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.

Parents, Staff Oppose Administration on Elementary Ed

Elementary school reconfiguration was the main topic of Wednesday's school board meeting.  About 200 people showed up, a result of the administration's use of Alert Now telephone network and email to inform the wider community.

The official October enrollment numbers are Moharimet 407, Mast Way 292.   Moharimet is over capacity, even with the two portable classrooms, while Mast Way has two empty classrooms.

The two options under consideration are (A) redrawing the bus dividing line and (B) changing Mast Way to grades K-2 and Moharimet to 3-4.  Option (B) was presented as a path to allowing fifth graders to move back to the elementary schools when enrollment declines sufficiently.  This is somewhat misleading -- either options allows fifth graders to be brought back eventually.

There was a certain déjà vu quality to the meeting.   In fact, the two options were considered at an almost identical meeting on April 18, 2013.  Like the first time, parents were overwhelmingly against the K-2/3-4 plan.   In fact, the opposition against this plan the first time was so widespread I was very surprised that it was once again brought up as an option.

Teaching staff present from both schools agreed with the vast majority of audience members that the bus line should be redrawn.  In contrast, the superintendent announced that he and his administration (including the assistant superintendent, special education coordinator and principals) were unanimously in favor of the K-2/3-4 option.   The board was largely non-committal but there was some support shown for both proposals. 

Since last spring I've predicted a number of times that the final solution will be the redrawing of the bus lines.  I haven't been right yet, but I'm sticking with the prediction.  I see it as very unlikely the board will go against the vast majority of the public.

The meeting started off controversially when Chairman Barth announced that staff would not be allowed to speak.  The justification was a policy that said the primary method for staff to communicate with the board was through the administration.  The board tried and failed to overrule the chairman's decision, but eventually reached a compromise where non-staff read aloud staff letters from each school.  My personal feeling was that the everyone should be afforded the opportunity to speak at a public meeting and that the Chairman was on thin ice when she suppressed the speech of staff members, many of whom are district residents.

The superintendent took the position that there was no research supporting one option over the other.  This was in contrast to some educators, especially at the first meeting, who cited research claiming that additional transitions were detrimental to learning.   Financially, there are potential economies to be had by assigning each grade to a single building.  There are costs too, for increased busing and the initial reconfiguration

The bus line could have been redrawn in time for the current school year.  The failure to do this, together with the unexpected surge in enrollment at Moharimet, have exacerbated the crowding in the multipurpose room.  The likely consequence is that taxpayers will have to cough up a half a million dollars to build a cafeteria at Mohariment.

The superintendent opposed the grandfathering of families that has occurred in the past when the bus line has been redrawn.  His justification is that the grandfathering, in which current Moharimet families can finish out at Moharimet, negates the very equalization the redrawing is meant to correct.  At this point the problem is so acute that the gradual transition that grandfathering produces is problematic.  One suggestion was to grandfather only the families of next year's 4th graders, or perhaps 3rd and 4th.

There's not much reason for me to belabor all this too long, as the meeting was widely covered.  Oy'C'mon did a great job live-blogging it on Facebook.  Foster's had an article the next day.  The superintendent's slides are available here.  You should be able to watch the meeting on YouTube soon.

Tuition Misinformation Abounds

Event note:  The superintendent will present yet another proposal for elementary school reconfiguration at the next ORCSD board meeting, 7pm October 16, 2013, ORHS. I'm thinking about bringing a "JUST REDRAW THE LINE ALREADY!" sign.

Newmarket had a town meeting and Foster's ran an editorial (then oddly recast it as a news article the next day) about tuitioning into ORHS.  The result: the citizenry is now more misinformed.  One new piece of information is that the deadlines have been extended so now the Oyster River board is expected to decide on November 20.

I'll just quote some of the misstatements and make the corrections.  For sources of the corrections I cite my past post (which links to NHDOE) and the actual "tuition framework" documents approved by the Oyster River school board and sent to Newmarket and Barrington.

Oyster River school officials got some potentially bad news this week with the announcement that the Dover School Board has approved some attractive tuition rates with Barrington for the 2013-2014 school year.

This isn't bad news so much as weird news.  We're already six weeks into the 2013-2014 school year (which I refer to as FY14, the fiscal year ending June 30, 2014).  Didn't these guys have a rate negotiated already?   It's probably Foster's getting the date wrong, but who knows.  The current agreement between Dover and Barrington will expire June 2014.  In that agreement special education was included in the tuition.   The new agreement, while it may nominally offer about the same tuition as before, presumably will not include special education so likely represents a substantial increase to Barrington taxpayers.

