Southbridge struggles with little state aid, funds lost to charter school

Underperforming schools hindered by fiscal constraints

By Laurie Schlatter and Shaun Moriarty
Citizen Chronicle Writers

SOUTHBRIDGE — The town has a double-prong problem hampering its spending plan for the coming year in the barest increase in state aid and a hefty drop in state money to cover the town’s costs for the charter school in Sturbridge.

“I’m looking for a solution to both of those problems, because it’s one big problem for me,” Town Manager Ron San Angelo said in an interview Wednesday.

“The reason this is impacting Southbridge so much is because it is a school district in receivership,”  he said. “If you open a brand new charter school right next door, well, of course, parents go, ‘Why can’t my kids in a district that’s underperforming, why not send them to the charter school?’ ”

He presented the Town Council on Monday with a $54 million spending proposal for fiscal 2019, which begins July 1:

  • The general government operating budget of $12.99 million is a 1.32 percent increase over $12.82 million this fiscal year.
  • The public school budget of $26.78 million is the same amount, or level funded, as this fiscal year. That is a 0 percent change.
  • The total budget of $54.49 million represents a 0.89 percent increase over $54.01 million this fiscal year.

“The reason the town is giving him (School Superintendent Jeffrey Villar) a level-funded budget is because the state didn’t give us any additional money to give to the district and, in fact, are forcing us to give money to the charter school,” Mr. San Angelo said Wednesday.

The first part of this problem is the tiny $46,140 increase in Chapter 70 state funds to the town. The governor’s proposed budget for fiscal 2019 allocates $21.23 million. That compares to the $21.18 million sent to the town this fiscal year, an increase of $754,829 over the $20.43 million received in fiscal 2017.

The second part of the problem is the state formula for funding charter schools and its impact on the town budget:

  • This fiscal year, Southbridge was assessed $908,140 to send 67 children to Old Sturbridge Academy Charter School, or about $14,000 per child. The state reimbursed 75 percent of the first-year costs for those children, or $614,871, leaving the town to cover the difference of $293,269. A tuition-free public charter school for Grades K-3, it is open to all residents of Massachusetts. Admission is by lottery. Preference is given to its 12-town district, which includes Southbridge.
  • The assessment for fiscal 2019 stands at $1.02 million, an increase of 13 percent, for the 67 children plus another six to eight.
  • The state reimbursement formula stands at 75 percent for the handful of new enrollees, then drops to 25 percent for those in their second year at Old Sturbridge Academy.
  • Estimated reimbursement to Southbridge in fiscal 2019 is $136,481, a decrease of 77.8 percent from fiscal 2018 reimbursement. It also leaves a difference of $889,894 that the town will have to cover.

“Every time a parent makes that decision for one kid, it’s costing us about $14,000-plus in revenue that leaves the town,” Mr. San Angelo said Wednesday.

All of that leaves the town’s school system facing the need to cut spending. “So we don’t have any money to give to the school system. That’s our dilemma right now,” he said.

Southbridge Public Schools faced with budget gap

Superintendent Jeffrey Villar sent an email to school staff Tuesday, the day after the town manager’s budget proposal offered no increase in school funds. “This represents a need for a $3,176,967 reduction in spending for (fiscal) 2019,” he wrote. Having already proposed cuts of $2.51 million that include the loss of 31 net full-time positions, Mr. Villar wrote that “absent additional funding, I will need to propose more spending reductions” to close a $665,000 gap.

Mr. Villar understands the process, works for the state, is looking at resources and “is trying to make a budget to fit into the resources he has,” Mr. San Angelo said. “He doesn’t have any other option unless the state gives him more resources. We’re asking him to do more with less money. He was the recipient of the money now going to the charter school. If I had the $1.026 million going to the charter school (in fiscal 2019), normally that money would be going to the public schools. So now he’s losing all that money, so he’s got a big problem. How does he improve the Southbridge school district if $1,026,375 is leaving and going to the charter school?”

Mr. Villar has to decide how he’s going to run the school district for this year and many years going forward, the town manager said.

