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HomeMy WebLinkAbout1975-CSC-rpt • Report to the Lexington School Committee on Financial Implications of Closing Schools from f Citizens Study Committee John Deutch Chairman Edmund Bicknell Robert Gary Nancy Knickerbocker Frank Parrish, Jr. Abigail Thernstrom I . Introduction - In February 1975 the Lexington School Committee established a Citizen's. Study Committee to assess the financial implications of the School Facilities Study with particular attention to potential savings - that might be realized by closing schools. The charge to the study committee was • "to study the cost implications of the School Building Survey, specifically the savings to be made by closing schools and the possible increased costs at schools which would receive students from closed or reassigned schools , future per pupil costs for several alternative plans and the impact on the tax rate of a capital school improvement program." The Committee has interpreted its primary responsibility to be the development of a framework for determining and comparing the financial implications of alternative plans for school closing that one might wish to examine. The Committee recommends that any proposal be assessed according to the procedure and considerations presented below but, of course does not take a position on any particular plan for future utilization of school facilities. This report is endorsed by all members of the Committee. In the course of the Committee's deliberations and collection of - financial data it has benefited from the prompt and. effective assistance from several town and school officials . Particular thanks are due to Frank DiGammarino, Director of Planning; James MacInnes , Administrative• Assistant; Richard Perry, Town Comptroller; Mitchell Spiris , Assistant Superintendent; and Richard Barnes , Director of Information. � , 7 II . Principal Findincs In this section the principal findings of the Committee are presented; a more extensive discussion of the basis for these findings is included in subsequent sections of the report. The principal conclusions of this Committee are: 1 . The full financial consequences of closing schools on the town cannot be determined until a program is adopted for disposition of the buildings. 'ID The savings which may be realized by closing schools are not sufficient to justify taking such action if the buildings are (a) left vacant, (b) employed for other school purposes , or (c) transferred to another town use. More substantial savings might be realized from closing schools if the buildings are (d) ),eased or soldor (e) demolished. Other conclusions of the Committee are: 3. If it is assumed that a discontinued school building will be used for some other worthy town purpose, it is important to consider the alternatives of utilizing newer as well as older school buildings. The selection of the particular building to be phased out of use for ed- ucational purposes should depend on the relative utility of the building for the new town function as well as the relative educational utility. The financial impact of the alternative transfers must consider both the school and town budets . 4. For elementary schools the scale of operation has surprisingly little effect on building-related costs . The larger newer schools do not appear to be more efficient to run than the smaller, older schools. -3- More precisely there is an increasing straight line relationship between /7 building-related costs and number of classrooms (correlation coefficient 0.88) . 5. There is a disparity in the pupil-related costs per pupil between elementary schools. Three of the elementary schools proposed for closing (Adams, Munroe, Parker) have significantly lower pupil-- related costs per capita. In some cases , depending upon redistricting choices and upon an assumed continuity of educational program at the schools which remain open, there may substantial ($50-$150) increase in the pupil-related costs for those transferred. In other, but fewer cases, there may be a decrease in the pupil-related costs associated with those transferred. 6. The rennovation program proposed in the School Facility Study is an educational program not required or necessarily implied by a decision to close schools. Accordingly the Committee did not dwell on this or alternative capital improvement programs . Rennovation costs should be included in considering the financial implication of closing schools only when the rennovations are required to increase capacity at schools which are receiving pupils. Such rennovation should be offset against anticipated savings. For every $240,000 of rennovation expenditures the tax rate increases by $1 .00. While in 'prior years a school rennovation program might have qualified for partial reimbursement by the state, at present there is a moratorium on the state reimbursement program. 7. The cost estimates for the particular rennovation program presented in the School Facility Study are not sufficiently refined to serve as - a e } -4_ secure basis for making a decision on a capital improvement program. 8. The commiftee notes that Muzzey has substantially higher pupil-related costs than the other two junior high schools . I1uzzey also has the highest building-related costs per pupil of all the elementary and junior high schools. 