A Clarification & Further Thoughts

This is intended as a extension of Thursday's post ("Finance Committee Looks for Savings...") on the RSU 18 Finance Committee meeting.

First, a clarification. Not all the savings from the reorganization scheme are intended to come through a reduction of system administration, or, more precisely, a reduction in the State allocation for system administration. The reorganization law in fact calls for 5% reductions, beginning with the next cycle of local school budgets (before reorganization occurs), in transportation, special education, and facilities and maintenance. See the "Financial Impact" section in the Summary of Public Law 2007, Chapter 240, Part XXXX.

However, the law was sold as "school administrative reorganization legislation", and under the banner of "too much administration" and "too many superintendents." It's likely that many members of the public are not yet aware of the cuts planned for these other areas.

Next, an extension of the discussion of the overall percentage of cost savings.

From this State site, we get these percentages (rounded) of various components of school budgets in 2006:

2005-06 Financial Indicators For School
Administrative Units -- Percentages
Data As Of 1/24/07 State Average

Regular Instruction 42.89%
Special Ed Instruction 13.65%
CTE Educ Instruction 1.88%
Other Instruction 2.06%
Student & Staff Supp 6.37%
System Admin 3.97%
School Admin 5.27%
Transp & Busses 5.39%
Facilities Maint 11.68%
Debt Serv 6.39%
All Other 0.46%
Total 100.00%

Transportation, special education, and facilities take up, in total and on average, 30.62% of school budgets. 5% of 30.62% is 1.53 % of the total local school budget.

Add to this the 50% reduction in system administration (50% of 3.97% = 1.98%) and we arrive at a mandated 3.51% (1.53% + 1.98%) reduction in local school budgets. Again, if we're to be most precise, we're speaking of a reduction in State allocation.

Now this is a rough and ready form of calculating and no one who works with numbers and budgets would want to work with numbers in this way. Nevertheless, I believe it's a valid demonstration of the order of magnitude of the projected cuts.

I believe that readers will be surprised at how relatively small these percentages are. SAD 46's budget for the current year is approximately $10 million. Using this same chart that we used for the state averages listed above, we arrive at reduction in SAD 46's budget (or allocation basis) of 3.34%

3.34% of $10 million is $334,000, and that's no small amount of money, particularly if it ends up being added to local tax bills. to replace State allocations!

"A guy could go broke on too many good deals", said one old-timer.