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04/22/2020 08:00 AMRegion 4 Superintendent of Schools Brian White presented the Chester Board of Education’s (BOE) proposed $4,964,446 budget for fiscal year 2020–’21 (FY 21), a 1.96 percent increase over last year, to the town of Chester on April 15.
After White highlighted key areas and provided an overview of the budget, the joint budget workshop of the Chester Board of Finance (BOF) and Board of Selectmen (BOS) was opened to questions and comments.
Chester BOE Chair David Fitzgibbons applauded White’s leadership while recognizing the impact that COVID-19 has had on town-wide conversations related to the FY 21 budget.
“Some people have suggested that because of the current crisis it would be appropriate for the BOE to adjust the budget,” said Fitzgibbons. “I don’t know how we would do that. I don’t know where we would begin, and I don’t know why we would do it. Any adjustment to the budget would have to be evidence based and we don’t have the evidence.”
He added, “The current budget remains the best estimate and we are really eager to work with town government to return any money, to keep expenditures as reasonable and as low as possible.”
Members of the BOF asked several questions on topics related to managing the costs associated with some of the biggest budget drivers: salaries, an 18 percent increase for health insurance, and an appropriation to a self-insurance reserve fund.
BOF Chair Virginia Carmany asked why the BOE was not attempting to bring in a flat budget considering the COVID-19 pandemic’s impact on state and local economies.
“We’re going through [our town budget] line-by-line, we’re trying to cut as much as we possibly can,” said Carmany. “Pre-COVID, we would have done some increases, and post-COVID, we’re trying to bring in a flat budget. But because your budget is increasing, we are going to have to use surplus [funds] that we won’t have for a future year to cover your increase now.”
As part of his response, White said “I do believe that we brought the same level of rigor this year to the process where we really did pull apart each line of the budget and understanding the current and future needs of the school, what you have there is truly a zero-based budget.”
Student enrollment projections and staffing were also brought up during the meeting.
“It’s often the comment that gets made in R4 [Region 4 School District] meetings that our elementary school class sizes and cost per student…rivals private school cost and I’m concerned for the sustainability of the model that we currently have,” said Carmany.
White acknowledged an ongoing dialogue regarding class size, enrollment, and staffing and that this affects his approach to the overall budget process for this year and beyond.
“As I’ve worked through the budgeting process this year, not only am I looking at the needs of the system next year, but as I’ve gone along… I’m developing a sense of long term, what might be the needs of the system,” said White. “I’ve been very careful to talk at every level…that we’re at a point, where given enrollment in our schools, we’re going to have to be very thoughtful about staffing levels moving forward.”
White also responded to a question from BOF member Jon Joslow on how the budget might be hit if schools don’t open in September because of COVID-19.
After detailing the current costs of the schools as they are operating with distance learning, White said, “There are a number of factors that we would have to weigh carefully should the closure go beyond end-of-year.”
Health Insurance the X-Factor
The one variable for him would be the health insurance fund, which is currently underfunded.
“Our budget as planned, based on the data available to us now to the extent that we can project, should be sufficient,” said White. “The biggest X factor for me right now is, given the health of the insurance fund, if for some reason, we were to see a greater hit, and have a different claims experience that is probably the one ‘for instance’ that I can think of now that is a little variable, but in terms of all of the other costs, in terms of what it takes to run Chester Elementary School, I think the budget in front of you is adequate even if we were closed down [in September].”
Conversation also centered on health care costs and deductibles associated with potential COVID-19 claims.
R4 Interim Business Manager Richard Huot informed the boards that the BOE carries $150,000 stop-loss insurance on every employee.
“The annual claims can’t exceed that,” said Huot. “If we have a run on the number of people who hit that foundation level, it’s going to be significant.”
He also mentioned the departure of 44 municipal employees from Deep River and Essex from the health insurance plan.
“That’s going to take $1.2 billion worth of revenue out of our stream into the reserve account, which is concerning,” said Huot.
Later, White said that there is a possibility that the BOE could see an impact from COVID-19 on its health insurance claims and the administration would monitor it closely.
Other Opportunities
Other conversation at the meeting centered on how the Chester BOE might find additional savings in the budget in terms of unexpended funds at the end of the year.
Before providing an overview of the R4 budget to close the meeting, White pointed to several measures he and his team took to better understand the current budgets as a starting point for developing those for FY 21. They included freezing the budget and bringing Huot on board to work across all schools to develop budget positions.
White pointed to health insurance costs, transportation contracts, compensatory education, cafeteria finances, and other examples as the changeable pieces to the current budget that makes an end of the year surplus hard to predict.
“The truth is any one of those variables could be very impactful between now and the end of June,” said White. “It’s our hope to be able to at least share end of the month projections with all of our boards as soon as possible so that information is out in the community but with the caveat that this is such an unusual year that those projections just need to be kept in the proper context. And unlike a typical year, we would be in a much better point at this time in the year to be able to say more confidently what the end of the year looks like and this year it’s just almost impossible to do.”
The Town of Chester will hold a virtual public hearing on the budget proposals on Wednesday, May 6. Meeting detials have not yet been released.