With its high school enrollment sliding and the number of empty chairs increasing at Oyster River High School, the School Board has been looking to stave off deep cuts in programs and personnel. The answer which up until recently seemed a sure thing was to accept tuition students from one of three high schools.

The LRPC doesn't predict enrollment will decrease at ORHS (status quo scenario) for eight years. The seats are available due to a past enrollment decline.  There's really very little stopping us from continuing in the current manner for the next decade or so.  And tuition has always been up in the air.

That number does not bode well for any long-term arrangement with Oyster River which is looking for $14,500 per head.

The ORCSD tuition discussion is about FY16, the school year that starts a little less than two years from now.  It is for a deal to send a large number of students and for ORHS be the school of record.  It includes some special education.  It's not clear at all how this number will compare to Dover's two years hence.  Historically our Barrington "choice" tuition has always been higher than Dover's.  Barrington taxpayers pay the Dover rate, and Barrington parents make up the difference.

With Deerfield off the table and Barrington pretty much out the door, Newmarket is last man standing, so to speak.

My view is that it's pretty much always been a choice of (A) Newmarket students or (B) status quo (some Barrington students), with (C) Deerfield,  (D) big Barrington increase or (E) stop taking tuition students (perhaps eventually closing a building) being the much less likely outcomes.   This really hasn't changed, except the longshot Deerfield is out for sure now.

At $14,500 Newmarket still has to pony up the money to bus students to Oyster River. With that addition, Newmarket’s total bill is expected to quickly climb to last year’s per student cost of $16,193.62. And according to numbers assembled by the Newmarket Superintendent James Hayes, it won’t be but a handful of years down the road that any early cost savings will be gone when compared to building a new $47 million school.

Wow, that's quite a load of misinformation in a single paragraph.  Newmarket is getting a great deal from Oyster River.   As I've previously argued, the NH DOE Cost Per Pupil (CPP) numbers serve as an apples-to-apples comparison for tuition.   CPP has no transportation costs included, and no outplacement costs included.

According to NH DOE, in FY08 Newmarket High School's Cost Per Pupil was $12,140.  Inflation has been pretty constant at 2.4% since the turn of the century, so I estimate this as $14,667 in 2016 dollars.  In other words, if Newmarket accepts the Oyster River tuition deal, they will be paying what they paid eight years earlier to educate a high school student, and trading up to an Oyster River education in the deal.  The FY08 $12,140 mentioned didn't include transportation, just like the $14,500 tuition.

The idea that "it won’t be but a handful of years down the road that any early cost savings will be gone" is totally crazy.  The proposal is to maintain a constant discount to Oyster River's cost over the life of the contract. Oyster River is giving Newmarket about 20% off its costs, probably (we don't really know what FY15 costs will be yet, much less FY16 costs, which get complicated by the addition of new students, see below.  For reference, in FY12, the latest year available,  Newmarket HS CPP was $16,194, ORHS was $16,304, about the same.)

Newmarket's alternative, an expensive renovation to a condemned building while constructing a new building, will cost much more.  If we estimate the renovation cost at $500K per year and the new building cost at $2M per year, that is adding $10,000 per high school student (assuming 250 students), or $5,700 per when you include middle school students, or $3,300 each spread over every Newmarket student.  Any way you count it, building a new school is an enormous new expense, adding around 20% to school taxes over there.  Taking the Oyster River offer is getting a discount that takes eight years off the price, around 20% per student (7% off Newmarket's school tax).  So Newmarket can turn down Oyster River and pay 27% more -- seems silly of them.

Another way to think about Newmarket's problems is their superintendent's statement that it will cost 60% as much as before to keep Newmarket High open to serve just the middle schoolers.  (Assuming equal grades) the cost to Newmarket for a middle schooler just went up 40% (.6*7/3).  The Oyster River taxpayers are helping to soften the blow by lowering Newmarket's cost to educate a high schooler by an estimated 20%.

According to a Power Point (http://tinyurl.com/tuition-numbers) presentation earlier this year, Oyster River expected an enrollment for the current year of approximately 600 students, declining to 555 by 2022-23. Assuming an agreement was already in place, and with Newmarket included, those overall numbers would range from 846 for 2013-14 to 836 for 2022-23.

I already talked about how the status-quo enrollment is not predicted to decline for eight years at the high school.  There's already some indication enrollment is shrinking slower than predicted.  The newspaper numbers do not include the Barrington and other tuition students we currently have (around 70).

While the addition of Newmarket would require some increase in staffing, OR officials calculate the fees garnered from a tuition agreement would quickly recoup that cost, leaving a profit to be returned to taxpayers — $400,000 a year by one estimate.

