Application of new tax law differs

Superintendent Stan Sawyer plans to spend $980,000 of a $2.1 million increase in funding Westbrook schools got from the state this year.

Sawyer said the schools must spend the $980,000 in several areas targeted by the state or face losing some state funding next year. The money would come from an additional $2.1 million the schools received as a result of the passage of new tax relief legislation passed earlier this year – known as LD 1.

While they are getting more state money, two local school districts are applying the law differently, as they attempt to meet three state-set spending targets, which came about as the result of a new school funding model – Essential Programs and Services. In doing so, they lack clear direction from the state, which has not yet issued guidelines for how “targeted funds” should be spent.

Sawyer said he needs to spend the new targeted funds in addition to existing school spending in those areas, while Gorham School Department Business Manager Paul Kelly views the “target” amounts as guidelines for overall spending on those areas.

Westbrook’s state aid to education rose $2.1 million to $10.6 million this year. Gorham’s increased $2.3 million to $13.9 million.

In Gorham, Kelly said the additional money Gorham schools received this year would not need to be spent to meet the state targets because the Gorham schools are already meeting them.

‘Targeted’ funds

Jim Rier, the policy director for school funding for the state, said the new funding law, known as Essential Programs and Services, sets spending targets for kindergarten through second-grade students, developing student assessments and technology, and allocates a set amount of schools’ state aid to ensure districts have enough money to meet those needs.

He said school spending must simply meet the amounts targeted, which does not mean schools need to increase spending by the amount of targeted funds they receive.

While there are no specific guidelines for spending in “targeted” areas, Rier said the money is intended for programs above and beyond normal classroom programs and teacher salaries.

In Westbrook, the state has targeted approximately $357,000 to be spent on kindergarten through second grade, approximately $359,000 to be spent on technology and approximately $265,000 to be spent on developing student assessments. Sawyer arrived at the sum of $980,000 by adding those three amounts.

For the current 2004-2005 budget, Westbrook School Business Manager Michael Kucsma said the school department is spending approximately $91,000 on student assessments this year, below the state-mandated figure of $265,000.

As for spending on kindergarten through second-grade students, Kucsma said the school department is spending approximately $1.2 million on Prides Corner School and approximately $955,000 on Saccarappa School, for a total of about $2.1 million. In addition, the school spends $1.7 million on such ancillary programs as art, music, guidance and other programs, bringing total spending to approximately $3.8 million.

And on technology, Kucsma said the district’s budget is about $303,000. The budgets for the individual schools also include about $215,000 in technology-related items, bringing the total technology spending for Westbrook to about $518,000, which is above the state-mandated target of $359,000.

However, Kucsma cautioned that both the district and the individual school technology budgets contain items that the state will not count toward meeting the targeted spending goals. Kucsma said that he did not know exactly which items were going to be disallowed by the state, or how much they would add up to.

In Gorham, the state has targeted $347,000 to be spent on kindergarten through second-grade, $372,000 to be spent on technology and $276,000 to be spent on student assessments.

Kelly said the budget for the Gorham technology department alone is $355,000, which does not include other technology-related items spread throughout other departments system-wide.

In the case of assessments, Kelly said Gorham was spending $274,000 to develop student assessment, just under the state-mandated level of $276,000.

Kelly said the total overall budget for Gorham’s kindergarten through second-grade schools is $2.4 million, well over the $347,000 mandated by the state. Kelly said he is still trying to find out what exactly the state is considering as spending of targeted money in this area, but he feels certain that Gorham will meet the targeted needs in this area.

Different interpretations

Because the Essential Programs and Services formula is so new, there is still a lack of clarity on how the schools should spend the targeted money.

While Rier said the state was looking for schools to simply meet the spending targets in the three areas and not increase their overall spending by the specific amount of the targeted money allocated by the state, Sawyer said he has heard differently.

Sawyer said he understood, based on conversations with Commissioner of Education Susan Gendron, that the state wanted the additional money to be spent on programs such as early childhood literacy education, all-day kindergarten, improved assessments and increased technology in the schools. “Everything I’ve heard from Augusta is that this money is supposed to be spent for its intended purpose,” Sawyer said.

Sawyer said the School Department is looking to establish an all-day kindergarten program, which he said the Department of Education has encouraged in school systems. “The intent for this money is for the schools to start spending money on early literacy and all-day kindergarten,” Sawyer said.

Sawyer said the School Department also wants to use some of the money targeted for assessment toward a program that would allow teachers to come in during the summer and other times when school is on break to work on developing new student assessments.

In addition, Sawyer said some of the money allotted to technology could be used to purchase a third mobile laptop computer lab for the high school. The school already has two such labs, and Sawyer said the positive response by teachers and students have led the school to look to add the third lab.

Penalties put off

Worried about losing future state funding if the school ran afoul of state rules, Sawyer said he sought an opinion regarding the use of the targeted funds from the school’s attorney, Richard Spencer of Portland-based Drummond, Woodsum and MacMahon.

In a May 6 letter, Spencer told Sawyer that in his opinion, when LD 1 was passed in January, the targeted funds included in the new state subsidy were to be spent in the areas specified by the state.

Spencer went on to say that since then, the Legislature has softened its stance and has given schools “a partial one year grace period,” allowing them to use the targeted money with fewer restrictions.

All school departments must submit a plan to the state Department of Education for how the targeted money is going to be spent by Jan. 15, 2006. While there will be no penalties this year, Rier said the law clearly states that schools have to make every effort to spend the money in the way that it is intended.

Spencer said while a school would not face a penalty for not specifically spending the money in the targeted areas, it could affect the amount of money a district gets from the state in future years. “The failure to use targeted funds for their intended purpose in (fiscal year) 2005-2006 could lead to the commissioner’s disapproval of Westbrook’s plan for use of its targeted funds for 2005-2006 and 2006-2007,” he wrote.

Spencer said if the commissioner does not approve the school’s plan, that school could lose some or all of its targeted money for the next year. If Westbrook were to lose the targeted money from the state in 2006-2007, Spencer said it could mean a loss of over $1 million in state money.

Rier said the targeted money was established to address specific needs. However, because the way schools are funded by the state has been changed so radically, for this year only the state has given the schools some flexibility in how the money is spent. “We’re not going to go in at the end of next year and determine that they didn’t spend the money on targeted needs and penalize them,” Rier said.

But Rier did say schools could lose future state funding if their spending plans don’t measure up to state standards. If a school’s plan for 2006-2007 does not show the proper spending in targeted areas, then that school district’s allocation will be reduced.

“We’ll determine the 2007 allocation depending on how strongly they go in that direction,” Rier said. “But we’re not going to take back anything from 2006.”

Kelly said while the state has not made clear to him how the money was to be spent, he was confident that Gorham is meeting the targeted requirements.

Even though there is some flexibility this year, Sawyer is wary of not spending the money in the way the state intended and then facing a situation where the schools could receive less state money next year.

Sawyer said the state has not even developed the guidelines for the plans that the schools must submit in January. He said he doesn’t expect that the state will give the guidelines to the schools until December of this year, months after local budgets must be approved, and only weeks before schools must tell the state how the money was spent.

The School Committee is scheduled to continue its budget deliberations at a meeting scheduled for tonight (May 11) at 7 p.m. in room 114 at Westbrook High School.