The amount of tax we have to raise is significantly impacted by the low percentage of HWRSD costs paid for by the state.  The chart below shows the percentage of our “foundation budget” (the level of spending the state feels is minimally adequate) that is paid for by the state.

 

Preliminary Chapter 70 FY 2012

Preliminary Chapter 70 FY 2012 (Click to enlarge)

HWRSD gets less than half of the amount of state funding provided to the average district in the state. The Chapter 70 formula takes into account aggregate property values and aggregate income levels of the residents of the town supporting a school district.  The State uses this formula to vary funding to school districts greatly — from 100% funding for some districts to as low as 17.5% to others.  In FY 2010 HWRSD received only 20.8% of its foundation budget from the state.  In FY 2011, this translated to state funding for 12.4% of our actual spending, since we spend above the state-mandated minimum.

Forcing a significant portion of school funding onto local revenue sources creates significant inequities in property tax rates.  In 2011, property taxes ranged from $2.13 per $1,000 of assessed value in Chilmark, MA to $19.49 per $1,000 of assessed value in Springfield, MA, a more than 9x spread.   Compared to other states, MA relies heavily on local property taxes to fund its public schools.  The chart below shows that Massachusetts is in the top 10 of all states in terms of the percentage of public school revenue derived from local property taxes.

Percent Public School Funding From Local Revenue (2008 Data)

Percent Public School Funding From Local Revenue (2008 Data) (Click to enlarge)

The overall 52.8% local share of public school funding in Massachusetts is high compared to other states, but as we see in the Chapter 70 chart above, some towns and cities are required to cover much higher percentages, up to 82.5%, of public school expenses.  With the 80% local funding share imposed on HWRSD under Chapter 70, Hamilton and Wenham’s  school funding burden is very high and tax rates will remain higher than average even if the HWRSD spending level were reduced to the state average, or below.

Why will our property tax rates remain well above average with average (or below average) school spending?  Many towns and cities have school spending at or above the average for the state, but have much lower tax rates.

Property tax rates are the result of two factors:

  • How much money you need to raise
  • The total assessed value of the property to be taxed

Addressing the denominator first:  the total assessed property values in Hamilton and Wenham are not high compared to our population.  Our rural nature, mixed housing stock, high open space and nonprofit land keep this value low. Compared to some other communities, Hamilton and Wenham have:

  • Insignificant commercial tax base
  • No oceanfront/super-luxury homes
  • High untaxed/low taxed non-profit property (e.g., Gordon College, Gordon-Conwell Seminary, Trustees of Reservations, Essex County Greenbelt) agricultural land and government-owned open space (Town parks and Bradley Palmer State Park)

Also, in recent years, the value of taxable property in Hamilton and Wenham has been shrinking.  For example, Hamilton’s FY 2010 equalized valuation (as reported by the MA Department of Revenue) is about $1.5B, while two years earlier it was $1.64B.  This reduction in property values will cause the tax rate to increase even without spending increases.

The amount we need to raise is relatively high in comparison the assessed values:

  • Typical population of full time residents, including school children
  • Our small town sizes precludes economies of scale in all services (regionalization of Hamilton and Wenham services helps where we do it–for example, could save $500K by merging police alone—but it is not enough)
  • We receive very low support from the state for HWRSD (See “Massachusetts Requires Hamilton and Wenham to Pay for 80% of the State Mandated Funding for HWRSD”)

Unlike towns on Cape Cod or the islands, we have mostly a year-round population with resident children to educate.  While we have had a regional school district since 1959, even combined the towns are small:  note that the aggregate assessed values of Hamilton and Wenham are still $200M less than Ipswich.

 

Based on FY 2010 data, HWRSD spends approximately $850 per pupil (or 6.3%) more than the average district.  See “HWRSD Spending: Do we want to be average or competitive?”   Since we have approximately 2000 students in the HWRSD, our total above-average spending was $1.7M in FY 2010.   As noted in the “HWRSD Spending” section, we spend about $840 less per pupil than the average of the other 24 districts whose high schools made Boston Magazine’s top 25 list in 2010.  In recent years, some have commented that HWRSD spends $2 to $4M more than comparable districts(without identifying either the districts deemed to be comparable or the fiscal year of the data they are referencing).   Based on the most recent data, even a $2M reduction in spending would put our district below average for the state.

Putting aside the question of how much we should spend, it is useful to understand the impact that a school spending reduction would have on the tax rates in Hamilton and Wenham. Our tax rates are about 30% above the average MA property tax rate, as shown on this chart:

If HWRSD per pupil spending were decreased by $1.7M, the property tax rates in both towns would be reduced by only 4%. Using the FY 2011 tax rates as a starting point, that means:

  • Hamilton tax rate would be $16.23
  • Wenham tax rate would be $16.51

This 4% reduction would translate to annual tax reductions on a $400,000 home of:

  • $304 in Hamilton
  • $265 in Wenham

Greater reductions in school spending would have a proportionate impact on our tax rate.  For example, a $4M reduction in spending in HWRSD (which would take us well below average spending levels) would reduce our tax rates only by 9-10%.

Spending in HWRSD in FY 2010 was only slightly above the State average.  In FY 2010, the last completed fiscal year, HWRSD spent $1.7M more (6.3%) than the average district in the State, or $850 per pupil. This chart (below) shows how our spending compares to the other 327 school districts in MA.

FY 2010 Per Pupil Spending - 328 MA School

FY 2010 Per Pupil Spending - 328 MA School

But when HWRSD is compared to the average FY 2010 spending of the 25 other schools that made the Boston Magazine’s top public high school list (remember, we were No. 12), HWRSD spent about $840 less per pupil — around median for the group. Cutting $4M out of our school spending, as has been suggested, would take us substantially below average and near the bottom of these comparables.

