Dresden Cost Reduction Committee Final Board Report

1. Dresden Cost Reduction CommitteeFinal Board Report • Why We’re Here • Who’s Here – DCRC Members • Executive Summary • Implementing Change • Findings & Recommendations • Our Thanks • Appendices: Historical Expenditure and Revenue Growth Cost Growth Dynamics

2. Why We’re Here – a Reminder • MISSION: The Dresden Cost Reduction task force will work to identify areas of possible savings at the Richmond Middle School and Hanover High School, and potentially at the SAU administrative level, that could be acted upon for the 2011-2012 budget and beyond. • GOVERNANCE: The committee will be advisory to the Dresden School Board and may refer relevant matters to the standing committees – notably the Budget, Negotiating, Education, and Athletic committees. Dresden Cost Reduction Committee Final Board Report

3. Why We’re Here – “Extraordinary Income” • Dartmouth payments ended in FY09 • Residual capital funds used up in FY11 • Other non-tax/non-tuition revenues declining in FY12 • $500k to $600k needed to make up loss from FY11 to FY12 Changes in Extraordinary Income, FY05-FY12 ($Ms) Dresden Cost Reduction Committee Final Board Report 12/14/2010 3

4. Who’s Here – DCRC Members • Carey Callaghan, Chair, CIO American Trust • John Aubin, Assistant Superintendent for Business • Kari Asmus, Dresden Chair • John Dolan, President of Vermont Institute of Natural Science • Kristi Fenner, CPA and Treasurer of Ansys, Member of DFC • Dr. Wayne Gersen, Superintendent • Hilary Pridgen, Proprietor, Trumbull House B&B • Rick Sayles, CFO of KVO Capital Management • Gordon Spaeth, Dresden Board Dresden Cost Reduction Committee Final Board Report

5. Executive Summary • For 2011-12, $500k in savings and/or new revenues to offset loss of residual capital funds is possible • $200k achieved by administration to date • Additional $300k possible, mostly through increased class sizes at HHS  Committee divided on merits of recommending this action at this time • No easy opportunities to substantially lower district costs • Incremental cost cuts could lower spending level but not trajectory • Total Cost = 3.2% annual growth over five years • Salaries & Benefits = 4.2% annual growth before base increases and other inflationary pressures Dresden Cost Reduction Committee Final Board Report 12/14/2010 5

6. Executive Summary (cont’d) Projected District Cost Growth Under Status Quo Dresden Cost Reduction Committee Final Board Report 12/14/2010 6

7. Executive Summary (cont’d) • Important to implement a sustainable set of measures that can change the trajectory of district cost growth • Hire less experienced teachers, mentor with the district’s master teachers • Establish a track for new hires that is 10%-15% below current track • Move toward a total compensation structure • Leverage use of technology to reduce small class size offerings • Adopt cultural and administrative changes to institutionalize cost containment Dresden Cost Reduction Committee Final Board Report 12/14/2010 7

8. Implementing Change • Implementing a sustained cost reduction program in the district • Foster a culture of cost awareness • Make cost containment an area of accountability • Encourage administrative leadership to avoid use of incremental budget change • Recognize the risks of doing too little versus the rewards of acting now Dresden Cost Reduction Committee Final Board Report 12/14/2010 8

9. Findings & Recommendations See Document A for Complete List Dresden Cost Reduction Committee Final Board Report 12/14/2010 9

10. Findings & Recommendations (cont’d) HHS Course Consolidation Scenarios Dresden Cost Reduction Committee Final Board Report 12/14/2010 10

11. Findings & Recommendations (cont’d) See Document A for Complete List Dresden Cost Reduction Committee Final Board Report 12/14/2010 11

12. Our Thanks • Community members • Members of organizations who helped us • Public Forum participants • Education and Athletics Committees • SAU and Dresden Administrators Dresden Cost Reduction Committee Final Board Report 12/14/2010 12

13. Historical expenditure growth Dresden Cost Reduction Committee Final Board Report 12/14/2010 13

14. Regular ed versus special ed growth Dresden Cost Reduction Committee Final Board Report 12/14/2010 14

15. Revenue growth Dresden Cost Reduction Committee Final Board Report 12/14/2010 15

16. Cost growth dynamics, part I

17. Cost growth dynamics, part II • For 2011-12, a zero increase in base salary and zero increase in all budget areas except benefits and special ed yields a 3.2% annual budget growth! • Assumes a 10% increase in both benefits and special ed • Assumes 1.25% increase in salary accounts as a result of step and track • Over five years, this would result in a 17.1% increase in the total budget, roughly $4,000,000 over current year budget • Cost shifts by State likely to increase cost and diminish revenue • Retirement costs likely to be downshifted to local government, employees • Building aid, other State aid revenues likely to be cut • IS BUSINESS AS USUAL SUSTAINABLE? Dresden Cost Reduction Committee Final Board Report 12/14/2010 17