Forecaster Forum: Withdrawal from RSU 5 is too costly for Freeport

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Freeport voters need and deserve to understand the potential financial consequence of withdrawal from Regional School Unit 5, our union with Durham and Pownal for public education. Whether by lack of curiosity or by suppression, elected and appointed officials able to provide this information have not done so.

As a former scientist and Freeport town councilor, I am familiar with analyzing data and public budgets. I view the withdrawal debate with growing concern. The financial projection presented by advocates for withdrawal is flawed, even biased. Those flaws are neither being recognized nor corrected.

The message at a public workshop last month was that withdrawal from RSU 5 would be a financial wash. That is simply not true. If Freeport voters do indeed choose to withdraw, we will all pay for that decision immediately, and we will keep paying in the future.

Quite apart from the turmoil and lost time, as school administrators, faculty and staff are diverted from education to reorganization, if Freeport withdraws there will be two kinds of financial cost: transactional and ongoing.

One-time costs include:

• A cash payment of almost $362,000 from Freeport to the new Durham/Pownal RSU 5 within 60 days of withdrawal.

• Approximately $350,000 for additional reserves required by rating agencies, in order for Freeport to keep its favorable bond rating. This would remain Freeport’s money, but after having been raised from taxpayers, it could not be spent on other public needs.

• Approximately $45,000, already paid by Freeport for legal and professional services. Freeport will also have to pay its share of the same services to RSU 5. With withdrawal would come additional costs for further negotiation and changes to the Town Charter.

In addition, the $14.6 million bond approved by voters last November for high school renovation has lost value by about $700,000. While Freeport residents have spent the past year debating RSU governance, construction costs have increased by 5 percent, according to RSU 5 architect Lyndon Keck.

The focus of public discussion so far has been to estimate the operating budget for a stand-alone Freeport school system. Will Freeport pay a higher price? Save money? Come out even? Data bias comes in many forms, such as interpreting a data set to mean more than it does or by using non-neutral data as though it were neutral. What has been presented to the public with Town Council sanction makes both mistakes.

First, it is not a comprehensive analysis, but is instead a single snapshot of an uncertain subject. Second, the snapshot relies exclusively on old data: expenses from 2013-2014. Proponents say their approach reduces uncertainty. The uncertain revenue detail, however, is historically small. Of far greater importance is that by using last year’s data, a $1.4 million increase in the RSU 5 budget this year is obscured.

To ignore that $1.4 million increase is the difference between rosy and troubling cost projections, the difference between slant and honest disclosure.

Using the withdrawal committee’s own model, financial projections show a very different result if they incorporate not the old RSU budget from last year, but the current budget.

Under the old budget: savings of $290,000 if current high school enrollment is maintained, and a $344,000 loss if 60 students transfer to other secondary schools.

Using the 2014-2015 budget: a loss of $274,000 if current high school enrollment is maintained, or a loss of $907,000 if 60 students transfer to other secondary schools.

Any analysis is extremely sensitive to enrollment at Freeport High School (130 students from Durham; 325 Freeport; 55 Pownal, 510 total). The most optimistic projections require full enrollment to continue, although the basis for that expectation is baffling, given the options open to Durham and Pownal parents if Freeport withdraws.

If enrollment declines, at some point administrators will reduce expenses. But even aggressive cuts – reductions it is hard to imagine residents would accept – will still leave a massive, additional tax burden. The grave effect of reducing expenditures, because so many costs are fixed, is that any cuts would necessarily, disproportionately affect programs and staffing. Leaving RSU 5 will threaten educational programs, or raise taxes, or both.

It is a disservice to the residents they serve for public officials to sanction the analysis they have, and not to confront what could be a grim future for our local schools. Putting aside the negative consequences for students – and there will be many – withdrawal from RSU 5 makes no financial sense for Freeport.

Rod Regier was an oceanographer at Johns Hopkins University before moving to Freeport in 1979. He served on the Freeport Town Council, which he chaired in 2004.