BE THERE OR BE FLEECED: School Budget to be Released Tonight 7 PM at New Rochelle High School Library

Written By: Robert Cox

DSC_0573_2.jpgIf you are not going to show up then don’t expect much sympathy when you complain later! Tonight is the night you can get your hands on the proposed 2010-11 budget so make the effort to be there, read it and ask questions. Everyone gets a chance to speak.

The first in a series of Board of Education Budget Review Sessions is scheduled for 7 PM tonight at the New Rochelle High School library.

A hard copy of the budget will be distributed at the outset of the meeting. A electronic PDF version of the budget is expected to be available on the City School District of New Rochelle web site on Thursday Last night the City School District of New Rochelle announced a proposed 2010-11 budget of $225,813,303, a decrease from the previous years of $3,649,969 (-1.6%). The 2009-10 budget passed by voters last May was $229,462,969.

A few thoughts on that…

As usual, the district preemptively announced manufactured a number to mislead the public in what they are being asked to vote for in May – a phony figure of a 3.8% increase in property taxes to support the budget. In fact, the district has no idea what sort of property tax increase will be necessary to support the proposed $225.8 million budget. The district is able to get away with this because so few residents understand what exactly they are being asked to vote on each May.

Voters must look beyond the smoke and mirrors and concentrate on one figure: how much money does the budget referendum allows the district to take from residents in the form of local taxes. The only number carved in stone by the May referendum is the local taxes figure. All the rest of it is fluff as was made clear from the recent audit report.

Voters beware. It is always the primary and overarching goal of school administrators and the unions to keep voters attention as far away from that figure as possible by tossing up distractions and threats. The district is like a football coach who wants to tell fans about how many points his team scores, or how many passes his quarterback completes when what really matters is how many games he wins and loses.

Message to votes: keep your eye on the one number that matters — how much revenue in the budget comes from local taxes.

With that caution in mind, the proposed $3.7 million budget cut is a step in the right direction. The devil, as always, is in the details. We will begin to see that tonight.

As explained at the outset of the budget process, school officials have allowed a massive gap to open between where the budget should be based on property values and the real dollar value of the budget. The good news is that the proposed budget is a step in the right direction. The question will be whether the district will treat the budget cut as a “one-off” event or a part of multi-year period of fiscal discipline designed to bring the budget back in line with property values, the key driver of school district revenue. New Rochelle needs their own “five year plan” to restore budget discipline and bring spending in line with what New Rochelle residents can afford.

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Readers will recall that when the proposed 2009-10 budget was first revealed last year, school board member David Lacher admitted that the district never knows what tax increases will be needed to support the budget. He said that the district announces a “property tax increase” figure because, as Lacher put it, “the press wants it”, another example of the way local officials place “PR value” over common sense in New Rochelle.

As few residents appear to understand, the two primary drivers of the revenue side of the school budget are both unknown prior to the budget vote: the assessed value of property in New Rochelle and the net amount of money going back and forth between the district and New York State. Given these two unknowns, there is no way the district can know how much money it will take from residents based on the current level of taxes and thus, by extension, what sort of increase will be required to support the budget. Federal funds are mostly formula-based and thus more readily calculable.

As Mr. Lacher often, and correctly, points out, the assessed value of property in New Rochelle has been steadily declining for many years but that decline accelerated last year in the wake of the recent financial crisis which has been a triple-whammy for area districts: housing values are down nationwide and credit has dried up, state tax revenue is down due to the recession and demand has slackened due to the collapse of the investment banking industry.

The accelerated decline was widely expected everywhere except, apparently, in the finance department of the New Rochelle school system. School officials repeatedly claimed that the decline in the assessed value of property would be the same as the year before despite the near meltdown of the financial markets just months earlier. Even when Talk of the Sound pointed out that the City of New Rochelle was using a figure more than double that claimed by the district, Schools Superintendent Richard Organisciak and Assistant Superintendent for Finance John Quinn continued to insist that the decline in assessables would be the same as the year before. Only after weeks of pressure, much of it coming from Talk of the Sound contributors and their readers, did the district budge on the issue. Unfortunately, their new number was just as illogical and unfounded as their original number. Quinn stated that they increased the decline in assessables from -1.41 to -1.50 and then added another -0.26 for good measure to come up with a final figure of -1.76. The City of New Rochelle Finance Department estimated a decline of -3.00 or about double the district’s number. Despite this, the district repeatedly claimed their figure was provided by the City of New Rochelle which was a flat out lie (we have the emails confirming the City’s projected number). It will be interesting to see what figure shows up in the budget documents tonight.

Despite numerous warnings by local residents and daily news accounts of financial problems over the past two yeas, school board members obediently approved a large budget increase last year including a brand new entitlement program, full-day kindergarten. Mr. Quinn claimed talked often about how the full-day kindergarten would be “free”; sometimes he said the conversion to full-day kindergarten would be free but sometimes he just said it was “free” and one occasion said the district might actually make money from a new full-day kindergarten. Of course, all of this was nonsense. Only much later in the budget process did Quinn quietly disclose that 13 teachers were being “reassigned” to the full-day kindergarten. Quinn never explained where they were being reassigned from but in the fantasy world inhabited by Mr. Quinn, these teachers were “free” because they were already working for the district. If each of these teachers cost $80,000 a year (salary, benefits, and pension) that comes out to be $1.1 million a year. When you add in teacher aides and unreimbursed classroom costs, the figure is closer to $1.5 million for the 2009-10 school year. If you consider that in light of the 2010-11 budget you see that the $3 million being spent on the “free” full-day kindergarten program since this past September represents more than 80% of the total budget cut.

Many voters believe that the budget vote is a referendum on the tax increase required to support the budget. It is not. The referendum is a vote on the total amount of money the district can take from New Rochelle property owners in the form of a “school tax” as well as other local taxes such as surcharges on cell phone bills. The “revenue” side of the school budget includes local taxes plus funds from New York State, collected as state taxes, and federal funds, collected as federal taxes.

Last year the school budget was $229.5 million but the local tax component of that amount was roughly $170 million. The remaining $59.5 million was based on expectations of state and federal funds coming to the district. The district does not know in advance how much money they will get from these other sources. Last year, the expected amounts fluctuated wildly based on Albany budget negotiations due to proposed reductions in school aid, decreases in the value of STAR exemptions, increases in state pension contribution requirements and other factors. The end result was revenue and expenses that differed dramatically from the budget passed by voters in May 2009. The audit report presented in January 2010 showed the district running at a $2.4 million deficit in the current school year. This deficit is likely to get worse not better over the next two years because state revenues are typically impacted in the 2-3 year period after a recession.

In previous years the district has been able to manipulate the tax rate by dipping into money accumulated in a reserve fund from previous taxes to mask the actual tax increase required to fund the district. This shell game has come to an end over the past year as the district has burned through most of its reserve. Under New York State law, the district can keep no more than 4% of the total budget in reserve which comes out to be roughly $9mm; the district currently has less than $5 million in undesignated funds, about half the legal limit, and this figure is declining each month.

The district is now talking about cutting 2-3 dozen teachers and reducing head count by another 30-40 teachers through retirement. Quite a mess.