What are our options?

Our education property tax really comes down to one main thing:  Take how much we spend, then divide it by how many students use it.

If we don't like the number that comes from that equation, we have two choices:  1)  reduce how much we spend or 2) get more students to use it.

This doesn't make logical sense when compared to a household budget.  You decrease cost by reducing what you spend.  Adding an additional person to your home doesn't make it less expensive to run the house.  In this case, total cost matters.  I don't know of many folks who have extra children to lower their "cost per person" at home.

That is how it works for schools, though.  Total budget doesn't matter as much as how many students it serves.  For Westford, we have the extra capacity to accept more students with the same amount of staffing.  That 7th grade classroom with 19 students taught by one teacher could accept up to 6 more kids.  More importantly, since the total we spent didn't change, it gets divided by a higher number of students.  The end result is we lower our spending per student.  *This will lower your education property tax rate*.

Not only will more students lower the rate, but it does so surprisingly fast.

Westford is in the opposite situation.  We have been losing students every year (mostly high schoolers graduating).  So, for the same or even lower total spending, it gets divided by a lower number of students.  We see higher spending per student, and education property taxes go up.

What about that first option of lowering spending?  We have made tough choices year after year to tighten the budget, mostly through reducing our staffing.  But we are coming to the point that further cuts are going to hinder our ability to meet the Vermont Education Quality Standards and, more importantly, the quality that is going to attract and retain families in Westford.

It takes a large reduction in spending to overcome even a small drop in students.

If that classroom with 19 students and one teacher drops to 18 students...we're still going to need one teacher.  We've reached the point where further reductions to teaching staff don't track one for one with enrollment.

To put real numbers to it, we could see zero change in homestead property tax this year if...
1)  We lower the budget by $278,000 (-5.6%)
OR
2)  We have just three more students in the school system than last year (+1%)

This is a bit of a simplification, as there are other factors involved in determining tax rates (base tax rate, revenues, CLA).  However, our spending per pupil number accounts for 44% of the tax increase this year.

Phantom students and "hold harmless"

Vermont uses the metric of "education spending per equalized pupil" to determine how a district's budget will affect the local property tax rate.

Like much of the education funding formula, this sounds easy to understand until you dig into it.  The number of pupils is just the number of students (preK through 12) in our town, right?  Nope!

In the FY'15 school year (2014-2015), we have a total of 295 students (15 preK, 169 K-8, 111 9-12).  This is the real number of students who are enrolled.

Yet, if one looks at the state data for number of "equalized students" in the Westford district, you see the number is 318.52.  Why is this number different (~7.8% higher)?  What does a fractional student look like?

This phenomenon has come to be known as "phantom students".  There are several factors in the state's formula that bring this about.

1. Student weighting
2. Two year averaging
3. Hold harmless provision

Student weighting

The state has made the assertion that education costs are expected to be different for certain student groups.  For example, it is assumed that students in PreK are less costly to educate than students in grades K through 6, and that secondary students (grades 7 through 12) are more costly. Weighting is also higher for ELL (English Language Learners), FRL (Free and Reduced Lunch) students, etc.  

Based on your mix of students and economic conditions, this will change your "equalized pupil" number.  Westford has relatively low numbers for ELL and FRL, and a shrinking number of secondary students. 

Two year averaging

Averaging pupil counts over two years helps smooth out random spikes and dips in student population.  This allows for reacting to trends rather than one-time events.  

Hold harmless provision

Schools that are experiencing large, sudden changes in student population are limited in the percentage of student loss in a single year.  That limit is currently a decrease of 3.5% of their prior year equalized pupil count.  For example, if a district 's two-year average were to drop 5% of students in a single year, their "equalized student" number would only decrease by 3.5% in the first year, then, assuming the student number remains unchanged, the second year will see a decrease of an additional 1.5%.  

By dampening the effect of large change, this gives a district time to adjust staffing to react to enrollment changes.  It also helps town taxpayers by spreading out the tax impact over two years.  

However, this mechanism wasn't really designed to deal with the type of declining enrollment our state has seen.  Extended enrollment decline of greater than 3.5% has a cumulative effect that may lead to a district falling under hold harmless protection even after enrollment has stabilized for several years.  

As student populations have decreased, especially in districts where one or two families leaving the system can cause a significant percentage change, we see cases of always hitting the hold harmless limit.  

Westford has hit the limit for the past several years.  We expect to remain in that place for several more years.  Large scale migration effects like the closure of the trailer park take many years to overcome.  Similarly, our graduating high school classes (the last of the baby boomer generation's children) are larger than our incoming classes.  

At 295 students preK-12, 3.5% is roughly 9 students.  

All districts in the state play by these rules, Westford is no different.  In our budget presentations, you will find our real student numbers and the equalized pupil count.  

How we use them:

• Equalized pupil numbers (aka "Phantom students") are used for all statutory calculations, such as spending per equalized pupil, local tax rate, etc.  The state requires this.
• Actual student numbers are used for all staffing decisions, expected case load, busing contracts, high school tuition, materials purchases, etc.  We budget based on real students.  

FY16 budget synopsis

Our complete budget process, minutes, and documentation are easily available online at our Westford School Board page.  This will always be the source of official meeting agendas, minutes, documents, web streams, etc.  This blog is an additional means of diving deeper into the data and methods used for school board decision making.

Our Joint Meeting budget presentation is on Wednesday, January 7 (7:00 at the school common area).

