More than 100 people braved freezing winds and the creeping chill of the Clarke auditorium to grapple with "The Dynamics of Public School Funding," at an open forum organized jointly by the Lexington Education Foundation (LEF) and the League of Women Voters (LWV), last Thursday.

Moderator Susan Solomon introduced the forum as one of a series of events sponsored by the non-partisan LWV, "to educate citizens and keep them informed about issues pertinent to the town."

"With tonight's collaborative event," said LEF president Leslie Nicholson, "we're reaching out to try to create a conversation about education and education funding in Lexington with a wider audience." The evening's four panelists, she acknowledged, faced the tough assignment of "distilling a sea of information into a shot glass of facts."

Fiscal policy specialist Peter Enrich poured the first double shot, outlining allowable sources of funding for schools and other municipal services under Massachusetts law, and sketching the town's consensus-building budget process. The primary revenue source, said Enrich, is the residential and commercial/industrial property tax, augmented by taxes on hotel and motel accommodation, jet-fuel and motor vehicles, and by non-tax revenue such as fees and fines. State aid accounts for around 7 percent, largely via Chapter 70 funding for the schools.

The effect of the adoption of Proposition 2 1/2 in 1980, said Enrich, has been to cap the one major piece of municipal revenue that has growth capacity by limiting the annual increase in the town's total property tax levy to 2.5 percent over the preceding year. In fact, said Enrich, the tax levy does grow by more than 2.5 percent annually, thanks to substantial new growth, which is excluded from Proposition 2 1/2. Citizens can also authorize larger increases by voting for overrides.

This system, said Enrich, a former selectman and current Town Meeting member, has "created the presumption that you can live within 2.5 percent, and if you don't, you have to go to the voters and you've done something which is extraordinary and wrong."

As Deborah Brown, chairman of the Appropriation Committee, which advises on the operating budget, demonstrated in her presentation, this presumption is untenable in an era of escalating costs, rising school enrollment, shrinking state aid and plummeting investment income.

The annual increase in medical benefits costs alone for the town's 1,300-plus employees, said Brown, "eats up the additional tax we can levy under Prop. 2 1/2. Yet health benefits make up just one of our budget drivers." Other areas of rising costs are energy, special education expenses, unfunded state education mandates, and repairs and maintenance for school and municipal buildings.

Brown explained that the operating budget mainly covers school and municipal wages and expenses. The outlook for fiscal 2005, she said, is a budget shortfall of $4.5 to $5 million, assuming maintenance of current services and staffing levels, and a zero percent cost-of-living wage increase for town employees.

The gap represents the difference between cost increases of around 5 percent over fiscal '04, and an anticipated growth in revenue of only 1.6 percent.

"This number, of course, grows larger if you contemplate restoring any of the services lost in last spring's override," said Brown, who sees no easy solution to the current economic crunch.

"My job is to tell you whether the shot glass is chipped or in need of replacement," said Capital Expenditures Committee member John Rosenberg, introducing his survey of the town's capital assets and the current state of capital funding and projects. On the public school front, the town is responsible for over 900,000 square feet of buildings, including LHS, two middle schools, six elementary schools, school administration offices, vehicles and computer technology.

To keep these essential assets operating, Rosenberg explained, Lexington uses two approaches to capital spending: "cash capital" funds set aside from operating revenues to cover items costing between $25,000 and $1 million, and debt-exclusion overrides to cover "big ticket" items like the $32 million voted in mid-2002 to replace Harrington and Fiske schools. As in the case of the operating budget, needs outstrip resources, with about $480,000 cash capital on hand to meet $2.7 million of capital requests for tax levy funds this year.

Lexington has made "remarkable progress" in recent years in updating its infrastructure, said Rosenberg. But he called the unfinished agenda "daunting," with the four remaining unimproved elementary schools representing either "an $80-million unfunded replacement project," or a "multi-million-dollar unfunded annual liability for essential renovation."

Capital expenses, while they can be postponed, do not go away, said Rosenberg, warning that it is neither painless nor prudent to avoid confronting and funding real capital needs.

After this battering with unpalatable financial realities, the audience appreciated School Committee member Scott Burson's invitation to take a seventh inning stretch. Then the relentless litany of soaring educational costs continued: $930,000 extra to fund contractual obligations; utilities up by $750,000; transportation costs up by $100,000, and so on.

In formulating a budget, said Burson, the School Committee's main concern had been to "maintain a dynamic level service," and to halt the perceived deterioration over the last two years in the quality of education provided by LPS.

Burson took the audience on a whistle-stop tour through three school budget scenarios for fiscal '05. The first represented Superintendent Joanne Benton's recommendations for containing increases at the 2.5 percent level, at a total cost of $64,357,140. Benton herself describes this on the LPS Web site as a "compliant" budget, not one in which she takes pride. The School Committee, said Burson, felt similarly uncomfortable, and asked Benton to identify possible restorations of key cuts.

Benton proposed two further budgets, featuring two tiers of "critical restorations," the second of which was endorsed by the School Committee at a meeting on Tuesday, Jan. 20. This budget calls for a total of $67,399,929, a 7.3-percent increase over last year, and while, according to Burson, it adds nothing new, it "brings us close to where we were before the failure of [last year's] override."

Questions from the audience heralded themes that will undoubtedly prove important throughout the budget process. What protection is available for elders on fixed incomes? (Enrich mentioned four schemes, including the town's volunteer program, that allows seniors to earn a reduction of up to $500 on their property tax, and the state-sponsored Property Tax Circuit Breaker Program, which, with relatively generous asset and income thresholds, provides "meaningful relief for many households in Lexington"). How do the increases in town employees' salaries compare with those in the private sector? What can be done to mitigate the "glaring escalation" in benefits? Should Lexington seek to increase its commercial tax base?

The true measure of a community, suggested both Enrich and Brown, is determined not only by its services and assets, but by the quality of its political and civic discourse. Hard times all too easily breed hard words and hard feelings, and as the town enters a challenging period of negotiation, Brown concluded by saying: "I feel very strongly that how we, as a community, navigate this crisis - the tone of our rhetoric and dialogue, as well as the process we follow and how we arrive at decisions - these things will ultimately have a greater long-term impact on our community than the adoption of one budget or another."

A full recording of the presentations and the question and answer session will air on Comcast Channel 10 at 9 p.m. on Thursday, Jan 29 and at that time slot on a number of successive Thursdays.

Two video copies of the forum will be available for borrowing from Cary Library.