As for how to close the $665,000 gap, Mr. San Angelo gave the Town Council three options to raise the proposed school budget by 1, 1.5 or 2 percent, which Mr. Villar also described in his email to school staff. “For example, a 2% increase would provide approximately $535,000 towards closing the gap, leaving a deficit of approximately $115,000,” Mr. Villar wrote.

If the Town Council wants to put more money in the budget for schools under one of those options, it narrows the gap and “and he doesn’t have to make anymore negative decisions. If they don’t, he may have to make some more tough decisions,” the town manager said.

Furthermore, the three options would not require a Proposition 2 ½ override because town has some extra levy capacity, Mr. San Angelo said. In other words, the town’s property tax base can support up to $711,848 more in spending and still remain within the property tax law. However, committing that wiggle room in fiscal 2019 means it won’t necessarily be available for emergencies or for future budgets. Still, future budgets are allowed to raise taxes 2.5 percent annually, plus new growth helps.

“In order to give the schools these increases, we do not have to do a Proposition 2 ½ override because we are still within our levying capacity,” Mr. San Angelo reiterated.

“We’re hoping the governor’s office or some more money that comes into the school district before we set the budget. So we’re hoping for some more state aid in some form or another. “

Another factor, he said, is the expected arrival of about 87 children leaving hurricane-ravaged Puerto Rico. The governor’s proposed budget has allocated $15 million to cover the entire state and all of the children. How much the town will receive to help offset funding shortages is unknown at this point, and it’s an issue this fiscal year and next, the town manager said.

Free cash may be used for stabilization

Other major increases in the total proposed town-school budget reflect a 15.5 percent rise in workers compensation costs and 4.16 percent rise for health insurance. Costs are higher, Mr. San Angelo said, plus workers comp claims on the school side have gone up. The town pays 60 percent of health insurance costs and employees pay 40 percent.

Furthermore, free cash is not being used in operating budget. “Fiscal responsibility says you don’t use one-time revenue to pay for ongoing expenses,” the town manager said. The state has just certified the fiscal 2018 free cash at $1.3 million, and he plans to recommend adding some of that to the stabilization fund.

Free cash is for the town’s capital improvement budget, to buy a truck or fix a baseball field, that’s appropriate, he said. For instance, it would cover the $300,000 for new equipment to create a central dispatch at the police station, a highly prized goal of town officials. But it would not cover the costs of personnel. Firefighters now doing the job of dispatch would be freed up to do more ambulance calls and bring in more revenue. But then the need for more dispatchers would cost more money and that payroll would have to be covered by operating budget. “There’s only so much money to go around.”

Returning to the subject of the fiscal crunch, Mr. San Angelo doesn’t see any changes in Chapter 70 or charter school formulas in the offing. He told the Town Council Monday, and strongly reiterated it Wednesday, that he has talked with state legislators and education officials about the formula process. “The answer I’m getting is, it is what it is. “

Logically, the status of the schools in state receivership and the charter school situation is what he is trying to explain and in writing to the state: “I’ve got the message up to the governor’s office that this is impacting Southbridge much more than it would be impacting the rest of the state because of the nature of our situation.”

Other school systems in receivership don’t have a charter school right next door, he said, so parents there don’t have that option.

“I’ve done everything in my power to tell them about the problem.”

Asked how he would characterize the response of the state to this argument, Mr. San Angelo replied, “They listen to me. This is a bigger issue than Southbridge, and it’s a unique issue to Southbridge.” They can’t just give more Chapter 70 money to the town. Other towns don’t have the charter school problem we have, but they aren’t going to change the formula just for Southbridge.

“The difficulty for the governor and the legislators is this is a unique problem, and state budgets don’t work as well for unique problems. They work well with let’s be fair to everybody. I can say this: The state’s been great in dealing with the town of Southbridge. They’ve been phenomenal. I’m not going to badmouth the state. They’ve given us a ton of different grants. I think the state is having difficulty with this issue, too, because they don’t have an easy solution for a unique problem. … I’ve spent a massive amount of time trying to communicate that problem upward. They’ve been listening. … communication is occurring and I’m hoping they find a solution to my unique problem.

“We want to have our budget done by April. I talked to our legislators again today (Wednesday). We had further conversation about this. They’re telling me they’ve got the ear of the governor’s office. They’re trying.”



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