School board instructs administration to use reserves to keep budget down

January 15, 2010
by Susie Pender

At their regular meeting on Tuesday night, the Chappaqua Central School District School Board continued their public dialogue with the administration about next year’s budget.

In response to the board’s request to the administration at the last school board meeting on December 15, the administration augmented its “Preliminary Budget Discussion” charts to provide two years’ worth of budget numbers as well as details on each of the fund balances that could be used to reduce the tax levy. See “School Board provides preliminary budget numbers for 2010-11 school year,” NCNOW.org, January 8, 2010.

After reviewing with Assistant Superintendent for Business John Chow the reserves that could be drawn down to lessen the tax burden of next year’s school budget, the board instructed the administration at the conclusion of Tuesday night’s discussion to assume for purposes of preparing the 2010-11 budget that $3.4 million of reserve funds would be used.

What two years’ worth of numbers showed

The Major Budget Components chart of Tuesday’s presentation, available by clicking HERE, showed the administration’s best guess at this time of what it would cost for school years 2010-11 and 2011-12 to simply maintain the current program offered by the district. As revealed at the last meeting, the administration predicted that it would require a 5.2% budget increase to maintain the program in 2010-11. They predict further that it would require a 5.9% increase to maintain the same program through 2011-12. It is important to note that these are not budget proposals, they are just starting points for the initial discussions between the administration and the board as the administration prepares the proposed budget, which will be released on February 23.

The charts revealed again that the bulk of this increase comes from salaries, a 5.3% increase as set by collective bargaining agreements, and employee benefits, a 14.1% increase, reflecting a substantial increase in contributions to the retirement system. And this level of increase would occur despite the fact that there would be a 6.8% decrease in debt service because one of the district’s bonds will be paid off, Chow noted.

Board member Gregg Bresner quickly calculated that these budget increases would translate into a 16% rise in taxes by the end of the second year, if nothing were done to reduce the budget or increase revenues other than taxes.

Anticipated revenues for 2010-11 and 2011-12

“The revenue side of the budget is trickier to predict because of state aid,” explained Superintendent David Fleishman. They are predicting a $536,355 decline in state aid in 2010-11 and an additional $730,500 decline in 2011-12. “My best Albany sources say that the state is at a point where they might have to cut state aid in the next few years,” Fleishman reported. “It’s not a surprise why they don’t do it. Everyone opposes it.” But if they choose to cut, he suggested, it will be a real cut. “Why get killed politically for little impact? We already know that there is only one more year of stimulus money, and that some of that [second year] money has already been borrowed [for use] this year.”

Board member Alyson Keisel expressed concern that, based on a means test, the district could lose substantial state aid over the next several years. Fleishman and Chow explained that only a portion of state aid is based on a means test. Building aid, transportation aid and BOCES aid are all across the board payments, not predicated on a means test.

On the other hand, Superintendent Fleishman suggested, “we could be wrong. Thirty percent of the New York State budget is revenues from Wall Street. If it comes back, . . . When the stock market does well, those are good years for school districts.”

$3.4 million in reserves found available to help with tax levy

As requested, Chow presented a chart identifying the district’s eleven reserve funds, their contents as of June 30, 2009, the end of the last fiscal year, the amount available for redistribution and the administration’s recommendations for what funds to consider using for school year 2010-11.

Last year at the end of the budget process, the school board decided to allocate $2.43 million dollars from the Unallocated Fund Balance to the 2009-10 budget to reduce the tax levy to 0%.
This year, the administration has indicated to the board that their work in preparing the 2010-11 budget would be different if the board could at this earlier time give some indication of whether and how much they might consider dipping into the reserve funds.

The board instructed the administration to move forward under the assumption that $3.4 million of reserves would be used to keep the budget down. Chow recommended that $232,361 be taken from the Debt Service Reserve Fund. This money is available, he explained, because that fund included interest income earned on bond monies as well as leftover bond principal. That money is restricted; it can only be used on debt service. So it will be used to reduce the debt service line in the 2010-11 budget on the expense side.

Similarly, the Reserve Fund for Retirement Contributions has $767,639 that can only be used for retirement contributions. So that amount will be used to reduce the employee benefit line of the 2010-11 budget, on the expense side.

On the revenue side of the budget, revenues will be increased by $2.43 from the Tax Certiorari Reserve Fund. As tax certiorari or tax grievances are filed, the district sets aside money in this account to pay for the final resolution, Chow explained. “We have recently had some substantial settlements with Mt. Kisco Country Club, Whippoorwill Country Club and Chestnut Ridge. As a result, the excess funds set aside for those cases can be released.”

The board has had no discussions yet as to whether they will dip into the Unallocated Fund Balance for the 2010-11 budget. That fund currently stands at $4,383,885, slightly less than 4% of the budget. State requirements only allow the district to keep a maximum of 4% of the budget in this fund. It is replenished each year to the extent that the district is left with excess funds at the end of the current school year. For example, if money was allocated in the 2009-10 budget for something, and that something didn’t happen, then that money would be excess funds at the end of the 2009-10 school year.

Operating standards for 2010-11

Last year the administration identified the operating standards on which they would rely in preparing the 2009-10 budget. That list included:

• Ensure tradition of excellence in teaching and learning continues.

• Maintain current class size ratios at elementary schools.

• Come close to existing class ratios at the secondary levels.

• Maintain existing structures at the middle school level to the greatest extent possible.

• Maximize efficiencies in scheduling personnel wherever possible and change schedules where appropriate.

• Offer close to the same breadth and depth of course offerings and extra-curricular activities at Greeley.

• Ensure that district buildings continue to be clean and well maintained.

• Ensure that school and district offices function efficiently and effectively.

• Ensure that we meet all legal mandates.

Superintendent Fleishman suggested that the same operating standards from last year should be applied to the budget preparation this year.

The board agreed, but asked that the administration look at the class sizes and show them what a budget would look like if they increased class size by one student.

To view NCNOW’s collected articles on the 2010 -2011 school budget, click HERE.