Discusses budget challenges in the era of the tax levy cap
If you are one of the many Long Islanders paying property taxes this year, the upcoming school budget season promises to be a challenging one in the era of the tax levy cap. Superintendent Dr. Robert Feirsen of Garden City School District held the first in a series of presentations of the 2012/2013 school budget at the Board of Education work session on Tuesday, Feb. 7. The proposal includes an overall budget of $104,976,751 with a budget-to-budget increase of $3,859,693 or 3.82 percent. The projected tax levy (with STAR) is 4.25 percent.
Feirsen opened the meeting explaining that Garden city has a tradition of presenting its budget in great detail, “much greater detail and over many more meetings than many other school districts.” He also reminded residents that the evening’s review contains only recommendations to the Garden City Board of Education and is the first step in a multistep process, which will include both comments from the community and board discussions.
Having worked on seven budgets in the Garden City School District, Feirsen emphasized that the night’s presentation was expanded due to the tax levy cap. “In order to understand the budget and understand the rules and regulations, procedures that we are going to follow this year, it is important to understand the changes that have occurred in the way school districts and all municipalities now do budgets and that’s primarily due to the tax levy cap,” Feirsen explained.
Last summer, Governor Cuomo signed the 2 percent New York State property tax cap legislation that is slated to take effect in 2013. “Because it’s such a complex topic and it’s so misunderstood and has been misinterpreted in the media, it’s important, I think, for the board and community to really get a handle on that before we enter the discussion on the budget,” he said.
Feirsen clarified the complexities surrounding the 2 percent tax levy cap and how it fits into the school budget discussion. “It’s not really a cap. Instead, and this is big misconception number one. It’s not a cap per se. What it does instead is it establishes two thresholds for approval of the district’s budget. Threshold number one is if the budget falls within certain parameters…and that requires a majority vote plus one as it always has.”
According to the superintendent, if the proposed property tax limit goes beyond a certain level, it requires a super majority (60 percent of the voters) to approve it. If 60 percent of voters do not approve it, the board can choose to put the budget up again, or adjust it. “If the budget at all, whether it’s at the 50 percent level or the 60 percent level, is not approved, we are allowed to increase taxes not 1 cent beyond what they were this year, so it’s actually a zero percent increase,” Feirsen explained.
The office of the State Comptroller created an eight-step formula for determining the tax levy limit. In order to clarify what the tax levy cap is, Feirsen explained what the tax levy cap is not. He said, “It’s not a limit on the tax increase in dollars that an individual property owner might pay; it’s not a limit on assessment changes; it’s not a direct control on the tax rate; it’s not an end to voting on school budgets; it’s not a 2 percent cap on property tax increases.” He added that this is not a one-year issue. “From my point of view and I hope the board shares this, it’s not an effective way to control costs and ensure high quality,” Feirsen said.
He reminded audience members that taxes are based on a number of things, including the budget and the adjusted base proportion, which tells you how much of the tax load your particular type of property is going to be. “The tax levy cap law actually puts controls on revenues, but it doesn’t give us relief from most of the costs that are driving up our expenditures, and we are going to feel that particularly poignantly this year,” Dr. Feirsen said.
Certain items are exempt from the tax levy service, including capital projects (bonds) and pension contribution increases that rise above a 2 percent annual increase. This year’s Teacher’s Retirement System rate increase is 1.2 percent and the (Employee Retirement System) ERS increase is 2.6, therefore only .6 percent of the ERS increase is exempt.
Feirsen maintained that the district faces a number of challenges due to the tax levy cap. “There’s so many misunderstandings and misperceptions out there and miscommunications on the part of our officials and the media, that I feel to a great extent we’re swimming upstream because many, many people hear that 2 percent number and that’s all they are focused on. I know this from conversations I have had in our community, conversations I’ve had with residents of other districts and conversations with my colleagues in other districts. The mantra is all the same: nobody gets it, nobody understands it, everybody was misinformed,” Feirsen said.
Garden City relies extensively on property taxes to operate programs as 90 percent of revenue for the school district comes from property taxes, Feirsen explained. The school district receives very little federal aid and state aid has declined 21 percent over the past six years, Feirsen added.
