Thursday, 11 April 2013 00:00
For many people, the mention of taxes, percentages and points can be a source of stress and anxiety. Add politics to the mix and you have a sure fire recipe for confusion.
For those of you who enjoy pouring over all the facts and figures, everything is posted in the Budget Information page on the Oyster Bay – East Norwich School website.
For the rest of us, let’s try to understand what is going on in the simplest way we can.
The first thing to understand is what makes up a school budget. Just like you do at home, the schools have to make a good guess at how much money will be needed to meet expenses for the near future. Those estimates are spelled out line by line in an expenditure budget.
The next step is figuring out how to pay for these projected expenses. School districts get some of their revenue from state aid, federal aid, local revenues and reserves. The amount received from all these sources is never enough to fund the entire expenditure budget.
The amount not covered by those revenue sources is made up from taxpayers in the form of a tax levy. It is this revenue item that New York State has limited. New York State passed into law a “2 percent limit” on the tax levy. However, the 2 percent figure was just a starting point. The state allows for exclusions to the limit. Depending on how the exclusions are figured in, some district’s limit comes in higher than 2 percent and some lower.
Some of the permitted exclusions are for real estate growth in the community, debt service, and district contribution to the retirement systems. When all the factors are calculated, the Oyster Bay East Norwich school tax levy limit for 2013-2014 is currently set at 3.09 percent. This number may change as more information comes in from the state, but should only deviate by .05 percent either way.
After a couple of years of hearing the Governor talk about a “2 percent cap,” it is easy to see why people are confused by the 3.09 percent figure that we are now working with. To be clear, our 3.09 percent tax levy limit is the amount allowed by New York State.
A district may choose to go higher than the permitted tax levy limit. However, a budget that is higher than the limit must pass the vote by a super majority of 60 percent. The OBEN Board of Education decided to stay within the state levy limit and will not need a super majority to carry the vote.
The trouble is that the business of operating our schools while maintaining all the programs we have in place will be more expensive next year. An “as is” budget for next year would cost 4.72 percent more than last year. However, since we can only increase the tax levy by 3.09 percent, a ‘budget gap’ has been created between revenue and expenditures.
Many school districts around the state are faced with cutting jobs and programs to close this budget gap.
Oyster Bay – East Norwich can be proud of the work done by the district administrative team. Last year was the first year of the Levy Limit Law. Showing great innovation, the administration closed the budget gap for the 2012-2013 school year without cutting any programs or jobs. Each subsequent year gets more and more difficult to keep up with rising costs. The 2013-2014 budget gap is going to be difficult to close without increasing class sizes and cutting programs.
Board of Education Trustee James Robinson said, “Preparing the budget is not a sprint to May 21, but rather a marathon for the future of the excellent educational program in Oyster Bay-East Norwich.”
It will become more and more difficult to close the budget gap each subsequent year that the levy limit is in place. The district administration has proposed cutting expenditures by $451,000 and dipping into the fund balance to raise the revenues to close the budget gap this year.
Many people wonder why the district does not just use the fund balance to bring the tax levy even lower. Many districts have been forced to do this and are now facing financial disaster. The district administration has proposed a budget that is within the tax levy limit while keeping an eye on the fiscal well-being of the District for the years ahead.
Not only has New York State limited the tax revenue the district can raise, but has also cut state aid to the district. This year Oyster Bay – East Norwich received over four hundred thousand dollars less from the State than was received in 2008-2009. Cuts in State Aid amount to over 2 million dollars less than OBEN would have gotten had the amount of State Aid remained the same since 2008-2009.
New York State Assemblyman Al Graf of Holbrook says, “A disproportionate share of education funds comes from the people of Long Island and the amount returned gets smaller and smaller every year.”
Long Island represents about 17 percent of school-aged children and homeowners pay the most in taxes. However, Long Island only gets about 12 percent of total school aid paid out by the state. The board of education will decide where cuts are to be made, how much reserves should be used and adopt the 2013-2014 budget at the April 16 meeting.
On May 21, the polls will be open at Oyster Bay High School from 7 a.m. until 9 p.m. for the budget vote. The vote will be decided by a majority above 50 percent.
If the budget fails, the board of education can choose to have a second vote, which carries with it the cost of hiring people to work at the polling place and renting the machines. If the budget fails a 50 percent majority a second time, the district would be forced into a contingency budget that would result in a significant loss of programs.