In the next six weeks the Marlboro School budget for the 2018-19 school year will undergo numerous revisions before final numbers are approved and inserted into a document that will go before the voters on May 15. During last week’s budget presentation, Patrick Witherow, Director of Business and Finance, stressed that with “every presentation the numbers should get tighter and tighter; so the numbers here are not set in stone but it is where we are as of today. I expect there will be some changes [but] nothing significant and we will be fine tuning [it] up until the day of final adoption.”
Witherow said last week the district submitted their tax cap levy calculations to the state Comptroller’s office.
“This year for the first time in four years, we see the ability to have growth in our levy,” he said. “[In] the last three years we’ve seen a reduction in the levy every single year based on increased building aide”- resulting in a $830,235 increase in the levy from last year. For the 2017-18 school year the tax cap levy equaled $33,948,733 and for the 2018-19 school year that number increases by 2.45% to $34,778,968. This is the amount that is projected to be raised in taxes from the residents.
Witherow said since 2014 the district has seen a “slight increase in the tax rate even though our levy has been dropping. We have been losing value in the district because we continue to see the Roseton Power Plant devalued. This past year it dropped by about $15 million in taxable assessment, which is about $44 million dollars in true value. So even though our levies have reduced, the value of the district has dropped faster, resulting still in increases.” He pointed out that although Marlborough residents recently saw a tax decrease, this was due to Newburgh’s incorrect assessment of the Roseton power plant by $1.2 million.
Witherow said next year will be a “rollover budget that as of last week has no proposed expansion of programs or personnel. He highlighted the major areas where he expects to see some increases: salaries/payroll up by $430,000, health insurance up by $100,000, ERS/TRS expenses up by $375,000 and BOCES Services also up by $32,000. Transportation costs, however, will drop by $70,000 next year because of consolidation of routes and sharing the transportation of out of district students with other school districts.
Witherow said he expects an overall increase in revenues of $864,081 in the 2018-19 school year, with $830,235 of that coming from the levy. He said the district is proposing to use $3,994,848 from their reserves, which is $235,922 more than what was appropriated for the 2017-18 budget. In addition, he expects to see a decrease in state aid next year by about $51,000 versus what the district budgeted in 2017-18.
Witherow listed the proposed 2018-19 budget totals: proposed expenditures are $57,600,937; the estimated revenues are $18,827,121, leaving a tax levy of $38,773,816. He reiterated that the school district’s tax cap stands at $34,778,968, which is what is prompting the proposal to tap the reserves by $3,994,848 to make up the difference. He said if the district does not use the reserves, then 60% of the voter turnout would be needed to pass the budget, because the district would be piercing the tax cap, an action Witherow said is not a “responsible” move.
Witherow said traditionally the district has funded 96% of their expenditures so they have built into the budget 4% in continent funds that can be used to pay for a myriad of items or circumstances that may arise in a given year. He said when the $3.9 million is applied from the reserves, “we’re really only expecting to use about $1.6 million of that. We have $2.3 million in what we consider contingent expenses, which is the 4% of our budget, that we hold in case a situation happens when we need to spend money that we didn’t plan on spending.” Witherow said in the past few years the district has built up these funds in order to cover expenses until the state aid numbers reflected the loss in value from the power plant bankruptcy. He said if the district does not spend the $2.3 million it will go back into the reserves.
“Basically it’s using our savings account to buffer any unexpected expenditures that come up. We’re not asking taxpayers to give us money to fund that buffer; we already have that money and that’s what we’re using,” he explained.
Witherow returned to the $1.2 million clerical error by the Town of Newburgh that has left the district short in their tax collection for the present 2017-18 school year, “which is not something we planned on.”
Witherow showed a spreadsheet giving long term financial projections for the district. He noted that presently the district has about $7 million in reserves but after the present school year ends, the reserves will be down to $2.6 million; a deep impact because of the clerical error. He noted that by the end of the 2020-21 school year the reserves will stand at $544,510, which is well below the allowable 4% in the fund balance. But in the 2021-22 school year this downward spiral begins to reverse itself, due in part to the district retiring some debt payments so that in the 2022-23 school year the fund balance has climbed to $1.8 million.
“As we go forward that should build until we have an adequate level of reserves in our 4% fund balance,” he said. “So we’re very sensitive right now to any increased expenditures, which is why we are proposing at this time a strict ‘rollover’ budget. There’s no new programs, there’s no new staff and no new anything; its all according to within the existing parameters that we have today.”
Superintendent Michael Brooks said the use of this amount of the reserves was anticipated in order to allow for a “soft landing so there aren’t spikes in the tax collection” bringing it “down to a planned level and once that debt starts to drop off, the reserves begin to build back up again.”
Witherow broke down the 2018-19 budget into a three part comparison: administrative costs are $5,204,866; Program costs are $43,122,076 and Capital costs are $9,273,995 for a total of $57,600,937. The budget for the present 2017-18 school year was $56,736,857.
Witherow said there are a few variables that may impact the near final budget numbers: the amount in the Smart School Bond Act and the final state aid numbers; the number of staff retirements and a redesign of programs within existing budgetary parameters to assist in efficiency.
By Mark Reynolds