Foster's has made this error a couple of times, which is odd as the real truth reinforces their point.  They corrected it in the "news" version of the editorial.  Actually the promised return to taxpayers is 25% of gross tuition, around $900K or 2.25% of the current budget (so about that much off your school tax bill).   This doesn't include 10% of tuition dedicated to capital improvements, $360K, which will save taxpayers another 0.9% when spent on things that otherwise would be bought using taxpayer funds.  The savings to taxpayers could be even greater if we tightened up the needed staffing (currently estimated at $2M total, regular and special education) and omitted the fund for new projects, which I've been calling the slush fund, instead returning all the excess to taxpayers.

The idea of a win-win deal is to have something for everyone.  Newmarket gets a place to send their kids and a huge discount.  The students get more programs.  Oyster River taxpayers get a bit of a break.  Almost everybody is happier than if no deal takes place.

What's especially odd is Foster's apparent disgust that the deal may be in the citizens of Oyster River's interest, i.e. that they may actually turn a profit.  I thought Foster's was conservative -- profit is good, is it not?  The weird thing is their implied argument is that Oyster River is being greedy because we are not charging $8,000 per student ($2M new costs / 250 new students) even when ORHS's CPP is currently over $16,000 per student.   Sometimes I think Foster's couldn't care less how they make their arguments, as long as the conclusions degrade Durham or Democrats.

But without Newmarket or another school district, the numbers head in the other direction, meaning staff layoffs and program cuts which the Oyster River School Board has been told will be significant.

Again, the enrollment contraction is a wave of low birth rate years, just now hitting the elementary schools, with the decline not hitting the high school for 8 years.   The Oyster River school district can continue along the way it's been going, which has been to keep a tight rein on costs lately as enrollment declines, and the burden on the taxpayers will stay about the same, without much in program loss.    If we don't tuition in a large number of students in FY16 we still have time to consider what to do about declining enrollment.

The threat of these cuts and the loss of programs appears to be a driving factor in public support for accepting tuition students from other districts on a long-term basis. A poll, conducted by the University of New Hampshire, showed strong support for a tuition agreement and very little opposition among Oyster River School District residents. 

We will be curious to see if that support holds up now that Newmarket has a better bargaining position at the negotiating table — one which might allow Oyster River to maintain class sizes and programs, but not turn a profit on the deal.

It pretty much has always been a choice between Newmarket or status quo, so their bargaining position hasn't changed much.   I will advise taxpayers of Oyster River not to take the deal if there's no tax relief in it for them.  Why should they?   80% of them don't have kids in the schools.  It already seems unfair to Oyster River taxpayers that the tuition is less than their local cost per pupil.  The profit, as Foster's derides it here, at least makes the deal a win-win, if still unfair. The deal will likely hurt their property values without the tax relief.  Test scores on average will go down.

Newmarket was being offered a lifeline that it would have been a mistake for them to decline when the tuition was $16,324. At $14,500 this is just a no-brainer for them. If nothing else, it gives them a place to put their kids while they build a high school.  But if they can't appreciate what a good deal they're getting, it may be best just for us to pass and see what comes down the pike.

Approximately 35 people, representing a “real cross-section of the community” showed up to say they would like to tuition the high school students somewhere else, to support building a new school and to learn about other options, Hayes said.

Some people in Newmarket could really use an Oyster River education. Apparently if the superintendent has his way they're going to be too pig-headed to accept one for their children.  My source says 25 people showed up for this meeting, and much of the aforementioned misinformation and more was relayed.

A 2% annual tuition increase was again brought up at the Newmarket meeting.  This is misleading.  The actual rate of increase proposed is the growth of the ORHS High School CPP figure.   The exact language from the framework is:  

Each subsequent year the tuition rate will change by the percentage of the actual change in the appropriated operating cost of Oyster River High School based on the prior fiscal year.

There's a helpful spreadsheet included in the framework that illustrates a big problem I have with this clause.   In particular, the calculation gives Newmarket yet another huge discount!

The problem is in the adjustment for the first year, which is "Percent change in appropriated budgets from FY15 to FY16."  Our CPP will spike down in FY16 -- this gain in efficiency is one reason we're taking tuition students.   We want to retain it for Oyster River and not just transfer it to Newmarket. 

Let's be concrete.  Suppose our FY15 HS CPP is $17,000 for 700 high schoolers.  To keep it simple, let's say we get 250 additional Newmarket students at a cost of $2M.   Assuming a lately typical 2% growth of costs for our kids, our FY16 HS CPP would be (1.02*17000*700+2000000)/(700+250) =  $14,882, a 12% reduction.   According to our formula, we would then lower Newmarket's tuition another 12%!   We definitely should not do that.  One fix would be a minimum tuition increase of 2% or the CPI or even 0%.