Boston Magazine's Top 25 - 2010

Boston Magazine's Top 25 - 2010 (Click image to enlarge)

The question becomes, do we want an average school system or a competitive school system?

Info on E&D Reserves

The level of Excess and Deficiency (“E&D”) funds for FY 2012 was a critical issue in determining the FY 2012 HWRSD budget.  E&D funds are the amount of unrestricted funds held by a regional school district at the end of the school year which it can use for unplanned future needs.  The revised FY 2012 budget adopted by the School Committee proposes that approximately $830,000, or 3% of the total district budget, remains in E&D for unplanned uses. Wenham voters approved a higher level of E&D than Hamilton voters, and this level is a compromise.  Another $682,000 of E&D will be used for operational expenses and capital expenses during FY 2012.  In the revised budget, E&D will be at its lowest level since June 30, 2007.

You can benchmark E&D among all the other regional school districts by determining the percent of their total budget represented by their E&D reserve.  As noted in The Community Connection and the memo from the Department of Revenue on Free Cash (another name for E&D), both posted below, 3% is a recommended minimum level for E&D. State law requires E&D in excess of 5% of the annual budget to be applied against expenses in the following year.   The chart below shows E&D as a percent of the total budget for 59 regional school districts (eliminating those which are technical, agricultural or vocational schools).

 

DOR certified E&D for FY 2011 as a percent of FY 2010 Spending

DOR certified E&D for FY 2011 as a percent of FY 2010 Spending (Click to enlarge)

The chart was developed using FY 2011 E&D levels reported by the MA Department of Revenue and FY 2010 Total Expenditures reported by the MA Department of Elementary and Secondary Education.  The chart shows that 61% of the districts have E&D at or above 3%. The average E&D level for all districts shown is 3.3%.  HWRSD’s E&D for FY 2011 (the current school year) was 3.4% of its FY 2010 spending, as shown in the chart.  Based on the position of the majority of the Hamilton Selectmen, the School Committee adopted a final FY 2012 budget that has E&D at approximately 2.3% of the budget, which would place us near the bottom quartile of the FY 2011 data.

The 2011/2012 Community Connection, published in April 2011, by the  Town/School Budget Process Committee – (PDF, 11 pages)

Department of Revenue Advice on Free Cash (E&D) – (PDF, 1 page)

New site design!

Greetings,

Have you noticed the new design? I’ve installed a new theme, much like our old website, just updated for modern browsers.

I’ve been moving my client websites to a new cloud based server in New Jersey.  This new server is at least 6 times faster than the old one, and has an advanced system architecture with a self healing fail-over setup (tech talk that means the site will stay online even if a disc crashes on the server).

If you’ve bookmarked the website you may wish to update it, as it now does not include /wordpress. The old address was www.hwsos.org/wordpress, now all you need to use is www.hwsos.org

Looking for a new header photo

I really like the header photo, but it’s got nothing to do with our community. If you have a photo that you’d like to offer, please send it along. I can edit the photo, it just needs to be high resolution, and will eventually be cropped to 960 x 200 pixels.

Tom Rogers

 

Cutbacks this year are few – but big challenges loom

Welcome to the 2010-2011 school year in Hamilton-Wenham.

We are thrilled to be able to start off the year with some really great news — Boston Magazine has ranked our high school 12th on its list of the 50 best public high schools, up there with towns like Weston, Lexington, Wellesley and Concord-Carlisle. Congratulations to the students, teachers, administrators, town officials and hard-working parents who all contributed toward this very big honor.

Elsewhere, in cities and town all over Massachusetts, students are returning to schools that are reeling from teacher layoffs and deep cuts in services and supplies, yet this year Hamilton-Wenham managed to dodge the bullet.

How did that happen?

  • First and foremost, our teachers and other unionized school employees gave substantial contractual concessions – including NO cost-of-living increase — in order to balance the fiscal year 2011 school budget, and we sincerely thank them for that.
  • The school committee and school administration worked extremely hard to develop a budget with just a 1.0% increase in spending – a significant achievement given the number of non-negotiable fixed costs they must accommodate — and we thank them for that.
  • With encouragement from SOS, the Finance Committees and Boards of Selectmen from both towns worked for months to build budgets that allowed for a 2.5% "Fair Share" increase in the towns’ assessment to the schools, which helped avoid layoffs and program cuts, and we thank them for that. (Although the overall school budget rose by only 1%, the 2.5% increase in the towns’ assessment was needed to offset decreases in state funding.)
  • Voters at both town meetings – who ultimately have final approval over both town and school budgets — strongly supported the 2.5% Fair Share allotment, and we thank you all for that.

The end result: For the first time in many years, the school district has a budget that did not require significant cuts, all without an override in either town.

What’s next?

We have a new superintendent, a new assistant superintendent for finance and administration, a new curriculum director, and new faces on the school committee and the finance committees and select boards in both towns.

We are energized by everyone’s positive attitude and focus on improving communication and working on shared goals. We hope that they — and you, as parents and voters — will again support a Fair Share school funding allotment for fiscal year 2012 to keep our excellent system strong.

Finally, in recognition that many of our funding problems begin at the state level, SOS has been working for several months with citizens and officials from five North Shore towns on an initiative to stimulate judicial review of the state’s current public school funding structure. This project is still in early stages, but has the potential to dramatically change our district’s share of state funding for public schools. We expect to be able to provide more details later in the school year.

In the meantime, please keep reading our emails and follow us on Twitter (http://twitter.com/hwsos), and thanks for supporting our schools!

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