REGULAR SESSION
DECEMBER 17, 2018
At a REGULAR SESSION of the Town Council of the Town of South Kingstown, County of Washington, in the State of Rhode Island held at the Town Hall, in and for said Town on the 17th day of December 2018 at 7:00 PM.
PRESENT: TOWN COUNCIL
Abel G. Collins, President
Bryant DaCruz, Vice President
Deborah J. Kelso
Rory H. McEntee
Joe Viele
Council President Collins calls the meeting to order at 7:00 PM.
1. PLEDGE OF ALLEGIANCE TO THE FLAG
The Pledge to the Flag is given.
2. ROLL CALL
Roll Call is taken and all members are present.
3. INITIAL BUDGET HEARING WITH SCHOOL COMMITTEE
Discussion and solicitation of comments from the public relating to the general goals and objectives of the development of the FY 2019-2020 municipal and school budgets.
The following members of the School Committee are present: Stephanie R. Canter, Chairwoman, Sarah E. Markey, Vice Chairwoman, Michelle Brousseau, Emily Cummiskey, Kate M. Macinanti, Jacy A. Northup.
Also present: Robert C. Zarnetske, Town Manager, Patricia Sunderland, Finance Director, Aimee Reiner, Director of Administrative Services, Colleen Camp, Executive Assistant, Chelsea Siefert, Director of Planning, Jon Schock, Director of Public Services, Jean Paul Bouchard, Tax Assessor, Laurel Clark, Library Director, Dr. Kristen Stringfellow, School Superintendent, Maryanne Crawford, Business Manager, School Department.
The Town Manager explains the purpose of tonight’s initial budget hearing being the solicitation of comments from the public relative to the general goals and objectives of the budget, dialogue relative to taxes, and proposed new projects and contractual obligations.
There are three dimensions of the budgeting process including structure, culture and skills. The structure are the rules, the organization, information flow and program design. The culture includes the values, objectives and attitudes, and the skills include the expertise of the professional staff, the Finance Director and the Business Manager from the School Department. The Town Council and School Committee bring the wishes of the community to the table. A municipal budget is our plan for operations for all of the town’s activities and balancing expenses and revenues.
The Town Manager works with the Director of Finance and Department heads to develop the Municipal Budget Program and the Superintendent works with the Principals and School Administrators to develop a School Budget Program.
The Town Manager and Superintendent work to balance the Municipal and School Budget Programs with the needs of the community. The Town Council has line item authority over the budget with exception of the School Budget Program which is bottom line authority. The electorate has the right to file petitions for an increase or decrease to the Town Council’s final approved budget for no less than $250,000.
The Town Manager discusses the 4% annual levy increase limit as mandated by state law. It is not a 4% cap on the amount of the Property Tax Transfer to the School Budget Program but a limit on the amount of revenue to be raised through the taxation of property, the tax levy.
This year the 4% cap is equal to $2,932,264, so we can’t levy a tax more than $2,932,264 over last year’s tax levy. It does not mean that households may not see a property tax increase of more than 4% over the last year tax, if the levy is increased to 4%. In a revaluation year, you are increasing the total levy on the entire property tax roll and if the value on your house went up more than the average, you could actually see a tax increase of more than 4%.
If we look at contractual salary and benefit obligations in the Municipal and School Budget Programs, and the debt service associated with the project that has been submitted to RIDE, we are already close to the cap.
The Town Manager discusses Capital Projects, the Capital Budget and the Capital Improvement Program. A capital improvement project is an asset with a useful life greater than the length of debt used to fund the project, or at least 10 years and a value in excess of $10,000. These include property acquisition, major improvements to an existing facility, and new building construction. The Capital Budget is the 1st year of the 6-year Capital Improvement Program and the Capital Improvement Program is a multi-year plan and a long range planning process reviewed and updated annually.
Discussion ensues relative to the distribution of Residential, Commercial and Industrial Property values in South Kingstown.
Discussion ensues relative to a hypothetical household budget analysis. The South Kingstown median income is $72,100. Basic household expenses are estimated at $60,877 leaving $11,223 in income left to pay local taxes and discretionary spending. The basic household budget does not include expenses such as childcare, student loan payments, unreimbursed medical expenses or interest on credit cards. Nor does it include Fire District tax, local property tax or local automobile tax. After payment of all tax obligations an average household of four is left with $98.17 per week for discretionary money spending, so raising taxes has a real impact on what is happening outside in the community.
