01/10/2013

Contingency, savings on fuel and health insurance expected to cover shortfall in school subsidy

Contingency funds, savings on fuel and savings on health insurance will allow Cape Elizabeth schools to weather a $197,000 curtailment of state subsidy announced last month - but the superintendent of schools said the reduction will keep the School Department walking a "fine line" for the rest of the school year.

Gov. Paul LePage issued the curtailment order on Dec. 27, 2012, a move to reduce spending by $35.5 million to balance the state budget. Part of that curtailment is a $12.58 million reduction in general purpose aid for local schools for 2012-13.

"We are feeling like we will be able to get through the year without a significant impact on student programming at this point," Superintendent Meredith Nadeau said at the Jan. 8, 2013 meeting of the School Board. "But I think it's fair to say we'll be walking a fairly fine line for the remainder of the year," she said.

"The larger concern from my perspective is what happens if there are additional cuts proposed, as we may hear from a supplemental (state) budget when it is introduced in the next couple of weeks," Nadeau said.

School officials anticipated the curtailment - $196,872 according to a spreadsheet published by the Department of Education - in November when the likelihood of a reduction was announced. The figure represents approximately 10 percent of Cape Elizabeth's state subsidy of $2 million for 2012-13. The school's total budget for the fiscal year is $21.8 million.

That budget includes a contingency fund that has not been used this year, Nadeau said. Fuel costs were locked in at a lower price than expected, she said, and costs for health insurance are also lower than projected. "We will be able to walk that line I think during the rest of the year, but will have to look really carefully as we move forward," she said.

Nadeau said the state is looking to modify the essential programs and services funding formula used for calculating state subsidy shares. Whether the Legislature decides to make changes or not, she said she was not convinced the outcome would be favorable for Cape Elizabeth. "I think it's reasonable for us to assume that state funding is not going to increase. It will likely further decrease," she said.

School Board member David Hillman said coping with the curtailment will not be easy, because revenues for schools are fixed. "Unlike businesses, we can't raise our prices," he said.