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APPROPRIATION COMMITTEE-2017 ATM ton's percentage of total in-district enrollment in the school due to the reduction of the district's size from 16 to 10 member towns; and a reduction in revenue (distributed across all remaining member towns). A major factor in the revenue drop-off has been a reduction in the number of tuition-paying out-of-district students following the enactment of state regulations requiring ninth grade students to attend available vocational pro- grams in their home towns for at least one year before applying for an out-of-district placement. District Developments A special district-wide vote held in 2016 secured approval for the construction of a new $144.9 million school building to replace the aging current facility. The cost of this project will be offset by almost$44 million from the Massachusetts School Building Authority(MSBA). The balance not funded by the MSBA will be bonded. The annual debt service costs for the project will be borne not only by district members, but also by out-of- district students from non-member towns, who will be charged a new state-authorized facilities fee for capital costs. Lexington was first assessed debt service costs for the new facility in FY2017, and the annual amount of its capital assessment will steadily grow to over $675,000 by FY2021. A new Regional Agreement was approved by the State in the spring of 2016. Key changes from the old agreement included: (1) the introduction of weighted voting on the MRHS School Committee based on each member town's enrollment; (2) changes to the assessment formulas to smooth out year-to-year fluctuations resulting from changes in a town's enrollment; and (3) explicit language to ensure that non-member towns contribute a fair share of capital as well as operating costs. The new agreement also included a provision giv- ing member towns unwilling to support the construction of a new facility a one-time opportunity to leave the district without any assessment for the new facility's capital costs. Six towns exercised that option, and as of July 1, 2017, Boxborough, Carlisle, Lincoln, Sudbury, Wayland and Weston will no longer be part of the MRHS District. Students from those towns already enrolled may continue their education at MRHS as out-of- district students,but any future enrollments will be considered only on a space-available basis. In addition, following a negative vote by the voters of the town of Belmont in the special district-wide refer- endum election held in 2016 to approve the construction of the new MRHS facility, Belmont's Town Meeting voted as well to withdraw from the District. That withdrawal was approved by the remaining member towns, and will take effect on July 1, 2020. Budget Overview This budget assumes a smaller high school population as the school aligns itself with the target size of 628 students. Staffing changes include net reductions in academic, vocational, guidance, and special education staffing of 1.5 FTEs and a net reduction of administration positions of 1.5 FTEs. The school will take ad- vantage of any further enrollment-dependent staff changes that may emerge. Salaries, which make up 60% of the operating budget, decreased $17,000 after factoring in contractual obligations. Transportation expenses for FY2018 are dropping by $284,161 due to the withdrawal of the 6 member towns. The District arranges and pays for transportation only for member students. Total health insurance premiums are lower due to staff reductions. In anticipation of a new building, infrastructure spending for the current fa- cility is limited, with an annual capital budget of $172,000 and contributions to the Stabilization Fund of $100,000. Debt service payments are still fairly stable, rising to $1,155,550 from $1,116,951, in FY2017. A $50,000 payment will be made toward the funding of the District's $17,000,000 Other Post-Employment Benefits (OPEB)unfunded liability. As of October 1, 2016, 613 full-time students (high school and post-graduate) were enrolled, of whom 47% received special education (SPED) services. Roughly 57% of these students were from the 10 in-district towns and 43% were from out-of-district and withdrawing towns. Total full-time enrollment decreased by 49 stu- dents,with in-district enrollment increasing 12 students, out-of-district enrollment decreasing 58 students, and a decrease of 3 students from the withdrawing towns. The drop in out-of-district enrollment resulted primarily from a Massachusetts Department of Elementary and Secondary Education (DESE) change to Chapter 74 reg- ulations, which now prevents the enrollment of 9t'' grade students from towns that have traditionally sent a large number of students. Despite lobbying efforts by MRHS, the state-imposed tuition rate set by DESE con- 11