Rising costs, decreasing state aid and new restrictions that limit revenue are just a few of the challenges that local public schools face as they draft their 2012-2013 preliminary budgets. As schools struggle to close multimillion dollar budget gaps, the first year under New York State’s new property tax cap legislation is just the beginning, with many predicting that it only gets harder from here.
“The tax levy cap will affect Schuylerville and many school districts this year and in years to come, as we will be forced to cut staffing, reduce programs and eliminate services for our students,” said Kim Smithgall, spokesperson for the Schuylerville Central School District.
Schuylerville is not alone in its struggle to budget for the coming year under the new tax levy legislation, a law passed in June of 2011 that is commonly referred to as the two percent property tax cap. That title may be misleading – as Christy Multer, a representative for Burnt Hills-Ballston Lake Schools put it, “The two percent tax cap is not that simple – it’s anything but two percent.”
Instead, the law dictates schools use a complicated, eight-step formula to calculate how much they can increase their tax levy. In some cases, the calculated figure works out to over three percent. In others, the formula actually results in a negative number – as seems to be the case for the Ballston Spa Central School District, whose tax levy will decrease next year by .3 percent due to a proposed settlement with GlobalFoundries. (While the town of Malta approved the settlement early last week, several other parties, including the town of Stillwater, as well as the Ballston Spa and Stillwater central school districts still need to approve the agreement.)
Regardless of how the numbers work out, the law undoubtedly places limits on the amount of revenue districts can collect from property taxes. Meanwhile, costs for health care and pensions continue to climb and state aid distributed to many districts continues to fall. All things considered, the new legislation leaves schools with few options but to start cutting staff and programs, or (for the lucky districts) to draw heavily from reserve funds until their remaining balance is next to nothing.
“Over the last several years, we’ve reduced our staff by about 46.5 people through attrition,” said Kurt Jaeger, assistant superintendent for business at the Saratoga Springs City School District. This year, in order to close a $2.1 million budget gap in the $109.5 million preliminary budget, Jaeger indicated another 14 to 15 teaching positions will also be cut through attrition. On top of that, the district will be pulling a significant amount from its reserve fund so it can continue to deliver expected services.
“We’re probably looking at drawing $4.5 million per year from our reserve fund over the next four years,” said Jaeger, an amount that will leave the district’s reserves with, “not an awful lot,” he admitted.
For Schuylerville, whose preliminary budget of $30.4 million is faced with a $1.22 million gap, drawing heavily from a reserve fund to avoid layoffs is not so simple.
“At this point in time, a total of 28 staff members, including administrators, teachers and support staff, have received layoff notices,” said Smithgall.
At Burnt Hills-Ballston Lake, approximately two positions are being considered for a possible layoff to help close a $2 million gap in the $57.0 preliminary budget.
While Ballston Spa may be able to avoid layoffs this year, the school has cut 50.25 full time employees over the last three years. With a preliminary budget of $76.4 million, the district still has a $1.1 million gap to fill.
“The impact of GlobalFoundries will be positive this year, but we will have a deficit going forward,” said Stuart Williams, spokesperson for the Ballston Spa Central School District. “Basically, [it’s going to] get harder every year due to the mandates and requirements imposed on school districts.”
Despite promises of unfunded mandate relief from Governor Andrew Cuomo earlier in the year, legislation has yet to pass through Albany that would make it so. Meanwhile, state aid for many districts will actually decrease for the following year, as it has for the last several years.
“If you compare what the [Saratoga Springs] district received in state aid in 2008-2009 compared to the governor’s proposal for this year, we’re down by about $5 million,” said Jaeger. “So state aid is going down, the levy has a limit placed on our revenue – it’s very difficult. Where do you develop the other revenue from?"
“This year is tough, granted,” added Jaeger. “Everybody’s got it tough. But you keep compounding that out into the future and you look at how the numbers are trending and you see some significant challenges in our future.”
