School Board provides preliminary budget numbers for 2010-11 school year

January 8, 2010
by Susie Pender

At the Chappaqua Central School Board meeting on Tuesday, December 15, Superintendent David Fleishman and Assistant Superintendent for Business John Chow presented preliminary budget numbers for the school year 2010-11 totaling $112,902,819. In introducing this budget presentation, Board President Jeffrey Mester emphasized, “This is not a proposed budget. It is just the cost of rolling over this year’s program. This is the start of a process.”

The estimated additional cost for rolling over this year’s program is $5.6 million, an increase of 5.18%, explained Superintendent Fleishman as part of his power point presentation. Five million dollars of that $5.6 million increase is in salaries and employee benefits, he noted. The entire presentation is available at http://www.chappaqua.k12.ny.us/BoardOfEducation/p091215.pdf and includes a budget calendar. 

The initial reaction by at least two board members, Janet Benton and Jay Shapiro, was that a 5.18% increase is too high to present to the community. “Five percent is higher than I feel the community will be comfortable with,” Benton cautioned.

The board members were united in their encouragement to all of the constituencies in the community to provide input during the next seven weeks, as the budget is prepared by the administration, and throughout the budget discussion process.  The administration’s recommended budget will be revealed at the February 23 school board meeting. 

In response to requests by the school board at the December 15 meeting, the administration will be prepared at next Tuesday’s school board meeting 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.

The starting point for the budget process

The over-arching strategic question framed by the school board for the budget discussion is: “How can the district ensure continuing excellence in academic and extracurricular programs while developing a budget that is fiscally responsible?” 

As Superintendent Fleishman explained, there are four pillars of a school budget:

(1) class size, which determines staffing levels; (2) program, the scope of which is defined by course offerings, curriculum, support services and professional development; (3) infrastructure, which incorporates buildings and grounds, technology and clerical support; and (4) contractual obligations, as defined by the district’s various collective bargaining agreements. The superintendent pointed out that the fourth category, contractual obligations, determines 75% of the annual budget.

Superintendent Fleishman continued his presentation by delineating the knowns from the unknowns in the raw data for the budget at this time. The knowns are:

  * Slight enrollment decline: There will be 26 fewer students in 2010-11, which could result in one or two fewer sections at the elementary level. This preliminary budget incorporated one fewer section;

  * Debt service amount: This is known because the repayment schedule is set at the time of the bond issue. “The debt service reserve cannot be used to pay down the bond principal,” Assistant Superintendent Chow explained in response to that question from Board Member Alyson Diesel.  “Every year we ask our financial advisors whether we should refinance our debt,” he noted in response to a question from Richard Luster, a New Castle resident and former member of the school board. “We have good rates on our three outstanding bonds, and they are not advising us to do that at this time.”

  * Teacher, administrator and COSA (Chappaqua Office Staff Association) contracts: These are legally binding obligations with set terms. In the 2010-11 school year, the teacher contract will be in its third year of a four-year contract; the administrators’ contract will be in the final year of a two-year contract; and the COSA contract will be in the final year of a three-year contract.

  * Teachers’ and employees’ retirement systems, the contributions to which are set by the State Board of Education: The state has already notified the school districts that there will be a 8.5-9% increase for 2010-11. The increase this year is only 6.19%. This substantial increase is to make up for lesser amounts generated by the state retirement funds in the stock market.

  * Percentage increase in health insurance: The district belongs to a health insurance consortium of school districts in Westchester and Putnam counties that purchases health insurance from Aetna. The premium increase this year is only 3%. “This is the good news story,” Chow happily reported. “It is much lower than expected; last year the premium increase was 13%.”

  * Contingency budget: This is the default percentage budget increase for 2010-11 if the budget proposed by the school board does not pass in May 2010. It is based on the Consumer Price Index, which for the defined period is zero. So the Contingency budget is a 0% budget increase.

Budget unknowns

The budget unknowns at this time, as identified by Superintendent Fleishman in his presentation, are:

  * Possible reduction in state aid: The amount is impossible to predict with any accuracy, but all indications are that cuts are coming from Albany.

  * CSEA (Civil Service Employees Association) contract: The school district is currently in negotiations with CSEA (the custodians’ bargaining organization) to determine the terms of a new CSEA contract. The prior one expired in June 2009.