9. Transportation costs associated with- alternative redistricting • r=roposals are critical because elementary school pupils bussed between • one and one and a half miles are not eligible for state reimbursement. 10. Finally the Committee expects that declining enrollment will not result in lower dollar amounts in future school budgets. There are three reasons for this: inflation, collective bargaining and the anticipation that teaching staff reductions will occur with the retention, on.the average, of more experienced, highly_paid,_,teachers, Thus reduced expenditures associated with falling enrollment will appear as a slower rate of growth in the school budget rather than in actual budget reductions. - Furthermore the major `savings ' attributable to falling enrollment are realized through teaching staff reductions , an action that can be taken Nether or not school buildings are closed. • III . Financial Data The Committee has chosen to work with data for 1974-75 appropriations rather than 74-75 or 75-76 budget data. The Committee has found no . annual expenditure data on a school by school basis and urges the school committee to continue its efforts to gather such data. The Comi ttee has collected the following data pertinent for 5- • assessing the financial implications of alternative school closing plans. Each budget category in the school program has been designated as a cost which is either 'bui l d i nr.-related' or 'pupil-related'.. - Not all the 'building-related° costs are potential savings if the 'decision is made to close a building. Important adjustments as described below, must be made to these building-related costs before they may be interpreted as savings . 'Pupil-related' expenditures are considered to be proportional • to the number of students in a school ° Thus the Committee assumes that if enrollment decreases (increases) in a particular school pupil-related expenditures will be. reduced (increased) in such a way that, on the average, there will .be no net change in the resources devoted to each child. Thus closing a school captures savings associated . with building-related costs but has no effect on the average 'pupil_ related' expenditure per pupil in a school that remains open, However the total 'pupil-related' expenditures in the school which remains Open will rise as students transfer from schools which are closed. This increase is offset by the reduced 'pupil-related' expenditures at the • closed school . There is a net indirect effect on 'pupil-related' expenditures for the entire system only if a discrepancy exists between the 'pupil-related' per pupil expenditures at the school which is closed • and 'the school which' receives their. studentse III A. Building-Related Costs Attachment I presents a detailed breakdown of the budget categories which the Co :ni ttee judged to be building-related. The Attachment • -6- includes the annual costs , by elementary school , according to the FY74-75 school appropriation for each category. All entries except for utilities may be reco2z led with the school administration computer coded program data provided to the Committee. Utilities are an exception since these are carried as a Town Wide item, not normally allocated by . school . The particular utility allocation employed is based on recent - information supplied by the school administration and these numbers • are surrounded by boxes to indicate that they are not in the computer codes. Time did not permit attention to telephones costs (assumed to be neglibible) and food service costs. The elementary school building- related -costs are summarized in the following Table I. TABLE I Elementary School BRui l di nq-Related Costs FY74-75 Appropriation ADAMS BO':: "N BRIDGE ESTABROOKE FISKE FRANKLIN HANCOCK HARRINGTON $78,380 - 104,986 112,238 - 93,126 96,684 88,605 - 60,245 92,516. HASTINGS MUNROE PARKER • 86,022 55,864 63,394 The annual 'building-related' costs dor the three junior high schools • - are detailed in Attachment III and summarized below in Table II . . TABLE II Junior High School Bui 1 di nc_Related Costs Fy74-75 Appropriation CLARKE DIA' OUD MUZZEY $203,971 $193,239 $180,577 ' -7- III B. Pupil-Related Costs Attachment II presents a detailed breakdown of the budget categories which the Committee_ judged to be 'pupil-related' . The attachement includes the annual cost by elementary school , according to the Fy74-75 school appropriation. Since only four schools have largely separate or self-contained special education classrooms , adjustments have been made for these four schools to arrive at comparable 'pupil- related' costs. All entries in this attachment may be reconciled with the school administration computer coded program data. The 'pupil- related' costs per pupil for the elementary schools are summarized in Table III and for the junior high schools in Table III. The' detailed breakdown for the junior high schools in presented in Attachment III . TABLE III Elementary. School Pupil-Related Costs per Student FY74-75 Appropriation ADPJIS BOWMAN BRIDGE ESTABROOKE FISKE FRANKLIN $858 935 849 976 908 908 HANCOCK HARRINGTON HASTINGS MUN ROE PARKER 987 1004 1034 874 908 • TABLE IV Junior High School Pupil-Related Costs Per Student FY74-75 Appropriation CLARE