For NewRo The Bell Tolls: Journal News Wake Up to Looming School Budget Crisis

Talk of the Sound has been reporting for more than a year on the out-of-control spending by the New Rochelle School District and warning that totally unrealistic assumptions about property assessments, state aid and one-time injections of stimulus funding. Now the Journal News has joined the party. Well, better late than never. The Journal News appears to be laying the foundation for the sticker-shock soon to be felt around Westchester County as school budget season approaches.

Early school budget picture not pretty

…the early picture is so ugly that all concerned may want to cover their eyes.

While the school budget crisis will reverberate all around the area, it will be particularly acute in New Rochelle which has been largely alone in continuing the massive year-on-year budget increases and adding more staff despite the economic crisis which has gripped the country since at least 2008. While almost every district in Westchester was limiting budget increases to between 0 and 2 percent, New Rochelle was adding millions to the ever-expanding budget.

After a decade or so of increasing spending, partly to accommodate growing enrollments, virtually all school districts have been paring down their budgets the past few years. Most districts now say they have few easy cuts left to make as the recession is descending like a grim.

Paring down budgets? Not in New Rochelle. While other districts have been holding the line, the New Rochelle Board of Education, under the leadership of Cindy Babcock-Deutsch, refused last Mayto provide residents any information on then-ongoing union negotiations with teachers, janitors and maintenance workers. Babcock-Deutch, who is up for election this May running for the only available school board seat in 2010, repeatedly claimed it was against the law for the school board to tell voters whether there would be cuts in jobs, benefits or salaries in the new union contract. The board claimed that if the contract details were known before the vote he would insist they be disclosed. The day after the budget vote, the union announced its new contract, a trick that voters may hold against Babcock-Deutsch in the May 2010 election for her board seat.

The Journal News cites a number of reasons for the budget crisis without mentioning the most obvious — teachers unions which have communities in a stranglehold.

State aid is whithering because of the state’s own deficits. Some federal stimulus money that was expected is not coming. Property assessments are going down, leading to costly tax rebates. Staff salaries are going up, although less than in the past. District contributions to the state’s teacher retirement fund are rising. Utility costs are high. State and federal mandates continue to force districts to spend in numerous areas, oblivious to the economy.

The BoE routine is entirely predictable:

School officials generally start the budget process by explaining that 70 percent to 80 percent of their budgets are made up of salaries and benefits determined by contracts with teachers, civil service employees and administrators. Then they explain that when you add in mostly fixed costs like special education, transportation, utilities, buildings upkeep and debt repayments, there isn’t much wiggle room left.

Well New Rochelle had wiggle room last year but they went ahead and kept up new hiring, replaced departing staff with new staff and added an entirely new program, full-day Kindergarten, using the argument that New York State would fund the transition period during Year One. The District sought to cover up the fact that by adding 13 new teachers to the Kindergarten program the true cost of the first year was over $1mm. In the upcoming budget there will be no transition money as residents will be required to pay the entire cost of a program that was approved in the middle of the worst economic crisis since the Great Depression.

Throughout 2009, Talk of the Sound repeatedly warned that the district’s assumptions about the assessed value of property were insanely optimistic (initially they projected the decline in 2009 would be the same as the year before despite the collapse of the financial markets). Even when they district slightly increased their project of the decline, they offered absolutely no economic or financial argument for their projections. It was just a made-up number that Schools Superintendent Richard Organisciak and his flunky John Quinn pried out of Ms. Babcock-Deutsch’s rather ample behind. The district number of -1.76 was significantly below City of New Rochelle Finance Commission Howard Ratner’s “conservative” estimate of -3.0.

Local property taxes make up the bulk of the school revenues so even a small error in the assessables projection can create large shortfalls in school funding which must be made up by increasing property taxes. As Talk of the Sound projected, the effective increase for the current year has been between 6 and 9 percent due to increased school taxes and a decline in the value of New York State STAR property tax exemptions.

The Journal News closes on a note of alarm: This is not a one-year problem.

“Next year, when the federal stimulus money ends, things may be even worse,” said Lisa Davis, executive director of the Westchester-Putnam School Boards Association.(emphasis added)

The article notes that the Mamaroneck school board has been soliciting “out of the box” thinking from residents.

For the New Rochelle Board of Education that means adding new entitlement programs like Full-Day Kindergarten, adding a new Mandarin language program, paying out more money to hire tax certiorari lawyers to litigate against New Rochelle property owners while not laying off a single employee, not cutting any benefits while giving away across-the-board pay increases and (my favorite) massive pay increases for the Assistant Superintendents funded by divvying up money from the line item for the position previously held by former Asst. Superintendent Fred Smith. The man responsible for finagling the district’s budget, Asst. Superintendent of Finance John Quinn has also been the biggest beneficiary of the Smith line item. Quinn has had, by far, the largest pay increase of any district employee; his salary has been increased by over 30% in less than three years.