Why the Portsmouth School Department is bracing for a 'tough budget year'

PORTSMOUTH – In the first half of a marathon Town Council session on Monday Superintendent Thomas Kenworthy and Town Administrator Rich Rainer gave a side-by-side presentation of the town of Portsmouth’s municipal and school district budgets and legislative priorities for 2023.

The municipality and school department budgets and legislative priorities overlapped at certain points, and state Sen. Linda Ujifusa, state reps. Terri Cortvriend and Michelle McGaw were all in attendance as Rainer delivered the dour conclusion of his matter-of-fact presentation, telling the council and the public audience:

“Getting hit by high inflation, the loss of significant aid to the town, and priorities that just keep piling up: it is going to be an extremely difficult budget year. We will do our best to keep the rates reasonable, but I’m not going to offer any false hopes. This is going to be a tough budget year.”

State cutting aid to Portsmouth school department budget by over $275,000 in 2023

In a RIDE table showing the governor’s recommended education aid to every town for Fiscal 2024, Portsmouth’s formula aid, group home aid and high-cost special education aid are all being cut. In total, figuring in a few other categories which have been cut including one called a “non-public transportation offset,” Portsmouth stands to lose $275,031 in state funding for its school department.

Kenworthy told The Daily News while Portsmouth has known since the school funding formula was last tweaked in 2010 that it would see its state aid reduced every year, this is the largest cut the department has had to swallow since joining the district in 2014.

He also explained that while Portsmouth did receive almost $17,688 in non-public transportation offset aid from the state last year and is not receiving any state aid in that category this year, that disbursement was something of a windfall which came after the FY23 budget had been finalized and approved. As a result, that line item does not figure as a loss in Portsmouth’s budgetary calculations, and the real loss the school department is dealing with as it calculates its next budget comes out to $257,145, the remainder of the total state aid cut less the transportation offset item.

At the Jan. 23 meeting, Kenworthy explained the biggest driver of aid reduction this year was an obscure fund category within the state funding formula for group home aid. According to the RIDE tables for enacted aid in 2023 and recommended aid in 2024, Portsmouth is losing $197,623 in group home aid, or about $16,468 per bed.

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Kenworthy explained at the meeting:

“We saw a dramatic reduction in group home aid, so that’s another one of the categorical funds that doesn’t get mentioned often, but we just have beds that are not being used in Portsmouth in our group homes. The problem we are facing, and we didn’t realize how significant it was till we dug into these numbers, is we’re down 12 total beds because they’ve closed those homes on the Boy’s Town campus.”

Portsmouth a 'big loser' in the school funding formula due to property values

Speaking at the Jan. 23 meeting in response to the school department’s legislative priority of adjusting and simplifying the state’s school funding formula, Ujifusa said, “It’s so opaque that it’s unbelievable…we have got to get this (formula) more transparent because it’s a mess. I think it was done on purpose to prevent people from advocating for what they want.”

Speaking to The Daily News in a phone interview, Kenworthy explained, “A huge driver within that formula is property values…when we really dug into the formula, our property values get really skewed with these really expensive waterfront properties which are not necessarily what the typical Portsmouth family owns.”

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He explained RIDE last updated the funding formula in 2010, “and this is when some of the new factors were introduced and there were some communities that were going to be ‘big winners’ and ‘big losers.’ For the districts that were going to be ‘big losers’ in the formula – like us – they did what they were calling a 10-year gradual reduction.”

What that meant in practice, said Kenworthy, was that from 2010-2020, the School Department knew – and the state spelled out from the beginning – that Portsmouth was going to lose somewhere between $100,00 and $200,000 in the funding formula every year.

“I think the tough part for us has been that since 2020, we were expecting to get through that and then after that we can have some budget certainty, but it hasn’t worked out that way for us," Kenworthy said. "They come up with a different reason every year as to how they’re going to play around with the numbers within the formula and we just continue to be a ‘big loser’ within the funding formula.”

Town Councilman Keith Hamilton criticized the formula both at the meeting and in an interview for essentially penalizing Portsmouth for having a strong tax base and a track record of strong fiscal stewardship with regards to maintaining its school system, and he pointed out every school department in Newport County except for Jamestown is contending with a cut to its state aid this year.

“Because of (this year’s) cut, Portsmouth taxpayers are on the hook for 5 cents more on their tax rate…In order to make up $257,000, on the taxpayer it is roughly 5 cents on the property tax rate.”

Portsmouth set to make first payment on $21.44 million school facilities bond

Rainer explained in his presentation that while Portsmouth’s municipal debt service obligations were scheduled to decrease by approximately $200,000 next year, the first payment on the school facilities bond is due this calendar year and will be included in the next fiscal year budget proposal, resulting in a net increase of over $600,000 in bond debt service next year. However, he said, “Barring any new debt issue, debt service will remain fairly stable until the late 2030s.”

Rainer also made a point to say the town is, “very satisfied with our collaboration between the town and the school district across three important areas: facilities management, information technology and the school resource officer program.”

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Kenworthy acknowledged the bond is “a significant investment on the part of Portsmouth taxpayers” and assured the public the facilities work would result in “significant health and safety improvements” at all of Portsmouth’s school facilities. According to a fact sheet on the school department website, the lion’s share of the funds is going toward Hathaway and Melville elementary schools.

He also reminded the public that over course of the debt service agreement, the state will reimburse over $8,000,000 to the town, a reimbursement rate of 35% plus an additional 5% health and safety bonus. Thus, the $21.44 million bond will actually cost the town about $12.86 million, and the fact sheet anticipates a yearly tax impact of about .002% on Portsmouth’s property owners – an additional $56.70 in annual property taxes on a $250,000 home, or $113.40 on a $500,000 home.

This article originally appeared on Newport Daily News: Portsmouth School Department state aid reduced by $275,000