Lexington now has NO robust forecast of future school enrollments, driven by families purchasing a home or renting an apartment (for example at AvalonBay at Lexington Hills) in Lexington. This forecast is badly needed because our schools represent $150 million of the town’s $200 million total FY17 budget.
We now have about 7,000 students in our schools, and some 10,000 home addresses in town, so Lexington has 0.7 student per residence — perhaps the highest ratio in Massachusetts.
How high will that 0.7 ratio rise? To 0.8, 1.0, 1.5, or 2.0? Nobody now knows because we don’t have a robust forecast. If the ratio reached 2.0, we would have almost 3 times more students than now — a huge budget problem since our schools already account for 75% of the town’s total budget.
An Enrollment Advisory Group (EAG) comprised of Selectman Joe Pato and residents Dan Krupka and Peter Beebee is advising Maureen Kavanaugh, the Schools’ Director of Planning and Assessment, on developing methodologies to forecast school enrollments based on Lexington’s housing stock.
Once a robust school enrollment forecast exists and using other key hypotheses (rate of increase of the town’s $114 million in employee salaries, costs of municipal bonding, etc), Lexington must forecast its operating and capital budgets in 5, 10 and 20 years. Capital planning is especially important because overall school expansions should be driven by future school enrollments, which are now unknown.
All we now know is that the schools have been adding +1 FTE (full-time equivalent staff) per just +4-5 additional kids (page 11 of this Superintendent presentation), which is evidently not sustainable long-term, and that we may need a $9 million operating override — i.e. an extra 6% tax increase — in 2018 to balance Lexington’s FY19 budget to educate 7,211 students in our schools in 2018-19, 5.3% more than our 6,849 students in 2015-16 (page 25 of this Town Manager presentation). Longer-term forecasts are needed to allow us to manage our schools strategically.
Such long-term forecasts will be somewhat imprecise, especially 10 or 20 years into the future, but are critical to determine whether Lexington’s finances are sustainable or not, and what tax increases the average resident will face compared with +5.1% per year tax increases over the past 26 years. Will taxes have to rise by +6% or +7% or (much?) more each year to fund our future budgets? If the required tax increases are too high — because we don’t save money, or from extraordinarily high school enrollments — something drastic may need to be done instead: ask the State for exceptional State aid, impose a very high special fee when a tear-down is approved (when a family with kids our schools must educate typically replaces seniors), or other measures.
Absent long-term forecasts of our budgets, we don’t know whether the town’s finances will remain sustainable in the future — we operate in the dark, asking residents periodically for extra tax increases (like the +2% tax increase approved on May 3, 2016) without knowing how high future taxes will end up being.
