- Department Overview
- Tax Collection
School Budget 101
Balancing the Budget
Salaries & Benefits
Revenues: State Aid, Tax Levy & Other Revenues
Equipment, Contractual, Supplies & BOCES
Questions & Answers
Basics of School Budgeting Q & A
Brewster Central School District
Budget 101 Workshop
November 20, 2018
Questions & Answers
Q1: When do the internal budget meetings with the Principals & Directors take place?
A1 (Victor Karlsson, Asst Supt for Finance & Operations): They take place throughout the month of December and into January. Principals & Directors begin developing their budget requests in October.
A1 (Valerie Henning-Piedmonte, Superintendent): At those meetings, we go through each line and question every single expenditure from year to year. A great deal of scrutiny goes into that process where the Principals & Directors must justify every request.
A1 (Victor Karlsson, Asst Supt for Finance & Operations): Principals & Directors recognize that staff is more valuable than “stuff”, so their “stuff” requests are usually very conservative because their more meaningful requests are made in the form of additional staff.
Q2: Does Brewster already employ zero-based budgeting for Salaries & Benefits, and Debt Service? And for Equipment, Contractual, Supplies, and BOCES Services?
A2 (Victor Karlsson, Asst Supt for Finance & Operations): Yes, zero-based budgeting is already employed for Salaries & Benefits, and Debt Service. A hybrid of zero-based and historical consumption is employed for Equipment, Contractual, Supplies, and BOCES Services. The basic costs of operating a school building or department are rather consistent from year to year, with the exception of one-time program implementations or other variables. Each year, parameters are provided to the Principals & Directors, such as X% increase, flat (no increase), or Y% decrease. They may have budgeted something as a one-time expense in the prior year, which is eliminated and substituted by a new item. An example of this would be the purchase of Math textbooks in one year, substituted by the purchase of Science textbooks in the following year.
A2 (Chris Kopf, Partner, O’Connor Davies PKF, LLP): The departments within each school building make requests, and it is incumbent upon the Principals and Directors to prioritize needs in order to stay within their total parameters.
Q3: Why do we provide parameters instead of prioritizing budget requests into three types of requests: “have to have”, “best to have”, or “nice to have?"
A3 (Victor Karlsson, Asst Supt for Finance & Operations): Over the years, the buildings have already identified their “have to have” and that is where they are living. The building-level and departmental budgets have not really grown over the years, but our programs have. Their “best to have” or “nice to have” items are discussed, but may not ultimately be included in the budget because the total request would exceed the parameters. For certain items, such as the implementation of a new Math program at the K-5 level, it may be determined that these items are essential in a given year and an exception would be made.
Q4: Why were the Fundations reading books discarded from Garden Street?
A4 (Valerie Henning-Piedmonte, Superintendent): Several years ago, teachers went in and out of Garden Street to retrieve any educational materials they thought were valuable. Once this process was completed, the District solicited the assistance of a textbook auction service to sell any remaining textbooks. The District then moved to a new English Language Arts program that involves a “word study” and is different from Fundations.
A4 (Victor Karlsson, Asst Supt for Finance & Operations): A separate “Budget 101” on January 14th is dedicated to “Equipment, Contractual, Supplies, and BOCES Services and we will have Principals and Directors discuss the specific items they purchase and a description of their inventory process.
Q5: When there are state mandates, such as school counselors at the elementary levels next year, how is that incorporated into the budgeting process?
A5 (Victor Karlsson, Asst Supt for Finance & Operations): That is a perfect example of the questions that are considered when there is a retirement, as shown in the “Salaries and Benefits” slide: “is there another need elsewhere in the district?” In the example provided where an elementary teacher is retiring, consideration would be given to replace the teaching position with the counseling position.
Q6: What are the guidelines for using the contingency/flexibility that is built into the budget for unplanned expenses? How is that used?
A6 (Victor Karlsson, Asst Supt for Finance & Operations): Those conversations are usually brought to the Board-level, and you can see that conversation playing out right now with the additional staffing requests for mental health supports and other programmatic enhancements.
Q7: What does it mean to have 4% Unassigned Fund
A7 (Chris Kopf, Partner, O’Connor Davies PKF): There are different “buckets” of fund balance: restricted/reserved, appropriated, and unassigned. The amounts restricted/reserved are established in accordance with General Municipal Law and Education Law and represent a future expense. The amount appropriated is used to offset the subsequent year’s expenditures, and the amount unassigned is available for unplanned expenses. NYS General Municipal Law limits the amount allowed to be retained as unassigned to 4% of the subsequent year’s budget.
A7 (Victor Karlsson, Asst Supt for Finance & Operations): The District’s Finance Committee meets semi-annually to discuss fund balance and reserve levels before making a recommendation to the Board of Education each June. Keep in mind the most important concept to protect the District from a catastrophic event is the unassigned fund balance which should be maximized at 4% each year, if possible.
Q8: How much interest is earned on the fund balance and reserves? How is it distributed?
