Viewpoint: School budget: This is not the year to raid reserves to keep tax rates well below cap

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Karen Rubin, Columnist

Oh, what a difference a few weeks make. But after the first presentation to the Great Neck School District board of the proposed 2020-21 budget, and taking all things into consideration (coronavirus pandemic, school closures, prospects for economic recession), I would still advocate as I did at the hearing that this is the wrong year to shortchange the district on property tax revenue. And this is why:

The administration is proposing a $242,799,885 budget, an $8.4 million increase, that allocates for added teaching positions to address the increasing enrollments and needs of our students in order to maintain programs.

At the March 2 presentation, the coronavirus was already on people’s minds – Superintendent Teresa Prendergast had already noted preparations in case the schools were closed – but the stock market hadn’t yet cratered taking with it people’s 401Ks, wide-scale quarantines that would keep people from their job and threaten the existence of businesses, and the unemployment rate was still at historic lows, consumer confidence was still high, and Trump was still touting the greatest, strongest economy in the history of the world.

But even before the exacerbations, there were already warning signs of fiscal troubles ahead.

Certain capital projects the school district was self-financing from its reserves were $6.6 million more expensive than projected; costs of materials were rising with scarcity as China’s factories were shut down; transportation costs – a $15.3 million budget item – are up $1.7 million, largely because of the need to entice bus drivers with higher salaries.

Moreover, state aid (less than 4 percent of Great Neck’s budget, versus 50 percent of New York City’s) is expected to be down this year, and likely down even more significantly because of the state’s $6 billion budget deficit, even before the additional billions in expenses to address the coronavirus pandemic (“You’re on your own,” Trump said to the states.”) and a policy to steer precious state aid to underperforming, high-needs districts and away from high-wealth, high-performing ones like Great Neck.

I can only imagine the higher expenses of closing schools and shifting on the spot to remote instruction that began March 18 for all grades, pre-K to 12.

I doubt there will be any savings (bus transportation is suspended, for example), but how much more money is the district going to have to spend on custodial services?

Moreover, many of our school buildings may be called upon to accommodate children of the many, many health workers, first responders and people who are employed in essential services in our community.

Based on the convoluted formula for the tax cap, the district could raise property taxes by 4.11 percent, but the proposed budget would increase the property tax revenue by 2.96 percent, an amount that is kept well below the tax cap by increasing the allocation from appropriated reserves and fund balance by $3,414.432 to $5.7 million. That amounts to 2.35% of the budget from appropriated fund balance and reserves, compared to 0.95% this year.

This in effect cannibalizes the district’s resources to address what can be anticipated as unprecedented financial stress on the district.

On the other hand, the total assessed valuation of property is also going up, as Assistant Superintendent for Business John Powell noted, and that’s a good thing.

It means that the property tax pie that all of us are allocated our fair share to pay, is bigger, so that if the district does push up the property tax increase in property tax somewhere between 2.96 and 4.1, it may not even be felt, but will give the district a cushion for the future. That is because this year’s budget becomes the benchmark for next and for every succeeding year, like compounding interest on a savings account.

Most people would not feel the difference if the school district doesn’t raise taxes closer to the cap – or at all – most of us will still face higher taxes. That is because of the shift in tax burden from commercial property owners to residential homeowners, and the overall re-assessment.

Unlike many communities, our school district continues to expand its enrollment, which next year is projected at 6,686 (not including the private and parochial students for which the district pays for a variety of services including $4.9 million in transportation).

This number has been rising steadily (enrollment in 1990 was 5,311). Our schools, among the best in the nation, are a key reason for families to move here and keep our home values high.

Speaking as an empty nester who no longer has children in the school system, I appreciate the opportunities my sons have had that have been directly responsible for (knock wood) their success in career and in life.

Their opportunities – now unaffordable luxuries in so many school districts – to participate in sports, theater, music, art, Model UN, Model Congress, science research, robotics, business clubs, Mock Trial, AP classes, enable our children to tap and cultivate abilities that enhance learning, self-confidence and give them a taste of how they want to shape their future.

This is how our district fulfills its mission to help every child, regardless of ability and background, fulfill their full potential.

The school board has demonstrated over and over how it recognizes the difficult balancing act among sometimes competing stakeholders, never asking a penny more in taxes than it absolutely needs. That would be true again this year, but this is not the year to raid reserves that cannot be replenished and will be needed for much more dire circumstances that lay ahead, in order to keep well below the tax cap.

Next year will be a horror when residents again marshal in with tales of woe, but the school district would have a lower benchmark upon which to draw, and lower reserves to address needs. Not to mention the unanticipated crises.

The line-by-line budget review scheduled for March 21 and the budget hearing on March 23 have been canceled. Hearings are scheduled April 21, May 11, before the Tuesday, May 19 budget vote. Information at www.greatneck.k12.ny.us.

2 COMMENTS

  1. “At the March 2 presentation, the coronavirus was already on people’s minds – Superintendent Teresa Prendergast had already noted preparations in case the schools were closed – but the stock market hadn’t yet cratered taking with it people’s 401Ks, wide-scale quarantines that would keep people from their job and threaten the existence of businesses, and the unemployment rate was still at historic lows, consumer confidence was still high, and Trump was still touting the greatest, strongest economy in the history of the world.”

    Absolutely, Ms. Rubin. Now that there’s a crater where your nest egg used to be and businesses are closing, NOW is the time to lash people to the yardarm and jack up their already obscene property tax burden. Brilliant policy.

    There is no limit to the gluttony. Not even a hint of self-awareness. Moloch must be fed, no matter what.

  2. In light of Cuomo’s advisement of today, March 26, 2020, you may want to revisit your position(s), Ms. Rubin. “Cuomo warns of widespread cuts to schools, others amid pandemic”, wherein he has advised that there will be downward school funding adjustments A N D, separately, further downward adjustments to reimbursements to schools for renovation and construction. Every downward adjustment in State funding is an UPWARD adjustment to the amount assessed against property owners who have to mak up any and all shortfalls.

    Question, will the Boards of Education instruct their Superintendents et al, to rework the 2020-21 School Budgets to reflect an austerity scaled budget in light of the above coupled with the State imposed lockdown, market crash and skyward trajectory of unemployment?

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