The other problem is that the discount compared to ORHS CPP remains constant.   I would like this gap to close over time because otherwise Newmarket will have no incentive to join the cooperative, as they can get the seats more cheaply though tuition.

I also don't like the very long period before the agreement can be cancelled.   I would add options at 3 years and 6 years (or even more frequently) for either side to give their 5 year notice.

See you all at the next meeting!

Deerfield Is Out

The Union Leader reports that Deerfield and Concord have signed a 10 year extension to their existing tuition agreement.  This happened at about the same time the Oyster River School Board voted to send a tuition framework offering Deerfield, Newmarket and Barrington the opportunity to send up to around 250 students to ORHS starting fall 2015.

Foster's and SeacoastOnline reported on our tuition framework.  The $2M cost for special education referred to in Foster's is a mistake -- $2M is intended to be the total budget to handle the increased student load, both regular and special education.  The expected level of in-school special education needed is included in the $14,500 tuition.  There is a cap on the district's exposure to the tuitioning town's special education costs, so costs beyond the expected costs must be handled by the tuitioning town.  I think it was stated that the tuitioning town needs to also pay separately for contracted services (such as Speech and Language Therapy and Occupational Therapy) for their own children.

The framework is essentially a non-binding contract proposal.  There is still room for negotiation, and nothing would happen until both boards and both district's voters approve the deal.   The board modified the framework so that tuition increases at the rate our high school CPP changes.  There's still the possibility of a problem as our CPP necessarily goes down when we accept a bunch of tuition students.  (See previous post.)  The timeline has responses by November 1 so the board can make a decision at the November 6 board meeting.

Barrington currently sends around 70 of its 400 high school students to ORHS.  Those students would be phased out (or the number greatly reduced) were we to accept all 250 Newmarket students.  The framework offers Barrington an opportunity to send more students.  As this is probably unlikely and Deerfield is out, it looks like the choice will be between Newmarket or status quo.

Board Member Turnbull opened a couple of cans of worms.  She asked if the high school could report standardized test averages separately for local and tuitioned-in students. The unstated implication is that that tuition students will bring down our test scores.  This is almost certainly correct -- School Digger 7th&8th grade combined NECAP ranks OR 16th, Deerfield 50th, Newmarket 72nd and Barrington 74th.  Historically, NH districts have not separated out tuition students when reporting such averages.

The second can of worms was Ms. Turnbull's suggestion that we explore modifying policy IIB, which states high school class sizes should be between 18 and 22 students.  She cites the current policy as a reason for high costs in the district.  The State of New Hampshire has a policy of at most 30 students per section.  In a comment I suggested that we check how well we're doing meeting the current class size policy before we change it and before we commit to tuition student staffing.  My hunch is we're less than full and could get by with less staff than proposed, but we'll have to see.

I stressed that this is a great deal for Newmarket taxpayers.   The proposed FY16 tuition of $14,500 is 10% below Newmarket's FY12 cost per high school pupil of $16,194.  If this is the actual tuition, I'll guess this ends up 20% under Oyster River's FY15 HS CPP.

Let's spend a minute reflecting on how good a deal this is for Newmarket.  The last time they paid this little to educate a high schooler was 2010! (FY10 HS CPP 14,156).  That's of course in nominal dollars. Adjusting for inflation, you have to go all the way back to 2008 when Newmarket's HS CPP was $12,140.  Assuming 2.4% inflation, that's $14,677 in 2016 dollars.  In other words, in 2016 Newmarket will pay the same to educate a high school student as they did eight years earlier.

There was some disagreement from the board table about whether this was a great deal for Newmarket. It was stated that Newmarket's CPP includes $500,000 of out-of-district special education placement expense that wouldn't be covered by the ORHS tuition.   Given 250 students, this adds $2,000 per student in costs for Newmarket, so the claim was a tuition of $14,500 makes Newmarket's cost $16,500 per student, about the same as ours.

But this isn't correct. I used the state's CPP numbers, which have all tuition expense (regular and special education placements) subtracted out.  (You can verify this by reading the state supplied CPP calculator spreadsheet.)  So Newmarket's HS CPP of $16,194 does not include their placement expense of $2,000 per.  Comparing their CPP to the proposed tuition is apples-to-apples.  Bottom line: we're offering the town of Newmarket a great deal and they'd be crazy not to accept it.  I'm currently withholding my judgment as to whether the taxpayers of Oyster River should accept it.

