MSMA SUMMARY OF APPROPRIATION SUBCOMMITTEE'S SCHOOL CONSOLIDATION PROPOSAL – April 10, 2007 Draft

Regional School Units: Number and Size. The Subcommittee's Plan provides that Maine's local school administrative units must be consolidated into 80 K-12 Regional School Units ("RSUs") with an average of 2500 students each. Existing SADs, CSDs and school unions will be eliminated, and their elected school boards will be abolished as of June 30, 2008. Almost all municipal school departments and their local school committees will also be abolished.

Authority of Commissioner of Education to design RSUs. The Commissioner is authorized to design one or more plans to reorganize Maine's existing school units into RSUs serving no fewer than 2500 students with some limited exceptions. The proposal says that the Commissioner will have flexibility to grant exceptions for geographic, demographic, economic, transportation, population or other unique circumstances, but it also says that there can be no more than 80 RSUs statewide. Since Maine has approximately 200,000 students, this means that the RSUs will have to average 2500 students each. As exceptions are made for coastal islands, Native American education, geographic isolation or other unique circumstances, the Commissioner will have to require consolidation of school units above 2500 students in order to maintain the average at 2500. The 21 school units in Maine with more than 2500 students are not exempt from consolidation.

The proposed timeline. The Commissioner is required to prepare plans for RSUs by June 1, 2007. The plan then allows only 60 days - until July 31, 2007 - for existing school administrative units to accept the Commissioner's plan or suggest an alternative. If an alternative plan is suggested, the Commissioner must make a decision on that plan by August 15, 2007. If a school administrative unit does not accept a plan prepared by the Commissioner or suggest an alternate plan by July 31, 2007, the State Board of Education is authorized to place that unit in an RSU.

The existing school units then have 90 days - until November 15, 2007 - to develop detailed plans for their RSUs and submit them to the Commissioner. Under § 1454(1) of the Subcommittee's proposal, there must be a "joint meeting of all the municipalities" to decide on the size of the board of directors of the RSU. In addition, the completed plan must address the composition and apportionment of the RSU board of directors, the method of voting, the disposition of real and personal property, the disposition of local indebtedness and lease purchase obligations, the disposition of undesignated fund balances, reserve funds, trust funds and other school monies, and include a transition plan for developing a budget for FY 2008-09 and for developing interim personnel policies. The completed RSU plans must be submitted to the Commissioner by November 15, 2007. There is then a short time period for the Commissioner and the units to go back and forth with proposed changes, with final RSU plans required to be approved by the Commissioner by December 31, 2007. If the existing school units fail to meet the November 15, 2007 deadline, the State Board of Education is empowered to develop the reorganization plan for that RSU. The State Board of Education is required to issue Certificates of Organization to all 80 RSUs by January 15, 2008.

The RSUs are then required to elect new boards of directors; hire a superintendent and central office staff, and prepare a budget for the FY 2008-09.fiscal year, and have the budget approved by the voters under the budget validation referendum method - all by June 30, 2008. This proposed timeline will necessitate that the budget development process be largely completed before the school board has been elected and before the new superintendent has been hired.

The Subcommittee's proposed timeline does not appear to be sufficient or practical; 60 days is not sufficient to determine the boundaries of the new RSUs; 90 days is not sufficient to complete the RSU reorganization plans; and it is not sensible to require development of RSU budgets for FY 2008-09 before the new board of directors has even been elected and before the superintendent of schools and business manager have been hired.

No local vote to form or join RSUs. The subcommittee's plan does not allow a local vote to form or join the RSUs. The final decisions are made by the Commissioner and the State Board of Education, in contrast to existing SADs and CSDs which were approved by the voters at the local level. It appears that the subcommittee decided not to allow a local vote because they were determined to make the RSUs operational by July 1, 2008 and because they would not be able to "book" savings from consolidation if the local voters could reject the consolidation plans.

Reorganization Planning Committees. The proposal includes a paragraph requiring the Commissioner to provide guidelines for the formation of Reorganization Planning Committees for RSUs, including representation from existing school units, member municipalities and members of the general public. These committees are not mentioned again in the proposal and it is not clear what they are expected to do or even how they could be appointed within the abbreviated time periods in the Subcommittee's timeline.

The Mandatory Budget Validation Referendum Process. Under §§ 1467 and 1468¬ of the proposal, beginning with the budget for FY 2008-09, the RSUs must use the Budget Validation Referendum Process and the cost center summary budget format for adopting their school budgets.

