Dr. David Hopson
Questions about the total budget, town assessments, and state aid to education have been raised at both the Russell Annual Town Meeting and the Huntington Annual Town Meeting this spring, as well as during a recent GTAC meeting. These issues seem to be on voters’ minds as they read that the district might be getting additional state funding and wonder how that would impact the bottom line of the budget, including the district’s ‘Excess and Deficiency’ or E&D funds. It appears that both Russell and Huntington did not approve the budget based upon the uncertainty around the amount of state financial aid to the district and how that additional funding would impact the towns.
State law (Chapter 71, Section 16B) covers the development and approval of regional school budgets. Essentially, this law states that once the towns approve the budget, and their total assessments, the school committee cannot expend any additional funds beyond the budget without further approval of the towns. Chapter 71, Section 34 also supports this by stating that, for all school districts, the ‘legislative body of a city or town shall establish the total appropriation for the support of the public schools’ and that ‘no city or town shall be required to provide more money for the support of the public schools than is appropriated’; in short, this legislation provides an annual cap on the ability of the school district to spend money.
While the school district cannot raise appropriations or the budget without approval of two thirds of our member towns, the district is allowed to decrease appropriations or assessments without a vote of the towns.
Chapter 71, Section 16B1/2 deals with a district’s Excess & Deficiency (E&D) Fund and requires that the district cannot keep more than 5 percent of its total budget in E&D. Any amount over that must be returned to the towns in the form of a decreased assessment. The district’s E&D fund is similar to a town’s Free Cash but the towns don’t have the same limitation on accumulating Free Cash from year to year. Thus the question of what happens if the district is awarded more state assistance—for example, by an increase in regional transportation reimbursement after the budget has been approved by the towns—is interesting. As the district cannot increase the budget without town approval, and historically our E&D has been just about 5 percent of the budget, any increase in state aid would be returned to the towns. Therefore, if our 7 towns approve the current version of the budget, if the district’s E&D is at the historic level of 5 percent of the budget, and the state provides additional revenue to the district, then this additional money would have to be returned to the towns as a decrease in town assessments – it cannot be used to increase E&D beyond 5 percent and cannot be used to increase the budget in terms of additional expenditures. Furthermore, recent changes in regulations require that any expenditures from the E&D account must also be approved by vote of the member towns in the same way the budget must be approved (I believe the thought behind this is that by spending E&D you are essentially changing the bottom line of the budget).
Historically the school committee has voted to return any additional funds to the towns that, as you can see by the law, is really a pro-forma vote unless there were no E&D funds (which situation the district has not yet faced). Thus the argument that we should wait to approve the school budget until after the state sets a budget due to a possibility for reduced town assessments, or to stop the district from increasing its budget to spend this additional money, is not necessarily a strong and compelling argument regarding approving the district’s budget.
