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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
4000
6000
8000
10000
12000
14000
16000
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
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
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