Mar 132014

FY15 School Budget Approval Flow Chart

FY15 School Budget Approval Flow Chart

When the Groton-Dunstable Regional School Committee certified what Superintendent Tony Bent called a “level services” Fiscal Year 2015 budget last week, it was the first decision in a series of votes by town officials, a spring election, and town meetings in Groton and Dunstable that will decide the level and quality of both town services and the regional school system for at least a year.

The schools’ multiyear deficit was caused by incorrect data input into an accounting spreadsheet in the school district’s FY 2013 budget. The error remained undetected in the FY 2014 budget, which inherited data from 2013. It wasn’t until the 2015 budget was being prepared by a different financial team last fall, that the school committee learned the combined gaps in the 2013, 2014 and projected 2015 budget had mushroomed into a $3M problem. The projected $2.5M deficit for the FY 2015 budget has been trimmed to about $1.9M in the certified budget. Of that amount, Groton is responsible for paying almost 80%, about $1.4M, and Dunstable the remainder.

Whether and how to fund that budget is the decision voters will face this spring.

The Levy Limit, Proposition 2 ½, and Debt Exclusions

The levy limit in both Groton and Dunstable, Proposition 2 ½, and debt exclusions frame the financial discussion.

The school budget is entirely separate and from the town’s operating budget, just as the school committee is entirely separate and parallel to the Board of Selectmen. But the two budgets are paid for from the same pool of tax revenues — primarily property taxes. There is a limit to the amount of taxes that can be assessed on property — the levy limit, which increases at a maximum rate of 2 ½ percent per year. Town boards can increase assessments up to that limit each year, with the approval of Town Meeting, to fund incremental cost increases in operating a town or school system.

Beyond that, Massachusetts’ Proposition 2 ½ kicks in. Increases of more than 2 ½ percent to the property tax rate require approval at a special election, a hurdle that has historically been tough to clear.

Some exceptions to the levy limit are allowed. Large construction projects are often excluded from the levy limit so they can be funded but not draw money away from a town or school district’s operating budget. The technical term for this is a debt exclusion.

All three of these concepts will come into play as the school’s budget problems are resolved.

The certification of the budget by the school committee was the first decision point. Next up is a special election in Groton on April 1, when voters will decide whether to change the way they are paying for the town’s new fire station.

The $9M fire station on Farmers Row, scheduled to open this spring, is being paid for with regular tax revenues that are counted against the tax levy limit. If the debt exclusion is approved April 1, the change would exclude the $448,000 annual payment from the town’s tax levy limit. That amount could then be drawn upon to pay for the school budget instead. If the exclusion is not approved, the Board of Selectmen would have to come up with $448,000 in additional cuts to town services or find another way to increase revenues to make up the difference.

Then comes Groton’s Spring Town Meeting on April 28, where both the town and school budgets are discussed and approved. Or voted down. The current town budget includes some cuts in services that had been planned and had funding allocated until the school budget problem surfaced. They include joining the Central Mass Mosquito Control Project for seasonal mosquito spraying, hiring an additional police/fire dispatcher, opening Sargisson Beach and other projects. The budget has been prepared by Town Manager Mark Haddad and approved by selectmen on the assumption that the April 1 debt exclusion will be approved. If it is not, more cuts may be required.

Dunstable’s Spring Town Meeting is two weeks later, on May 12. Dunstable voters weigh the same questions on their town budget and the school budget. But Dunstable has less financial room to maneuver than Groton, because it operates closer to its levy limit, so it has less taxing capacity held in reserve. Groton officials, generally, expect Dunstable voters to be faced with a Proposition 2 ½ override vote to fund town and school obligations.

If either Groton or Dunstable Town Meetings reject the school budget, it is sent back to the school committee. It can make more cuts to reduce the funding requirement or resubmit it for another vote without changes, but they cannot increase it beyond the already-certified limit. If that correction loop occurs, whichever town rejected the school budget is required to hold another town meeting to debate and vote on the budget a second time.

If a school budget is still not approved, the school committee can call a Super Town Meeting of all registered voters in both Groton and Dunstable. The budget, possibly with amendments, is presented there. If a majority approves the budget, both towns are assessed accordingly even if one or both didn’t approve the budget on its own.

According to Groton Town Clerk Michael Bouchard, if the budget fails to win approval at the joint town meeting, the school committee needs to notify the State Department of Education that it does not have an approved budget. The state then certifies an amount of money to keep the schools open — usually one month’s portion of the previous year’s budget and each town pays that assessment, month by month until a budget agreement is hammered out.

Need to learn about town financing and levy limits?

Levy Limits: A Primer on Proposition 2 1 / 2
Download the Massachusetts Department of Revenue’s “Levy Limits: A Primer on Proposition 2 1/2”