Impacts of the COVID-19 pandemic have caused havoc for school districts everywhere, and they are particularly vexing where budgets are concerned — districts have spent much of the past year living under the threat of a mid-year budget axe slashing up to 20% of state aid.
But for a district like Riverhead, one of just 11 school districts in New York State that failed to pass a budget for the 2020-2021 school year, devising a budget for next year is all the more difficult.
The state’s property tax cap law, enacted in 2011, limits real property tax levy increases to the lesser of 2% or the Consumer Price Index, with a few limited exceptions and adjustments — for items like capital debt and local tax base growth.
Since district voters twice rejected the proposed 2020-2021 operating budget last summer, the Riverhead school district was prohibited by law from increasing the 2020-2021 property tax levy. That means the property tax levy limit for 2021-2021 is based on the 2019-2020 levy — a setback of nearly $2.4 million for the district, compared to what the tax levy limit would have been for 2021-2021 had the 2020-2021 budget passed.
While the tax levy remained static for two years, the district’s expenses have continued to climb, including significant cost centers over which the district has no control. Among those costs are contributions to state pension funds, which are set by the state, health, property, liability and other insurance costs, and salaries set by existing collective bargaining agreements.
Despite the challenges, district officials are committed to staying within the property tax cap; last month the school board adopted budget goals affirming that commitment.
Deputy Superintendent Sam Schneider provided a detailed, plain-English exposition of how the tax levy cap is calculated, including explanations of all the components that go into the calculation, such as PILOT payments and adjustments for tax base growth and capital improvement debt service.
This year’s tax levy cap, set by the state comptroller, is 1.23%. Schneider explained how he calculated the allowed exclusions and adjustments to arrive at a 2021-2022 tax levy increase of 1.47% over the current year’s levy — which is the same amount as the 2019-2020 levy because of the contingency budget. The school board approved the calculation last night, authorizing Schneider to submit the calculation to the state comptroller’s office for approval by March 1, as required by law.
Against that backdrop, Schneider and Interim Superintendent Christine Tona last night gave the first of three budget presentations to the board, leading up to the adoption of a proposed budget by the school board on April 20, a public hearing on May 11 and the budget vote on May 18.
View/download the budget presentation document at the end of this article or on the school district website here.
Watch the video:
Tona said in developing a budget for 2021-2022, the most important goal is to recognize that last year, Riverhead district residents went to the polls and told the district twice that “they didn’t have confidence in our spending plan.” The district must “listen to their message, learn from it and put forward a spending plan that’s in the best interest of our students and the community at the same time,” Tona said.
Last night’s presentation focused on expenditures for general support, benefits and debt service.
General support includes expenses for the board of education, who are unpaid volunteers; central administration, which includes the superintendent’s office, business office and personnel office; auditing; insurance; and BOCES administration.
Proposed expenditures for general support for 2021-2022 total $4,114,939, a 3.72% increase over the current year. (See budget presentation document, page 24 for a breakdown.)
Benefits expenditures include pension contributions, workers compensation costs and health insurance costs. Pension contributions, which are based on employees gross salaries, will be calculated when staffing is finalized, Schneider said. The proposed budget line for workers compensation expenditures — which fluctuate throughout the year, depending on the number of employees receiving workers compensation — is $886,037. The total recommended appropriation for health insurance is $15,961,073. Because the state health insurance premiums are set for the calendar year and the district’s fiscal year is from July 1 through June 30, the district has actual numbers only for the first six months of its fiscal year and must estimate the cost for the final six months (January through June 2022). Schneider said he estimated a 10% increase in the coming year, based on past experience.
The district’s debt service expenditures will total an estimated $8,219,891 for 2021-2022, a 1.4% reduction from the current year. Debt service includes interest on a tax anticipation note — short-term borrowing to pay expenses while the district awaits disbursement of property tax revenues collected on its behalf by the towns of Riverhead, Brookhaven and Southampton.
TANs are traditionally due in June, Schneider said. To cut interest costs, the district began issuing two series of TANs, with part of the principal due in February and the balance due in June. This approach has saved the district $167,583 in interest expenses in the last two years, Schneider said.
The next budget presentation, set for March 9, will cover the regular day school budget, transportation and facilities.
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