DIAM(? D f4U7_LE`( . $1098 1070 1461 • -8- III C. Other Costs The Committee notes that there are a variety of other consequences i fro; closing schools _ _ r�'have iJortant financial implications. Some of these consequences appear in the school budget, others in the town budget. Examples in the school budget are food service costs and transportation costs. The Committee has not developed precise estimates of the additional transportation costs that would be borne if schools were closed. The busing costs to the town are likely to be substantial since the present school policy of busing elementary school children who live between one mile and one and a half miles from their school is not eligible for 7O state reimbursement. Estimates of transportation costs , which are an offset against 'confirmed savings' will be possible when a precise redistricting plan is put forward. Other consequences which appear in the to 'n budget concern traffic control and crossing guards. The Committee has made no determination of what the cost changes are likely to be. IV. Some Inferences From the Financial Data These financial data have suggested the following conclusions to the Committee. First the data do not support the hypothesis that the smaller, older eleTentary schools are significantly more 'inefficient' to operate. With the exception of Hancock both the total cost (building- related and pupil-related) per student and the 'pupil-related'.costs per student are lc.,er for the older schools (Adams , Munroe, Parker) -9- than most of the newer schools . Second, the data indicate surprisingly large 'building-related' costs for the newer, larger schools . The Committee expected that economics of scale would be more in evidencefor this category of • costs. Third, the fact that pupil-related costs are on the low side for the. smaller schools shows that it has been possible with small enrollments allocate teaching staff in a manner similar to that found in the larger schools. If this had not been the case one would have encountered higher 'pupil-related° costs in the small schools reflecting large average pupil/teacher ratios. In fact pupil/teacher ratios are quite close throughout the elementary school system. The ratio is maintained. in the smaller schools by combining classes ; a practice now found in over 30% of the elementary school classrooms . Thus the Committee does not forsee that closing schools will result in appreciable reduction - of teaching staff if the policy of a pupil/teacher ratio of 24/1 is maintained. Of course school closings may be accompanied by staff - auctions that result in savings and a higher average pupil/teacher ratio. But such an action does not require school closings and hence it is not attributable as a °savings ° from closing schools. The large 'savings presented in a recent Newton study are a result of treating all staff reductions at the closed schools as 'savings' without recognizing that staff reductions would occur throughout the system as enrollment • • falls even if no schools were closed. Declining Enrollent and School District Organization, V. Silluzio, Newton Public School Study, FebruarY, 1974. • • • • -10- V. Translating Tui l di na_nel ated'Costs Into Savi nos The closing of a school building does not necessarily mean that all 'building-related ' costs will be recoverable as savings to the town. The most important consideration in determining what portion of the building--related costs are recoverable as savings , concerns the dis- position of the school building. The Committee strongly believes that the school committee should Took beyond the financial con- sequences to the school budget and assess the financial consequences to the tax rate of the entire town. If a school is closed, the building may be put to different uses. The building may be (1) left vacant in anticipation of future needs (2) employed for another school purpose (3) transferred to the town for use in another function - (4) leased or sold (5) demolished Clearly the future use of the building will have a major impact on the recoverable savings. Certain remarks should be made with regard to each of the five alternative uses mentioned above: (1) Keeping' the buildingempty will ll result in substantially higher insurance costs. According to era Norman Stoltz* for the five schools mentioned for closing in the � School Facilities Study the insurance costs might he: l nsuren ce consultant to the Town of Lexington. 11- • Approximate Current Insurance Cost For Insurance Cost Vacant Building Without Contents ADAMS $3,100 $10,000 FRANKLIN 2,000 6,400 Hr',NCOCK 900 ' 3,500 • liUi`;°•P3E* 700 2,700 2,800 10,000 , MUZZEY 3,200 . 12,000 total $12,700 $44,600 with a possibility of doubling of the rates if the vacant building do?s not quali:'y for the normal discount below manual given to the town because of good experience. Sprinkler systems in the four schools designated by (*) are assumed to be kept in operation. In addition the Committee anticipates that the vacant buildings would require substantial maintenance and security protection. (2) If the closed school° buildingg is employed for another school purpose e.g. administration building, there will be rio contingent savings (see below). (3) Transfer of the building to another town function will mean that a major portion of the 'building-related costs ° e.q.custodial , maintenance , utilities will appear elsewhere in the town budget. To properly estimate the tom wide impact of such a transfer requires investigation of the new t.c n use. Furthermore it n?i aht prove more desirable and/or economical -12- to 2-to transfer a new building rather than an old building. (4) If the school building is put up for lease or sale essentially all the 'building.