Already hard-pressed by increasing pension costs and escalating health insurance contributions, K-L school district officials face an additional pressure—developing a budget that stays within the new state tax levy limit.
As budget talks for next year intensify, district officials are estimating a shortfall in the 2012-13 budget and even more serious challenges for the 2013-14 school year that could threaten programs, class sizes, services and the use of all six buildings in the school district.
The major cost increase next year is benefits—projected to rise by over 7 percent, or $2.26 million. Add wage increases of over $500,000 and there's a potential budget increase of 2.39 percent over last year's budget, according to the district's Finance Advisory Committee Expenditure Forecast, or FACE, as the five-year-budget report is known.
Michael Jumper, assistant superintendent for business, presented both the FACE report and a summary of the new tax cap legislation as it pertains to the district at the Nov. 17 school board meeting. Both presentations are posted with this story.
The issue is a gap between an overall projected rise in costs—$2.65 million—and what the tax cap allows, which amounts to a preliminary estimate of $2.3 million increase in spending.
The shortfall, $350,000, doesn't include a loss of $400,000 in federal stimulus funds, potential decreases in state aid, staffing to fulfill the state-mandated program or any other new programmatic needs which could result in a gap of at least $750,000 or more.
Jumper presented the numbers as estimates, with the disclaimer that the state's finance and taxation departments continue to provide guidance on the complex eight-step formula school districts must use to calculate its tax levy limit. The formula allows for certain exemptions from the cap, including some pension cost increases, legal expenses and the local share of capital expenditures.
In September, the which, "to the maximum extent possible," maintains programming and achieves spending levels within the property tax cap.
The board mulled the implications of both reports on the budget development process and discussed the use of fund balance and reserves in the current cap environment. Jumper cautioned against the use of fund balance to pay for ongoing expenses and board member Michael Gordon said it was too soon in budget talks to be considering those questions.
"This is an expenditure projection and reflects zero policy decisions," he said. "It's a mechanical projection and serves the purpose of giving us a sense of where we are headed," he said. "Whether or not we will use fund balance is a conversation we'll have when we talk about the revenue side of the budget."
"You want to work through the expenditure side first, and then look at fund balance. You want to make sure the budget lines are where you want them to be, then make cuts where we can and still maintain a top notch program," he said, equating the 2012-13 budget woes to the tip of an iceberg.
"The problem with the tax cap is that you don’t just beat it one year and then you are good going forward. The only way to really beat the cap is to get to a point when your expenditures are not growing at a level any greater than 2 percent or CPI—and the only way to do that is looking at all expenses...and keep our costs down to a rate of growth less than or no more equal to cap that we have," said Jumper.
Superintendent of Schools Paul Kreutzer outlined some of the next steps the administration would take.
"We are continuing to work on the long-range academic plan," said Paul Kreuter, schools superintendent. "This is a tight budget. We work smart in-house here, we can re-allocate and shift things and take that ground you asked us to...We are in a good situation to come to you in the new year with elements of the plan and we are going to have a balanced budget."
The next school board meeting is Thursday, Dec. 1 in the John Jay High School library.