The new property tax cap has the administrators of the doing everything backwards.
“Historically we always put the budget together by looking at all the expenditure items throughout the entire budget... and then we would say ‘how do we fund this?’,” assistant superintendent of business Michael Frank said at the March 12 meeting of the board of education at the , describing it as more of a “balancing act” with the tax cap in place. “This year’s process instead of starting with the budget, we had to start with the tax levy, we had to do the tax cap formula to see what total amount of revenue we can have from generating taxes. It’s a little backwards compared with how we used to do it.”
In order to determine the district’s levy cap – 2.88 percent – they must begin by taking the prior year’s tax levy ($27,361,847) multiplied by a “tax base growth factor” (1.033) that is designed to, if there’s a lot of growth in the community, raise the levy. The growth increases the levy by about $90,000 to $27,452,141. However, the growth number changes every year and is not set by the district.
Prior year PILOTS (payment in lieu of taxes) are added (NHP-GCP has $43,975), subtract any capital expense exemptions ($864,812). This then gives an adjusted tax levy of $26,631,304.
“The capital exclusion is nothing more than taking the debt service section of your budget, adding it to the capital expenditures that are funded by tax dollars that you spent in the subsequent year, netted against the state aid and transportation aid that you get associated with debt service,” Frank said.
This adjusted levy is then multiplied (or CPI – 3.13 in January), whichever is lower, yielding $27,163,930. A projected PILOT provided by Nassau County ($49,024) is then subtracted for a tax levy limit of $27,114,906.
Teachers retirement (TRS) did not rise but employees retirement (ERS) did go up, so the district can add $21,738 back in as well as capital exclusions of $1,013,427 and arrive at a levy that cannot exceed $28,150,071, or a $788,224 million difference between the old and new levy, or 2.88 percent.
The district had a budget of $33,527,125 for the 2011-12 school year. The current figure for 2012-13 is $34,794,528, a 3.78 percent increase and 3.98 percent on the levy. The district is currently speaking with bargaining units and tying to save additional $300,148 to meet the levy cap.
“The reason you don’t have the line-item budget in your hand is because it’s still a work in progress,” Frank said. “We still have a little ways to go.”
The refinancing of debt reaped $1.5 million in savings while combining curriculum and technology positions netted over $140,000 according to Frank. A settled contract with administrators giving concessions of a flat rate contribution for health insurance and no increase for 2012-13 and 2013-14 school years helped to “benefit the school district tremendously,” he said.
The district’s BOCES line is going up by $262,480 because of several students move into the district requiring BOCES services. It was paid for out of reserve funds in 2011-12.
Another item for which the district must budget is $108,000 in tax certiorari settlements in 2012-13. These settlements occur when residents and businesses challenge their tax bill and assessments and the county makes adjustments for their mistakes and people are reimbursed for paying an excess amount of tax. Previously the county would make up the difference for the schools since it controlled the assessing, yet after the repeal, school districts would have to fund and pay the county back for any moneys they reimburse on their behalf.
Frank said that if retirement and health contributions remained flat as well as no loss in federal funding or a shift in certiorari, the budget would be facing a $49,134 increase, or 0.15 percent and a levy decrease of 0.47 percent.
“It’s the five things that are out of our control that are really driving this budget,” he said.
If a contingency budget were to be in place, that is if the proposed budget either fails at the polls twice or if the proposed budget fails on the first ballot and the board does not wish to hold a second vote, the board would be forced to cut the budget to arrive at a zero percent levy increase and cut a further $788,000. Under contingency, no equipment purchases can be made, and a per use fee would be charged to all persons and groups wishing to use any of the school facilities or grounds and fields.
“We can’t if we’re going to lose $788,000 dollars,” Frank said.
Using an average assessed value of a home in the district provided by the Nassau Assessor’s office, the difference the homeowner would pay between a passed budget and the contingency would be $82.01 a year.
In order for a school district to go above their cap, they must have a supermajority (60 percent or above) of the vote. It still requires only a simple majority to pass a budget that is within the levy cap. The NHP-GCP board had instructed administrators this year to adhere to the cap limit set.