Laura Nelson is doing her homework so that generations of Derry children can continue to do theirs.
The Derry superintendent and her administrative team took a “to do” list away from Monday’s Fiscal Advisory Committee meeting. A reduction in state “adequacy” funding and an increased “downshifting” of state retirement obligations has made it necessary for the corner office staff to look closely at what they need, what they can do without, and what a reduced 2015-16 budget would look like.
Jane Simard, business administrator for the district, gave an overview. Simard said that due to declining enrollment, the district is poised to receive $453,000 less in adequate education funding than it received for the current fiscal year, and over two years, she said, that would come out to about $900,000 less. The working budget is already up by $900,000, for a possible tax impact of 93 cents, and the loss of the $463,000 would impact it further.
Simard reminded the board and Advisory Committee that the tax impact is based on the current assessed valuation. There are other moving parts, including the Unexpended Fund Balance (UFB) and Catastrophic Aid, which could cause the numbers to go up or down.
“We still get $8.6 million in a stabilization grant,” Nelson said. “But if the stabilization formula changes, it will affect the budget even further.”
Simard said trimming $1 million from the working budget would equate roughly to reducing 12 staff positions.
“Where will those cuts come from and how will it impact programs?” Advisory Committee member Craig Bulkley asked.
Chairman Neal Ochs said possible cuts would be discussed over the next couple of meetings.
Nelson said she and the leadership team were planning an all-day session Thursday, Dec. 4, to discuss scenarios.
Simard amplified, “There is no set position associated with these numbers. This group requested the numbers. We will work on the positions.”
“To level-fund this budget, we will have to take $2 million out,” Nelson said.
Committee member Bruce Kling gave a presentation on how he saw the numbers. He said he tried to do a “roll-up” of different accounts, from 2006 to the present day. Among his findings:
• Staffing has been reduced from 632 to 547, a net loss of 90 positions.
• Wages have increased by 1.8 percent a year, benefits by 6 percent a year, and New Hampshire Retirement by 19 percent.
• Debt has dropped to minus 3.9 percent.
“It’s a bit unfavorable,” Kling said of the increases.
Budget committee member Brenda Willis reminded the group of the money the board has saved by bringing special needs children back to the district, instead of outplacing them. “Do you have those numbers?” she asked Kling.
“Bruce would not have those,” Nelson said. “His information was taken directly from the MS 25 (document).”
Due to the New Hampshire Retirement System and the state’s shifting costs to the towns, retirement benefits have gone from the district paying 34 percent to the district paying 50 percent, and that’s an uncomfortable number for Kling. “How do we address this moving forward?” he asked.
Bulkley asked Simard if the retirement share was an unfunded liability and Simard said it was. “If everyone who was able to retire retired this year, we would have an unfunded liability of $1.5 million,” she said, and she and Nelson said that was not budgeted for.
“It’s worth a discussion because of the Baby Boomers,” Bulkley observed.
Nelson said thanks to a warrant article two years ago, the district is now able to set aside money from the UFB. It may be needed, she said, noting, “If 20 people decided to retire this year, we would start 2015-16 with a frozen budget.”
“Even half of that would clobber you,” Bulkley said.
But Nelson doesn’t think it will happen, observing that Derry has a “veteran staff.” “People like working here,” she said.
Also, she said, few teachers are taking early retirement because they are leery of the “gap” between their district-provided insurance and Medicare.
A discussion of class sizes also surfaced, with Ochs saying he would like to have that as part of this year’s budget conversation. He said adding two students per classroom across the board would bring the class sizes up to New Hampshire Department of Education-recommended sizes. “Would it give us more flexibility to have new kids in the district without hiring teachers?” he asked.
Nelson said that would bring lower elementary classes from 18 to 20 per room, upper elementary from 22 to 24, and the two middle schools from 25 to 27.
That’s as high as he’s willing to go, Ochs said, but he’s willing to have the discussion.
“If we do that, we could eliminate some positions,” vice-chair Ken Linehan said.
Nelson agreed to meet with her team and run some scenarios of what the impact would be of increasing class size.
“Can you cut $2 million?” Bulkley asked.
“We need to run the numbers,” Nelson said. “I’m reluctant to say yes, I’m reluctant to say never.”
Nelson also cautioned that whatever numbers they came up with wouldn’t be firm until she received the Pinkerton Academy tuition rate. “We expect the Pinkerton numbers by Dec. 11 and we’ll have them for our last meeting, Dec. 15,” Nelson said.
Derry tuitions its high school students to the semi-private Pinkerton.
Ochs urged the board, administration and Advisory Committee to consider all options. “It’s important to bring forward any ideas so we can review them,” he said.