Tonawanda News — With residents poised to cast an up-or-down vote on school budgets Tuesday, administrators, teachers and increasingly many parents are hoping to strike a balance between maintaining the essentials of education and holding the line on taxes.
To do so, many districts are relying on rainy day funds to offset tax increases— a trend school officials say isn’t sustainable in the long term.
Despite an increase in state aid this year, 97 percent of school districts across New York relied on their cash reserves to stay within the mandated tax cap and avoid cutting educational programs, a report from the New York State School Boards Association indicates.
The three local districts serving the Tonawandas are no exception.
Those reserves have protected Ken-Ton, North Tonawanda and the City of Tonawanda during the last few, tough years. But, per projections, if districts don’t make efforts to preserve that backup money — all three districts will use them up by 2017.
“I don’t totally agree that reserves should be used” to balance the budget, Assistant Superintendent of Administrative Services at the North Tonawanda school district, Alan Getter, said. “But in these times, we need to use those (funds) to help and hope that they will return. It doesn’t hurt our budget right now, but eventually, they are going to be used up.”
NT is using a total of $4.7 million of their savings in this year’s upcoming budget — both from its reserves and from its fund balance, which represent two different lines on the budget, but are of a similar nature.
About $1.7 million of that came from the district’s reserves, which will be gone by the 2016-2017 academic year if NT doesn’t stop using the funds at the current rate.
But NT, as well as the two other districts, do have time to tackle the challenge. Getter said there are ways to balance the impending gap — including the district’s voter-approved reserves that have restrictions on how they can be used, as well as general cost-saving measures that may need to be implemented with greater speed.
In the City of Tonawanda, $1 million from the district’s fund balance will be used for the 2013-2014 budget. But, if all goes as planned, only $750,000 of the fund balance will be left at the end of this academic year — presenting what some have called a “hole” in next year’s budget.
In response, Stephen Perry, Administrator for Business and Financial Services, said that the district’s recent purchasing freeze will likely assist the district in having leftover savings at the close of this year, resulting in a higher fund balance than initially budgeted. He declined to comment on how much money currently sits in the fund balance, as any figure is only an estimate until the end of the fiscal year.
Meanwhile, next year’s budget is designed to protect the district’s balance by rightsizing and reducing how much of the set-aside money is used, Perry said. In future years, he hopes to use only $400,000 of the fund balance.
“Earlier in the budget season, we were going to have a problem year in 2014-2015, but with this budget in place, we pushed that problem year to ‘15-’16,” Perry said. “If the fund balance gets to the point where it is too low, the risk is financial insolvency. But as long as we keep pushing the problem a year farther away, the district will be OK.”
Ken-Ton is in the same boat. Superintendent Mark Mondanaro said the district has used 54 percent of its fund balance over the last four years.
“These monies are being drained down at the same rate every year,” Mondanaro said. “The changed economy hit us and we were lucky to have some built up ... but if we think this is going to stay the same, the ability to do that is going to run out in four or five years.”
Mondanaro said the district has started making efforts to prepare itself for when that time comes. But reducing the reliance on those funds means that the district’s lost revenue must come from somewhere, whether it’s from increasing taxes — while staying under its tax cap — consolidating schools, or cutting educational programs and teachers.
The challenge is one that school districts across the state are facing in an era when state aid is an annual guessing game and local tax bases are shrinking.
“Crafting budgets this year was like walking a tightrope,” Executive Director of New York State School Boards Association Timothy Kremer said. “Move too far in one direction and you cut too deeply into educational programs. Move too far in the other direction and you run the risk of exceeding your tax levy limit.”
But despite the constraints, the state’s average tax levy increase was just 2.8 percent — below the average allowable increase of 4.6 percent. Although the legal cap is publicly perceived as 2 percent, each district’s upper limit is calculated individually based on a number of different factors.
Locally, Ken-Ton’s tentative increase is 4.66 percent, more than one percent less than its cap, but a good deal higher than the state average. In the City of Tonawanda, the increase amounts to 3.2 percent, again, less than its cap of 4.6 percent. NT’s tax levy increase totals 2.56 percent, while its cap is 4.7 percent.
All three budgets are subject to the public vote Tuesday.How the mandated "2 percent" tax cap works: Each district's actual tax cap is calculated individually based on many factors, including: • The change in taxable property values -- such as the addition of new housing, stores or offices • A carryover of up to 1.5 percent of unused tax levy growth from the previous year • Pension contribution increases • Capital costs, including bonds and interest for capital projects • The district can override its tax cap if the budget is approved by a supermajority of at least 60 percent of voting residents Contact reporter Jessica Bagley at 693-1000 ext. 4150, or follow her on Twitter at @JessicaLBagley