FSC Report Problems – Parts 2 and 3

Fiscal Study Commission (FSC) Report Problems – Part 3 (Part 2 Follows after)

 ‘Lies, Damn Lies, and Statistics’. This article discusses the problems with the statistics in several of the report’s Exhibits and Charts.

Page 12 Graph titled ‘Percentage Growth in Property Values and Tax Bills Since 1993 …’

Misleading. The line showing the Total Value of Single Family Properties does not belong on the same graph of Average Tax Bills and Average Property Values. What’s worse, the line for Total Value of Single Value Properties was not even adjusted for the large amount of new growth in the number of new homes built in the 10 years prior to 2008. Thus it makes it appear that tax bills were rising too slowly relative to property values.

Page 12 Graph titled ‘Assabet Valley Collaborative Average Tax Bill’

– Selective. Using the Assabet Valley Collaborative for comparison purposes is arbitrary. Towns like Westborough and Southborough have significantly different characteristics compared to Shrewsbury, such as wealth and percentage of commercial properties. Their inclusion is arbitrary, intended to imply that Shrewsbury’s taxes have been rising too slowly.

– Not adjusted for major events. For example, it does not show the impact of Shrewsbury moving the funding for about half the cost of rubbish collection and disposal from the tax levy to fees, nor the impact of moving the funding for about 25% of the cost of the sewer system from the tax levy to fees.

Page 13 Graph titled ‘Assabet Valley Collaborative Average Tax Bill’

– Selective. Again, using the Assabet Valley Collaborative for comparison purposes is arbitrary, intended to imply that Shrewsbury’s taxes should be higher. Shrewsbury is a lower than average tax community, but graphs like this one exaggerate the situation by including towns like Westborough, Southborough, Bolton, and Stow.

Page 25 Graph titled ‘Shrewsbury Public Schools Enrollment History 2004 -2013’

Misleading. The scale of the vertical axis is distorting, making enrollment growth appear larger than actual. On a percentage basis, between 2004 and 2013, enrollment increased less than 5%. The related comments also do not explain that most of this increase resulted from increases at the pre-K and Kindergarten levels that were the result of school policies (e.g. increases in the number of full day kindergarten classes offered).

Teacher Contracts

Page 26 Chart that purports to summarize recent teachers’ contracts.

Misleading. To the casual reader it implies that annual increases in teacher salaries have been a minimal factor in the growth of the school budget, when in fact, the combined, cumulative, impact of COLA’s and step increases has had a substantial negative impact on the school budget. In dollar terms, the annual growth in total salary accounts IS the biggest school budget buster, but you would never know it by listening to the school department.

The presentation also makes it appear to the casual reader who does not read the footnote, that the teachers’ last COLA increase was only 0.25%. But teachers actually received total COLA’s of 2.75% during the 2012-13 contract year. And a new contract, currently being negotiated, could well include an additional retroactive COLA increase for the current year as well.

 

Charter School Data

Page 29 Chart titled ‘historical net cost to Shrewsbury arising from charter schools …’

Misleading. Shrewsbury and other school districts use a peculiar accounting method to insist that charter schools cost them money. It is peculiar because it only shows the costs to Shrewsbury. It does not show the costs saved by not having to educate these children in Shrewsbury.

It is also worth noting that when the school department praises itself for developing math programs at the middle school to keep students from going to charter schools, it implicitly accepts the need and the value of grouping/tracking, something it refused to consider at the middle school level for years, despite numerous parental complaints.

Total FTE Positions

Page 34 Chart ‘Shrewsbury, MA Department of Education Staffing Levels FY14’

Confusing. Which of these classifications are included in the calculation of pupil/teacher ratios? Based on the data that the school department submitted to the state Department of Education for the years 2011-12 and 2012-13, one would have to believe that 64 FTE teaching positions had been eliminated in that one year, but we know this did not happen (See historical numbers in chart on page 25 of report). What does this say about the integrity of data in any report submitted by the school department to the state?

Page 68 – Appendix B – Graph titled ‘2011 Shrewsbury Income and Benefits’

Misleading and unrelated. It highlights an estimated Shrewsbury Median Household Income of $88,985. After seeing this, the casual reader might relate that to average teacher salaries reported for Shrewsbury (about $71,000), and think that teachers are underpaid. But many households have two, three, or even more earners, so median household incomes and the average incomes of individual teachers are not comparable.

A better basis of comparison would have been 2011 median incomes in Massachusetts for a single earner, which was estimated by another company as $54,475. But of course, that might lead the reader to wonder why average teacher salaries in Shrewsbury are so much higher than this median number.

