May 27, 2017
Thanks to a lower-than-expected increase in health insurance costs, the second draft of the 2017-18 school district budget is about $40,000 short of currently projected revenues - a large improvement from the nearly $350,000 shortfall at the end of February.
“We are in a much better position than we were a year ago,” said Superintendent Jon Peterson, referring to the negative tax cap (less than 0 percent) the state allowed last year combined with the Gap Elimination Adjustment (GEA - legislation put in place in 2010 to fill the shortfall in the state budget by cutting aid to school districts - was eliminated this school year). “I’m very optimistic that the state will provide more funding for all schools, including Mayfield.”
The state Legislature has until April 1 – this Saturday – to approve a state budget. The state budget has been on time for the past several years. Governor Andrew Cuomo in January proposed a state aid increase to Mayfield totaling $103,209; the Legislature has historically increased that amount beyond the governor’s proposal.
The state’s allowable tax levy cap increase for Mayfield is 4.42 percent. That figure was arrived at after an eight-step process was computed. Because the first payments for the community-approved January 2016 capital project - +$554,730 – were factored into the formula, the overall maximum tax levy cap increase was 4.42 percent. Without the capital project payment and counting only increases in usual school spending, the school tax levy increase would have been 1.79 percent.
District Treasurer Samantha Schweizer explained that a large portion of the $554,730 capital project payment will not be reimbursed by the state in the 2017-18 school year, causing the district to upfront that payment this school year without reimbursement. Typically, school districts borrow money for capital projects and get reimbursed in the same school year for them, basically balancing off a large share of the original increase. With some capital project work underway this spring, the timing of the borrowing won’t allow that reimbursement to happen in the 2017-18 school year.
Community voting on the budget will be held from 12 noon to 8 p.m. on Tuesday, May 16 at the junior/senior high school. The public hearing on the budget will be held at 7 p.m. on Tuesday, May 9 in the Upper Library at the junior/senior high school.
Maximum tax levy limit or cap
The state's “maximum tax levy limit or cap” is the highest allowable tax levy a school district can propose as part of its annual budget requiring approval by a simple majority of voters.
Certain exemptions don’t count against the cap. These include voter-approved local capital expenditures, increases in state mandated employer contributions to employee pensions, and some court orders or judgments. The capital project loan payment exclusion raised the district's maximum allowable tax levy limit to 4.42 percent in 2017-18.
Each school district determines its “tax levy limit” using an eight step formula. The formula adjusts a district’s tax levy to reflect growth in the local tax base (if any) and the rate of inflation or 2% (or whichever is lower. The base inflationary amount is 1.26 percent in 2017-18).
The law, though referred to as a "2 percent tax cap," does not cap property taxes at 2%. The law applies to the tax levy - the total amount of taxes collected - not to tax rates or individual tax bills.
Building the 2017-18 Mayfield budget
The school district, following the usual process to build the proposed budget, created three budget subcommittees composed of supervisors, principals, the superintendent, the district treasurer and Board of Education members to consider three scenarios for their part of the budget: a straight rollover of everything in the budget now, proposed increases in spending for new initiatives and reductions in their areas. They also studied staffing, programming and other (facilities, BOCES, transportation, etc,) needs.
The Presidential Committee – made up of the presidents of the three labor unions, the Board of Education president, the PTAs, administrators, the superintendent and district treasurer – embarked a lobbying campaign with Cuomo, Senator James Tedisco and Assemblyman Mark Butler for additional funding. The committee also merged the various suggestions into a proposed budget that was presented by the superintendent to the Board of Education. Peterson also met personally with Tedisco on March 8 to discuss the state education budget and its impact on Mayfield.
On February 28, Peterson presented a first draft of the budget that included a 15 percent increase in health insurance costs that was $348,389 above projected revenues. The Board of Education determined early on that they would not seek to override the state’s cap.
Peterson characterized the proposal as a “sustaining” budget, meaning there were no new initiatives but all current programs would continue to be funded in 2017-18. The few retirements that have been announced by staff members were worked into the first budget draft.
When projected health insurance increases were reduced in early March (the district is part of the FulMont Trust health care consortium, which works collectively to control rising costs amongst its member school districts), Peterson said the shortfall for the second draft of the budget dropped to $40,063, which is where it stands right now.
Overall spending would increase by $1.066 million. Of that total amount, $511,765 would be for usual school budget increases while $554,730 would pay for the capital project borrowing. The second budget draft totaled $18.571 million.
He expects the Board of Education to adopt a 2017-18 budget proposal on Tuesday, April 4.
Depending on any increases from the state, and after filling the budget shortfall, Peterson said the board may:
put aside some funding to reduce the use of the fund balance, since board members already agreed to raise their fund balance spending to $1 million next year (it had been $910,000 for years);
consider some of the initiatives reviewed by the budget subcommittees but not included in the budget.
Conservative budgeting and tax rate increases
Mayfield has a history of conservative budgeting and low tax rate increases.
For last September's tax bills, school tax rates and bills declined by 0.66 percent thanks to an influx in new state aid, and the end of the Gap Elimination Adjustment (GEA) penalty. The Board of Education has been able to adopt a budget that met that cap without cutting programs.
The 2016-17 school budget was adopted during community voting on May 17, 2016 by a vote of 247-54, an 82% to 18% ratio.
In the town of Mayfield, where nearly 85 percent of the school district in located, the school tax rate declined from $23.21 per $1,000 assessed value in the 2015-16 school year to $23.024 per $1,000 value in 2016-17. That 19 cent per $1,000 assessed value translated to a September 2016 school tax bill that was $19 smaller than in September 2015 for a home assessed at $100,000.
To read more about the 2016-17 budget development process, check out this link.
Before the current 2016-17 school year, the school district's tax increases were modest: 2.7 percent in 2015-16; 1.27 percent in 2014-15; and 3.5 percent in 2013-14. These were in years when the state was cutting school aid through the GEA.