The 2013-14 budget for the Herricks School District will be one of the most difficult in recent years, having to cut between $3 million and $3.2 million in order to come in under the state-imposed 2 percent tax cap.
“When I say out of the budget, that would be maintaining existing programs and services,” Superintendent Dr. John Bierwirth said during a meeting of the board of education on December 13 at the middle school.
“Last year we started in June so we had only very preliminary estimates when we first started talking with the board and the public about our financial picture. This year for a variety of reasons we waited until this point.”
The superintendent gave the district council of PTAs the financial numbers last week which he described as “fairly firm” for all areas of the budget except for the growth factor which the district was supposed to have received from the state in November.
“We don’t expect that to be very significant because obviously there has not been much construction in Herricks, new buildings going up,” the superintendent said. “So there’s no reason to believe that that should be anything other than about flat.”
Half of the amount is adjusted by the fact that the teachers’ and employees’ retirement systems rates are going up by a significant amount, a portion of which is above the cap.
“If the rate goes from 9 percent of salary to 11 percent of salary, that’s 2 percent, or goes from 10 to 12,” the superintendent said. “it’s obviously not 2 percent, that’s a 20 percent increase from 10 to 12 but the way the state calculates it, that’s a 2 percent increase.”
The rate for teachers’ retirement system in 2012-13 is 11.84 percent and is projected to rise to somewhere between 15.5 and 16.5 percent of salary next year. Dr. Bierwirth said any amount above 13.84 would be above the cap, raising it.
“Right now at a 16.5 percent rate, the adjusted tax cap would be 3.5 percent,” he said. “The $3.1 million to $3.2 million that we have to cut does not change if the teachers’ retirement system comes in less, the cap is just adjusted downward because $3.2 million is under the cap.”
Benefits in each of the systems are guaranteed and any shortfall must be made up by an increase in contribution from taxpayers.
“The retirement systems and health insurance do not move up in a straight, even line; one year is six, one year is nine,” Dr. Bierwirth said. “The retirement system went from a little over 11 percent to 11.84 instead of going to 13-something and then 15, 16 so we did a half-jump one year and a four-step jump the next.”
The administration would present a recommended budget to the board at it’s January 24 meeting that will also include recommendations for cuts above $3 million. The superintendent added that at that meeting estimates and projections for the next five years would also be given “because at this point we can actually project out in broad terms for the next five years.”
The 2012-13 school budget , a 2.41 percent increase over the previous year, while the levy – what the school district asks taxpayers to pay – was $89,929,401, a 2.88 percent increase over 2011-12.
Dr. Bierwirth estimated that the district would not receive a firm number from the teachers retirement system until about February 2013.
“So we don’t know whether the adjusted cap will be, if it was 15.5, that would be 2.9 percent,” he said.
Every $1 million in spending (or cuts) equates to roughly 8.3 positions, or 25-28 total positions on top of the 85 positions cut over the last 2 years.
“At this point we would be asking the public to vote on a tax increase of 2.9 to 3.5 depending on where the retirement system ends up coming in, having cut an additional 25-28 positions out of the budget,” Dr. Bierwirth said. “Last year it turned out to be slightly better than we anticipated, this year is somewhat worse; over the two years it’s about exactly what we projected over the two-year period of time. It’s safe to say that the cuts that we made the last two years kinda didn’t change a lot that was going; things were different but we got to keep most of everything the way it was and the district intact. This year that’s not going to be the case. There are going to be some real difficult choices and programs and things that are not going to be around next year to go. It’s going to be a tough year to find 24-28 positions to go.”