3NCD: Schools and Taxes

About this series: Each month, three New Canaan Democrats write essays on a common topic.  You can search for “3NCD” to find them all.  We present these to advance the public debate on important issues and to present a range of opinion within the Democratic party in town.

Essay 1:
The truth is that most places change over the course of one’s lifetime. Sometimes for the better, sometimes for the worse and sometimes it’s just difficult to judge – they’re just different. For example, my Dad’s office of 40 years was located on Broadway in New York City, diagonally opposite the Flatiron building. His office on the 15th floor overlooked that building. The nearby park, which is the home of the original Shake Shack, was non-descript – we used to walk across it to get to the luncheonette catering to the business community. When he left in the early 80’s, the neighborhood was already in transition — architects had moved in where wholesalers of cameras and shoes had been. Today it is one of the more fashionable areas to work and live in Manhattan.

Why does a place change? Some causes are easy to identify, like the decisions to open or close transportation links, introduce or relocate businesses, or the impact of a natural disaster like a Hurricane Katrina. These decisions can create dramatic changes in a place rather quickly, which may or may not be permanent or long lasting. However, what I am interested in are the choices towns make which influence over time the character of a place and change it for better, worse or indifferent. Our little town of New Canaan is at such a crossroads; the choices it makes during the next five years will alter and affect over time the town and the townspeople who live here. Let’s consider education.

Education accounts for 65% of our town’s operating budget and our investment has paid us back handsomely. Our graduation rate is close to 100%, the majority of the town’s school age children attend public schools for part if not all of their education, and graduates are admitted to and attend top colleges throughout the U.S., which includes each year many Ivy League colleges and highly ranked public universities. Within the last three years, the New Canaan public school district has achieved national recognition as being one of the top public school district’s in the nation. After years of being in the shadow of Greenwich, its larger, more diverse, and wealthy neighbor, New Canaan has pulled ahead of it because of thoughtful, focused planning by our Board of Education, Superintendent and town government. And while education continues to represent more than half of our town budget, this is not the result of inflated budgeting or frivolous spending (as one of the other essayists points out) but a reflection of increased costs — in fact, our Board of Education and Superintendent have demonstrated sensitivity and flexibility in fiscal matters over the years.

For property owners, the benefit of living in a community supporting a proven, high performing school district is that families want to live here and are willing to pay top dollar for our residences. Our school district has always enjoyed a local reputation as being home to one of the better Fairfield County public school districts, but now, owing to the investments we have made as a community; we enjoy a reputation that is known nationally and internationally. I do not think we should underestimate this achievement and its positive economic ramifications.

Demographically, the town is split between its population of empty nesters, those between the ages of 55 and 75 and its families with school age children. How many of these empty nesters will stay or leave during the next ten years? How many grandparents’ homes will become their grandchildren’s homes? (I know of three young families who moved into their parents’ homes because of the excellent public school education.) The trends suggest that some empty nesters will move out of their homes and into smaller residences — hence the interest in building more apartments/town homes for independent seniors– and that some will choose to remain in their homes. The irony is that in order to move into those smaller residences, seniors will need to sell their single family homes to young families attracted to the town’s schools.

As the population ages and remains in town, there is a projected demand for new services for our senior citizens. What could be some of the economic ramifications of these projected new demographics? A decline in families and a school age population will mean less families with multiple cars, more available parking and less commuters. (Could that lead to a reduction in train service? How could a reduction in service impact the town’s future as a country escape from NYC? Does anyone remember the years of lobbying it took to increase the service?) The town could earn a real estate windfall should one of the school buildings be closed and sold to a developer. One of the regional hospitals could expand its clinical services in town to service our seniors. Conversely, with the increased demand for health services, we may see an increase in the demand among healthcare professionals for better residential choices, and services that cater to their population’s needs, e.g. good schools for their children.

Perhaps, before entertaining a divisive tax structure that pits different demographics against one another, we should examine whether we wish to become a single demographic community or whether we want to retain our multi-generational character. I suspect that the latter will be true and if so, then it behooves us as a community to tackle our future fiscal challenges from a shared perspective and appreciation of how our town’s asset, education, impacts positively our town’s economy, services and character. Yet, if it is the former, then I trust that future plans being put forward will reflect that choice, .e.g. the folly of a town parking structure.

Essay 2:
My New Canaan property taxes are $14,800. Therefore, with one child in school system –at the 2012/2013 cost of $18,500 per student- I am gaining $3,700 worth of education (in addition to other services) for free. I am much appreciative to those of you who subsidize my New Canaan lifestyle.