-rel?ter costs ' would be averted. Furthermore the town would raise revenue by this course of action. However rezoning may be required and would be required to realize the full co. mercial value of the building. The Committee has not pursued this possibility. (5) Demolition of the building would also result in the savings of essentially all 'building-related' costs . The cost of demolition has not been investigated by the Committee. The Committee has attempted to determine if a consensus exists in town as to the disposition of closed schools. Apparently no plan exists for disposition of the buildings and little systematic thought has been given to the problem. Accordingly the Committee saw no purpose in speculating on possible future use of closed school buildings. Evidently a complete study of the financial impact of closing schools is not possible in the absence of a plan for disposition of the schools. Under these circumstances the Committee has divided 'building--related' costs into two categories. The first category entitled 'confirmed savings ' gathers together all items of building-related costs that the Committee feels confident would be a contribution to savings to the _town regardless of the future use of the building. The second category entitled 'contingent savings ' are those items of building-related costs that ray well [options (1 ) (2) or (3) above]. not emerge as a savings to the town. The Co nnii ttee urges that these two categories not be lumped toceti;e r in future discussions of potential • -13- savings from closing schools . The breakdown into School Closing Savings for elementary schools is presented in Attachment IV. In addition to classification of the items of 'building-related' costs into 'confirmed' and 'contingent' savings two adjustments have been made. First the salary savings associated with reducing the position of a principal will not be that person's salary. Rather it is likely that the present principal will be reassigned to some other administrative or teaching duty within the system and a more junior, lower paid, individual severed. Thus the savings is the salary of this junior person which is estimated to be $14,000. Second, the fringe benefits of non-certified personnel (secretaries , custodians , etc. ) are not carried in the school budget but in the town budget, The Committee is informed that these fringe benefits may be estimated as 30% of the salary and accordingly the salaries in Attachment IV have been increased by this factor. The comparable School Closing Savings for the junior high schools are presented in Attachment V. The confirmed and contingent savings from closing elementary schools are summarized in Table V and from closing • junior high schools in Table VI. -14- TABLE V From Savincs :ry _P1nJ 1i1n Elementary CChVVIs_ jjDl{'iS UfBRIDGE ES ARROOK_ FISKE X Confirmed $45,681 43,760 44,657 42,443 52,792 Contingent 30,055 64,412 67,120 49,387 45,806 FRANKLIN HANCOCK HARRINGTON HASTINGS MUNROE PARKER Confirmed $38,586 32,897 42,698 37,440 29,706 34,935 Contingent - 49,363 24,784 47,063 45,012 24,233 25,676 TABLE VI Savings From Closing Junior Hich Schools CLARKE DIMND MUZZEY Confirmed $79,127 77,479 78,268 Contingent 124,195 116,221 96,746 The Committee emphasizes that "confi reed savings ' are not necessarily automatic upon closing of a school . To realize these savings , determined management is required. lore generally determined management will be required to reduce teaching staff as enrollment drops, whether or not schools are closed, while keeping the pupil/teacher ratio at the present level • *which includes $10,500 non--recurrft,j exp�'nse.s for boiler replacement. • -15- The Committee notes that the major portion of building up keep, general repairs , and maintenance are carried in the Town t'(ide School budget and. not allocated by school . The Committee is concerned that the general level of these expenditures may not be adequate to maintain the physical plant in good working condition. Thus the reduction in Town wi de expenses for salaries and expenses associated with maintenance is anticipated to be minimal . It should be noted that Tables V and VI do not include transportation costs. These costs would be off set against confirmed savings IV. Illustrative Use of the Financial Data In this- section sample calculations are presented in order to illustrate how the financial data may be used by interested parties to estimate, under various assumptions , the financial consequences of • certain courses of action. The Committee notes that there are important gaps in information e, . transportation costs, school disposition so that no single method can presently be used with precision. Furthermore it is possible to adopt a variety of viewpoints toward the data e off. either including or excluding consideration of differential pupil-related