Members of Regional School Unit 12’s Board of Directors explained the methods and effects of their proposed cost-sharing plan, at the Somerville School Sept. 6, during the third of three meetings on the proposal.
The plan, which would replace the current system where towns pay a fixed percentage of the budget, will allocate expenses based on a cost per student formula.
Jerry Nault, Chairman of the board’s Finance Committee, said “the process should be simple.”
Under the proposed system, the RSU will reference the the state’s ED279 report to calculate a cost per student. This was an important factor in feedback RSU 12 officials have received to date, Nault said.
Using round numbers to easily demonstrate the formula, the example given at the hearing focused on a hypothetical RSU budget of $25 million. After subtracting the portion of state subsidy that goes directly to debt relating to school construction, the net hypothetical operating budget would be $23 million.
In the example, there are 2300 students in the RSU, which allows $23 million operating budget to be divided into a cost per student of $10,000.
A hypothetical town of 460 students would therefore have a total cost allocation of $4.6 million dollars.
This town would use both its state subsidy funds, the minimum required amount of locally contributed funds, and any additional funds needed to pay their share of the budget.
In the example, if the state subsidy for the town was $2.3 million, their minimum required amount would be $1.7 million. Together, those funds would cover $4 million of their $4.6 million share, with the town having to raise the remaining $600,000.
A safety net provision in the first four years of the plan would help the towns ease into the changed cost allocations and not be overwhelmed by sudden increases, Nault said.
The safety net, which decreases gradually over the four years, limits the change of payment to no more than 25 percent for each school year.
Using the example given by Nault, if “Town A” saves $400,000 on their cost share under the new system, and “Town B” has $400,000 in additional costs, in the first year, Town A will save no more than $100,000 while Town B will pay no more than $100,000 more; both equaling 25 percent of their changed shares.
In the second year, the towns will be responsible for 50 percent of the changed shares. Town A will save $200,000 while Town B will pay $200,000. The third year will be 75 percent, with the towns paying their actual shares in the fourth year.
“We don’t expect them to come up with the difference in one year” because “to make a huge changes in your taxes from one year to another is really hard for towns to manage,” said board member Chris Johnson of Somerville.
Nault said that the number of students in the RSU keeps decreasing, and therefore costs per student end up increasing. “We are trying to reflect reality by switching to” the cost per student method.
Nault said the RSU could try to control cost per student by increasing the number of students or “we can continue to do the things we’ve done this year by dealing with staff, dealing with facilities and getting better arrangements cost-wise.”
Board chair Hilary Holm, of Wiscasset, pointed out the old method looked at 2008 and 2009 local contributions to determine town’s share of the budget costs. At that time, Westport Island and Somerville had similar numbers of students, but because Westport Island was a minimum receiver of state subsidies, its contributions were much higher, Holm said.
Under the new method, the percentage would be reflected solely on the number of students.
Because cost increases for the RSU are shared among eight towns, Nault said the new method is “like an insurance policy,” when operating costs go up.
Nault said the Finance Committee will meet and review feedback from the three hearings regarding the proposed cost sharing system. There will likely be a second round of hearings to share the final version in October before it shows up on the November ballot, he said.
Documentation relating to the proposed changes is available on the RSU 12 website, www.svrsu.org.