Discussion ensues relative to debt service in municipal budgeting. It limits your future ability to do anything.
Discussion ensues in regard to goals and objectives. An objective is a way of reaching a goal. A series of things you do to achieve the ultimate outcome. We need to figure out where we want to be in the long run and set up our priorities. One of the categories of the Town Council’s Goals and Objectives from the 2016-2018 term is Communication and Education to maintain and improve communication with the School Committee and determine how to address the impact of declining student enrollment, as it relates to educational programming, facilities usage and capital planning.
Discussion ensues relative to traffic safety being a quality of life challenge in South Kingstown.
Discussion ensues relative to budget choices and context. The tax rate is a function of two things: the total cost of the program and the total value of taxable property. How much do you need and where are you going to get it from. It is the value of the property that drives the entire piece of equation. We are also constrained on the taxable property because there are only two ways to deal with what that value is. The grand list, the total piece that cannot increase by more than 4% per year. It is really just a function of how much every parcel is worth and how many there are and that is why the eastern seaboard is the way it is, because everybody has said subdivision will get us what we want in the community. We have avoided subdivision which means we have a growth management problem that is based largely on the choice to not do subdivisions. Growth accounts for 2% of the annual budget. We do not grow quickly, so if you want to keep the tax rate low you have to drive expenditure low or increase revenue. We can work on revenues and try to get the state to work on state aid, work on fines and licenses. There is not a lot to it though. The real energy is on development, on growth on the current tax payers side. If we are to constrain growth, and it is what the community says it wants to do, then the only other thing we can do is keep expenditures to a minimum.
Discussion ensues relative to the property tax roll classification. Eighty-four percent of the property tax roll is associated with residential property, twelve percent is associated with commercial and industrial properties and four percent with tangible and motor vehicles. We need to be driving a budget toward things that we can do. We can affect the ability to pay so that you can end up with folks not feeling like they are being forced out of their homes, but it means changing some of the ways we are doing business.
The cost of the program is two pieces, we divide it into Municipal and School and we can divide those programs into labor and capital. Seventy-five percent of the program comes from the School Program and 25% comes from the Municipal Program. About 71% of the total costs of operating municipal government is labor on the education side and 20% is labor on the municipal side. The ratio between expenditure on labor and expenditure on capital in the School Program are 19 to 1. For every one dollar spent on capital, nineteen is spent on labor. In the Municipal Program for every dollar spent on labor, four is spent on capital.
It is also worth noting we are budgeting this year in a period where we are still seeing declining enrollments in student population but also seeing an increase in the overall population. The roads are becoming more congested and demands on senior services are increasing.
Discussion ensues in regard to the Pro Forma Budget, Municipal General Fund for FY 2019-2020. Three contracts were negotiated for the Municipal Program this year. We found that our EMS technicians were underpaid. We were unable to hire because of our rates. There are substantial salary increases on the municipal side, a 7.5% increase overall and with benefits we are up an overall 8% personnel increase over last year. The Capital Budget has a $100,000 increase due to the revaluation. The total proposed Pro Forma for FY 2019-2020 for the Municipal General Fund is $27,154,775, $2,513,964 more than FY 2018-2019 or 10.2%.
If the Property Tax Levy is increased by the four percent maximum, it translates to an additional $2,932,264 to be raised by taxes. If the levy is limited to the 2018 rate of inflation of 2.18% it allows for $1,601,899 more to be raised by taxes.
Discussion ensues relative to the Future Bonding Sale Schedule. In 2006 the electorate approved a $1,000,000 bond authorization for improvements to the Neighborhood Guild and in 2014 the electorate approved a $4,000,000 bond authorization for School Building Improvements. These bonds are authorized but have not been issued. It is proposed to request the electorate to approve an additional $76,000,000 in bond authorization for School Building Improvements and $500,000 in bond authorization for Road/Bridge Improvements at a Special Bond Referendum in November 2019. A $43,500,000 bond issue is planned for FY 2020-2021 to fund the Neighborhood Guild Improvements, the Road/Bridge Improvements and $38,000,000 for School Building Improvements. The remaining $38,000,000 bond issue for School Building Improvements is planned for FY 2021-2022 resulting in new debt in the amount of $81,500,000.
The $81,500,000 in new debt is twice the amount of debt that the Town of South Kingstown has ever had. South Kingstown is financially sound and the bond rating is good. The standard for indebtedness is that your debt not exceed 10% of your operating budget. We can do this without exceeding the 10% benchmark.
