AUBURN — Confusion over the $1.2 million in additional state subsidy received by the Auburn School Department this summer could result in a few extra dollars for taxpayers.
During a workshop Monday, Sept. 11, city and school officials hope to find an easy solution to disburse $128,755 to Auburn residents after it was not reflected in tax bills that were recently sent out. Roughly $1.1 million of the additional subsidy was reflected in the bills, however.
According to City Manager Peter Crichton, during budget talks earlier this summer, city and school administrators made a verbal agreement that 100 percent of the additional state subsidy received by the School Department would go directly toward property tax relief for residents.
After the agreement was made, it was announced that Auburn would receive $1,22 million in additional school subsidy from the state. But, owing to questions aired just one day before the city was to finalize its tax commitment, the $128,755 was subtracted from the total amount.
Crichton said Superintendent of Schools Katy Grondin still has concerns that 10 percent of the funds need to be used toward the School Department’s local cost share to meet state guidelines for Essential Programs and Services formula.
However, he said he’s recommending to the City Council on Monday that the city use its financial software to credit taxpayers with the additional funds.
A home assessed at $200,000 would receive about a $2 credit, he said.
While the funds originally withheld don’t represent a significant impact on taxpayers, the questions highlight the often-confusing state school funding formula and procedures.
Grondin said disagreement still exists over whether the School Department meets its required local share. She said that when the department did calculations based on receiving the $1.2 million subsidy, the local share was off by $128,755.
She said in “an unusual year,” no one really knew what to anticipate, and Auburn received so much additional subsidy that it put them below in the local EPS share.
When the School Department met with city officials during budget talks, she said she told them it was important to meet the local contribution, then 100 percent of funds would go toward tax relief.
She added that either way, the $128,755 will end up as tax relief. If it remains with the School Department, it will be counted as revenue and rolled into the fund balance for next year.
The EPS formula dictates what percent of the total the state will pay, and what percent a municipality must pay.
Auburn had planned to make its tax commitment on July 27, and Crichton said Grondin emailed him with her concerns the night before. He called the timing of the confusion “terrible” and said it left the city with little time to respond. For that reason, he and Finance Director Jill Eastman decided to keep the funds out of the tax commitment.
“I don’t want to do anything to hurt the community or the School Department,” he said. “And we continued to research the issue.”
He said city attorney Michael Malloy and an attorney for the Maine Municipal Association looked at the issue. Crichton said eventually, even Maine Department of Education Commissioner Robert Hasson was in on the discussions.
After setting the tax commitment without the funds included, Crichton said he was told by state education officials that Auburn schools did in fact meet the required essential programs and services threshold before the additional subsidy. Grondin maintains that it doesn’t.
In a memo to the council, Crichton said there was no mention by school officials that Essential Programs and Services could have an impact on the agreement. He added, “nor was this possibility raised” at subsequent budget workshops or when the fiscal 2017-18 school budget was approved.
“It’s an odd set of circumstances,” Crichton said Friday, adding that the verbal agreement made by city and school administrators still exists. “The mayor and all the councilors expected that 100 percent would go toward tax relief.”
The council and school administrators will discuss the issue during the 5:30 p.m. workshop Monday at Auburn Hall.