In other news, Siemens reported a successful HVAC and lighting upgrade for the remaining three schools.   (Recall the high school project already saves us $92,000 a year in fuel and electricity.) The savings from the remaining three schools are projected to be $83,000 per year and with the incentives the project will pay for itself in 4.7 years.  I was skeptical about this project, but it appears that Siemens has indeed made it all work.  Congratulations.

In other other news, apparently David Taylor has or is about to file papers to bring the RTK kerfuffle to court.  Since the board is already enjoined as a result of Mr. Taylor's previous lawsuits, involving the court again has potentially serious consequences. I am sorry to everyone for my involvement in this matter, and I continue to hope David and the district can work things out without a court battle.

Half a million here ...

A fair amount has happened since school started so I thought I'd do an update.

We're Newsworthy

Welcome to Kimberley Haas, a reporter Foster's sent to the 9/17 school board meeting.  Ms. Haas has written two articles about us since then:

Foster's, September 19, 2013 Plans for cafeteria at Moharimet School discussed

Foster's, September 20, 2013  If OR tuitions more students, taxpayers could realize $400g

Jeff McMenemy of SeacoastOnline is also on the beat:

SeacoastOnline, September 06, 2013 Newmarket seeks lower school tuition offer from Oyster River

SeacoastOnline,  September 10, 2013  Towns seek to lower proposed tuition rate

SeacoastOnline, September 18, 2013 Oyster River H.S. lowers tuition price for Newmarket, other towns

SeacoastOnline,  September 24, 2013  Newmarket favors new tuition proposal (Oyster River lowered proposal by 12 percent)

You can always watch old school board meetings on YouTube (9/18/13, 9/4/13).  But you don't have to because I sit through them and report back to you here.

 Mohariment Cafeteria, $500,000

The initial enrollment figures for the two elementary schools were startling.  Mast Way began with 287 students, Moharimet with 409.  That's 122 students, 43% more, at Moharimet if you're counting.

Moharimet has an official functional capacity of 388, so it's a little tight in there.  The pain is most acutely felt in the multipurpose room, which serves as a cafeteria when not a gym or auditorium.  And sometimes, we found out, at the same time that it is a gym.

This leads to the first of our half-million dollar items alluded to in the title.  The board gave Superintendent Morse approval to explore building a cafeteria at Moharimet.  The intended capacity is 360, the expected price tag is $500,000 and the size is 10 feet longer than Mast Way's (inequity?).  It would be sited near the kitchen, either in the parking lot or toward the church.

The superintendent wants to begin construction this April, so the cafeteria is ready by September.  This means spending money in the current fiscal year.  This is possible due to some found money (more about that next).  This district plans to seek approval for the Moharimet cafeteria from the voters in the March election before proceeding.

$500,000 is 1.25% of the $40M budget.  Found money or not, if the board decides to build a cafeteria at Moharimet your FY15 school tax will be about 1.25% more than if they decide not to. 

The superintendent preemptively defended himself against the implied charge that it's only the overcrowding from the imbalance that's moved the Moharimet cafeteria to the top of the priority list.

Local Government Center Fraud Payout, $500,000

From what I can tell, despite the name, Local Government Center (LGC) is a private, for-profit company. LGC is an insurance agency.  It was rather dubiously formed by merging non-profits that were administering insurance for municipal employees.   It got in trouble for mixing pools, which is a fancy way of saying LGC didn't return excess health insurance premiums to the towns and school districts who paid them that it was required to by law. 

The district's share of the settlement is $688,555.  Since employees pitch in a certain percentage of their heath insurance premiums, some of this money belongs to them.  The superintendent speculated that the district would retain around $500,000. 

ORCSD is getting the settlement in the form of what I think was called a premium holiday. Basically, LGC is giving us a discount of $688,555 on our health insurance this year.   Seemingly sensible local governments (including Durham) that sought insurance elsewhere in the wake of the scandal are crying foul, as only current customers are in a position to take the premium holiday.

 LGC was also in the news recently as the conflict of interest that ended the NH Senate Presidency of Peter Bragdon. NHPR has been covering LGC well for a long time.   

My main concern is that every time there's some revenue that comes into the district it becomes an excuse to spend with "minimal impact on District taxpayers"  (agenda).   New projects add to taxes whether or not they are offset through found money or tuition profit or spread over the years through financing.  Instead of a minimal impact on the taxpayers, we should aim for a positive impact: lower taxes.

Oyster River Cuts Proposed Tuition $500,000 per year

The prospects for a tuition deal improved after we lowered the proposed tuition for Newmarket from our cost per pupil (CPP) ($16,324) to $14,500.  As before, this tuition deal does not include transportation and places a ceiling on special education support.   Dr. Morse proposed a plan where the board approves a single proposal that it offers to each of the interested districts.