The property tax related to debt service on the average house assessment of $352,944 for FY 2019-2020 is $0.25 or tax due in the amount of $88.05, and with the new debt added the tax for FY 2024-2025 on the average house assessment projected at $374,657 will be $0.59 resulting in a tax due amount of $220.29 or an increase in cost per household of $132.24.
Dr. Kristen Stringfellow, Superintendent presents Pro forma estimates for FY 2019-2020. If the School Fund were to receive a zero percent increase in property tax transfer the School Committee would have to reduce the current budget by $4,399,421, at 1% increase to the property tax transfer the reduction would be $3,859,894, at a 2% increase the reduction would be $3,320,368, at a 3% increase the reduction would be $2,780,841 and at a 4% increase the reduction would be $2,241,341.
The Superintendent discusses some of the demographics in the South Kingstown School population. There is less than 1% of English Language Learner population in South Kingstown, 17% of the population is poverty as categorized federally by free and reduced lunch levels. As of September 2016 we had 44 ESL students speaking twelve languages, largely located in the West Kingston Elementary School. As of October 2018 we had 60 students in 7 schools speaking 12 different languages in various dialects at 5 different levels of English language proficiency. Some of the support staff added to the budget has been to support ESL students.
Thirteen percent of our student population are supported by special education services. The state average is 15% and the national average is 13%.
The graduation rate is on an increase. We are at the highest level of students graduating in South Kingstown in the last decade. Approximately 94% of the students enrolled graduate.
It is projected that enrollment will continue to decline and that from 2013 through 2027 the total enrollment decline is expected to be 604 students. As of October 2018 the total number of students enrolled in South Kingstown schools was 2,959.
In FY 2008-2009 we had 3,591 students and 589.6 Full-time Equivalent (FTE) staff. In FY 2018-2019 we have 2,978 students enrolled and 485.80 FTEs. The net change is 17% enrollment decline and 17% staff decline.
Charter School enrollments in FY 2011-2012 was 103 students and in FY 2018-2019, 81 students. The career and technical center enrollment in other school systems has increased to 69 students. Narragansett and Chariho have the largest number of students from South Kingstown, 21 and 29 students respectively. The total number of students choosing to attend Independent and Parochial School for the FY 2017-2018 was 319.
Discussion ensues relative to FY 2019-2020 revenue projections. It is believed that federal funding projections will be flat. Funding will be reduced in Title I and II and IDEA funding. State aid will continue to be reduced; we are in the 9th year of the funding formula. The reduction that we will see in the funding formula is approximately $711,000. This does not include any reduction in enrollment. We are estimating using 19.47% or $500,000 of the undesignated fund balance to be applied as revenue. The Medicaid reimbursement which was formerly $800,000 is being projected at $425,000. Tuition to the ITA and CTE is projected at zero.
Discussion ensues relative to expenditure assumptions for FY 2019-2020. The teacher salaries are increasing by 2% plus steps per contract or $750,000. The employee health insurance costs increase by 7% and dental by 3% or $449,000. Out of district tuitions and transportation increased by $822,000. The School Department has a current collective bargaining agreement with NEA-SK (teachers) which includes a 2% salary increase and a 20% co-pay for healthcare. The collective bargaining agreements with SKESP and Council 94 still need to be negotiated.
The pension rate that South Kingstown pays to the ERSRI and MERS on behalf of employees for FY 2019-2020 is estimated at 15.02% for the certified pension rate and 13.16% for non-certified pension rate.
In 1996 the State Aid to Education was $7,433,939 or 28.9% of the budget and the projected State Aid to Education in FY 2019-2020 is projected at $5,443,387 and less than 9% of the estimated budget. Typically, the funding formula would end at the ten-year point and then stay flat, however, the urban communities are requesting RIDE to take another look at the funding formula and when that happens the more affluent communities don’t do better.
In FY 2000-2001 the School Budget was $36.81 million and in FY 2018-2019 $61.20 million.
The following need considerations have been identified for the School Committee: additional Middle School Family Community Engagement teacher; a .25 School Resource Officer, new line item to offset school lunch balances, new line item for styrofoam tray replacement and additional amount needed for CTE tuitions.
