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Consultant: Chatham, Harwich Schools A Good Financial Mix

by  Alan Pollock

            Harwich and Chatham taxpayers already spend significantly more on their school systems than the state requires.  And according to one expert, that's why the two communities are prime candidates for creating a regional school district.

            Consultant Mark Abrahams, a certified public accountant who has worked with a number of communities exploring regional school agreements, said Chatham and Harwich could create a fiscally balanced partnership that would be nothing like the troubled partnership between Dennis and Yarmouth.  Abrahams made a detailed presentation to the regional school district planning board at Chatham High School Monday afternoon.

            Abrahams' analysis used school spending figures from the state to qualify how much each town spends to educate its children.  The study presented this week did not evaluate whether the towns would save money by combining their school districts; it also did not specifically address school construction costs.

            The consultant's calculations were based on an evaluation of each district's foundation budget, which represents the minimum spending level needed to provide an adequate education, in the eyes of state officials.  The foundation budget is based on enrollment, changes in student demographics, inflation and geographical differences in wage levels. 

            Contributing to the foundation budget is Chapter 70 aid from the state and a required local contribution, which is calculated based on the state's assessment of a community's wealth, Abrahams said.  In determining wealth, state officials equally weigh a town's total property values and the aggregate personal income data reported to the state department of revenue.  When it comes to determining a community's required local contribution, “wealth pays more,” Abrahams said. 

            Ideally, the required local contribution is subtracted from the foundation budget, and the state fills in the remaining money through Chapter 70, but the state's budget crisis makes that funding source highly unreliable, he said.  In fact, Chatham and Harwich each receive relatively little state aid each year.  Communities are free to spend more than the state requires on their school systems, and Harwich and Chatham have consistently done so, Abrahams said. 

            Based on the most recent figures and projections for fiscal 2011, Chatham will have spent $1,049,744 more than the state requires on its school system, and Harwich will have spent an excess of $946,300 over the state target.  Though Harwich's school enrollment and its actual budget are more than twice the size of Chatham's, both communities spent approximately the same amount over and above state funding requirements, Abrahams said.

            “Dollar-wise, it's remarkably close,” he said.

            By contrast, while the town of Dennis spent more than the state minimum in recent years, Yarmouth's contribution to their two-town regional district was well below state requirements.  Last year, state officials deemed that Yarmouth was so far behind its funding target that “they, in the state's opinion, would not catch up,” Abrahams said.  Consequently, the state changed the rules and required Dennis to contribute more than $1 million more to balance the most recent regional budget, and the bad feelings between the two towns only intensified.

             The financial inequity in the DY district wouldn't be present in a Harwich-Chatham district, Abrahams said.  “You are different because both of you are above the [required local] effort,” he said.  “In my view, it's totally dissimilar to the Dennis-Yarmouth [situation],” Abrahams said.  Chatham and Harwich have similar equalized property valuations and income wealth factors, he noted.

            Abrahams said he worked with the communities of Ayer, Lunenberg and Shirley, Mass., when they considered regionalization.  Voters in the wealthiest of the three towns, Lunenberg, “had issues with distributing its wealth to Ayer and Shirley,” he said.  Lunenberg backed out of the arrangement, and town meetings in Ayer and Shirley overwhelmingly embraced the partnership, Abrahams said.  The two-town regional district will likely succeed because the member towns are fiscally well matched, he noted.  Harwich and Chatham officials should call their counterparts in these towns to learn from their experience, Abrahams said.

            Under a regional partnership, Chatham and Harwich would have a number of options for determining each town's annual school assessment.  There are various ways the towns could share capital costs and debt service, as well as transportation expenses.  The assessments could be based on each community's wealth, or simply by the number of students enrolled from each town.  Different methods have different statutory requirements, and some require a two-thirds vote at each member's annual town meeting. 

            “My suggestion is to look at the data,” Abrahams said.  The towns should run several scenarios based on different assessments “and see what's the most equitable between the two communities.”

            Regional school planning board member Craig Vokey of Chatham said the assessment formula might be based on the average of the most recent three or five years' enrollment data, helping to buffer the district from any sudden changes in either town.  When the Chatham Housing Opportunity Program houses were built in 1989, “there was an explosion of children in this town” a few years later, Vokey said.

            Vokey said he is troubled by comments made at recent meetings that indicate that some people have already formed an opinion about the viability of a regional district for Chatham and Harwich.  Until a firm proposal is produced “we don't have the ability to say a yay or nay on it,” he said.

            Board member Jack Brown of Harwich agreed, saying the conceptual discussions of a possible partnership are good, but they are not enough to help the towns make a decision.

            “Data matters,” Brown said. 

            At next month's annual town meetings, voters in Chatham and Harwich will be asked to appropriate funds to continue the school regionalization study.  Chatham's funding request is for $10,000; Harwich, which appropriated $5,000 last year, will be asked to spend another $5,000.

4/1/10