Last week Louise Lynch, Business Administrator for the Highland Central School District, gave a slide presentation on the district’s proposed budget for the 2018-19 school year. The district is considering a “rollover” budget of $45,004,152 that keeps current educational programs and staff; calculates new debt for the 2014 referendum BAN and additional debt for the prior year bus propositions; includes funding for known staff movement and retiree Health benefits and retains $100,000 inter-fund transfer for the food service. She said this proposed budget represents an increase of 4.99% from the present year and, if approved by the voters in May, would be the largest increase since the 2013-14 school year, which was a 6.5 percent hike.
Lynch said the new debt from the $17.5 million district building project has been structured in several ways.
“Some of it was short term financing [and] this year has turned into longer term financing, which is known as serial bonds,” she said.
Lynch said the increase in debt for the new buses is $128,269 but pointed out that the district will be receiving aid for these purchases. She said there is new debt payment of $1,494,168 because of the building project, for which state building aid is anticipated. She indicated that this debt is what is driving the 2018-19 budget.
Lynch said in the future the annual debt payment will change based on the amount of debt held by the district. She said the 2018-19 school year will be the first time paying debt on the $17.5 million building project. Although the project was approved in 2014, the first borrowing of nearly $5.5 million was done in mid 2017. A second borrowing of approximately $12 million will happen during the 2018-19 school year.
“At this time we are projecting what the interest will be and what the principal will be,” she said. “I think it is pretty solid [$1.4 million] but at this time it absolutely is an estimate.” After the borrowing is secured and calculations finalized, Lynch said the annual payments “will be the same from the 2019-20 school year all the way on for the next fourteen years.” Lynch said “once the building aid starts running that will also be relatively constant year to year.” She noted that building and transportation aid is relative to a district’s wealth and population. This aid money can be used to pay for construction costs.
Lynch said employee pension costs will increase next year by $125,323 and health insurance premiums are estimated to rise by $432,495. She also noted an additional $43,033 in miscellaneous expenditures.
Lynch provided a slide to highlight factors that have influenced past budgets and tax levies. She said the NYS tax cap limits the growth of school property taxes to no more than 2% of the Consumer Price Index [CPI], which is a measure of the variation in prices paid by typical consumers for retail goods and other items. For the 2013-14 budget, the CPI was 2%, and reached a low of 0.12% in 2016-17 and a high of 1.62% in 2015-16. The 2017-18 budget came in at 1.26% and she is expecting the cap for the 2018-19 school year to return to 2%. She said when the CPI is high “the levy and the budget generally follow.”
For 2018-19 the amount to be collected in taxes stands at $28,000,464, which is right at the tax cap limit of 2%. The expected NYS Aid is $14,952,225 but Lynch said the district generally receives more after passage of the state budget in April and final tabulations are concluded.
Lynch said the district will also receive $540,000 in other revenues, “which is interest, non-resident tuition, prior year refunds and federal medicaid.”
Lynch expects the board will apply $1.5 million from the appropriated fund balance as they have for the past two budget cycles. She pointed out that the district has only modest amounts in their reserve funds. She added that the district has not used any money of the Employee Accrual or from the Debt Service.
Lynch said the proposed 2018-19 budget of $45,004,152 budget has an increase of $2,137,222 [or 4.99 percent] from the present school budget. She said the district is staying within the tax cap and is actually proposing a balanced budget. She explained that the maximum tax levy increase from last year that is allowed under the present 4.45% tax cap is $1,193,211. She reminded the board that the district will be receiving $14.9 million in state aid, which is actually an increase of $906,899 from last year and an additional $37,112 in other revenues. Adding these three figures comes to $2,137,222, which is the exact amount of the increase that is proposed in the 2018-19 budget and meets the state tax cap provision.
Lynch acknowledged that these are higher budget numbers than the district has seen in recent years, due in part to growth in the CPI, some economic growth and the district dealing with $1.4 million in new debt. On the brighter side, she said an approved budget by the voters may mean that more state aid will be allotted to the district.
“I’ve used very conservative numbers in the building aid [for the construction] because they can only get better,” she said.
Superintendent Thomas Bongiovi said there is often talk of gloom and doom and making cuts that surrounds the development of a school budget.
“We’re not saying that; this maintains all positions and all programs [but] there are no new programs or positions in this budget. It maintains everything we have and it can only get better depending what comes down from the Governor,” he said.
Board member Sue Gilmore concurred, saying “this is too good, as Tom said no gloom and doom, this is wonderful.”
Barone was more cautious, pointing out that although there is no fiscal gap, meaning not enough revenue to meet expenditures, “we have the largest budget increase in five years and that is a little concerning to me.”
Board member Mike Bakatsias believes the $1.49 million in new debt should not be pulled out of the two percent tax cap calculation but instead it should be included in the computations in order to give a more accurate overall fiscal picture. Barone added, “that’s the formula, no way around it.”
Lynch said the district could “grow programs” if even more state aid were to be approved than expected or if the school board were to approve a budget increase higher than the 4.99% that is presently proposed. She said historically Highland has had one of the lowest school budgets, if not the lowest, in Ulster County.
“In light of past budgets I think we want to present a budget that can be adequately supported,” she said.
Bakatsias said the district could grow programs by examining ways to reuse money more efficiently in the existing budget, by streamlining programs or by reviewing how budget items can be recaptured.
Superintendent Bongiovi said this is a “good modest start in the budget process and I think we’re going in good directions.” He said there will be more revisions ahead in the next few weeks, but added, “It’s not where you start, it’s where you finish.”
By Mark Reynolds