Wilton’s FY 2020 budget — A perfect storm of an ailing state economy, grand list woes and declining student enrollment

With Wilton’s mill rate for fiscal year 2020 now fixed at an increase of 1.24 percent over last year, it’s worth reviewing the context in which this decision was made, principally because the factors that contribute to this week’s decisions will likely continue to be important reference points in guiding future Board of Finance decisions.
State economy
Connecticut’s economy has fallen significantly behind the national average in state GDP growth, job growth and home price appreciation. This malaise has been exacerbated by a steady out-migration of residents — particularly higher-income residents — giving rise to Hartford’s chronic yearly budget shortfalls. Sadly, the Lamont administration and General Assembly have focused almost exclusively on revenue initiatives aimed largely at affluent Fairfield County towns like Wilton. Many of these revenue prescriptions have been hastily devised with far-reaching and potentially destructive implications (witness the ill-conceived school regionalization proposal which still floats out there). This chaotic approach to managing the state’s fiscal woes — which began under the Malloy administration — has sent a chill through an already cold Fairfield County housing market and has contributed to continuing reductions in our residential grand list, which is down over four percent based on the recently published revaluation. The significant reduction in state and local tax deductions beginning in tax year 2018 has only compounded this problem. Fairfield Country realtors have noted a significant rise in the withdrawal of buyer contracts in reaction to the fiscal uncertainties emanating from Hartford. And as noted in this week’s Board of Finance meeting, even holding the town boards to a zero-percent increase over last year will result in an increase in the mill rate due to the decline in our grand list. To make matters worse, the impact will be disproportionately felt in smaller homes and condos.
Tax hike equity
Wilton’s taxpayers have experienced year-over-year increases in our mill rate for over 10 years. This has been driven largely by mandatory cost increases associated with negotiated labor contracts for the town and the school. Until recently, these increases have been largely borne by Wilton’s homeowners/taxpayers. Once the revaluation was published and it became apparent how disproportionately the magnitude of the grand list decline would impact smaller homes and condos, it became clear that some measure of balance was needed to spread the load of such change across the town. Philosophically, the approach taken for fiscal year 2020 — particularly given the specter of potentially significant tax increases coming from Hartford — seems appropriately balanced.

Student enrollment
Since its peak in 2009, annual student enrollment has been steadily declining. Most projections show that future declines will extend beyond 2027. This affliction is not unique to Wilton; it is a nationwide trend reflecting lower birth rates and an increasing propensity for young families to stay in urban environments. Unfortunately, this trend has recently accelerated.

The combined effect of sagging home prices and declining school enrollments present a very difficult environment in which Wilton and many other CT towns must manage sustainable yearly budgets for their schools and homeowners/taxpayers. Therefore, a balanced approach to sharing this pain is essential.
The good news for Wilton taxpayers is that both boards have been proactive over the last three-plus years in adopting austerity measures to manage through this turbulence. Some of these proactive measures include:
"The hiring of a highly competent CFO who now serves all town boards. This has reduced headcount and contributed to a partnership mentality among town boards in collectively dealing with emerging fiscal constraints.
"The sharing of a single town facilities manager has reduced headcount. This individual has utilized innovative approaches to managing Wilton’s campuses while managing the ongoing needs of all town departments.
"Unifying the town boards’ general ledger system into a single software instance will reduce headcount, enable a deeper examination of town staffing models and yield faster, more accurate financial decisions which should benefit Wilton taxpayers.
Wilton’s three boards have led by example and have been cited several times by Gov. Lamont as the model for the voluntary adoption of shared services that provide meaningful savings to taxpayers.
There are, however, areas of opportunity that warrant further examination for savings. Given the relative magnitude of the Board of Education (BOE) budget — which consumes approximately 70% of Wilton’s taxpayer dollars — the BOE will need to stay focused on the dynamics between projected declining enrollment and its impact on annual per-pupil spending (aka Per Pupil Expenditure or PPE). The graph below shows an 11-year review of the differential between these two measures.

No cuts made
Note that, despite criticism that the school budget has been “cut” either this year or in past years — in fact, since fiscal year 2010, the Wilton school budget has never been cut from its previous year’s amount. At worst, the school budget has been held flat to a previous year — something that has occurred only twice in the past 11 fiscal years. More importantly, when calculating the school’s year-over-year per pupil expenditure — which factors in annual enrollment declines (the dark bar in the graph above)" — WPS has enjoyed generous increases in PPE over the past five years, with most years being well above the rate of inflation. This year’s (FY 2020) budget provides an increase in PPE spending by 0.76 percent despite the zero-percent year-over-year change to the school budget. Despite the expense-moderating approach the Board of Finance has taken toward the town’s overall budget, WPS have been able to reduce the student-to-staff ratio over the past seven years — from a high of 7.48 in fiscal year 2011-2012 to 6.99 in the current fiscal year — thereby improving Wilton students’ educational experience.

Teacher salaries in Wilton are another area that merit some examination. This expense item — by far the largest component of the BOE budget — was highlighted by the governor’s recent proposal to surcharge towns with teacher salaries that fall above the state median. In the recently published list from Lamont’s office, Wilton is the third highest in average teacher salaries in the state — being 25.3 percent above the state median, six percent above Ridgefield and 9.2 percent above Darien. The upcoming teachers’ contract renewal may offer some opportunity to moderate this large and above-average growth expense item.
Our town has successfully adopted a culture of austerity during increasingly difficult economic circumstances and members of the BOS and BOE should be commended for rising to this difficult challenge. Nevertheless, with the possibility of punishing tax increases coming from Hartford, our town agencies must continue to be laser-focused in seeking savings opportunities that allow us to “right-size” Wilton during these turbulent economic times.
Peter Balderston is a member of the Wilton Board of Finance.