Budgets II: Caps
and referenda voting dominate season
(from Maine Townsman, July 1996)
By Josephson, Staff Writer
AUTHOR'S NOTE: Back in April, the TOWNSMAN looked at the variety of line-item budget formats that a growing number of voters are acting upon these days when approving their school budgets. This article continues the TOWNSMAN's exploration of the dynamics of school budgets, by observing actions on school budgets this season.
There were caps on the school budget, real and politically driven. There was an increasing number of school budgets voted on in the privacy of the polling booth; most of which passed on the first go-round; many of which were in the line-item format.
There were district-wide budget meetings that lasted all of nine minutes; there were some that went on for hours. There was at least one district-wide meeting that voted on a line-item budget at an open meeting, using electronic ballot counters. And there was one school district that changed its funding formula in the name of fairness.
Three of the five school budgets working under the pressure of spending caps this season were doing so because of written agreements between their municipalities and their largest taxpayers. Madawaska's agreement was with Fraser Paper Co.; East Millinocket and Millinocket's agreements were with Great Northern Paper Co. All three agreements had been made to avoid taking assessing differences to the state Board of Property Tax Review (see TOWNSMAN, February 1995). But it wasn't all corporate imposed caps. In Waterville, it was a cap set by the mayor who had committed herself and the city to no tax increases. In Bath it was a cap set by the charter back in the 80's to keep pace with the Consumer Price Index. A look at the dynamics of achieving the cuts required by the caps follows:
On June 13, a $5.5 million school budget, driven by an agreement with Fraser Paper Co. that not only reduced the mill's valuation but also froze the mill's tax bill for the next two years, was approved by Madawaska (pop.4,880) voters. It was nine percent or $200,000 less than last year's school budget. .
While the town had been ready to take its share of the cuts (an estimated 8.7 percent) needed to make up for the loss in municipal valuation resulting from cutting Fraser's valuation by $20 million, the school committee had been less responsive. Resorting to public pressure, the selectmen authorized a non-binding secret ballot vote, to see how residents felt about requiring the school committee to do its part to honor the agreement. Residents said they supported the selectmen 676 to 502.
To avoid the drawn out debate of this year's school budget, a task force made up of school committee, budget committee, selectmen and citizens at large has been created to figure out how to cut the necessary $300,000 from next year's school budget
Like the town of Madawaska, both Millinocket ( pop. 6,989)and East Millinocket ( pop. 2,117) recently made out-of-court agreements with their largest taxpayer Great Northern Paper Co. to cap their tax commitment over a period of years in lieu of facing an appeal before the state Board of Property Tax Review. Millinocket's agreement was to not only drop the company's valuation from $228 million to t110 million, it was to reduce the tax commitment by 16 percent over four years. For East Millinocket the agreement was to cut its tax commitment by more than $500,000 or 12 percent over three years.
Having shared the necessary $800,000 a year required cuts equally with the school department for the past two years, Millinocket's councilors decided this year to shoulder most of the burden, with the town side cutting some $650,000 from its budget, and the schools cutting $96,000.
"To ask the schools to shoulder any more would have jeopardized the accreditation of the high school," Town Manager Jim Kotredes told the TOWNSMAN. As such Millinocket will be cutting eight full-time and four part-time employees from its rolls. It should be noted that in the course of three years, Millinocket's budget has gone from $7.1 million to $4.5 million as a result of the agreement with Great Northern.
In East Millinocket, where a revaluation of the mill is waiting in the wings, the terms of the agreement saw both sides (municipal and school) cutting about $100,000 each from their budgets.
To keep the quality of education high, as tax dollars decline, both Millinockets have dusted off a 10 year-old report on consolidating their two school systems and are reportedly going to look into the idea again this summer.
In Waterville (pop. 16,925) the cap was imposed by the newly elected mayor and supported by the city council. The mayor argued there was no room for increases unless she raised taxes and that she refused to recommend to the council, in light of the depressed regional economy and the imminent foreclosure of the Hathaway shirt factory which employs more than 500 people.
In the end Mayor Ruth Joseph compromised. Instead of the $748,000 increase over last year's budget that the school committee had requested, the city only gave the schools a $443,000 increase, with the city absorbing $305,000 debt service on a $1 million school technology bond issue authorized in 1994.
In Bath (pop. 9,605), the cap was charter-driven. It was a cap adopted by referendum in 1988 that limited spending to the rate of the previous year's Consumer Price Index (2.5 percent last year) .
