$1.1 Million School District Budget Overrun and Spending Freeze Foreshadow Extraordinary FY’24 Budget Challenges

Less than two months into the 2022-2023 school year, Wilton Public Schools Superintendent Dr. Kevin Smith informed the Board of Finance (BOF) that the school district is already seeing a budget overrun of nearly $1.1 million. It’s a number that exceeds what typically will get reimbursed by state grants, a fact made worse that the district will see new expected cuts in those grants at the same time as it may have to face other unanticipated costs.

The rocky start to the ’22-’23 budget year, coupled with higher anticipated labor and insurance costs for next year, was information that signaled to the BOF that the town will face new challenges as it begins the process of setting next year’s budget.

The alarming reality of the school budget is compounding the BOF’s dilemma as to whether and how to provide guidance to the Board of Education (BOE) as well as the Board of Selectmen (BOS) for the FY2024 budget planning process — with many indicators pointing to large potential increases that could test the limits of what Wilton taxpayers are willing to bear.

Smith and BOE Chair Deborah Low attended Tuesday’s (Oct. 11) BOF meeting to highlight the many complex issues that are impacting the current budget and will likely impact next year’s proposed budget.

“The purpose of our presence here tonight is really just to share some information,” Smith told the BOF. “Coming through the last budget cycle, there was consensus around the idea that as members of the Board of Finance, you’d like to have more information from the Board of Ed early on in the process.”

With the caveat that the BOE is only just beginning to think about next year’s budget, Smith presented a “preliminary outlook” for the FY2024 budget that highlighted several key issues. (Smith’s entire presentation can be seen on the Town website.)

Enrollment and Staffing Needs 

Smith began with a discussion of enrollment figures and projections, and related staffing needs.

• While overall enrollment is not expected to change significantly, increases are expected at Miller-Driscoll and Cider Mill, resulting in the potential need to add classroom staff.
• Some state grants, which Wilton has previously relied upon for some teacher salaries, will expire.
• Additional full-time-equivalent (FTE) positions, including an interventionist and a social worker, may also be needed.

The net effect would be 6.5 FTE, which Smith estimated could result in approximately $750,000 added to the operating budget next year.

And that was not even the most shocking number discussed at the meeting.

Outplacements Soar for Sobering Reason

Smith reminded the BOF that the current budget had anticipated an increase in outplacements for students with special needs. However, the actual numbers — and the reason for those outplacements — are coming as a surprise.

“We’re experiencing an increase in the number of our most costly out-of-district placements,” Smith told the board.

“There are some kids who are on our radar screen that we know may be leading toward an outplacement… but some of our most costly outplacements weren’t actually on our radar screen. These were typically-functioning, typically-developing kids that ran into all kinds of mental health issues and required a pretty substantial [out]placement.”

Smith’s comments took an even more sobering turn.

“What we weren’t anticipating was the number of new outplacements for kids who are suicidal and really need the most intense level of therapy,” Smith explained. “As it stands, those types of residential therapeutic placements are about twice as costly on average as a more typical residential day school placement.”

The costs have soared to nearly $1.1 million over the $2.9 million in the approved budget for out-of-district placements. Smith pointed out that most of that overage would be covered by the district’s Excess Cost Grant.

[Editor’s note: Following the meeting, Smith reiterated how the overrun impacts the current year’s budget: “It’s not uncommon to exceed the out-of-district tuition line. Those costs are usually covered by the Excess Cost Grant. What’s different about this year is the higher number of very high-cost therapeutic residential outplacements we’re covering so early in the school year. For that reason, we froze the budget.”]

Smith said there were currently six students — significantly more than in previous years — in the most costly type of outplacements, and he was reluctant to project what the future number might be, whether higher or lower.

“This is a concern because we are still in the very early part of the school year,” Smith noted. “I don’t know how to accurately give you a projection because I just don’t think we have one of what we might anticipate by the end of the year.”

While the Excess Cost Reimbursement state grant will cover much of that overrun, his concern also reflects the fact that Wilton is expecting a reduction of roughly $170,000 in current year Excess Cost Reimbursement grants from the state, due to changes to the state’s formula that greater reflect a district’s wealth.

On the plus side, Smith noted that cost avoidance has been a key focus.

“We do work on trying to find efficiencies to the best extent possible,” he said, citing examples such as special education programs which focus on cost avoidance by meeting student needs within the district.

“[When] we’re able to keep kids in district, we are able to avoid the extraordinary costs of outplacements,” which, Smith explained, can run from $50,000 to $75,000 (or more) higher per student than the cost of in-district programs such as the Collaborative Center, Genesis and Community Steps.

BOE Budget Freeze in Place 

Smith is clearly worried about the district’s fiscal picture.

“We froze our budget at the end of September because we’re worried about some of these costs and the need to be able to cover them,” he told the BOF.

“Fixed costs will be the fixed costs, but anything that we can control and defer, that’s what we’re doing right now,” Smith explained.

“All of the planned expenditures that we consider discretionary, that’s where we start,” Smith said, giving an example of a planned expenditure for new textbooks that would be put on hold.

As for next year’s budget, and in the spirit of continued information-sharing, Smith said he intended to update the BOF in November with additional potential budget impacts due to facilities costs, utilities, transportation, other contracted services, and healthcare costs.

Labor costs associated with the teachers’ contract as well as the custodial staff are unknown as the district is currently in mediated negotiations with the two unions. Smith would not comment on the possible outcomes from those negotiations but said he expected the results to be known early in the new year.