Page 68 – Appendix C – Shrewsbury Override Scenarios

Unrelated to the rest of the report. The inclusion of this chart makes it clear that the primary objective of the Fiscal Study Committee was town officials’ desire to try to ‘sell’ Shrewsbury residents on an override.

Pages 69 – Appendices E thru G are exhibits that are part of the budget packages that are prepared during the town’s budget process. These were not the results of original research prepared or requested by the Fiscal Study Committee, except possibly for updates to include the latest year’s data.

Conclusion: Anyone who understands basic statistical methods should have seen the problems with these graphs and charts. Town officials must have known that they were misleading. How can one avoid concluding that town officials were determined to tell a story – the presumed need for an override – and that they distorted the data to promote that story?

Author: John Lukach       Posted: 1/18/2014

Fiscal Study Commission (FSC) Problems – Part 2

Part 1 pointed out the serious flaws in the Significant Findings section of the Shrewsbury 2013 Fiscal Study Commission (FSC) Report. This article continues the discussion of problems with three sections of the Executive Summary, starting on page 4. All of the quotes come directly from the report. A link to the entire FSC report can be found at the end of this article.

 

Real Estate Taxes – page 4

‘That revenue stream is split overwhelmingly in favor of residential real estate taxes at 87% of that total, the remaining being commercial/industrial real estate taxes.’

The report fails to discuss the negative implications of such a high percentage from residential taxes. It is well known that commercial and industrial properties generally contribute more in real estate taxes than they cost in town services, while residential properties contribute less in real estate taxes than the costs of town services they require.

Later in the report the committee shows exhibits comparing Shrewsbury to other towns in the Assabet Valley Collaborative. This comparison is misleading since it fails to take into account significant differences among these towns, such as relative wealth, average housing values, percentage of land zoned residential, and minimum residential lot sizes. This comparison also excluded some neighboring towns for no other reason than that they were not in the Collaborative.

 

State Aid and Grants – page 5

‘Net State Aid has decreased since Fiscal Year 2009 and has been relatively stable at slightly under $20 million for Fiscal Years 2011-2014.’

‘Town administrators expect a slow growth in State Aid between 1-2% in the coming years.’

These are probably the two most important statements in the entire report, but their implications were not thoroughly analyzed. Given the truth of these statements, it should have been obvious that merely obtaining an operating budget override in one year would not solve the budget problem. In fact, several town officials have stated on a number of occasions that an operating budget override would only be a temporary fix to the town’s budget problem. Yet neither they nor this report have suggested anything that might help address the budget problem more permanently.

Prior to 2008 school salaries were able to increase annually at rates much higher than 2 1/2 % primarily because of the significant annual growth in state aid. Since 2009 state and town officials have acknowledged that the years of getting significant increases in state aid were over. But if that is true, and historical growth rates in state aid will no longer occur, then town officials should realize that historical growth rates in school salary accounts are also no longer feasible.

Yet nowhere in the report is there any discussion of the possibility of restructuring teacher steps in order to reduce permanently their impact on the school budget.

School Department: Expenses – page 6

1) ‘The school department’s operating budget allocated from the Town’s taxable base is $52 million. With Federal and State Grants, Circuit Breaker reimbursement, tuitions, fees, and revolving account charges the operating expenditures total $62.7 million for the FY13-14 school year.’

But nowhere does the report discuss the additional millions of dollars worth of services that town departments provide to the school department each year, and whether the total costs of these services are reported completely or not. These omissions tend to minimize the amount of support the school department appears to receive from the town. Thus school officials can use selective data to make it appear, but incorrectly, that the school department is underfunded.

2) ‘Student population has not declined but instead has stabilized at approximately 6,000 students.’

The report failed to look into the reasons why student population may not yet have declined as forecast. Some probable reasons for higher than expected enrollments include decisions by school officials to expand pre-kindergarten and full-day kindergarten enrollment substantially. Not only do these expanded offerings increase enrollment at these grade levels, but they probably cause some increase in enrollments in grades 1 – 4 that are above forecast as well.

3) ‘This subcommittee requested commissioning a study of special education costs related to the feasibility of returning students currently tuitioned-out into an in-house program.’

But the committee report failed to recommend a study to determine what may have caused Shrewsbury’s direct costs for special education students as a percentage of total costs to increase so much faster than the state average over the last 10 -12 years. Again, school policies are at least partially the cause of this rapid increase, but school and town officials refuse to discuss this problem.

Author: John Lukach       Posted: 1/3/2014