  * Transportation costs: The transportations costs are based on the Consumer Price Index of May 2010. To the extent special needs students are bused outside the district for school year 2010-11, transportation costs are affected.

  * Special education placements: “This is the hardest category [of the budget] to predict,” commented Superintendent Fleishman.

  * Number of employee retirements: Chow expects this number to be available at the end of January. The teacher contract provides for a $1500 incentive stipend if retirement plans are revealed by the end of January.

  * Amount of fund balance to be used to reduce budget and tax levy: This is typically determined by the school board very late in the budget process after the cost side of the budget has been refined and the revenue side firmed up, explained Chow. However, this year, “we are starting this conversation earlier. At next Tuesday’s board meeting [(January 12], we will present additional preliminary budget numbers for 2011-12 as requested by the board. We will also provide information about each fund balance.”

  * Assessed tax value: determined late in the process.

  * Tax certiorari settlements:  “There are quite a few outstanding,” Chow noted. Total exposure on those is four plus million dollars.”

Anticipated changes to the revenue side of the budget

Assistant Superintendent Chow expects revenues from sources other than property taxes to be down again this year. On page 12 of his power point presentation, he predicts a $536,355 cut in state aid. He expects aid from the county, which comes from sales tax, to be reduced by $50,000 because consumers are purchasing less and therefore paying less in sales taxes. He also expects interest income to be down $50,000. At the end of the day, the question for the board will be: How much of the fund balances should be used to make up for these revenue deficits and to keep the tax levy down?

For those interested in drilling down to levels of greater detail in these preliminary budget numbers, the administration provided power point charts of the following data: Recent Budget Increases (over last seven years); Major Budget Components of 2009-10 budget; Major Budget Components, estimated for 2010-11 to maintain current programs; 2009-10 Revenues Summary; Major Revenues, estimated for 2010-11; Budget Calendar; and Possible Allocation of Reserves. Click here to go to the December 15, 2009 power point presentation.

Questions from the school board and the community

In the question and answer session following the presentation, Board Vice President Janet Benton suggested that the administration look at all the reserve funds and explain to the board and the community what level is appropriate for each fund and why. Chow confirmed that this information would be available at the January 12 board meeting next week. 

Benton noted that last year the administration saved some money in the technology budget by not replacing hardware with a new lease. “This preliminary budget,” Chow explained, “assumes a new lease for new equipment. But since it replaces an old lease and in technology prices don’t necessarily increase, there is no substantial increase in the technology budget.”

Gregg Bresner pointed out that the Operations & Maintenance budget was slightly down for 2010-11, and asked whether there was any concern that the district was “letting things go” by cutting there. He was assured that that was not the case.

Richard Laster, a long-time New Castle resident and former member of the school board, asked whether the board this year would be looking into the relative cost of operating two middle schools in the current configuration, grades 5-8 at each school, versus another configuration. He noted that there is a growing disparity in the number of students serviced by each school, with Bell’s numbers increasing and Seven Bridges’ numbers decreasing under the current district map. “How much does it cost and what should we do about it?” he asked. “Shouldn’t this be brought out into the open?

Board President Jeffery Mester responded: “That has been discussed and will be discussed.” Laster added: “I don’t remember that happening last year.”

School board requests to the administration

Gregg Bresner encouraged the administration to take a multi-year approach to preparing the 2020-11 budget. “Structural cost issues need to be solved in the long term.”  Benton echoed his thought, especially regarding the costs of running two middle schools under their current configurations. “Is it more efficient to run schools of different configurations, looking at that over multiple years? Should we do some back of the envelope calculations and see what that would look like?”

President Mester put an over-arching question to the administration: “If we do ‘X,’ how will that affect program and budget? Is it worth it, to reconfigure the middle schools, to raise class size? We need to understand what our alternatives are.”

Superintendent Fleishman responded, “There are trade-off and options in the first three pillars on the spending side and with the fund balances on the revenue side. We can provide a very clear picture for 2010-11 and 2011-12 on the budget side.”

President Mester stated his position on the use of fund balances to keep budget increases down: “We have rainy day funds and I look outside and it’s raining. I think we should be dipping into those funds.” 

Benton expressed concern about using too much of the fund balances this year. Fleishman offered, “we can get you two years of information, so we can look at reserve funds over two years.”