The financial implications of a unified school district

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By Brendan Kinney

For many residents of Essex Junction, Essex Town and Westford, a major question regarding the potential unification of these towns’ school districts will be: Will it save me money?

The Regional Education District Study Committee spent a great deal of time looking at the answer to this question. While it is impossible to predict the many variables related to future school budgets and taxes, we were able to make some definitive statements about potential savings.

With the help of an outside consultant, an analysis was done of potential additional costs related to merger and potential savings. The new costs were in the areas of transportation and adding additional Westford students to the high school enrollment. To be conservative, we assumed all students would have access to transportation. If the new school board decides on a different plan, the additional costs would be reduced. The defined savings were in three major areas: central office staff consolidation, Westford high school tuition, and duplicated costs such as audits. The analysis showed a total savings of $1,025,294. Not all of this would be realized in the first year but would all be in place by year four. The committee believes that once a unified school district is created, other efficiencies and opportunities for cost savings will be identified.

The biggest savings for taxpayers would come from the tax incentives being offered by the state to districts that merge. There are two possible scenarios. If all three communities vote for merger, then the new district would be eligible for what are called “accelerated incentives.” The tax reduction in the first year would be 10 cents, 8 cents in the second, and so on, with the fifth year being 2 cents. Income sensitivity rates would be adjusted proportionally. One school budget would be established with one equalized school tax rate assessed in all three communities. Our education funding system is complicated further though by the need to apply a common level of appraisal to the equalized tax rate. This could mean that actual tax rates could differ depending on each community’s appraisals as they relate to the state-determined full appraisal value. Income sensitivity rates would be the same in all three communities as they are not affected by appraised values.

If Essex Junction and Essex Town vote to merge and Westford doesn’t, then the new district would be eligible for what are known as RED (Regional Education District) incentives. These incentives cover four years instead of five and are 8 cents in the first year declining by 2 cents each year to 2 cents in the last. Westford residents would not be eligible for the tax incentives if they vote “no” on a unified district.

After analyzing the outside consultant’s report, the committee requested a financial model to show what would have happened over the past five years if the savings and tax incentives had been applied to known school budgets. The analysis showed that tax rates were lower by an average of 4.6 cents in the fifth year, even though the incentive at that point was only 2 cents. The committee talked about trying to project future tax rates. We found there are just too many uncontrollable variables to make it a realistic exercise. There are many factors that are determined at the state level on an annual basis that affect tax rates, for example base tax rates —the base education amount used to determine rates — and reimbursement rates for services like transportation and special education. In addition, it was impossible to predict what decisions the new school board would make about things such as contracts, staffing, and transportation. We found the analysis involving the previous five years gave us a more accurate picture of what might happen.

The financial situation in Westford is unique relative to Essex Junction and Essex Town. While the FY16 school budget for Westford is lower than its FY09 budget, declining enrollment and its effect on tax rates is causing school taxes to increase at an alarming rate. Without merger, it is likely that the quality of the education available to Westford’s students will be compromised as taxpayers will be unlikely to support budgets that maintain programs due to the resulting tax increases. However, being part of a unified school district would change the situation dramatically. Essex Junction and Essex Town have not experienced the rate of enrollment decline seen in Westford

The study committee found that a unified school district could lead to improved learning opportunities for students, administrative efficiencies and a more understandable governance system, while saving taxpayers money at the same time. More detailed financial information can be found on the committee’s website at www.redstudy.wordpress.com

Brendan Kinney is chairman of the Regional Education District Study Committee that has recommended combining school districts in Essex Junction, Essex Town and Westford.