ?

I can appreciate that a secret ballot makes it easier to vote against the committee that's standing on stage right in front of you.   But I don't think the district is under any obligation to give legal advice to citizens, especially those who want things that drag the meeting out longer.   If you care, look up the rules before the meeting starts.    Or do what I did and sit with John Collins, David Taylor and Stephanie Adams, which is way better than the Internet.

No.  Gotta have a secret ballot.  This takes another fifteen minutes.  Then they had to count.   More waiting. The result: 58 YES, 60 NO.  The amendment fails!  Those extra votes Ruth rounded up made the difference.

Now the moderator makes his third mistake.   He tries to move to the next article without allowing further amendments or discussion, or even the vote that ends consideration of Article 4.   John Parsons reads him the riot act.

It's pretty late and people are leaving by now.   We haven't even gotten to Article 6.    I missed most of the discussion of Article 5, but it looked like it survived unamended without any trouble. Which is really odd, because Article 5 is basically permission for the district to take $1 million extra out of taxpayers' pockets for a rainy day.  Chairman Barth stressed how the fund could be used to lower taxes in years like this when non-tax revenue is reduced.

Article 6 is the big enchilada, in which we appropriate $38.8 million to pay for schools. It was voted through unamended with no discussion.

Why spend two hours on $20,000 and then let $1 million and $38.8 million slide by?  Beats me.   Probably because "sustainability" sounds like "hippie talk."   I think Paul even mentioned Boulder and Palo Alto.  Bill Hall didn't like all this marijuana around one little bit.  What?  Jim Kach came out for composting.

Kenny Rotner, candidate for school board, was working the crowd.  Tom Newkirk was of course on stage with the rest of the board.  Nobody I asked seemed to know who Carl Piedmont was.   I shouted his name a couple of times, figuring he'd be at the meeting.  Nothing.

Thanks everybody for coming out and enduring this unnecessarily tedious meeting.  Your votes really made a difference.   It looks like we have a real race on our hands in March.  Stay tuned.


Update 2/7:  I've been thinking about it for a couple of days, and it occurs to me that those I called "cutters" above were at the meeting for the same reason I was: to be there to vote against changes to the board's budget.   They were presumably more worried about increases, but they weren't there to propose significant cuts.   Similarly, I was more worried about cuts, but I had already posted I would vote against any increases as well.   Underlying what seemed to be a contentious meeting was widespread support for the board's work.   The school board and administration have managed to unite what was a year ago a very divided community.  All in all, a remarkable accomplishment.

Deliberative Session this Tuesday, 2/5 7pm. Come Out and Vote!

Hi everybody.  Dean here.  It's been a while since I've posted, but it's time to jump back in.

Come to the Deliberative Session Tuesday -- It's Important to Vote

The district website has these important dates:

Each year, appropriating taxes for schools involves the public voting on two different days.  The first is the deliberative session, called "Annual School District Meeting - Session I" above.  It's the meeting where any citizen in the district can propose changing the amount of tax to be appropriated.   The proposals are immediately voted on and may be approved by a majority of registered voters present at the meeting.   The second day of voting comes on Election Day, March 12th, 2013.  On that day, the budget (as revised at the deliberative session) is approved or disapproved.   School board members are also voted on then -- this time two at-large school board members will be selected by the voters.

You, gentle reader, should attend the deliberative session this Tuesday.   It's an election day (really just an hour or two) in which very few people tend to show up.   It means that whoever does make the effort to show up, especially with a group, has tremendous power to make sweeping changes to our schools.

I think the proposed budget is fine just how it is, so I want you to come to the meeting and vote with me against any changes.

I don't know of anyone in the district who doesn't think taxes are too high.  We all support the efforts of the board and superintendent to cut expenses and raise non-tax revenue.    But drastic cuts to school funding, besides being awful for our kids and our future, hurt property values right away.   Most of your neighbors probably moved to Oyster River because of the schools.  So I supported the board when they declined to make further cuts, which they believe would lessen education.

I went to the district presentation on the budget, and the meeting at Lee Town Hall about it.   From those I didn't get the impression that there was a big groundswell of opposition to the budget.   Almost no one showed up to the Lee and Durham meetings.  I heard Madbury had a nice turnout and respectful meeting.   

If there's a plan out there for tax cutters to show up en masse at the deliberative session, they're being pretty stealthy about it.   Nonetheless, it will be our own fault if enough of us don't bother to attend the deliberative session to turn back any such showing.

Unlike most election days in New Hampshire, there is no same day registration at the deliberative session.  But if you're already a registered voter from Lee, Durham or Madbury, you are encouraged to attend the deliberative session this Tuesday, 7pm at the High School.    We need your vote.   

The Warrant Articles

The deliberative session only determines the amounts on the various warrant articles.  The warrant articles themselves have to be approved by the voters on election day, March 12th.  