The superintendent went on to explain that Nassau County has shifted costs of multiyear certiorari settlements onto school districts as a result of the county guarantee legislation. “Starting in 2013/2014, we will be responsible for those tax certiorari charges and we don’t know what they are going to be right now; we don’t think they will be small but we really have no idea what the extent of them is,” he added.
Since the passing of the tax levy cap, a host of other mandates have been hoisted upon the school districts, including paying for answer sheets for grade three through eight testing. Feirsen said the scoring of the Regents exam will cost $1.75 per student per exam; and the district will be charged $4.15 per exam per student for the printing, scoring and scanning of exam answer sheets. Printing reference tables and essay booklets for the English Regents exams will also be required to be sent out to bid.
In the context of the economic climate, Feirsen said the budget-to-budget increase is significant. Spending reductions were made to cut the budget increase to 3.82 percent. He also noted the budget cost drivers include contractual salary increases, pension hikes, special education and debt bond service payments that are at the peak of interest.
Feirsen said, “We are paying off three bonds. We are paying the remaining balance on the 1998 bond. We’re paying the 2005 bond that the school district used to pay for the middle school fields…and the 2009 school investment bond.” Debt service will start to shrink 2015.
Feirsen clarified what additional reductions would be needed to achieve a 2 percent tax levy increase. He explained it would cost roughly $2,050,000, which would mean the difference of taking away 23 teachers with salaries and benefits; or more than the cost of a primary school; or more than the entire cost of all principals and assistant principals; or more than twice the recommended allocation for capital improvement projects and purchase of two school buses and vans.
The goal of the budget is to achieve the balance that enables the district to provide good programs and at the same time at a level the community can afford, Feirsen said. “So when we assembled the budget, we went through a long process. We’ve been doing this for months already. There were no givens; there were no automatic increases; there were no wish lists. We asked our supervisors to comb through their budgets and provide every saving possible, at the same time, we wanted to avoid quick shots, the one-shot remedies that don’t help you down the road,” Feirsen added.
In conclusion, Feirsen said this budget preserves programs and utilizes reserves and reduces staff as a result of lower enrollments. “No major changes, no major reductions are proposed in terms of programs,” he said. He noted that many other Long Island districts are reducing athletics, special programs and high school electives, closing buildings, reducing support services and cutting back on technology initiatives in order to save money.
Albert T. Chase, assistant superintendent for business and finance, highlighted the main sources of revenue for the district, including approximately $4,621,037 in projected state aid; local revenue PILOT (Payments In Lieu of Taxes); appropriation from reserves; fund balance allocation; and property taxes.
Chase explained the district is appropriating monies from its reserve funds and fund balances to offset the amount of taxes the district has to levy. “Over the last several years, we’ve been able to accumulate reserves when we’ve had balances at the end of the year. We put those away for a rainy day. We’ve used them last year and we’ve used them this year,” Chase said.
After the superintendent’s presentation, School Board Vice President Barbara Trapasso asked the administration whether or not the reduction in the reserve account put the district in jeopardy. Chase responded that, at some point, reserves will run out, but added that he is hopeful that the pension system’s rate of increases will slow down.
“There are two options: Either the reserves are used to offset taxes or they’re not. So at this point, we are using $1.1 million. Were that to disappear, then, by default, that would increase property taxes by $1.1 million. So we certainly don’t want to increase our use of them, but to decrease the use of them, at this point, would only result in the offsetting of a property tax increase,” he said.
School Board President Colleen Foley encouraged residents to become involved in the budget process and reacted to the superintendent’s recommended budget increase. “Yes, it is a very high number and I we would all like to see zero. Knowing that may not be possible, we have to see what does the community value, what does the community want from its schools and yes, we’ve always said it, but I think this year it’s crucial, that people come out and vote for what they value,” Foley said.
The budget adopted by the board of education will be presented for vote on Tuesday, May 15. To learn more about the Garden City Board school budget, or for a list of upcoming budget work sessions and meetings, visit www.gardencity.k12.ny.us.
