SchoolBudgets

Complicated,confusing,predictablePart2CostsDaleMagee

0

20000000

40000000

60000000

80000000

100000000

120000000

140000000

TotalOperatingSchoolBudget TotalTownBudget

Part1:Revenues$availableforcostincreasesarenotjustheldto2½%theyareheldto2½%ofafractionofthetotal&this

fractionmustbearthefullinflationarypressure

Inflation

Inflation

Prop

Tax

Town

Budget

Expensesideissues:

• Onceabudgetisestablished,volatility &inflationare2thingsthatdestabilizefuturebudgets

• Outsideexpensescancrowdoutfundsforschools• Wewilllookat:– Perspectivesoninflation– Overviewofteachercosts– OverviewofSPEDcosts– Heathinsurancecosts

Inflation:Educationby~3-4%/yrinwellmanageddistrictsandinthestateasawhole

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2000

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2008 2009 2010 2011 2012 2013 2014 2015

PerPupilExp

Shrewsbury

State

Westborough

Shrewsburyavg annualincrease2008-15=4.8%for2008-2014:3.4%Massachusettsavg annualincrease2008-15=2.8%

Source:DESEPerPupilExpensereports

CPIismadeupof9differentareas,eachwithuniqueinflationpattern

LaborIntensiveFieldshavehigherincreasesinthecostoflabor(Baumol effect)

EvenSchoolBudgetscontainseveraldifferentinflationrates

• Teaching:2factorsthatpushitup• SpecialEducation:especiallyoutofdistrict&highneedsstudents

• HealthInsurance:virtuallyalwaysafewpointsaboveinflation

Teachers

• Makeup45%ofOperatingBudget• TotalCostaffectedby

– Salary– Numberofteachers

• Salary:– 13steps:startat~$46Kandpeakat~$78Kwithbachelorsdegree(expectedtogetMasters)

– 7Tracks basedoneducation:~$5KforMaster,~13Kfor60creditsbeyondMasters

– CostofLiving:generally~2%/yr.Overthelongrun,tracksSocialSecurityfairlyclosely

Whileseniorteachersalariesgoupby2%/yr,juniorteachersalariesstartat50%

lowerbutgoupby~7%/yr

AvgShrewsburyAdvDegree

Becauseofchangesinthemixofnew&experiencedteachers,mostnewmoneywenttohiringmoreteachersinthepast5years

5

5

5

TheSpecialCaseofSpecialEducation

• Largescope:fromminorlearningdisabilitytooutofdistrictresidentialcare

• Longtimespan:Highneedstudentsentersystematage3andremainunderdistrictcareuntilage22,ifrequired

• BothInflationandVolatilityareissues• At~14% wehavealowerpercentagethanstateaverageinSPED

819SpecialEdstudents:mostarelowestcostcategory

715

1174

8 110

100

200

300

400

500

600

700

800

0-$42500 $42510-49999 50,000-99999 100000-149999 >150000

NumberofstudentsinSPEDcostcategories

Numberofstudents

Brakepointforstateaid

BecausetherearefewerhighcostSPEDstudents.Most$spentonthelowcost

students

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2,000,000

4,000,000

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14,000,000

0-$42500 $42510-49999 50,000-99999 100000-149999 >150000

$spentonstudentsincategory

$spentonstudentsincategory

(~7%/yr)Volatility:-4%to+20%

Source:EndofYearReports,TotalTuitionoutofdistrict

SpecialEdhasmultiplesourcesofrevenue- buttownbearsthevolatility

0

5000000

10000000

15000000

20000000

25000000

2008 2009 2010 2011 2012 2013 2014 2015 2016

SPEDby$Source

FedGrants490 StateFoundation StateCircuitBreaker180 Town(SPEDbudget- above)

SpecialEducation

• AidfromFederalgovernmentisflat

• Stateaidfrom“CircuitBreaker”buffersbutdoesnotprotectfrominflation

• Mostofthevolatility&inflationisbornbythetown

WhyisHealthCarecostimportantifitisnotpartoftheTownAppropriatedSchoolBudget?

• Locally:increasesleavelessforthetowntopayfortheschoolbudget

• Statewide:moreofthepiegoestohealthcareandlessofthepiegoestoeducation

• Taxpayers:lowerraises,higherpayrolldeductions,highercopays&deductiblesleavelessforeverythingelse– (employercontributionscanexceed$6/hr)

Locally:ShrewsburyHealthInsExp~5%/yr(andareabouttogoupby>10%)

Source:MassDORMunicipalDatabankhttps://dlsgateway.dor.state.ma.us/reports/rdPage.aspx?rdReport=ScheduleA.HealthInsurance.HealthInsExpenditures&ctHealthExp-PageNr=7&rdDataCache=3302376082&rdShowModes=&rdSort=&rdNewPageNr=True1&rdRequestForwarding=Form

4%

14%Healthcare

Education

Source:MassBudget&PolicyCenter

ForFY18StateincreasesforHealthCarewere10XmorethanEducation

Aspaychecksincreasedby50%,workerscontributionstopremiumsincreasedby~200%

Onedriverofincomestagnationhasbeenbenefitgrowth,primarilyHealthIns.

Whatarethepressuresinthefuture?

• MaintainingClassSizeputsusinahigherinflation categorythantheCPI.

• SPEDisahighinflationservice.– Regulationsandstatecontrolofoutofdistricttuitionsleavelittlewiggleroom.

• AlthoughhealthinsuranceisnotpartoftheTownAppropriatedSchoolBudget,itcrowdsoutfundsavailableforotherschoolcosts

• Eachoftheseitems,bytheirnaturewillgoupmorethan2½%,morethantheCPIandmorethaneducationasawhole