Here's what the warrant articles approved by the school board look like.  Article 6, appropriating $38.8 million, is of course the focus:

Click to enlarge

The default budget (what we get if NO on Article 6 wins on March 12) is about $270,000 (0.6%) less than the budget proposed by the board.   You can't change the default budget at the deliberative session -- its calculated according to the law from parts of the previous year's budget updated to reflect contractual agreements in effect.   Even if the general fund was zeroed out at the deliberative session, the presumably large number of citizens who thought that having schools was a good idea could vote NO on article 6 in March so the default budget would be in effect next year.  But I'm hoping the budget remains unchanged at the deliberative session so we can all vote YES in March.

Why Support the School Board's Budget?

By asking you to vote NO on everything at the deliberative session, I'm asking for the warrant articles as approved by the school board to be left unchanged.  Then I will ask the voters on March 12th to vote YES on each of these articles.  I am asking you to support the school board's budget.

Why?  The short answer is that the administration and the school board made a valiant effort to produce a flat budget -- one that spends the same amount in FY2014 as in the current school year, FY2013.   They saved money through a retirement incentive, health care costs that will be lower than expected, and fuel savings due to a deftly accomplished overhaul of the high school HVAC and lighting.   Nonetheless the budget proposed is not flat.  It represents a 1.6% increase in spending over last year, and I believe an average of 4.6% increase in taxes.  

Why the increases?  First let's consider the 1.6%.  One point to note is inflation is running about 1.7% this year, so in real terms, this is indeed a flat budget.   About $400,000 of the increased expenses (over 1% of our budget) is the result of the state shifting retirement expenses to the district. Hopefully with the recent election that kind of cost shifting will wane, but this particular expense is probably here to stay.  The district is also spending heavily on capital expenses that are badly needed.   Though the temptation may be to try to put those off when money is tight, the board is acting responsibly here by carefully prioritizing so as to not let things go until there's a crisis and an even more expensive repair.  The members should be commended for this.

The difference between the spending increase (1.6%) and the tax increase (4.6%) is the result of reductions in non-tax revenue.   There was about a $200,000 (0.5%)  reduction in direct state aid to towns for schools.   We expect to lose another $200,000 (0.5%) in federal Title I grants, for which we no longer qualify.  And we had a fund balance (the amount of money left over at the end of the year) of over two million a few years ago that we've been gradually spending down, about $700,000 (1.8%) that didn't need to be new taxes this year.   That particular party has ended, thus the money needs to come from new taxes next year.   In fact, if we pass Article 5, we may start retaining our fund balance for a few years, which would probably add 0.5% to 1%  to taxes for a few years until we reach the 2.5% fund balance retention limit (about $1 million for us, I think). I'm sure I'll write more about that in a subsequent post.

Anyway, the board and administration did a heroic job of cutting, but were unable to cut fast enough to keep up with reduced government support.   The Tea Party madness has largely subsided, so I don't think we'll keep seeing such big cuts from the state and the federal governments in the near future.  It's worth noting the state's shifting of retirement funding to districts, part of the Tea Party program of cutting of state taxes, ends up raising taxes for most NH residents, as the burden gets shifted from state funds (which include taxes on tourists, etc.) to local property tax.

The board is considering increasing revenue in the future (mostly from more tuition students) and will continue to watch costs, while keeping the quality of education up.  I'm supporting them, and I urge you to as well.

School Board Election News

This past Friday was the deadline to file to run for the two at-large school board seats.  All the candidates will be listed on the ballot in a single multiple-choice question.  Everyone in the district may vote for two.   The top two vote-getters win three year terms.

Stephanie Adams was kind enough to send me the candidate list, which appeared in the Durham Friday Update:

• Thomas Newkirk (Durham)
• Carl Piedmont (Madbury)
• Kenneth Rotner (Durham) 

Tom Newkirk won in a landslide last year, and served out the remainder of Ann Wright's term after she resigned last January.  He's done a great job.  ORCSDcleanslate, meaning me, supported Tom last time, and I again support Tom for his reelection to a full three-year term.   Kenny Rotner also has the full support of ORCSDcleanslate.    Kenny is a local M.D., and a frequent presence and commenter at board meetings.

I don't know anything about Mr. Piedmont.  I don't think I've ever met him at a board meeting.  I do want to wish him luck and thank him for running.  His candidacy makes the election a real race.   I look forward to learning what he has to offer in the weeks to come.

I wish to extend an open invitation to all the candidates:  Anything you send me (ORCSDcleanslate@gmail.com), I will post as-is here on ORCSDcleanslate.org.  

Further Reading

For now the important take-away is: come to the deliberative session on Tuesday and support the board by voting NO on any proposed changes to the warrant articles.   If you want to study up, you might start here:

This is the budget presentation that Superintendent Morse and Business Administrator Caswell have been presenting this past month.

The Advisory Budget Committee's excellent report has lots of great detail, especially the graphs at the end.  My personal request to the committee is to extend some of the graphs more into the past, for additional historical perspective, but I do appreciate that that's a lot of work.

Mike McClurken's report on the district is full of information.   He recently started a website that has a link to his report.   Here's an older pdf version.

Here is the letter and information FORE posted on the deliberative session.

Here's the proposed budget off the district's website.

The district website budget information,  forenh.org and oysterrivercommunity.blogspot.com are good places to check for district budget news.

There's so much more to say, but this is probably more than you can take before the deliberative session on Tuesday.   See you there.