BOF Reaction

“I’m really glad we’re talking about this now and not waiting until January or February to be talking about it,” BOF Chair Michael Kaelin said in response to Smith’s presentation.

BOF Vice Chair Stewart Koenigsberg said, “I don’t think it’s unexpected, particularly some of the difficulties that the children are having given the aftermath of [the COVID-19] pandemic.” 

Koenigsberg added that the snapshot provided by Smith underscored the need for more dialogue between the boards in advance of budget planning.

Ongoing Dialogue or Upfront Guidance?

Over the last several weeks the BOF has grappled with a request from First Selectwoman Lynne Vanderslice for BOF guidance for the FY2024 budget planning process.

By all accounts, the BOF wants to avoid a budget process (like last year’s) with last-minute developments and compromises that leave all parties feeling unsatisfied.

Kaelin has said he does not think the board could reach consensus on specific budget targets for the BOS and BOE. (Indeed, Vanderslice came away from the BOF’s Sept. 13 meeting with no expectation of receiving the guidance she requested.)

In part due to comments from BOF member Chris Stroup (who was not in attendance at the September BOF meeting when the subject of budget guidance was initially discussed), the BOF members reignited the discussion on whether any agreement on budget guidance would be feasible, unanimous, or beneficial.

Though Stroup said he personally believes a “ground up” costing approach is better than what he called “top-down guidance”, he also believes the BOF could reach an opinion (even if not unanimous) on what level of spending to set as a target.

“Let them [BOE, BOS] tell us what they think they should spend. Let them then respond to our collective guidance on the maximum that we would be supportive of. And if there’s a difference — if there is, maybe there isn’t — then let them just articulate sooner rather than late in the process what the tradeoffs are,” Stroup said.

Kaelin reiterated his own point of view.

“I don’t think we can [offer guidance],” he said. “There’s just too much uncertainty, too many variables, and any target I would agree to now would just be arbitrary.”

In a similar vein, BOF member Sandy Arkell also called for ongoing dialogue, but as in previous meetings, emphasized the importance of an early understanding of what tradeoffs might become necessary to adjust to the rising costs.

Koenigsberg advocated for “a feedback loop” with more dialogue in advance of budget preparation rather than “absolutes” like budget targets.

“I think it’s a much better process [if] we [the BOF] continue to have these dialogues with the Board of Ed leaders,” he said. “I think it’s a much better process than setting guidance. I think a consistent dialogue could be a much better process.”

BOF member Matt Raimondi suggested the board could do both — have greater dialogue and offer budget guidance — though he conceded that arriving at budget guidance would be difficult.

“I think there are a couple ways to provide [guidance] if we wanted to… [but] at this juncture I’d find it very hard to provide guidance specifically, whether it’s on Board of Education or Board of Selectmen [budgets]. There’s just a lot of unknowns right now,” Raimondi said.

“I wonder if there’s a way to provide more ‘high level’ guidance — high level being on the mill rate or a subject like that,” Raimondi mused. “Each of us probably has their own views about what the taxpayers may find or may not find acceptable. And using that, [the BOS and BOE] can back into what the budget should be.”

BOF member Rich Santosky felt the board would be in a better position to develop budget guidance later in the year or early next year, once union negotiations are final and other costs more clearly identified.

Specific guidance, Santosky said, would give the BOE and BOS something to “work toward.”

“If we gave them a top end, it would make them work toward that a little bit better,” he said. “But my sense is that we probably want another round of hearing what their challenges are before we do that.”

Kaelin asserted that a determination as to “appropriate” levels of spending simply should not be made before seeing budget proposals.

“It’s not a preordained conclusion, at least on my part, as to how much of a tax increase I am going to support, “Kaelin said. “I need to know what the tradeoffs are, what I’m going to lose… But I don’t know what that answer is until we go through the [budget] process.”

Koenigsberg also sought to clarify the board’s perspective when it comes to assessing BOE budget priorities on programs such as instructional coaching, which has elicited much skepticism from some BOF members in previous budget cycles.

Koenigsberg’s suggested the BOF’s intention is not to second-guess professional educators on matters of instruction, but to help assess which costs are most essential.

“Before you get to the question of [coaching] efficacy, it’s more a question of if you need to cut, where do you cut first?” he said.

“I think we should come to a meeting of the minds [with the BOE],” Koenigsberg continued. “Frankly, I find that more useful than giving guidance on things that I’m not an expert at.”

Woeful Public Engagement

If uncertainty about the upcoming budget planning process was one theme of the BOF meeting, another resounding theme was the need for involvement from residents.

Board members are urging residents to begin following budget discussions now, so that residents are not surprised when proposed budget increases are trimmed back, as occurred last year.

“The public should get involved in this process much sooner,” Kaelin exhorted. “This year there’s more uncertainty than ever. We know there’s going to be significant cost increases. But what we really don’t know is what we’re going to lose.”

Koenigsberg said he expects the upcoming budget planning to be “the most difficult” he has seen in Wilton, but was bleak in his outlook for input from the public.

“I don’t think we’re going to get significant public input,” he predicted. “The best public input has been through the surveys and even that, we all know, has its significant shortcomings.”

Stroup also lamented the lack of public engagement on the budgets.

“We didn’t get the 15% of the town out to vote in last year’s budget. The budget was approved because we had an insufficient number of voters,” he said. “I don’t know whether to take that as the Town is incredibly pleased with the work we’re doing or completely apathetic.”

Editor’s note: The article was updated to add additional clarity about the overrun in spending on outplacements and state grant reimbursements.