While the council reportedly had the option of "manipulating" the spending cap to allow for increased spending requests this year (the school budget was up 7.8 percent), it chose not to. Instead it cut $52,000 from its own budget and requested that the Board of Education cut $100,000 from its budget to meet the cap's bottom line.
The Board of Education agreed saying it would take half from operating expenses and half from capital improvements. Fearful that this would lead to a decline in the school's infrastructure or to additional re-quests in the near future, the council momentarily strayed from the principle and law of leaving it to the board to determine where to make the cuts. The council said the education board should take all the cuts from operating expenses. In the end the board's initial decision prevailed, leading some to conclude that per-haps a reassessment of the cap was in order.
First Vote Passage
An increasing number of school districts in Maine ate moving away from the open budget meeting to referenda held in member municipalities. While there is no official tally, MMA counts 28 school administrative districts that have adopted this option.
Proponents say day-long referenda voting attracts more voters. Opponents say the referenda do not allow for amendments; the response is either yes or no, and as such, many fail their first time around causing a costly drawn out process of passage. Recent reports indicate that neither the opponents or proponents are correct in their assessments 100 percent of the time.
At last count, there were 13 district budgets that passed the first go-round. They included: SADs 6, 9, 15, 22, 28, 44, 47, 48, 53, 60, 61, 67, and 75. It should be noted that in SAD 9 (Farmington, Wilton, Weld, New Sharon, Chesterville, Industry and Vienna), SAD 22 (Hampden, Winterport and Newburgh) and SAD 15 (Gray and New Gloucester), adoption of the budget in the first round of voting was in stark contrast to last year's experience, where it took several attempts to get a budget approved. The secret say some was in improved communication with tax-payers before the vote.
First round passage aside, not all of the districts adopting the referenda process experienced the expected high turnout. In SAD 48 (Newport, Palmyra, Corinna, Hartland, Plymouth, and St. Albans) only 443 of the 9,000 registered voters or five percent cast a ballot on the $10.5 million budget. There was also a low turnout at the polls reported in SAD 61 (Bridgton, Casco, Naples and Sebago) with only 371 votes (or three percent of the residents) cast on a $13.9 million budget. And the 500 that turned out for the first budget by referendum in SAD 44 (Andover, Bethel, Greenwood, Newry, and Woodstock) was lower than referendum supporters had hoped for, according to reports.
First Round Defeat
Local Option: There were at least two districts-SAD 54 and SAD 40-in which voters, via the referendum process, approved their district's line-item budgets but voted down the "local option" article (the local share above the amount required by the state). The subsequent actions taken by school officials in those districts indicates that in the move to a line-item format there is no consensus on how to best integrate the line-item format with the mandated state format, especially when voting by referendum.
Under state law, voters are required to approve the state allocation, the local share, and additional local monies, often referred to as the "local option". Prior to the recent trend of approving school budgets via a line-item format, the local option was technically the only place where voters could impact the overall bud-get, which was presented to them in a lump-sum manner. Voters would cut the local option and the school committee would decide where the cut should come from.
Actions taken by school officials in SAD 54 and SAD 40 reveal the lack of consensus on how to deal with the problems arising from the adoption of the line-item budget format for the purpose of voter approval.
Officials in SAD 54 (Skowhegan, Norridgewock, Mercer, Cornville, Canaan, and Smithfield) said the de-feat of the local option was invalid. As they read it, voters, had already approved the spending when they approved the line-item articles. As such they chose to return to an open meeting to validate (rubber stamp) their earlier votes.
Officials in SAD 40 (Friendship, Union Waldoboro, Warren, and Washington) apparently read the de-feat of the local option differently and cut $50,000 from it, returning to a second referendum, where voters narrowly approved the reduced amount.
It should be noted that in both districts, the wording of the line-item articles was such that voters were asked if they wished to "appropriate" so many dollars for a particular item (instructional salaries, administration, etc.)
Maine Municipal Association Staff Attorney Joseph Wathen advises that one way to avoid the dilemma experienced in SAD 54 and SAD 40 and reportedly elsewhere around the state is to only ask voters if they wish to "expend" so many dollars in any line-item article and wait to the "local option" article to "raise the additional local funds".
