Dresden Cost Reduction CommitteeFinal Board Report

12/14/2010

1. Why We’re Here2. Who’s Here – DCRC Members3. Executive Summary4. Implementing Change5. Findings & Recommendations6. Our Thanks7. Appendices:

Historical Expenditure and Revenue GrowthCost Growth Dynamics

Why We’re Here – a Reminder

12/14/2010Dresden Cost Reduction Committee Final Board Report2

MISSION: The Dresden Cost Reduction task force will work to identify areas of possible savings at the Richmond Middle School and Hanover High School, and potentially at the SAU administrative level, that could be acted upon for the 2011-2012 budget and beyond.

GOVERNANCE: The committee will be advisory to the Dresden School Board and may refer relevant matters to the standing committees – notably the Budget, Negotiating, Education, and Athletic committees.

Source FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 (est.)Dartmouth 1.9 1.9 1.9 1.9 1.9NH State Building Aid 0.9 0.8 0.8 0.8 0.7 0.7 0.7 0.6Town of Hanover 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1Residual Capital Funds 0.8 0.5Other 0.1 0.1 0.5 0.1 0.1 0.0 0.2 0.1

Totals 3.0 2.9 3.3 2.9 2.8 1.6 1.4 0.8Change From Preceding Year (0.1) 0.4 (0.4) (0.1) (1.2) (0.2) (0.6)

% Change From Preceding Year -2.1% 13.0% -10.9% -4.0% -41.4% -13.5% -42.1%

Why We’re Here – “Extraordinary Income”

12/14/20103

Changes in Extraordinary Income, FY05-FY12 ($Ms)

Dartmouth payments ended in FY09 Residual capital funds used up in FY11 Other non-tax/non-tuition revenues declining in FY12

$500k to $600k needed to make up loss from FY11 to FY12

Dresden Cost Reduction Committee Final Board Report

Who’s Here – DCRC Members

12/14/20104

Carey Callaghan, Chair, CIO American Trust John Aubin, Assistant Superintendent for BusinessKari Asmus, Dresden ChairJohn Dolan, President of Vermont Institute of

Natural ScienceKristi Fenner, CPA and Treasurer of Ansys,

Member of DFCDr. Wayne Gersen, SuperintendentHilary Pridgen, Proprietor, Trumbull House B&BRick Sayles, CFO of KVO Capital ManagementGordon Spaeth, Dresden Board

Dresden Cost Reduction Committee Final Board Report

Executive Summary

12/14/20105

For 2011-12, $500k in savings and/or new revenues to offset loss of residual capital funds is possible

$200k achieved by administration to date Additional $300k possible, mostly through increased class

sizes at HHS Committee divided on merits of recommending this

action at this time

No easy opportunities to substantially lower district costs

Incremental cost cuts could lower spending level but not trajectory

Total Cost = 3.2% annual growth over five years Salaries & Benefits = 4.2% annual growth before base

increases and other inflationary pressures

Dresden Cost Reduction Committee Final Board Report

16.016.7

17.318.1

18.819.7

3.5 3.5 3.5 3.5 3.5 3.5

2.8 2.8 2.8 2.8 2.8 2.8

22.323.0

23.624.3

25.126.0

$0

$10

$20

$30

FY11 FY12 FY13 FY14 FY15 FY16

Millions

TOTAL COST3.2% ave. growth/yr.

SALARIES & BENEFITS4.2% ave. growth/yr.

DEBT SERVICEFlat growth

ALL OTHER COSTSFlat growth

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Projected District Cost Growth Under Status Quo

Executive Summary (cont’d)

Dresden Cost Reduction Committee Final Board Report

Executive Summary (cont’d)

12/14/20107

Important to implement a sustainable set of measures that can change the trajectory of district cost growth

Hire less experienced teachers, mentor with the district’s master teachers

Establish a track for new hires that is 10%-15% below current track

Move toward a total compensation structure

Leverage use of technology to reduce small class size offerings

Adopt cultural and administrative changes to institutionalize cost containment

Dresden Cost Reduction Committee Final Board Report

Implementing Change

12/14/20108

Implementing a sustained cost reduction program in the district

Foster a culture of cost awareness

Make cost containment an area of accountability

Encourage administrative leadership to avoid use of incremental budget change

Recognize the risks of doing too little versus the rewards of acting now

Dresden Cost Reduction Committee Final Board Report

Findings & Recommendations

12/14/20109

Budget Category

Proposal Ideas $s Potentia

l

Athletics Program cuts such as move to intramurals, cut in # of teams, etc.

