Schools prepare for tight budgets as tax cap looks to hold levy at 0.12%

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01/27/2016 6:00 AM |

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Local superintendents preparing next year’s school spending plans are describing the process as daunting because they’re bound to nearly zero percent tax levy growth for 2016-17.

New York State Comptroller Thomas DiNapoli confirmed last week that school districts and municipalities will be expected to cap tax levy increases at 0.12 percent, down from the current fiscal year’s limit of 1.62 percent.

“Although some [schools and local governments] can rely on available reserve funds to bridge the gap,” he explained in a statement, “others may need to take a hard look at operations to find ways to cut costs to stay under the cap.”

State legislation passed in 2012 requires school districts and municipalities to limit increases in the amount of money they raise through property taxes to either 2 percent or the rate of inflation determined by the Consumer Price Index, whichever is less.

If a school district decides to pierce the tax cap, it must get a 60 percent approval rate from voters. In 2012-13, Greenport was the first — and remains the only — local school district to propose piercing the cap, for which it was able to obtain the necessary voter support.

In anticipation of the coming tighter restrictions, the Riverhead School District has offered its teachers a retirement incentive of $25,000 or subsidized health insurance coverage.

That offer is in addition to retirement benefits Riverhead teachers are already guaranteed through their union contract, which offers them either $40,000 or subsidized health insurance coverage. With the newest retirement incentive agreement, retirees who opt to forgo the health insurance could each receive a total of $65,000.

Superintendent Nancy Carney said 26 teachers have agreed to retire early, which she estimates will save the district more than $2 million in 2016-17.

“The savings realized by the retirement incentive will be instrumental in preserving programs for our students next year,” she said. “This should allow us to keep all our current programs and stay within the cap.”

School officials in neighboring districts said they’re evaluating the best course of action to address the latest budget constraint.

David Gamberg, superintendent of the Greenport and Southold school districts, said there are some planned retirements in Southold that could help lower next year’s tax increase, but retirements aren’t likely in Greenport, where most of the staff is fairly young.

“We are working to carefully analyze the proposed budgets in both districts and a specific gap has not yet been determined,” Mr. Gamberg said.

The tax cap limit for 2016-17 has been welcome news for some homeowners, including Southold resident Dan Wagner, who attends local school board meetings regularly.

Mr. Wagner said in an interview this week that he believes school districts should use reserves to offset tax hikes instead of increasing the levy year to year.

“This is a good step in the right direction,” he said of the latest tax cap figure. “I think the kids are getting a great education, which they should for $36,000 per student, but more needs to be done to reduce spending increases.”

As health care costs continue to rise and the tax cap continues to squeeze spending, school districts are relying on more state aid. [See chart for preliminary state aid figures.]

State Senator Ken LaValle described Gov. Andrew Cuomo’s school aid funding proposal as “a good starting point,” although he said it “doesn’t provide the level of funding necessary for our schools.”

Mr. LaValle and other state representatives have focused their efforts in recent years on restoring school aid lost by a budget adjustment formula known as the Gap Elimination Adjustment.

Since the 2009-10 school year, the GEA formula has been used reduce the amount of aid school districts are entitled to and thereby help reduce the state’s $10 billion deficit.

“I am pleased that in the State of the State, the governor has expressed interest in eliminating the GEA — however his proposition is to eliminate it over the next two years,” Mr. LaValle said in a statement. “That is unacceptable. The GEA has hurt students and taxpayers — we need to end the GEA now and I will work to have it completely eliminated this year.”

School boards and district officials are expected to start outlining their budget proposals during public Board of Education meetings in the coming months. This year’s budget vote is scheduled for May 17.

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School aid proposed in Gov. Andrew Cuomo’s budget

Riverhead

$28,011,796

15.95 percent increase

Smart Schools grant: $2,191,853

Shoreham-Wading River

$10,507,537

8.56 percent increase

Smart Schools grant: $1,003,429

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