A status of the work taking place to finalize Minisink Valley’s proposed 2019-2020 budget was presented at the Board of Education’s March 21 Finance Committee and general meeting.
The major factors contributing to the 2019-2020 budget are:
1. The closeout of the 2018-19 budget:
A February review of state aid and other revenues are projected to be less than budgeted.
2018-19 expenses are projected to be greater than budgeted due to operating expenses, salaries and benefits.
The combined impact of revenue shortfall and increased expenditures are expected to results in a deficit similar to 2017-2018.
2. State aid:
Prior to the 2017-2018 school year, state aid increased by approximately $1 million annually.
State aid received in each of those years contributed to revenues exceeding expenses by:
° 2014-15: $3.1 million
° 2015-16: $2.6 million (while adding 9 staff)
° 2016-17: $1.9 million (while adding 29 staff)
But since 2016-17, state aid hasn’t provided sufficient, sustainable increases to meet increased operating costs.
State aid for 2019-20 is projected to be less than state aid received in the 2015-16 school year.
State aid estimates are provided annually in January and March. These projections are used for developing a budget to be adopted in April with a May vote for the school year beginning July 1.
The majority of state aid payments received for the current year aren’t received until March, June, July, August and September during the last quarter (or later) of the actual budget.
Since the 2014-15 school year, the district has reinstated and/or added staff to:
° Reinstate programs and staff lost in prior years due to cuts.
° Expand educational and extracurricular opportunities for students.
° Since the 2014-15 school year and through this year, 74 positions have been added.
4. Tax cap formula:
Doesn’t provide a 2 percent increase each year
The formula is complex. It includes a percent change in the Consumer Price Index (CPI) up to 2 percent; assessment growth in the district; debt service obligations for construction projects less building aid; debt service for bus purchases, less transportation aid; and PILOT (Payment in Lieu of Taxes) payments received.
° The district will receive a $861,000 PILOT payment from CPV or 1.93 percent of the tax levy.
° This $861,000 reduces the district’s cap from +1.46 percent to -0.47 percent, requiring a tax levy reduction of $208,000.
These four factors mean the 2019-20 is a very challenging budget to prepare because of:
2018-19 projected deficit
Declining state aid
Additional salaries and benefits over the past four years due to the 74 people hired
The negative tax cap
For the 2019-20 school year, the district has a projected gap of $9.4 million, which would require a 21 percent tax levy to have a balanced budget. This is unrealistic. Why is there a gap?
The gap is created in part by a revenue shortfall from less state aid plus conservative school tax levies over the past three years.
In 2016-17, the maximum tax levy was 2.43 percent; the actual was -2.0 percent
In 2017-18, the maximum tax levy was 3.85 percent; the actual was 1.5 percent
In 2018-19, the maximum tax levy was 3.14 percent, the actual was 2. 6 percent
In a three-year period, the district did not raise 7.32 percent of the tax revenue that it could under the tax cap formula.
° Had this 7.32 percent been included in the tax levy, the cumulative effect would have been a maximum tax levy of $47,978,651 vs. $44,531,753, or almost $3.5 million more available to the district.
The gap is intensified by increased operating expenses, jobs reinstated or filled in the last five years and the salary and benefit costs tied to those positions.
What’s the current budget development work taking place?
The district has eliminated 15 positions from the 2019-20 budget through retirements and resignations.
An incentive retirement package has been offered to eligible staff, with the belief that many will take advantage of it. The district will know actual numbers once the three-week period to consider the package concludes.
Every department and school continues to look at all way to cut expenses without impacting student programs and jobs.
Already, the district has reduced an initial 11.8 percent projected tax levy to 9.4 percent. Currently, this means a resident with a home with a fair market value of $300,000 would see a $631 increase in additional taxes, or $52.62 monthly/$1.75 daily.
The final tax levy number will follow when the number of retirements are known and final determinations on further expense reductions and state aid are confirmed.
Budget development work continues and the district will continue to provide updates.