SACO – Last week’s proposal by Gov. Paul LePage to balance the state budget has sent school and city officials scrambling to understand the impact.
Among the many changes that would shift $420 million in costs traditionally funded by the state onto local property owners are $14 million in general purpose fund cuts to education – a loss of $2.6 million for Regional School Unit 23.
In 2004, voters passed a law that requires the state to fund 55 percent of all education. The funding came from state sales and income taxes. That has never materialized and, in recent years, school officials say the state has averaged around 43.5 percent, leaving local communities to make up the difference.
This year, the governor has also proposed that local municipalities take over the state’s obligation to pay 50 percent of teacher retirement funds.
In Maine, teachers have historically paid into their retirement and the state matches that amount. According to the Maine Management Association, shifting these costs onto local communities takes money away from direct education programming by requiring the local school system to contribute that amount toward the retirement program.
On top of the revenue sharing cuts, the governor also issued education curtailments for RSU 23, which includes Saco, Old Orchard Beach and Dayton, that totals $624,000 over the next two years
To make up the total $2.6 million revenue shortfall for RSU 23, it would require a significant increase in property taxes for Dayton, Old Orchard Beach and Saco.
RSU Superintendent Patrick Phillips said the cuts couldn’t come at a worse time, as the recent squeezing of $1.8 million from last year’s budget included the elimination of 15 positions. Philips said the new curtailments and unexpected changes from the state would result in the elimination of 52 teaching positions in local schools throughout the district.
“Our local taxpayers are completely fed up with higher property taxes and are likely to vote down a school budget that has much in the way of an increase. If this happens, the budget process this coming year will be a disaster,” said Phillips in a letter he wrote to state Sen. Linda Valentino, (D-Biddeford, Dayton, Old Orchard Beach and Saco) and state Representatives Barry Hobbins and Justin Chenette, both Saco Democrats.
Last October, barring any surprises from the state, Phillips projected what he called “a modest 3 percent increase” in the RSU budget. He said even before adding in retirement funds, school funding has been “flat lined” by the state.
Flat lining education also impacts private schools. Approximately 65 percent of Thornton Academy’s revenue comes from public school funds. Headmaster Rene Menard explained the challenges for his school.
“Absolutely it impacts us. State revenues had been increasing, but now with the economy the state’s average (tuition rate) is down about 5 percent. We’ve committed to a three-year contract with our teachers, and yet the revenue is not keeping up with the increases in labor costs and health care,” Menard said.
Thornton Academy teachers and administrators also contribute to the Maine State Retirement System. As a private school, Thornton Academy receives a flat contracted rate per student and is not eligible to receive any taxes raised by Saco to cover cuts to teacher retirement.
“If the state were to back off on their share of funding the retirement system, that cost would shift to Thornton Academy and we would face the same dire situation as the RSU,” Menard said.
For Thornton Academy and other private schools that receive state funding, an even bigger revenue blow came when the state cut the school’s Insured Value Factor from 10 percent to 5 percent four years ago. This is calculated based on the insured value of the school’s buildings and equipment divided by the average number of enrolled students.
“That money is intended to help us with maintenance. When the state cut IVF we took a revenue hit of $500,000 to $600,000 per year,” Menard said.
Recently Thornton Academy announced a $2.5 million renovation project on its campus. Menard said part of that money would have previously come from insured value funding.
“Over the last four years, TA alone has taken over a $2 million hit. The revenue we had to pay down our debt is going down,” Menard said.
Legislators and educators agree that state funding cuts are doing nothing to improve the quality of education.
“The governor’s (proposals) will shortchange the students in the classroom in our ability to provide them with the high level of educational opportunity this community is well known for,” said Valentino in a written statement from Saco’s legislative team released over the weekend.
Chenette, who campaigned on the promise to hold the state to its commitment to pay 55 percent of the education budget, is one of several representatives who have proposed legislation that would mandate that the state live up to its commitment.
“Obviously in this tight economy we need to determine where the money is going to come from. The only solution is to do both: make cuts and raise revenues,” Chenette said.
That is why the freshman representative has also proposed his own cuts. The first would eliminate $593,000 in the allowance that state legislators use to communicate to their constituents every 2 years. Chenette has used social media outlets such as FaceBook to affordably communicate to voters.
He also proposes eliminating the 2011 tax breaks given to Mainers who earn more than $250,000 in annual income. In total, Chenette says he can find $10.6 million over the next two years that could reduce the liability for local municipalities.
“The state is kicking the can down the road to local communities and after the last few years of declining surplus in our emergency funds, we’re just not ready to absorb that,” Chenette said.
“If every senator and rep went through and found ways to cut expenses and add revenue like I just did, then we might be able to stave off the crippling effect of revenue sharing for cities like Saco, which just aren’t prepared to absorb these costs.”
Rep. Justin Chenette
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