In contrast to current law which allows each local school unit to determine the form of the articles it uses to adopt a school budget, the Subcommittee proposal also mandates that all RSUs employ the same budget format with six expenditure articles, three revenue articles, and a summary article. The Budget Validation Referendum Process first requires a meeting of the legislative body of the RSU to adopt the budget, followed by a referendum within 10 days thereafter at which the voters either approve or disapprove the budget adopted at the meeting. In most RSUs the first meeting will be a town-meeting style budget meeting, although in large single municipalities, it may be a vote of the city council. If the budget is not approved at the referendum, the budget adoption process will have to be repeated again and again until a budget has finally been adopted both at a meeting and referendum. This Budget Validation Referendum Process has been available as an option in Maine law for six years, but has only been voluntarily adopted by three school units.

As part of the Budget Validation Referendum Process, the Subcommittee proposal will require that information be distributed to the referendum voters that shows the amount proposed by the school board to be raised for each budget article, the amount approved by the budget meeting, and, if applicable, a statement as to the dollar amount and percentage that the RSUs locally raised funds will exceed the RSUs required local contribution under the EPS Funding Act. Under the Subcommittee's plan, the school board will not be permitted at the referendum to distribute an explanation as to why specific budget articles or the total proposed budget are above EPS. The information provided to the voters at the referendum is limited to that which is mandated in § 1468(2).

Assignment of contracts. Based on the Subcommittee's most recent proposal individual teacher contracts, collective bargaining contracts and superintendent's contracts will be assigned to the new RSUs. Where different bargaining units and bargaining agents are involved, the resulting issues will be resolved through the existing procedures of the Maine Labor Relations Board.

Disposition of school property and school debt. Under § l452(8)(E)(F) and (H) of the proposal, the plans for reorganization are required to deal with the disposition of real and personal school property, the disposition of school funds, and the disposition of existing school debt and lease-purchase obligations. Under Section 53(1), however, the board of directors of an RSU may require the municipal officers of member municipalities to transfer title to all of their school property and buildings to the RSU board of directors. Section 53(3) provides that the RSU board must assume existing state-subsidized debt but that assumption of the local debt of an existing school unit by the RSU is optional. It is possible under these provisions that an RSU could take the school buildings of an existing school unit or municipality but choose not to assume the local debt associated with those buildings.

School closings. The Subcommittee's proposal includes a statement that the final reorganization plans may not provide for closing any schools existing during the 2007-08 school year except as permitted under § 1483. § 1482 provides that a school may not be closed unless the closing is approved by a 2/3rds vote of the board of directors of the RSU and § 1483 provides that the affected municipality must vote on whether or not to close the school. If the municipality votes to keep the school open after the board has voted to close it, the municipality must pay the additional costs of keeping the school open.

Mandatory school budget cuts in FY 2008-09. § 1452(2)(A)(I) of the proposal requires that projected expenditures in FY 2008-09 for special education, transportation and facilities and maintenance be reduced by 5% from expenditures in FY 2007-08. These reductions in expenditures must be made regardless of local conditions and whether or not the school unit has been consolidated with other units.

The Subcommittee's proposal also provides that projected expenditures for system administration in FY 2008-09 may not exceed a new rate to be established by the Legislature under EPS for system administration costs. The Appropriations Subcommittee is booking savings of $20,000,000 in statewide costs for system administration in anticipation of these required changes.

Collaboration. The Subcommittee's proposal includes general statutory language to encourage collaboration among RSUs and with municipalities and other levels of government but does not expressly require collaboration.

Review of unfunded State mandates. The Subcommittee's proposal requires the Department of Education to conduct a review of unfunded state mandates pertaining to education and report its findings and recommendations back to the next Legislature by December 15, 2008.

Mandatory cost sharing formula for additional local funds. The Subcommittee's proposal mandates a new cost-sharing formula for additional local funds raised by an RSU. Under Maine's current school finance law, a school unit's EPS costs are shared among its member municipalities according to their "required local contributions" as defined by the EPS Funding Act. Additional local costs are currently shared by municipalities in SADs or CSDs according to cost sharing formulas previously approved by the voters of those districts. Under the new mandatory formula, member municipalities in an RSU will have to share their additional local costs in the same percentages as their required local contributions under EPS.

Minimum mil rate expectation. The proposal requires that the property tax for education in a municipality in an RSU must be no less than 2 mils.

Advisory councils. The Subcommittee's proposal authorizes the board of directors of an RSU to establish school advisory councils comprised of citizens of member municipalities to provide advice and counsel to the board. The plan provides no further detail as to who should be appointed to such councils or what their responsibilities might be. This provision appears to have been included to address the concerns of Maine's smaller communities that they may not have an adequate voice in the governance of the new RSUs.