Fund Balance Discussion
At a recent candidate forum I was asked what I thought was an appropriate cash reserve ('fund balance') for the school district. In that setting, it was not possible to provide much detail.
There is a discussion going on between the school department, the School Committee, the town of East Greenwich, and the Town Council. I was asked to provide input for drafting a policy governing the use of fund balance. I responded with this document.
This is NOT the final policy, just my input to the process that will determine the final policy. There will be public discussions of the policy at meetings of the Policy Committee, the Finance and Revenue Committee, and the full School Committee. As required by law, notice of those meetings and agendas will be posted on the Rhode Island Secretary of State's website.
Proposed Cuts to the Governor's Recommended State Education Aid for East Greenwich
With the FY2023 East Greenwich budget process nearly completed, the Finance Committee of the RI House of Representatives proposed a last minute revision to the Governer's Recommended Education Aid
package that adds $17 million to the aid governed by the funding formula
but reduces East Greenwich's share by approximately $729,000.
The chart at the right shows the percentage change over the FY2022 formula aid by district for the Governer's Recommended Aid.
How large are budget-to-actual variances for Rhode Island school districts?
Historical Record of Expense Budget Variance
Background Information for Fund Balance Discussion
This is supporting documentation for the School Department's response to the question 'Why does the school department need a $3 million fund balance?' posed by the Town Manager. The official response was written by the Superintendent, and included this information in an attachment.
The Finance Subcommittee of the East Greenwich School Committee is in the process of updating its fund balance policy. Questions that have arisen include:
- What is the purpose of fund balance?
- What is the optimal size of the fund balance, given the defined purpose?
- How much fund balance do other school districts have, and how do they use it?
- What is the relationship between the town and school fund balances?
My position on COVID-19 mitigation policies
- 1. I support the Superintendent's recommendation to make face masks optional, provided a satisfactory solution can be found for every individual who is immunocompromised or otherwise at high risk.
- 2. The relative risks of infection and social-emotional impact need to be considered.
- 3. I believe our policies should reflect the mainstream consensus of Public Health, Medical, Mental Health, and Educational professionals.
- 4. The future behavior of the virus cannot be predicted with any certainty. Policies should have enough flexibility to adapt quickly, with the goal of keeping schools open and keeping students and staff safe.
East Greenwich has the ninth highest FY2022 residential property tax rate. Why?
There are three primary reasons:
- 1. In terms of assessed property value per resident, East Greenwich is not particularly wealthy, ranking 11th. Other towns have a considerably larger tax base per capita.
- 2. State education aid varies greatly by town. If every town had to raise their FY2022 state education aid through residential property taxes, East Greenwich's adjusted tax rate would rank 19th
- 3. With 0.20 public school students per capita compared to the state average of 0.12, East Greenwich has more students enrolled in public schools per capita than any other community except Barrington.
East Greenwich Tax Rates: A Century of History
- The residential tax rate is nearly the same as it was 100 years ago.
- The black lines represent revaluations, which are designed to realign assessed and market values.
- Almost all (90%) of the variability in the tax rate is caused by the real estate market and revaluation cycles.
- Contrary to the narrative of unsustainable tax growth that we have seen, the lack of a significant trend (up or down) in the tax rate means that the amount of taxes collected (the levy) and the size of the tax base have grown at the same rate over the last century. I interpret this as evidence that our town is well-managed, and has been for a long time.