The Newmarket Perspective

There's been a somewhat odd dynamic to the negotiation with Newmarket.  It was announced last spring that Newmarket was willing to pay our cost per pupil.  Somehow it only occurred to Newmarket in September to ask for a lower rate, which we gave them.

There is some drivel going around that Newmarket could actually save money by building a high school rather than tuitioning out to Oyster River, given the high rate.  That seems ludicrous to me, but let's do the math to be sure.  [In a comment below, Mike M. reports that it has been admitted that there was a math error by the Newmarket folks.]

NH DOE has Newmarket FY12 CPP at $15,159 and Oyster River at $16,502.  DOE also provides CPP for high school only: Newmarket $16,194, OR $16,304.  Let's make a guess (probably a lowball) that a new high school costs $30M.  [MM says $53M.]  If we believe the high school DOE numbers, at the initial high rate the extra tuition Newmarket would pay to Oyster River would pay for a new High School in 30M/((16324-16194)*250)) = 923 years!  Let's say we compare to Newmarket's lower district-wide CPP -- then Newmarket's increase would pay for a new High School in only 30M/((16324-15159)*250))  = 103 years.

As a matter a fact, the new deal saves Newmarket so much money that in 30M/((16194-14500)*250) = 71 years the taxpayers of Newmarket would have saved enough to buy a new High School, courtesy of the taxpayers of Oyster River.  (It's actually much faster than this when you consider the inflation adjustment discussed below.) 

Now, I like the idea of a tuition agreement and despite some trepidation I want to help our neighbors over in Newmarket.  I just don't see why we need to be so generous we save their taxpayers over $400,000 the first year and an increasing amount in the years beyond. 

The Oyster River Perspective 

The discount just offered amounts to 16,324 - 14,500 = $1,824 per student, or $456,000 per year for the expected 250 students.  

The superintendent promised 25% of the tuition to taxpayer relief, down from the 40% promised when Newmarket was willing to pay up.  Let's see, 25% * 14,500 * 250 is around $900,000,

a bit more than 2% percent off your taxes.   The old figure, 40% * 16,324 * 250  is around $1,600,000, around a 4% tax break.

From the district's point of view, they were retaining around $2.46M (60% * 16,324 * 250) in the old deal and around $2.72M (75% * 14,500 * 250) in the new one.  Look at that -- another quarter million dollars of found money.  Time for free all day K.

[MM reports that Foster's made an error reporting "400g".  I've indented my original commentary which was based on taking Foster's at its word.] 

But Foster's reports that the taxpayers can realize $400K annually in the new tuition deal.  (If it was up to me, the headline would say "only $400g.") This is much less than the $900K I calculated.  There appears to be some slight-of-hand going on here.

Where it was previously reported that 40% of the gross tuition would be returned to the taxpayers, $400K seems to be 25% of the tuition profit of $1.6M, not of the total tuition revenue of $3.6M (14,500 * 250). The costs are expected to be $2M, mostly for staff.

What of the 75% of the profit not returned to taxpayers?  That's $1.2M more of found money.  That's plenty to get a football program going, along with a bunch of girls' sports to avoid Title IX troubles.

One important thing to note is that the tuition deal should help our cost per pupil.  (The renegotiation didn't affect the costs, just the revenue.)  Back of the envelope, assuming 250 additional tuition students at a $2M cost, our CPP of $16,502 would change to ((16,502*2,000+2,000,000) / (2,000+250)) = $15,557, a 6% reduction.  

Inflation

I didn't tell you the worst part of the proposed deal.  There is a 2% nominal increase in the tuition we charge over each of the first 8 years.  This is very likely a ridiculously low number.  It is below the broad inflation rate (CPI), and seriously below the observed inflation in school costs. 

From 2001 to 2012 (the latest year available), the NH Cost Per Pupil has increased at an annual rate of 6.27%.  (That's the nominal increase -- it's 3.81% after inflation.)  Over the same period, Oyster River CPP grew at 7.31% a year.  If that continued, the nominal 2% increase would mean Newmarket pays $16,656 in the 8th year, while our cost grows to $26,749.  Their 12% discount becomes a 38% discount, perilously close to not even covering the cost of the additional staff.

Since the financial crash, nominal cost per pupil has grown more slowly.  The state CPP grew at an annual rate of 3.86%, while Oyster River's grew at 1.95%, actually below the rate of inflation (which remained at 2.4% in the period) and below the proposed 2%.  As just mentioned, we should get a dip in CPP after we take additional tuition students.  But it's unlikely we will be able to maintain the austerity of nominally growing less than 2% a year for another eight years.

