This story was originally produced by the Concord Monitor. NHPR is republishing it in partnership with the Granite State News Collaborative.
The Concord School District is facing a $17 million budget hole for the coming year that could result in a reduction of staff and programs.
In a first draft of Concord’s school budget, costs are expected to increase by roughly $10 million, while revenue is projected to decrease by $7.1 million, creating a massive deficit that board members must reconcile.
The draft budget calls for total spending to rise 8.2% to $134 million to keep staffing and programs relatively constant. A large chunk of the falling revenue is from a reduction in state education funding to the city.
Together, the numbers mean the school board will have to make far more significant cuts than in recent memory to arrive at its stated goal of no more than 5% increase in the school portion of the property tax rate. To reach a 5.2% increase in the tax rate, the board would need to find $14.5 million in spending reductions, Business Administrator Jack Dunn said Wednesday. Some of that will come from applying reserves, but not nearly all of it.
“Things we have very little control over are all coming together at one time and making this an exceptionally challenging year for us,” Superintendent Tim Herbert said to the school board this week. “It is recognized by the SAU that there are difficult decisions that lie ahead of us.”
The Concord Board of Education has begun its budget workshops and plans to post an official proposed budget on March 4. Workshops will continue ahead of public hearings on March 16 and 18 and a finalized spending plan is expected on March 25.
Driving the potential spending increase are salaries and benefits, debt payments and supportive staff and programs for students. The district was hit with a surprise second bill from its insurance manager this past fall and, in addition, is seeing a 10% increase in its heath insurance rate for the coming year. Demand for specialized student services, including special education in and out of district classrooms, is growing faster than expected. While reserves are set aside to help offset it, debt on the $155 million middle school project is more than $6 million in the first year. According to Dunn, $1.3 million of new debt will fall to the taxpayers in this budget.
Insurance and special ed also slammed the current spending year. This fall, special education costs had more than doubled projections and SchoolCare, a risk pool through which Concord gets health insurance, obligated Concord to an additional $2 million in payments. The district was faced with an unexpected $5 million deficit, and the board hollowed out its special education reserve and raised taxes an additional 1.5% to cover it.
These costs continue to climb, but are made far harder to tackle when the district is pulling in less money from all sides.
Concord will net $2.8 million less in state education funding next year. This isn’t a falling student population issue, but a major change in the state’s estimation of Concord’s equalized property value. That drop in state education funding alone would take a 3.65% increase in the tax rate to offset, Dunn said.
The district is expecting $300,000 less in Medicaid coming in. Tuition is falling, too, in the neighborhood of $168,000. Deerfield students are now able to choose between three local high schools and are coming to Concord in halved numbers. The board must also reconcile a $1.5 million gap in revenue from reserves – money from savings that was used to patch special education and insurance funding holes – that won’t be in the cards for this year.
The school tax rate for the current year is $14.81 per thousand dollars of assessed value.
In a normal year, the increase in property tax rates directly corresponds to how much residents’ tax bills will change as a result. This year is different.
A citywide property revaluation currently underway will both recalibrate local property tax rates and update assessed property values. New property values are expected to arrive in the fall, and the new tax rate even later. To set its budget, the board will make estimates based on the current tax rate and current property values.
The board’s 5% target, under the current rates, would mean a 74-cent increase in the tax rate, meaning a $296 increase on the tax bill of a $400,000 home.
Notably, however, homeowners have no way of knowing exactly how much their individual tax bills will be affected by new budgets as spending deliberations play out at the city or school level in Concord this year. Both their newly assessed property values and the new tax rates will be unknown until this fall, after budgets are finalized.
The revaluation means that different property owners will see different increases on their tax bills, depending on the change in their property values. Those whose property values are growing the fastest – people who own manufactured homes, condos and multifamily buildings – will likely see increases to their tax bills larger than the increase in local spending alone.