The following items either cannot be reduced or can be reduced with significant difficulty and risk: salaries, health insurance, life insurance, dental insurance, retiree health/medical OPEB, teacher and MERS pension, FICA, gasoline, fuel, and electricity, classroom teachers K-8 per contractual class sizes, unemployment benefits, staff as required by Special Education Director, Worker’s Compensation, purchased services, rubbish disposal, water, telephone, sewage, transportation, liability and vehicle insurance, outside tuitions.
Discussion ensues in regard to the staff in the School Department that are eligible for reduction but with significant discretion based upon student need, safety and instructional programming.
Discussion ensues in regard to items eligible for consideration including supplies and renovation, again with considerable discretion.
Discussion ensues relative to items eligible for consideration of reduction including sports, music and clubs.
Discussion ensues relative to programs eligible for reduction.
The South Kingstown School Committee requests a 2.5% Property Tax Transfer increase.
The Superintendent discusses that when State Commissioner of Education Deborah Gist came to South Kingstown in 2010 and met with the Town Council she explained that South Kingstown’s per pupil expenditure is so much higher than similar districts in our area and in the State, in the top five of per pupil expenditures. The reason is that we have more staff, we value lower class sizes, and we value all of our buildings. She told us that we were not going to be favorable in the funding formula. We still value low class sizes and we value our community schools, it is the values in our town. The funding formula has required difficult reductions. In some areas we cannot cut anymore.
Discussion ensues relative to the number of FTEs in the budget.
Discussion ensues relative to whether the Town and the Schools may be able to consolidate some personnel and/or other functions and services.
Discussion ensues relative to what steps are being taken to attract students from other communities to South Kingstown.
Discussion ensues relative to what the Superintendent is targeting to reduce the School Program. She indicates that she has not discussed that with the School Committee as of this date and would rather not discuss that at this time.
Discussion ensues relative to doing a three to five-year projection for the School budget. The Capital Budget is a six-year plan but there are difficulties doing it with the operational due to uncertainties with state aid and federal funding.
Discussion ensues relative to better marketing within the School Department in order to attract more students to the district.
Discussion ensues relative to what the School Department is paying per FTE in order to get an estimate of how many FTEs may need to be cut based on the number of dollars we are looking at in each of the scenarios. The total school budget for FY 2018-2019 is $61,201,572. There are also contractual limitations that would have to be considered.
The following members of the public comment:
Raissa Mosher
James O’Neill
Nicole Lanphear
Monique Chartier
Michael Morrissey
Roland Benjamin
Josh Daly
Deb Bergner
Steve Sharkey
Emily Totten
Dorald Beasley
The Superintendent requests direction from the Town Council in regard to the amount of an increase to the property tax transfer the Town Council is willing to consider. The request at this point is for the Town Council to consider a 2.5% increase to the property tax transfer.
The Town Manager discusses that we have debt service today that deals with current debt and we know we are building toward future debt. We need to put some money aside so we can smooth the transition to a higher debt load based on the debt we will take on to do a school project and that number is $500,000.
Council Vice President Da Cruz is not willing to consider an increase of over between zero and one percent on the school side and would like to know what that looks like.
Councilman McEntee believes there is an obligation to look after the taxpayer and to insure they are not seeing increasing taxes significantly over time. He would like to see no increase but is comfortable with 1.25% and meet in the middle. It is up to the School Committee to find ways to reduce, preferably not personnel or teachers.
Councilman Viele is uncomfortable giving a number during this meeting. The hesitation is that you have picked a number and admittedly have not had the time to go through the presentation. It is questionable how you arrived at the 2.5% increase.
Councilwoman Kelso is hesitant to settle on a number without more information, wants to go forward with an informed decision, and needs much more time to digest the numbers.
The Superintendent discusses that direction in regard to the amount of the increase to the property tax transfer is something that has been going on for at least the last ten years. It is a place for the School Committee to start. If we build it at 2% we can still end up at zero or four.
Discussion ensues relative to scheduling more meetings to discuss reductions to the FY 2019-2020 school program budget.
The Town Manager cautions that a session that focuses on one side of the equation, we have to keep in mind as we are going through these discussions that every decision in regard to the school is also a decision in regard to taxpayers and the rest of municipal operations. These are not separable, they cannot be analyzed in isolation from each other.
Council President Collins would like to see when we meet on January 9, 2019 an Executive Summary with a 1% increase in the property tax transfer of what the School Department sees as possible reductions.
UNANIMOUSLY VOTED: to adjourn at 10:20 PM.
ADJOURNED,
Dale S. Holberton, CMC
Town Clerk