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CACF: 2012-13 School Budget

Submitted by the Citizens Advisory Committee on Finance

The Citizens Advisory Committee on Finance (CACF) unanimously supports the adopted Manhasset School District Budget of $87,069,424 for the year 2012-2013. The CACF would like to address some longer-term issues confronting the district. In recent years the district has strictly controlled spending in a difficult economic period and further reduced the tax burden by partially funding current expenses with the district’s reserves. This was done while maintaining school programs, but an austerity program can result in postponing needed investments. New tax cap rules will limit the ability of the district to spend beyond the most critical current needs and replenish reserves to historical levels. Approval of tax levy increases beyond the state-mandated cap will require a super majority vote of the community. Communication of the district’s long-term needs must be of the highest priority of the board in order to achieve that level of community support.

The budget represents an increase of $1,477,326 (or 1.73 percent) over the prior year. The largest factors in the increased expenses were a $558,504 increase in mandated pension contributions to the New York State Retirement System, a $417,047 increase in health care expenses and a $337,579 increase in compensation (increment only), which by themselves would have increased the year-over-year budget by $1,337,992 (or 91 percent of the total increase). The net impact of all other budget line-items was an increase of $139,334 (or 9 percent of the total increase). Over the past four years, the average annual increase in the budget has been 2.02 percent.

The adopted budget increase in expenses is expected to be paid for by a $1,752,398 (or 2.30 percent) increase in the property tax levy. Over the past four years, the average annual increase in the property tax levy has been 1.69 percent. The property tax levy covers 89 percent of the proposed budget. The difference between the increase in the tax levy and the budget increase offsets reductions in other sources of revenue, primarily reimbursements for the intermediate care facility and the MTA payroll tax.

Manhasset’s School Tax Compared To Other Districts

Thanks to the high level of retail and commercial activity in our town and tight control of tax level increases, Manhasset has the lowest school tax rate of the 62 public school districts in Nassau County as of the 2011-2012 school year, which is the most recent, comparative data available.

Expense Per Student Compared To Other Districts

For the 2010-2011 school year, Manhasset spent $26,452 per student which ranked 16th among 39 K-12 public school districts in Nassau County that spent more than $20,000 per student. Over the last five years (2008-2009 to 2012-2013), spending per student has increased a cumulative total of 2 percent.

Reliance On State Aid

In the proposed budget, state aid increased by $36,310 to $3,568,734. State aid covers 4.1 percent of the total budget (the same as last year). There has been a long-term decline in the district’s ability to rely on state aid. In 1990-1991, state aid accounted for 10.6 percent of the total budget.

Crowding In The Secondary School

Manhasset has a growing student enrollment. In the 1997-1998 school year, total enrollment was 2,452. In 2012-2013, enrollment is projected to be 3,251 for a 33 percent increase over the past 16 years. Student enrollment has increased by 195 (or 6.4 percent) over the past five years. This increase will particularly affect the secondary school. Over the past five years, total enrollment has increased by 235 (or 17 percent) in the middle and high school. This trend of a disproportionate increase in the secondary school enrollment is expected to continue. Not only will the increase in the secondary school enrollment place increased demands on school facilities, but it will also necessitate a greater number of guidance counselors and advanced placement course teachers. Unfortunately, the state-mandated cap on tax levy increases makes no allowance for growth in a district’s enrollment.

Reduction In Reserves

The General Fund Balance is a reserve that is governed by New York State and can be replenished only from surplus capital in the district’s operating budget. Since 2002, the General Fund Balance has averaged over 15 percent of the budget, providing the district with an ability to offset rising expenses and smooth fluctuations in the tax levy. Manhasset ranked 29th out of 43 K-12 school districts in Nassau County for General Fund balance as a percentage of budget expenses for the 2010-2011 school year (the most recent survey data available).

As noted above, the average annual increase in the tax levy over the past four years (1.69 percent) has been less than the average increase in the budget (2.02 percent). This was mostly accomplished by using reserves to pay for a portion of the expense budget increase, resulting in a lower level of reserves. Current projections for June 30, 2012 have the General Fund Balance decreasing to 6.9 percent of the budget, a significant reduction from the 15.9 percent level of two years ago. Under current property tax levy cap rules, the district will not be able to replenish the General Fund Balance to historical levels. Based upon current reserve projections, the district will have minimal flexibility to use reserves to offset rising costs, stay within the state-mandated property tax cap and maintain existing programs.

Tax Cap Rules Limit Debt Relief

The district had taken advantage of lower interest rates to arrange for refinancing of some of its debt that will take effect over the next two years. The district factored expected savings from the refinancing in its long-term planning. Under the new tax cap rules, savings from debt refinancing are excluded from the calculation of the tax base so that the district does not get the benefit of the lower rates when calculating the next year’s tax levy. This will have a significant impact on the district’s long-term financial planning.

The CACF, which is comprised of residents of Manhasset selected by the board of education, is responsible for advising the board on financial matters, specifically on the annual school budget. As in previous years, we note with appreciation the transparency of the budget process, the wealth of financial information made available by the administration and the administration’s responsiveness to CACF inquiries.

The Citizens Advisory Committee on Finance includes John H. Haberkern, chairperson, with members Erika Craven, Merilyn Donnelly, Michael Gaffney, Daphne Hildebolt, Dorothy Price Hill and Joel Levitin.