Next year however, my son is off to college and it becomes my turn to subsidize others. I have no problem with this process. That is the way it is supposed to work.

New Canaan residents receive good value for their education budget. Our schools are the foundation for strong families, community and property value. So far, there does not seem to be any concern or push-back on costs that increase at a faster rate than property values, inflation or household income. It is an investment the Town is happy to make.

In the 5 years ahead, Town demographers forecast New Canaan will have ~200 fewer students: 3964 vs 4126. These same demographers forecast we will have an unchanged town-wide population of ~20,000. Together, these forecasts suggest there are likely to be more empty-nest families like mine.

I hope they are all as committed to New Canaan schools as I am. If not, there might be turmoil in The Next Station to Heaven.

Essay 3:
Last month we discussed “user fees” and why they really don’t move the needle much in reining in the town’s budget. Now it’s time to talk about the 800 pound gorilla that sits in the middle of every debate about budgets and property taxes – our schools. Full disclosure: (1) I sent my daughter to NC’s schools from third grade through high school – she received a wonderful education from dedicated, accomplished, professionals. (2) I believe strongly that every generation bears a responsibility to educate the next and that the costs and benefits of that responsibility extend (although perhaps not equally) to the entire community, not just parents. That said, however, we face some tough challenges.

Some numbers: New Canaan’s school enrollment is somewhere around 4200 students. We spend (or will spend) around $18,000 to $20,000 per student per year. In the upcoming town budget, schools are roughly: 67% of the operating budget, 40% of capital expenditures, and 58% of total debt service costs. For fiscal year 2012-13 we will spend about $84 million of the town’s roughly $130 million budget on education. These are big – gorilla size – numbers, almost all paid for by property taxes.

Don’t get me wrong – New Canaan’s Board of Ed. and school administrators/teachers do an excellent job. You only need to look at our state or national educational rankings, SAT scores, college admission results, etc. to know that they work hard and that we are getting our money’s worth. The school system they are responsible for is one of the primary drivers in attracting young, successful, families to our town. Furthermore they are fiscally responsible, given their mandate. For example this year’s proposed education spend for operating costs (arguably the most “controllable” of any budget item) is up by less than 2% which is, in my view and in these times, quite a remarkable achievement.

Nonetheless, no matter how well managed the process or how successful the results – $84 million is a lot of money. What drives these gorilla sized numbers? The short answer is – we do. New Canaan has precisely the educational construct that it, in the past, has opted to have. Today’s problem is: Can we continue to pay for that educational construct given what appear to be some fundamental shifts in our town’s reality?
The town population is aging, placing demands on tax revenues for different services and raising questions of burden sharing. (Tax rebates or reductions for those without children? Tax surcharges for families with more than one child enrolled?)
Young families appear to be having fewer children but rightly expect continued excellence in the educational options available to them. With stable or declining enrollment on the horizon we will face questions about our physical plant. (Keep our 3 primary schools or consolidate?)
The town’s non-educational infrastructure is declining and many of its operating assets are in need of repair, refurbishment, or replacement. (Town Hall, Fire Station, first responder and emergency services, etc.) How do we fund these requirements in the face of our recent very modest-to-flat growth in gross tax ratables? (Higher property taxes versus reduced educational expenditures?)

School costs in New Canaan are NOT the result of mismanagement, waste, or profligate spending – quite the contrary. They reflect, instead, an installed cost base (with a relatively high component being fixed costs) that responds to a previous – but not necessarily unchanging – reality. This is one of the classic definitions of a structural financial problem. Like all such problems, solutions will be both tough and painful. My own view is that we cannot sacrifice our commitment to maintaining excellence in our educational construct (it is critical to our “New Canaan” brand) but we will have to struggle with questions of optimality in terms of its physical plant, curricula offerings, and class size. My own experience in dealing with structural mismatches in the private sector leads me to the view that we will need to couple those questions with some form of “hard ceiling” share of town revenue (e.g. educational expenditures within the town budget not to exceed some % of revenue) in order to provide the Board of Education a broad working template within which to come up with “right-sizing” solutions while providing the rest of the town budget with increased access to tax revenues (perhaps incorporating some version of “burden sharing” mentioned above) to address our emerging needs.

Structural problems do not solve themselves – they get worse. They cannot be fixed overnight or with band aids. Their solutions will prove contentious and painful. Ignoring them will prove disastrous.

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