Schools Should See Increase in State Aid

By Adam Swift

As the town starts the budget process for Fiscal Year 2024, there was some good news regarding state aid on the school side.

At last week’s School Committee meeting, Town Manager Tony Marino and an outside financial consultant laid out a slightly different approach to the town and school budgets for the coming fiscal year. 

During that discussion, Marino stated that Governor Maura Healey released the preliminary state budget and Cherry Sheet figures for municipalities last week, with a marked increase in the state’s contribution toward the school budget. The Cherry Sheet figure for the state contribution to the town’s coffers looked to increase by $1.8 million for FY24, with $1.7 million of that increase coming on the school side of the budget.

Marino and Sarah Johnson, a financial consultant who worked with Marino as the finance director in Ipswich, laid out how the town will look to approach the town and school budget process for FY24.

“When I started as town manager, one of the things everyone really liked in the interview process was in my previous town we had what’s called a base budget calculation,” said Marino. “What it did was it took all the town and school expenses and put it in the budget total and basically assigned percentages.”

Using that model, in most towns Marino said the schools tend to be about 60 to 65 percent of the total operating budget.

With a new town chief financial officer just coming on board, Marino said he brought in Johnson to work with assistant finance director Robbie Powers on establishing a base budget calculation for Winthrop. Johnson and Powers looked at all the school expenses from last year and this year’s projected numbers to come up with the base budget calculations.

“The goal (of the calculation document) is to equitably share total revenues between the schools and the town,” said Johnson.

Johnson ran down the sources of revenue for the town, the largest of which is the property tax levy, which can increase by 21/2 percent over the previous year and adds in any new growth. 

The next largest source of revenue for the town is state aid, where Johnson noted that the state aid number is expected to increase by $1.8 million, with the vast majority of it earmarked for the schools.

Other sources of revenue include local receipts and additional revenues.

Counting the expected increase in state aid from the governor, the estimated revenues for FY24 are $59,377,345, Johnson said.

“In order to equitably share that revenue, the easiest way to come at it was to look at your FY23 operating budgets that were already voted,” said Johnson. “Then I asked Robbie to give me any other expenses that were either benefitting the schools or made on behalf of the schools.”

Johnson noted that in some towns, the vocational school budget comes off the top of the revenues, while in Winthrop they have always been listed in the town budget.

Johnson said they then looked at state assessments that were in the town budget and those were split up with an allowance made for abatements.

She said they then backed out the numbers in the town budget for the school expenses for items such as health insurance, workers compensation, unemployment insurance, and medicated and added them to the school side of the budget

This would more accurately represent the true expenses that the schools have to pay and also would give the town a truer picture of what its budget would look like without all of the school expenses. 

Johnson said the total amount of the additional state aid was added to the school side of revenue, bringing the total amount of the revenue earmarked for the schools to 60.6 percent, compared to 39.4 percent for the town.

“So that is a very quick overview of the process of this base budget document and how you go about budgeting the revenues and sharing the expenses,” said Johnson.

Marino said the document is what the town is using as a baseline as it works with the schools to build the FY24 budget.

The town manager noted that the school department in the past was paying for the items that have been moved to its side of the budget ledger.

“You were just getting less money and now we are just putting them into your budget,” said Marino. “I would argue you were always paying for (the expenses) but it was shown on the town side of the budget and it would impact how much the town could give you every year because those increases were being absorbed on the other side. Now, they are just showing up in your column.”

Looking at the estimated revenues for FY24, Marino said the amount of money that will be available for the school budget looks to be just under $36 million. He said that is the number Superintendent of Schools Lisa Howard and her team will use to build their school budget.

“This is the baseline, this is why towns and schools do this so you know what the actual expenses are, so if you needed to go for additional funding, that is how you would make the case for it,” said Marino.

At first glance, Howard said the nearly $36 million figure looks like a big number for the school district, but noted that the expenses that were moved to the school side of the ledger come to just over $9.5 million.

“It’s nice to know what we have up front so we can start the budget process a lot earlier and really work the budget through systematically without worrying about what we are going to get,” said Howard. “However, knowing that we have $35,938,000 moving forward – and again, those numbers are rough – if the medical insurance numbers are higher, that number on the bottom isn’t going to change. So we have to go into our budget and see how we can make that work.”

School Committee member Suzanne Swope noted that without the unexpected state aid windfall for the coming year, the effective increase in the school’s budget for FY24 would be only a little over $400,000.

“I get it that the governor has been generous and that might be our saving grace for this year, but the truth of the matter is the town of Winthrop budget under this plan doesn’t really get us any farther ahead than we were last year,” said Swope.

Howard said she didn’t necessarily disagree with that characterization, but added that the schools also would not necessarily have less money to spend. She said since many of the expenses in FY24 will also fall under the school budget for the first time, the school administration is working closely with the town to get a handle on items such as health insurance costs.

Howard also pointed out that the increase in Chapter 70 state funding is also part of an effort across the state to increase state aid levels to municipalities through a revised Chapter 70 formula. “The intent was to equalize spending in communities in a manner that was equitable in a way that it hasn’t been for a number of years,” said Howard.