costs per student in- various schools. The Committee does not insist that any single viewpoint be adopted, but rather urges that in future• deliberations one clearly identifies the viewpoint and assumptions taken toward the financial implications of closing schools. The report permits one to adopt various points of view and the Committee hopes the report will help structure subsequent debate in a more productive way. • The first example presented in an estimate of the 'cmflr-ied savings ' -16- that would be realized from adopting the school phase-out schedule . reco=nded in the School Facilities Study. The estimates are in current dollars , do t nc e o. . -s tti ;"'angor tion costs , and, of course , do not reflect additional 'contingent savings ' or expenditures associated with future building use. School Facilities Plan - Confirmed Savings Current dollars - no transportation costs School Year of Closing 76/77 77/78 78/79 79/80 80/81 HANCOCK ;2,897 32,897 . 32,897 32,897 32,897 MUH ROE 29,705 29,706 29,706 29,706 ADAM'S 45,681 45,681 45,681 FRANKLIN 38,586 PARKER 34,935 34,935 MUZZEY 78,268 TOTAL 32,897 62,603 108,284 143,219 260,073 The second example presented is an estimate of the `confirmed savings ' that would,be realized from adopting the school , phase-out schedule recommended by the committee to Study the Reassignment of Pupils. Again the estimate is given in current dollars and does not include off-setting transportation costs . II . Reas§ignment Cor:-iittee Plan - Confirmed Savings Current dollars - no tranr,nortation costs . School Year of Closing 77/78 78/79 79/80 HANCOCK 32,897 32,897 32,897 PARKER 34,935 34,935 ADAMS 45,681 MTIROE 29,706 MUZZEY 78,268 TOTAL $32,879 $67,832 $221 ,487 The third illustrative example considers the consequences of closing a particular school and reassigning pupils to other schools. The particular case examined is the closing of Hancock school in the 77/78 school year proposed by the Committee to Study the Reassignment of Pupils . Approximately 50 students (from sub district1 ) would be reassigned to Fiske and annroximately 100 students would be reassigned to Hastings . The maximum off-setting pupil related costs from this shift may be determined from the data in Table III . FISKE [ $908 - $987] X 50 = - $3950 HASTINGS [$1034 - $987] X 100 = $4700 750 In this case the net pupil-related offset is a relatively small amount. In the case of other school closings the offset may be a _good deal •larger; -18: for example in the case of ; unroe a sample reassignment resulted in an offset of approximately $7500. } n- I If one f t�rtrter .s s�tYes that 1 .5 acid� 'tic ��1 buses will be required for transportation at a cost to the town of $4500/bus (this figure assumes full 70% reimbursement) , there will be an additional offset against savings of $6750. Thus under these assumptions the potential savings associated with closing Hancock and assigning the students as specified might be $25,397 or less. Confirmed Savings $32,897 differential pupil related expenditures - 750 transportation costs ® 6 ,750 • $25,397 If one adds to this amount the total of 'contingent savings` for Hancock under the assumption . that the disposition of the building took place in a manner that made these costs recoverable, the total reaches $50,1810 This example of closing Hancock indicates the importance of considering both transportation costs and the impact of differential pupil related expenditures . In this case the differential acted to reduce savings in a minor way. In other example e.g. Munroe (Muzzey) the differential will act to decrease (increase) savings in a major way. The final e>'annnle cie -r,r;-trates the range of financial impact that s P -19- results from various assumptions about the costs discussed in the body of the report. This example also illustrates a procedure for calculating i _ range financial impacts for ether cases of int'rest. The example, presented in the following table, assumes that Munroe is closed with reassignment of pupils to Boman, Fiske, and Franklin. A range of net savings are exhibited according to the assumptions made concerning (a) disposition of the building i .e. contingent savings , (b) transportation costs, and (c) offset in pupil-related costs. These costs provide bounds on the savings to be realized from closing schools. • ` 7 k -20- Estimated Low and High Limits .on Cost Savings From Closing 1,1unree School - 1974 Dollars Disposition of Bldg. Disposition of Bldg. Options (1 ,2,3) o.10 Options (4 ,5) p.10 - Transportation Costs1l Transportation Costs Low High. Low High No pupil-related offset Confirmed savings $29,706 $29,706 $29,706 $29,706 Transportation costs - 6,750- -22,500 - 6,750 • -22,500 Contingent Savings 0 0 24,233 • 24,233 TOTAL 22,956 7,206 47,189 31,439 Full pupil-related offset Confirmed savings 29,706 29,706 29,706 29,706 14, Transportation costs - 6 ,750 -22,500 - 6,750 -22,500 Pupil-related offset2} - 7,470 - 7,470 - 7,470 - 7,470 • Contingent savings 0 0 24,233 24,233 TOTAL $ 15,486 $ -264 $ 34,719 $ 23,969 • • • 1 ) Assumes use of 1 .5 buses. Low estimate assumes full reimbursement. {7 Ci ti e'stim'te ass.- . es no state reimbursement. 2) Pun i l r el atcd offset t assuLes 50 students reassigned to cowman, 80. students to Fiske and 50 stt.dr'ntc, tn Fr:en'lin