For those not able to attend, a quick synopsis of our FY16 proposed budget:

• Proposed budget change:  -1.3%  (-$67,000)
• Projected homestead tax rate change:  +4.9% ($72 per $100k of assessed value)
• Projected income sensitivity tax rate change:  +9.35% ($26 per $10k of income)

Budget and Tax History

Yearly budgets are usually presented in relation to the previous year.  While the rate of change can be volatile year to year, overall longer trends can give a better picture of what a budget is really doing.

For example, big changes in a given line item from a previous year can get shadowed by a small change in the current year.  Looking at a multi-year history of that line item would tell a more complete story.

We like to include our budget and tax history in all budget conversations to be as transparent as possible.  The trends are clearly visible.  Below is our history, including the proposed budget and projected tax rates.  Tax rates for FY'16 are based on actual data for all variables except base tax rate (estimated to be +2 cents by the state) and the base education amount.  Those values will be available in the spring.  

Year over year, the budget change has averaged -0.33% for each of the last six years.  

Increases to the tax rates during recent years are directly attributed to our decreasing student population and the higher state base tax rates.  Local tax burden is determined not by our total spending, but instead our total spending per pupil.  As pupils decrease, spending per pupil for the remaining students increases.  

As the last of the baby boomer's children are graduating high school, we're seeing outgoing classes that are larger than incoming classes.  That has turned into a drop of -3.5% per year in students for us, driven by high school graduation.  Incoming elementary classes are stable or growing slightly.  

Based on population and birth rate predictions, we have several more years of decreasing preK-12 enrollment to prepare for.  

Proposed FY'16 staffing

A quick look at our budget will show you that preK-8 salary and benefits consume 50% of our total budget.  A further 30% goes to high school tuition.  How did the board approach staffing at our school for this upcoming budget?  Are we doing our job to be responsible to the taxpayers in Westford?

The Vermont State Education Quality Standards form the basis of our decision making around staffing.  Do we comply with the state standards in how we staff our school?  The words "must and "shall" show up often in relationship to staffing, leadership, curriculum, services, and more.  Guidelines are provided for the appropriate ratios of students to the staffing for particular services.

All staffing at Westford School complies with the Vermont State Education Quality Standards.  Each year, an audit of each position is performed to determine the following:

• Does the staffing of each position support projected student need for the coming year?
• Does the staffing of each position match the anticipated workload for the coming year?
• Is the staffing of each position appropriate to the Education Quality Standard recommendations for student to staffing ratios?
• Does the staffing support our School Action Plan?

Student need can change drastically as students move in and out of our system.  We attempt to be proactive in staffing to react to those changes.  School Action Plans and Education Quality Standards move less quickly, so changes can be more strategic.

The history of our total staffing (Full Time Equivalent positions, or FTE) is shown below.

Some observations of our staffing:

• Licensed staff change from FY11 to FY16 = -13.7%
• Support staff change from FY11 to FY16 = +4%
• Total staff change from FY11 to FY16 = -7.4%

The downward trend in staffing tracks with our decrease in students.  Support staff positions are traditionally less costly than licensed staff, so shifting appropriate workloads to staff positions can result in cost savings. 

What does the FY16 student to staffing comparison look like?

*Teachers include all instructional educators (classroom teachers, special educators, reading specialist, math specialist)

**Staff includes all employees (licensed teachers, librarian, nurse, counselors, SLP, ETIS, IT, custodial, maintenance, clerical, paras, etc.)

Westford School is well above the state average in all three metrics.  We could handle more students within our current classrooms, so these numbers could get better with the same staffing if student populations increase.  

Recently, the Secretary of Education presented to all state school boards that if they were to increase the state average student to staff ratio of 4.67 to 5.0, it would result in annual savings of $74 million dollars to state taxpayers.  That equates to about 7 cents on the tax rate!  Westford has exceeded that challenge by an additional 10%.  

Data driven comparisons

Each year, the Department of Education publishes detailed reports on all schools in Vermont.  A great deal of data is contained within, and these are useful tools to help compare our school district to others to see how we are doing on important metrics.

Visit http://education.vermont.gov/data for a full list of reports.

So how did we do compared to the averages and other area schools?  Let's look at two of the most asked about topics during budget time; staffing and taxes.  (All data presented is pulled directly from the above website.)

The metric that has the largest potential impact to our budget is the student to teacher ratio.  Right-sized staffing is critical to keeping the ratio both constant and appropriate.  The average student to teacher ratio in Vermont is 9.9.  The chart below shows Westford within the cohort of schools with greater than 200 students.  Believe it or not, Westford is not considered a small school in Vermont!

Westford's student to teacher ratio is 11.88, which is the highest ratio for K-8 schools with 200 to 400 students.  This is achieved with one classroom teacher per grade level.  Note that all the schools with a higher ratio have at least two times the students we have, thus more flexibility in how to deploy teachers and classroom configurations.  The FY'14 student to teacher ratio was calculated to be 12.1.

How this ultimately affects our town is through budgeting and the resulting tax rate.  Below is a chart sorted by Actual Homestead Tax Rates for all the towns in our general area.

Westford's actual tax rate compares favorably to other towns in the area.  These rates are adjusted by the Common Level of Appraisal, so they provide a fairly equalized look at how town to town property taxes stack up against each other.

Data for FY'14 and FY'15 has been compiled manually from the Department of Taxes,  http://www.state.vt.us/tax/pvredtaxrates.shtml and is included below.  Our continued loss of equalized pupils is evident as the spending per pupil number grows.

 

2014 Situational Analysis

The conversation about public education in Vermont was elevated by last year's tax impact and the resulting proposed actions in our state legislature.  Many factors are at play, yet the intricacies of it all are rarely fully explained.

The below presentation is an excellent factual overview of our current situation.  It is a necessary foundation for anyone interested in understanding the issues, and a valuable update to those who have followed along last year.