Important Notice About Requests for Financial Data and Answers to Questions Regarding Reorganization Law

INFORMATIONAL LETTER NO: 10
POLICY CODE: BA

TO: Superintendents of Schools, Members of School Boards and School Committees, Members of Reorganization Planning Committees

FROM: Susan A. Gendron, Commissioner

DATE: August 21, 2007

RE: Important Notice About Requests for Financial Data and Answers to Questions Regarding Reorganization Law

NOTE: Please share all correspondence regarding the reorganization law with all school board members, and members of any Reorganization Planning Committees (RPCs) to which your SAU belongs. Also, please encourage all of the above to sign up for the Department’s Reorganization Updates which will include this and other information and resources. They may sign up online at: http://www.maine.gov/education by clicking on “School Administrative Reorganization” and then e-News Updates, or send contact information for all school board and RPC members to: Melissa.Padgett@maine.gov.

…………………………….

Notice about Requests for Financial Data

A handful of school administrative units have indicated in the media that they plan to file a Notice of Intent on August 31 indicating they will file an Alternative Plan. For units of fewer than 2,500 students, I wish to make clear that a determination that “the financials don’t work” must be based on the Department’s response to a request for financial data, and a careful review of that data by the SAU and/or RPC.

Without that data from the Department, it is not possible for SAUs/RPCs to accurately calculate the effects of possible consolidations, and requesting it and reviewing the response is part of a unit’s demonstration of “due diligence.”

Answers to Key Questions

In our ongoing effort to answer questions about the Reorganization Law and its implementation as they come up, below please find answers to a number of questions having to do with school choice, the 2 mill minimum, forming RPCs, and several other topics. Most of these, and other questions can be found on the Q&A section of our website, at the address given above.

Q: Under what conditions might school choice be taken away from future students in a community that currently has it?

A: Before governance is transferred from the current School Administrative Unit (SAU) to an RSU, SAUs may rescind the rights of their own students to school choice, as is allowed under previously existing law. RSUs may not rescind the authority of a member SAU to offer school choice. The Reorganization Law is silent as to how a previously-existing school unit might decide to continue or discontinue school choice once the RSU is formed. The Department is required to submit to the Education Committee, by January 31, 2008, recommendations and proposed legislation necessary to implement the reorganization law; the Department will include a recommendation that this issue be clarified.

Q: I’m not sure if my unit technically has school “choice” – we have a contract with a school outside our unit. Can the new RSU take away that contract, or refuse to renew it in the future?

A: A regional school unit in which a previous education unit has contracted for secondary school programs is bound by the terms of that contract, unless otherwise negotiated by the parties. See Section 1479(2).

Q: Can an SAU form/join more than one Reorganization Planning Committee (RPC)?

A: Yes, an SAU may participate in more than one RPC for purposes of planning but it’s preferable for an SAU to conduct its broad-based explorations informally, and then to focus on participating in one RPC soon after filing the Notice of Intent, as the due date for the plans is December 1, 2007 and therefore decisions need to be made in time to meet this deadline. Please note, also, that an SAU may request only one $2,500 stipend for miscellaneous costs on behalf of one RPC, for whom the SAU is managing these funds.

Q: Must all units raise a minimum 2 mills, whether or not they join an RSU? (The language of the law seems to only require it of those units that join an RSU.)

A: The Department understands that the intent of the reorganization law is for everyone to raise 2 mills, though the law isn’t clear on this issue. The Department is required to submit to the Education Committee, by January 31, 2008, recommendations and proposed legislation necessary to implement the Reorganization Law; the Department will include a recommendation that this issue – including where any amounts raised and not needed by the municipality are to be directed – be clarified. The intent of the law should guide SAUs in their planning as they move ahead in this effort.

Q: If an RSU wants to raise more money, locally, in any of the four categories, is it permitted to? That is, does the law require a showing of savings regardless of any extra the RSU may raise in a budget or is the RSU permitted to show that it can’t realize the savings so will raise whatever else is needed?

A: The law does require a showing of savings as part of a Reorganization Plan or Alternative Plan regardless of any additional amount the RSU may raise in a transparent budget that is validated by the voters.

Q: If an SAU files more than one Notice of Intent, will the Commissioner approve more than one or only one?

A: The Commissioner is required to respond to the Notices of Intent to indicate whether or not the intended action complies with the requirements of the Reorganization Law. While she could find that more than one Notice of Intent filed by the same SAU does comply, it is important for SAUs to focus on participating in one RPC soon after filing the Notice of Intent, as the due date for the plans is December 1, 2007, and therefore decisions need to be made in time to meet this deadline.

Q: If a municipality raises additional funds for a K-8 school, are those funds part of the RSU budget?

A: While this amount would be voted on by only one municipality in accordance with a specific warrant article, these funds must be reflected in the RSU budget and be included in the budget, budget validation, auditing, chart of accounts, etc. for which the RSU is responsible. See Section 1481(2), last paragraph and 1483(1)(A).

Q: Do the Reorganization Plans and Alternative Plans have to show the reductions in the four areas (system administration, transportation, special education, and facilities/maintenance)? And how can units achieve those savings?

A: It is important to note that EPS amounts in these areas are being reduced, so the Commissioner will be looking for these savings to be reflected in all the plans. The Department will be convening focus groups in at least 3 of the 4 areas (transportation, special education, facilities/maintenance) in the very near future to develop strategies for SAUs to consider for achieving these savings, and to develop ways of achieving these savings in the aggregate where possible (e.g., special education). The Department will also provide suggestions on how to achieve administrative savings, given the revised per-pupil amount in the EPS formula.

Q: Can a municipality that belongs to two different CSDs (K-8, 9-12) join two different RSUs?

A: No; the law requires that a reorganization plan “. . . provide comprehensive programming for all students from kindergarten to grade 12 and must include at least one publicly supported secondary school.” See Section 1461(3)(B)(2).

Q: Will the reorganization into a new RSU be considered a change of employer and adversely affect employees who have met federal requirements regarding Medicare contributions?

A: The Department understands that the intent of the Reorganization Law is to provide a seamless transition process for SAU employees, and is seeking informal guidance – in consultation with the Attorney General’s Office and Drummond Woodsum & MacMahon – on the question of whether the change to an RSU represents a change of employer for purposes of meeting federal requirements regarding Medicare contributions. With respect to securing a new federal ID number, this process can be undertaken once the RSU is organized and there should be ample time to secure the number.

Q: Can an SAU that files an Alternative Plan still pursue reorganization with others and have a department facilitator through the process?

A: Because this is largely dependent on the specific facts of a given situation and how the overall reorganization effort is taking shape, the Commissioner will determine if this is feasible after reviewing all the Notices of Intent.

Q: We’re not ready to make a final decision on partners – can we get an extension on the August 31 deadline for filing our Notice of Intent?

A: All units must file by the August 31 deadline so that the Commissioner can get a complete picture of the potential Regional School Units across the state and respond to all the notices by Sept. 14. Units that are still engaged in discussions with multiple possible partners should file more than one Notice of Intent and indicate the possible partnerships.

While the Commissioner could find that more than one Notice of Intent filed by the same SAU does comply, it is important for SAUs to focus on participating in one RPC soon after filing the Notice of Intent, as the due date for the plans is December 1, 2007, and therefore decisions need to be made in time to meet this deadline.