Herricks Looks to Cut 2011-12 Budget from 7.65 Percent Hike

“Normally we would not be presenting anything on the budget until the end of January or early February,” Herricks Superintendent John Bierwirth said at the Dec. 9 meeting of the Herricks Board of Education at the Middle School. “However, we’re coming to you now because we’re facing a rather extraordinary set of challenges.”

Following last year’s budget that initially failed by a single vote, forcing the cut of about $800,000 in order to pass, Bierwirth described what the district is facing for 2011-12. On the expenditures side alone, contributions to the state health insurance plan is set to rise by 13.75 percent during calendar 2011, with a projected increase of $1,654,065 for Herricks.

“We would expect another significant increase,” Bierwirth said of the second half of the 2011-12 school year.

Contributions to the teachers and employees’ retirement systems (TRS and ERS) are expected to increase by about one-third, from 12 to 16 percent. The total increases would amount to $1,648,098 for the TRS, and $846,031 for  the ERS.

The retirement system bases its rates on a five year return formula, which “exaggerates swings in the market and as is happening now, tends to hit you hardest in the times you can least afford it,” Bierwirth said.  “It’s not clear when it may go back down.”

The total ERS cost for 2010-11 ($600,000) and 2011-12 ($400,000) was partially offset by using funds from the district’s ERS reserve. Contracted salary increases are set to add another $3,168,338, for a total projected increase of $7,380,532, the equivalent of a 7.65 percent budget to budget increase.

“With the economy what it is and the rate of inflation what it is, I don’t know about people you know, but I don’t see people going for a 7.65 (increase),” Board President Christine Turner said.

Bierwirth characterized the situation as a “shaved stand-pat budget,” adding that, “I don’t see that changing very much if we’re trying to maintain current programs and services.”

On the revenue side, Herricks is expecting $500,000 to $750,000 less in state aid than what was estimated in the spring and even further cuts in the 2011-12 school year. The board had set aside $500,000 in a reserve in August to cover the loss of state aid. Federal stimulus funds run out at the end of the 2010-11 school year. Herricks used its share of the funds for expenditures which would not be recurring, such as FUNdations training, purchasing materials and the Columbia writing program. The Federal jobs funds passed in August (about $375,000 for Herricks) will be available for 2011-12.

Each one percent increase on the expenditure side equals $965,390 while every 1 percent on the tax levy is equivalent to $837,641. Bierwirth said that it was “reasonable to estimate that whatever the level of expenditure increase, at this point, the tax levy will probably go up by at least two and probably more like three or four percent above whatever the expenditure increase is.”

Asked by Board Vice-President Richard Buckley to explain that figure, Bierwirth said that based on indications from Albany, Herricks could lose “a million or two” more in financial aid since due to the Federal stimulus money given to school districts, New York State had taken the equivalent amount out of the state aid amounts, “so we ended up right were we were going to be otherwise. If there are any changes, I think they’re all down, not up.”

Bierwirth said he's not recommending this budget at this time, but merely presenting figures which he knows about to initiate the discussion. The board asked about the possibility of preparing a budget at two percent so they would have a picture of what such a situation would look like if a tax cap were to be in place.

“If there was a gap, there would be two percent” Buckley said. “Two percent is probably the lowest we could ever possibly think of going, and then decide as a community where we want to be in there somewhere. Coming down to two percent gives you a feeling of that’s the worst case scenario. Now let’s look at the ramifications of that and then talk about possible places where we could land in terms of a tax increase.”

It has been estimated that should a two percent tax cap be in place as proposed by new Governor Andrew Cuomo,  it would only yield $625 million statewide. However, retirement and health care costs would require $800-plus million in funding to cover, producing a $200 million gap for school districts.

“If you can put real numbers out there people can understand what the ramifications are in practical terms, then you can have a better, more informed discussion,” Bierwirth said.