Balance

So the Oyster River taxpayers are expected to go along with a tuition deal that will reduce their taxes an anemic 1% 2%.  The students get to maintain and increase their programming.  The administration gets its slush funds. The Newmarket taxpayers start out paying 10% less per student for a better high school, and that discount grows over time.

The tuitioning deal needs to be a balance between the needs of the students and the desires of the taxpayers of both Oyster River and the other district, most likely Newmarket.   My feeling about the current proposal is it tilts too heavily in favor of the students and Newmarket taxpayers at the expense of district taxpayers.

I would be in favor of a tuition deal where the tuition rate would rise at a rate equal to the rise in NH cost per pupil.  Or, if we wanted to tie the rate to our own costs, we would need to be careful about the expected CPP reduction when we get a new influx of tuition students.   We could solve it with a minimum increase (say 2%, or the CPI) if our CPP happens to grow more slowly.   We might also want a formula that closes the discount over time.

The other concern I have with the tuition arrangement is not the deal per se, but the proposed staffing.  Tuitioning is perhaps our only opportunity to get our class sizes toward the high end of our policy (18-22) without morale-sapping layoffs.  To do this, we have to hire the minimum number of teachers.  We need to be similarly tightfisted on new non-teaching staff.  I haven't seen any evidence that this analysis was done by the administration.  Or if it has, they haven't shared it.

The third concern is the profit -- the difference between the tuition charged and the cost to provide the extra staff and programs.  The administration is essentially proposing to split the profit, now estimated at $1.6M annually, with the taxpayers.  The latest proposal seems to be 75% 45% to the administration, 25% 55% to the taxpayers [corrected $400K->$900K].  I'd like to see 100% to the taxpayers.

$500,000 to Reserve Fund  

There is an item in the 9/4/13 minutes that Sue Caswell reported that the total FY13 fund balance is $1,097,714 and that "they will retain $500,000."  I think what this is trying to say is that the new reserve fund, approved by the voters last March, will be initially funded with $500,000 that would normally be returned to the taxpayers.   Congratulations district property taxpayers -- your taxes just went up another 1.25% next year.

I personally don't think it's right that Sue gets to decide how much the Reserve Fund is funded. Nothing against Sue -- we'd probably all be better off if we always did what Sue suggests.  But Sue isn't one of the people we elected to make decisions like this.  I thought that a board vote would be required to approve this transfer, but I'm too lazy to try and decipher RSA 198(4)b to find out for sure.

Loophole in Budget Goals may cost $500,000

The budget goals were approved as modified.  My concern is the loophole in goal 1:

The ORCSD 2014-15 Budget will not exceed the cost of living as established
by U.S. Government for 2013. Health Insurance, negotiated contracts and
State cost shifts/mandate not subject to COLA.

Now, if I was a superintendent I would want to write the goals with as many loopholes as possible, so I could claim victory no matter where the budget ended up.  However as a taxpayer, I would prefer the goals be loophole free.   If we're unable to negotiate a good contract, or the state shifts more costs onto us we might not be able to achieve our goal.  But we'd have tried, and we'd have reasons, possibly good ones, for our failure.  Life happens and one doesn't always achieve one's goals. I guess I'd make a lousy superintendent.

I have no idea if the cost of this loophole will be a $500,000 -- it's just a guess keeping with the theme of this post.   A half a million here, a half a million there and pretty soon we're talking about real money.  But the real real money is in the tuition deal, where it currently looks like the taxpayers of Oyster River are being given the short straw, where their meager 1% savings over the first year may grow into a substantial tax increase by the eighth year.

Moharimet Kindergarten Stays

On Wednesday August 21st the Oyster River school board voted to direct the superintendent to prepare a plan that addresses the imbalance between enrollment in Moharimet and Mast Way Elementary schools beginning in the 2014-2015 school year. The plan is to be presented at the October 16th school board meeting.

Children registered to start kindergarten at Moharimet this year will indeed attend Moharimet. The first day of school for kindergarten students in the district is this Thursday, August 29th. Grades 1 through 12 start a day earlier, Wednesday August 28th (school calendar).

A plan proposed by the superintendent on July 17th to have all kindergarten students in the district attend Mast Way this school year was not acted upon by the board.  The hastily scheduled meeting was packed with kindergarten teachers and parents, almost all of whom were there to protest this proposed plan. Public comments were restricted to 90 seconds per person to accommodate the large crowd.  Many parents brought their children to the meeting.

