Finance Analysis for 2024-2025 School Year

May 4, 1971 EGHS students protesting budget cuts are refused admission to the Financial Town Meeting (East Greenwich Pendulum)

The School Committee approves the budget submitted by the School Department, and may recommend changes.
The actual appropriation of funds is entirely controlled by the Town Council.
For many years, residents had the final say on the town budget through a Financial Town Meeting. Some years the meeting was quite contentious, with budget items being removed in some cases, and funding for items that had been cut being restored in others.
It was often difficult to obtain a quorum, and the Financial Town Meeting was eventually discontinued. The Town Council now has the final say on the budget.
As you would expect, this creates a certain amount of tension between the School Committee and the Town Council. While we may not agree on some details, I believe the members of both elected bodies have the best interests of our community at heart.

Total Property Tax Levy and School Appropriation History
(click on image to see data)

The property tax and school appropriation data is telling a story, and has been telling the same story for several decades at least.
Engineers like to think of data as a combination of signal and noise. The signal is the story. The goal of data analysis is to separate the signal from the noise.
In this case, the signal and the story are very clear and simple, but until recently the signal has not been received.
The reason for this is that there is no simple explanation for this signal in terms of year-to-year percentage changes.
So like the protesting students in the previous panel, the data was trying to tell its story but the message was not being received.

Total Property Tax Levy and School Appropriation History
(click on image to see data)

The long-term, big picture view:

The tax levy and school appropriation tend to evolve along straight line trajectories that persist for years.
Events can occur that change the slope of the trajectory. The new trajectory is a different straight line.
When you look at the long-term history, you see a series of connected straight line trajectories with some background noise.
Models that produce connected straight line trajectories explain the data exceptionally well.

Story Parameters for Recent Years
click image for larger version

The most recent straight line trajectories for the tax levy and school appropriation have the following properties:

In a normal year we expect the property tax levy to increase by $1.8 million¹
In a normal year we expect the school appropriation to increase by $815,000²
The growth characteristics of the tax levy provide strong evidence for straight-line trajectories.
The growth characteristics of the school appropriation also provide evidence for straight-line trajectories.
Many events that are commonly assumed to affect the signal are actually more like noise, and can be ignored for forecasting purposes.

School Appropriation Percentage of Property Tax Levy

Based on the fact that the property tax levy is increasing by $1.8 million per year and the school appropriation is increasing by $813,000 per year, we can say that:

The expected percentage increase in the school appropriation will decrease over time.
The percentage of the property tax revenue that the school department receives is gradually decreasing and will continue to do so.
The expected increase in the school appropriation next year is 2%.

School Appropriation: Straight-Line vs Constant Percentage Trajectories

The school appropriation history strongly suggests that it evolves along a straight-line trajectory.
In any multi-year period, the straight-line trajectory that produces the equivalent of constant 4% year-over-year growth will have higher than 4% growth for the first half of the time period.
Requiring that single-year increases cannot exceed 4% effectively caps 13 year straight-line growth at 3.3%.

13 Year Appropriation Forecast with 95% Credible Intervals
click on image for larger view

The youngest students in the East Greenwich School System are in the Class of 2037. This suggests we should be planning thirteen years out.
The figure to the left shows the predicted school appropriation with 95% credible intervals for 2026 through 2037.

Fiscal Year	Lower 95% Bound	Expected Appropriation	Upper 95% Bound
2026	$40.4	$41.8	$43.3
2027	$41.3	$43.1	$45.0
2028	$42.3	$44.4	$46.6
2029	$43.2	$45.7	$48.2
2030	$44.2	$47.0	$49.9
2031	$45.2	$48.3	$51.5
2032	$46.2	$49.7	$53.1
2033	$47.1	$51.0	$54.7
2034	$48.1	$52.2	$56.4
2035	$49.1	$53.6	$58.0
2036	$50.1	$54.9	$59.6
2037	$51.1	$56.2	$61.2

Thirteen Year Tax Levy Forecast with 95% Credible Intervals
click image for larger view

The youngest students in the East Greenwich School System are in the Class of 2037. This suggests we should be planning thirteen years out.
The figure to the left shows the predicted property tax levy with 95% credible intervals for 2026 through 2037.

Fiscal Year	Lower 95% Bound	Expected Levy	Upper 95% Bound
2026	$65.4	$66.6	$67.8
2027	$66.5	$68.4	$70.1
2028	$68.0	$70.2	$72.4
2029	$69.5	$72.1	$74.6
2030	$71.0	$73.9	$76.8
2031	$72.5	$75.7	$79.0
2032	$74.0	$77.6	$81.2
2033	$75.5	$79.4	$83.3
2034	$77.0	$81.3	$85.4
2035	$78.5	$83.1	$87.6
2036	$80.0	$84.9	$89.7
2037	$81.6	$86.8	$91.9

¹	Plus a noise term with an expected value of zero and a standard deviation of $485,000.
²	Plus a noise term with an expected value of zero and a standard deviation of $580,000.
³	Predicted values and credible interval bounds are the mean, 2.5th, and 97.5th percentiles of the posterior predictive appropriation distribution. This is a status quo forecast, meaning future debt service impacts have not been factored in. If information about future debt service is available, it can be incorporated by using informative priors.
⁴	Predicted values and credible interval bounds are the mean, 2.5th, and 97.5th percentiles of the posterior predictive levy distribution. This is a status quo forecast, meaning future debt service impacts have not been factored in. If information about future debt service is available, it can be incorporated by using informative priors.

2024-2025 East Greenwich School Department Financial Overview

Overview and Historical Background

The Data is Telling a Story

The Story

Implications of the Story

Implications of the Current Trajectory

Implications of Straight-Line vs Constant Percentage Change Trajectories

Long Term Forecasting - School Appropriation³

Long Term Forecast - Property Tax Levy⁴

References and Footnotes