Second vote: It should also be noted that under Maine law, school districts voting by referendum on the budget have the option to return to the open meeting should the first vote fail. That's what they did in SAD 5 (Owls Head, Rockland and South Thomaston) and SAD 46 (Dexter, Exeter, Garland, and Ripley). In SAD 5 they had originally defeated the ad-ministration article and the local option. In SAD 46 they had originally defeated expenses for the school board, the principal's office, money for the operation of the district buildings and the local option.
For SAD 5, it wasn't the first time they switched over to an open meeting following the defeat of some portions of the budget via the referendum vote; they've been doing it for the past three years. For SAD 46, it was the first time. They are learning. Last year, the district waded through six failed referenda before changing to an open district wide meeting where items voted down by referendum, passed readily.
Referenda voting on the school budget aside, the majority of school budgets continue to be adopted at town meetings or district-wide meetings. While there is the option of casting secret ballot votes at these meetings, many say to do so would be very time consuming.
That said, it is of interest to comment on a few such meetings that cast secret ballots during their district-wide meeting. In Community School District 10 (Manchester, Mount Vernon, Readfield and Wayne) they went to a line-item budget for the first time. Under Maine statute CSD's do not have the authority to approve their budgets by referendum. As such, CSD 10 offered voters at the meeting the opportunity to vote by written ballot at the meeting. It rented one electronic voting machines and made it available at the meeting. On only one item did the 280 residents resort to the machine. For the most part, they used their four hour meeting to analyze and debate the specific line-items.
In SAD 11 (Gardiner, Pittston, Randolph, and West Gardiner), where there is a movement to go to budget approval by referendum, they provided those attending this year's open district meeting with the opportunity to vote on the so-called lump sum budget (actually six articles) by paper written ballot. Voters chose only to vote by paper ballot on the local option.
The District says it added an extra 15 minutes to process the votes of about 250 people. The $15 million budget passed intact. Gardiner's mayor said he called for the written ballot vote to show that it was not necessary to switch to referendum-style voting.
While the debate at many open meetings can go on for hours, like SAD 27's ( Eagle lake, Fort Kent, New Canada, Saint Francis, Saint John Plantation, Wallagrass Plantation and Winterville Plantation), which took almost four hours and wound up cut-ting $200,000 from the local option of a $7.5 million budget, not all do, if reports published in the newspapers are accurate. Those that were conducted with speed, attribute it to public meetings held prior to the vote.
In SAD 71 (Kennebunk and Kennebunkport) it reportedly took 18 minutes for 136 voters to approve a $16 million budget. In SAD 56 (Searsport, Frankfort, and Stockton Springs) it reportedly took 25 minutes for the 94 taxpayers in attendance to approve a $6.3 million budget.
In SAD 33 ( Frenchville and Saint Agatha) it reportedly took nine minutes for 60 residents to approve a $3 million school budget.
In SAD 59 (Madison, Athens, Brighton Plantation, and Starks), where there was a line-item format, it reportedly took the 59 voters in attendance 37 minutes to approve a $7 million budget.
In SAD 41 (Milo, Atkinson, Brownville, LaGrange, and Lake View Plantation) it reportedly took 60 voters 20 minutes to pass a $5 million budget.
CHANGING THE FORMULA
Residents in SAD 17 (Harrison, Hebron, Norway, Otisfield, Oxford, Paris, Waterford and West Paris) used primary election day to change their local share formula from one based solely on property values to one that includes student enrollment as well. By 193 votes they decided that a 75/25 formula was a good start in working toward what the so-called waterfront towns of Harrison, Waterford and Otisfield saw as a more equitable formula.
As to be expected the waterfront communities voted overwhelmingly in favor of the change; while the out-lying municipalities were drastically opposed to the change. With Norway, the largest town in the district voting for the change, because it was fair, the new formula was approved.
The Harrison town manager says that although with the new formula his town is still paying more per student than the other towns, it is no longer doing so by a 3 to 1 ratio; now it's more like 2 to 1. The new formula will be implemented over a five year period; and according to reports, the school board will look at how the formula has worked.
It should be noted that SAD 17 is the first district attempting to change the formula to include student enrollment to successfully do so in recent years. The last to do so was SAD 40 (Friendship, Union, Waldoboro, Warren and Washington) where they adopted a 50/50 formula in 1992. With SAD 17's action, the number of school administrative districts including student enrollment in their local share formula rose to 16. (see Maine TOWNSMAN, October 1993).