The decision means that 410 students are expected to attend Moharimet this year.  The recent capacity study indicates Moharimet has a functional capacity of 388 students, so we appear to be over capacity.  However, the capacity study assumes 80 half-day K students, compared to the 57 currently registered, and does not include the two modular (temporary) classrooms that have been in use for the past two decades.  The capacity study further assumes classrooms will be on average filled at 90% of the maximum allowed by district policy, which allows 20 K students or 22 grade 1-4 students per room.

Here's my attempt to adjust the numbers to assess whether we are actually over capacity at Moharimet. I try to improve the method by looking at K and 1-4 separately.

There are 2 K classrooms, so they have a functional capacity of .9*2*2*20 = 72 half day students, which should easily accommodate the expected 57.  The remaining 15 classrooms, plus two modulars, have a functional capacity of .9*(15+2)*22 = 336 students, which is about one classroom short for the 353 1-4 graders expected.

The 90% factor takes into account that some classes will have fewer than 22 students, that some classrooms may be undersized and that 3-4 combination classrooms may not be filled to capacity.   It is still possible that the grades 1-4 can fit in the available space while staying within the district's class size policy.

At the meeting, Principal Harrington said he will handle any capacity problems, though he wasn't yet sure how.

The 306 students expected at Mast Way easily fit into its functional capacity of 369 students.  The superintendent expects that there will be two empty classrooms at Mast Way this year.

The parents were generally upset by the last minute nature of the proposed change to shift K students to Mast Way.  The superintendent put forth a credible defense, saying that he and the board have been working on the issue since March, that there have been several public meetings on the issue, and that it was the unexpected surge in enrollment over the summer which forced Moharimet over capacity and necessitated a prompt response.  He distributed copies of an impressive 26 page handout on the enrollment issue that he had quickly pulled together for the meeting.

Board member Newkirk voted against the motion directing the superintendent to produce a plan by October 16, saying he would prefer that multiple plans be presented so the board could choose among them.  Board member Turnbull, who had previously urged the superintendent to try to find a solution that could be implemented in time for the current school year, was not in attendance.

The board also voted to approve a one-year contract for a fifth grade teacher needed to accommodate an unexpected surge in enrollment there.  The superintendent assured us the money for the new teachers can be found in the budget approved by voters last March.

The board further voted to place a letter from the school's attorney in the public minutes.  Member Rotner voted no, saying he had not had sufficient time to consider the disclosure. As of this writing, the minutes have not year been posted, so the content of the letter is unknown.  It likely has to do with the recent Right-To-Know kerfuffle (scroll down).

You may view the YouTube video of the August 21 school board meeting here and the August 14 school board meeting here.

Mast Way K Fait Accompli?

It looks like the board is going to be asked to approve the Mast Way K plan at the recently added school board meeting tomorrow, August 21, 7pm.   You may recall the plan is to send all Kindergarten students to Mast Way, in order to equalize the enrollments at Mast Way and Mohariment.  According to a comment on Oyster River Community's Facebook page, staff has been informed that this is a reality for the upcoming school year, commencing next week.

The idea was first floated by the superintendent at the July 17 school board meeting.  I vaguely recall Principal Harrington being asked to call all K families.

The agenda for tomorrow's meeting has basically one item:

Consideration of Elementary/Middle School Enrollment and Options. 
Since the close of school in June 2013 the elementary schools have had forty-one (41) new student’s register. Mast Way Elementary is up twenty-two (22) students, Moharimet Elementary is up nineteen (19) students, and Oyster River Middle School is up forty-nine (49) students.

There's no mention that there is also expected to be a huge 9th grade class this year, around two hundred compared to usual 160 or so.  If our enrollment projections are wrong, we need to fix them before making decisions on tuitioning.

I have written about the elementary reconfiguration on a number of occasions (April 18, April 25, May 2, May 16, July 26.)  I found one reference to Board Member Turnbull asking the date for implementation be moved up from FY15 (school year starting August 2014) to FY14 (school starts next week).  I apologize to my readers for not realizing and emphasizing that this was coming so soon.

If you want to comment about the change before it's approved, show up at the school board meeting tomorrow (Wednesday) by 7pm.  Be on time -- public comments are at the beginning of the meeting.  (There are also comments at the end, but by then it will be too late.)

If you can't go (or even if you can), you may sent the board a note at orcsdsb@orcsd.org.  Please note that anything you send to that address will be a public document, and a paper copy will be placed in the public folder at the SAU office.



There's lots more to say about tuition based on the August 14 meeting, but I'm going to save that for another post.  Teaser: It looks like the Newmarket superintendent is trying to torpedo the deal. The meeting and fallout have been covered pretty well in the mainstream media (1 2 3).