Cost transfers such as higher program fees

Less than $100k per year

Contract New pay track for new hires“Total Compensation” philosophy and

contract (i.e., salary plus benefits subject to negotiated limits)

$800k-$1.2m in savings per year, plus related benefit savings

Classroom Additional electives in teachers’ schedules at RMS

Larger class sizes at HHSOnline elective offerings at HHSAdvanced Placement Program in lieu

of other advanced electives at HHSConsolidation of HHS course offerings

(e.g., by having more required courses and fewer electives)

$130k-$520k in savings per year

See Document A for Complete ListDresden Cost Reduction Committee Final Board Report

Findings & Recommendations (cont’d)

12/14/201010

  Status Quo

1 More Student

Per Section

2 More Students

Per Section

3 More Students

Per Section

4 More Students

Per Section

Consolidation Actions:

Reduction in # of Course-Sections 0 12 22 31 39

Quality Measures:      

Ave. # of Students Per Course-Section 17.6 18.6 19.6 20.6 21.6

# of Course-Sections 212 200 190 181 173

Teaching Staff Size (FTEs) 42.4 40.4 38.4 36.4 34.4

Ave. # of Course-Sections

Per Teaching Staff FTE 5.0 5.0 4.9 5.0 5.0

Ave. # of Students Per Teaching Staff FTE 87.8 92.2 97.0 102.3 108.3

Estimated Savings:          

Annual Teaching Staff Expense Reduction $0  $130k $260k $390k $520k

HHS Course Consolidation Scenarios

Dresden Cost Reduction Committee Final Board Report

Findings & Recommendations (cont’d)

12/14/201011

Budget Category

Proposal Ideas $s Potentia

l

Facilities Shared services with Town of Hanover

Energy efficiencies

Less than $100k per year

General & Materials

Ongoing solicitation of savings ideas from public

More use of e-mail or web-posting in lieu of paper

Increased use of volunteers

Less than $100k per year

Revenue Items Retaining a grant writerSolicitation of int’l students as tuition

students Collecting partial tuitions from other

districtsEstablishment of HHS Foundation to

conduct fundraising

$100k +

See Document A for Complete List

Dresden Cost Reduction Committee Final Board Report

Our Thanks

12/14/201012

Community membersMembers of organizations who

helped usPublic Forum participantsEducation and Athletics

CommitteesSAU and Dresden Administrators

Dresden Cost Reduction Committee Final Board Report

Historical expenditure growth

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$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

6.8% average growth per yr.

4.1% average growth per yr. (inflation adj.)

Dresden Cost Reduction Committee Final Board Report

Regular ed versus special ed growth

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$0

$3,000,000

$6,000,000

$9,000,000

$12,000,000

$15,000,000

$18,000,000

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

4.3% average growth per yr.

1.7% average growth per yr. (inflation adj.)

11.2% average growth per yr.

8.4% average growth per yr. (inflation adj.)

REGULAR EDUCATION

SPECIAL EDUCATION

Dresden Cost Reduction Committee Final Board Report

Revenue growth

12/14/201015

$0

$3,000,000

$6,000,000

$9,000,000

$12,000,000

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11

$11.6M $22.1M$22.0M$20.6M$20.4M$19.4M$18.6M$17.3M$13.7M$13.5M$12.5M 6.7%

HanoverAssessment

7.3%

NorwichAssessment

3.5%

TuitionCharges

7.2%

Ave. Growth Per Year:

Total Revenue Per Year:

Dresden Cost Reduction Committee Final Board Report

Cost by Budget Category

$11.2

$4.8

$3.3

$0.9 $0.7 $0.6 $0.4 $0.3 $0.2

96%99% 100%98%

50%

94%91%

72%

86%

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

Salaries Payroll Taxand Benefits

DebtService

ContractServices

Suppliesand

Materials

PropertyServices

OtherServices

Other Equipment

Bu

dg

et i

n m

illi

on

s

0%

20%

40%

60%

80%

100%

Cu

mu

lati

ve

Per

cen

tag

e o

f T

ota

l B

ud

ge

t

Salaries by Type

$8.2

$1.4$0.8

$0.4 $0.4

37%

50%49%43%

47%

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

Teacher Ed. Assistant Custodial Administrative Other

Budg

et in

milli

ons

0%

20%

40%

60%

80%

100%

Cum

ulat

ive P

erce

ntag

e of T

otal

Budg

et

Cost growth dynamics, part I

Cost growth dynamics, part II

12/14/201017

For 2011-12, a zero increase in base salary and zero increase in all budget areas except benefits and special ed yields a 3.2% annual budget growth! Assumes a 10% increase in both benefits and special ed Assumes 1.25% increase in salary accounts as a result of step

and track Over five years, this would result in a 17.1% increase in the

total budget, roughly $4,000,000 over current year budgetCost shifts by State likely to increase cost and

diminish revenue Retirement costs likely to be downshifted to local

government, employees Building aid, other State aid revenues likely to be cut

IS BUSINESS AS USUAL SUSTAINABLE?

Dresden Cost Reduction Committee Final Board Report