Southern Maine school districts prepare for subsidy loss
PORTLAND — The freeze is here, and not just because of the weather.
With more than 200 school districts in Maine facing the loss of a cumulative $12.58 million in general purpose aid from the state Department of Education, school officials are reviewing purchase orders and combing budgets for possible savings.
Portland schools stand to lose the most, with $870,000 cut from a $14 million subsidy. Chief Academic Officer David Galin said the amount is exactly what was expected.
"We knew going in to this year the budget would be tight, and put a number of budget control steps in early," Galin said.
While capping spending on supplies, Galin said the department will now review every vacancy more closely to see replacements are absolutely necessary. He said keeping current staffing is a priority.
South Portland School Superintendent Suzanne Godin also said she knew the curtailment was coming. South Portland schools stand to lose $411,000 of their $3.1 million in state subsidies.
"It was actually a little less than what we were anticipating," Godin said Monday.
The reduction in education subsidies was part of a general order signed by Gov. Paul LePage on Dec. 27. The order reduces state spending by $35.5 million to offset revenue shortfalls in the current biennial budget. It will be followed Jan. 11, 2013, by a supplemental budget drafted to close a $100 million shortfall at the Maine Department of Health and Human Services.
About $26 million of the reductions come in DHHS and DOE spending, although Sawin Millett Jr. , commissioner of the Department of Administrative & Financial Services, held out hope some DHHS cuts could be restored in the supplemental budget.
The Legislature's Appropriations and Financial Affairs Committee will meet Jan. 4 to review the spending cuts in the curtailment order. The curtailment order can be amended or accepted by legislators when the full body reconvenes on Jan 8.
Regional School Unit 5 Superintendent Shannon Welsh said she would like to see a quick consensus on what needs to be done.
"I would ask them to work quickly and take decisive action. Give us the information sooner than later, (so) we have to have time to respond," Welsh said.
RSU 5, comprised of Freeport, Durham and Pownal schools, stands to lose $138,000 of its $5.2 million state aid for the current fiscal year.
Distributing the spending reductions throughout state agencies may have help blunt the blow, Welsh said. But she still expects RSU 5 to refrain from purchasing new curriculum materials to enhance science offerings, and to consider reducing field trips and practice scrimmages for spring athletic teams.
In a district where 80 percent of the budget is comprised of salaries and benefits, selective trimming to offset reduced subsidies can be difficult, Welsh said.
Welsh and Kelly Wentworth, RSU 5 finance director, are reviewing areas where some savings can be achieved and will present a list to School Board members at a Jan. 9 meeting.
Millett said the supplemental budget needed to balance DHHS accounts would look to avoid diverting any more education subsidies.
“It is not part of current game plan. My hope is that this would be the extent (of reductions),” he said last week.
Godin said a spending freeze in areas including supplies, field trips, professional development for staff and other travel was put in place in December. She will assemble a group of district department heads, a School Board member and the leaders of unions for district staff to consider other cost cutting measures.
Godin and Millett noted the curtailments are not not a new phenomenon for school districts.
“In five of the last six years there has been a curtailment of some magnitude,” Millett said.
The curtailment of school district subsidies would come in the form of a cessation of payments from the DOE to districts, although Millett said all have received six months of the subsidies determined by the Essential Programs and Services formula.
Dan O'Shea, finance director in the Falmouth School Department, said the possible curtailment of $234,000 of a $7.5 million subsidy was less than expected. But he could see how Falmouth schools could be hit with an 11 percent subsidy reduction.
"Upon seeing the figures it's clear to see that town's with higher property tax bases were impacted the most relative to their total education spending," O'Shea said.
Fixed personnel costs, debt service and the fact that most teachers have bought supplies for the year leave few areas to cut, O'Shea said.
"The (mid-year) timing of the curtailment does not leave us many options for reductions, but we will examine every purchase being made to insure it is absolutely necessary," he said.
In Brunswick, where the School Department receives a state subsidy of $10.45 million, the proposed curtailment would reduce subsidies by $235,500. Superintendent Paul Perzanoski said the department has been bracing itself for a curtailment since October.
The amount deducted from state subsidies may be covered by shifting surpluses at the end of the school year, and Perzanoski said he does not expect the subsidy reduction will require reductions of staff positions or services.
"We have basically been in a freeze since October 2008," he said, noting that he reviews all purchase orders to ensure they are for essential needs.
Perzanoski said his department endured reduced revenues because of the closing of Brunswick Naval Air Station and the loss of Durham students as part of the consolidation that formed RSU 5.
He said his message to legislators won't be much different from what he has said before.
"We've continued to talk about the fact we get less from federal and state government and the majority of responsibility falls on taxpayers," he said.
Scarborough School Department Business Manager Kate Bolton said her department was also prepared for a loss of subsidies. Scarborough is slated to lose $392,000 of its $4.8 million subsidy, and a discretionary spending freeze has been in place since November.
Bolton said it will be up to administrators and the School Board to determine the final details for coping with the revenue loss.
Some costs, including staff pay and contracts for energy, must remain fixed, and Bolton said staff are identifying areas of possible savings and considering a shift of undesignated fund balances as a "last-ditch resort."
Even if education funding is spared further reductions in the short-term, the long-term prospects are not promising in terms of the biennial budget for fiscal years 2014 and 2015.
Jennifer M. Smith, the state's director of Legislative Affairs & Communications, on Dec. 28 said the latest estimates of a structural budget gap between revenue and spending tops $880 million for the next budget cycle.
By law, the gap assumes full funding of an average of 55 percent for general purpose aid, full funding for municipal revenue sharing, and merit pay increases for state employees.
Those full funding goals are unlikely, so legislators and state officials are still left with hard budgeting decisions for the next two years.