A8 (Victor Karlsson, Asst Supt for Finance & Operations): Approximately 2% is earned in our New York Cooperative Liquid Assets Security System (NYCLASS) accounts. General Municipal Law severely restricts the types of investments that a local government can invest in. The most extravagant investment vehicle that a local government can invest in is a Certificate of Deposit (CD).
Equipment, Contractual Supplies Q & A
Brewster Central School District
Budget 101 Workshop: Equipment, Contractual, Supplies, & BOCES Services
January 14, 2019
Questions and Answers
Q1: When you anticipate for the worst case scenario in the utilities budget and you do not use all the money that is budgeted, what happens?
A1 (Victor Karlsson, Asst Supt of Finance and Operations): The money would remain in the utility budget unspent.
Q2: Are math graphing calculators included in the high school budget?
A2 (Nichole Horler, Principal, Brewster High School): Yes, we purchase new calculators each year to replace broken ones. Each math classroom has graphing calculators that students can sign-out.
Q3: Is the District responsible for providing textbooks to any Brewster child that is attending a private school in another district?
A3 (Victor Karlsson, Asst Supt of Finance and Operations): Yes, NYS Law requires that Brewster provide textbook reimbursements to all Brewster children attending non-public schools.
Q4: Are there limitations on the cost per textbook? Would the District have to reimburse for a $175 textbook?
A4 (Victor Karlsson, Asst Supt of Finance and Operations): The NYS Education Department allocates $58 per student in State Aid, but we are not limited to that amount in terms of the reimbursement.
Q5: Do the funds for textbooks also go to students attending out-of-state private schools?
A5 (Victor Karlsson, Asst Supt of Finance and Operations): Yes, the reimbursement is to the Brewster student, regardless of where the non-public school is located.
Q6: If another school district sends students to a private school in Brewster, do the textbook reimbursement costs offset each other?
A6 (Victor Karlsson, Asst Supt of Finance and Operations): The last non-public school within Brewster’s geographic boundaries was the St. Lawrence O’Toole School, which closed several years ago. Therefore, no students are attending a non-public school in Brewster.
Q7: Do we have any special education students from other school districts that attend Brewster that is offsetting the cost of sending Brewster special education students outside of the district?
A7 (Elizabeth Kennedy, Director of Pupil Personnel Services): Yes, we do. If we have an appropriate program that another district might not, we do consider student referrals but must first ensure we are meeting the needs of Brewster students first.
Q8: How is the tuition determined for a special education student?
A8 (Victor Karlsson, Asst Supt of Finance and Operations): It is actually determined by the NYS Education Department. The State sets the tuition rates for each district based on their special education costs. Our special education rate would be the same for any student attending our schools. We currently have one student attending Brewster from out-of-district, who was “grandfathered-in” over a decade ago when Board policy changed.
Q9: Why would a child need to go to another public school instead of attending a private school for special education services?
A9 (Elizabeth Kennedy, Director of Pupil Personnel Services): Other public schools may offer very specific programs and still allow the student to experience a public school setting. It also allows for an easier transition back into Brewster, which is always the ultimate goal.
Q10: How expensive is it when a student is placed in a residential facility and remains enrolled until the age of 21?
A10 (Elizabeth Kennedy, Director of Pupil Personnel Services): It depends on the specific residential program. Some students graduate before 21. The costs of residential tuition and board can vary, and typically costs a minimum $75,000.
Q11: How many students are in residential facilities?
A11 (Amy Osooli, Assistant Director of Pupil Personnel Services: Secondary (WMS & BHS): There are currently three students attending residential facilities. At the initial placement meeting, a plan is immediately developed to transition the student back to Brewster. The ultimate goal is to provide the least restrictive environment, which means an education in Brewster.
A11 (Elizabeth Kennedy, Director of Pupil Personnel Services): It is a decision that is made with extreme caution. We exhaust every local support before recommending a more restrictive setting, such as a residential placement.
Q12: Do we transport special education students out-of-district? Is there a maximum distance for a special education student’s out-of-district school?
A12 (Elizabeth Kennedy, Director of Pupil Personnel Services): Yes. Generally, special education students should not be transported more than 50 miles each way. Placements are based primarily on program availability, although distance is certainly a consideration.
Q13: Is it anticipated that we will use the full transportation budget this year?
A13 (Victor Karlsson, Asst Supt of Finance and Operations): We typically perform rough fund balance projections beginning with the December month-end, but have not yet completed a fund balance projection yet for this year. We typically do not expend the entire transportation budget, unless vehicles require extensive/significant repairs or there is a spike in the cost of diesel/gasoline fuel.
Q14: Last year there was an additional allocation to replace obsolete transportation radios. Will the budget be reduced next year since the radios were purchased this year?
A14 (Victor Karlsson, Asst Supt of Finance and Operations): The allocation was for a lease, which is an annual commitment. Through the competitive bidding process, the actual lease amount is less than what we anticipated in our budget. Becauses actual costs are not known at the time of budget development, we must be conservative to be certain that we can afford the item. Fortunately, we will see decreases in the budget expense for radio leases for both facilities and transportation as a result of a successful bid last summer.
Q15: If there is a surplus in the Transportation budget, do the funds stay there or can they be re-allocated for something else?
A15 (Victor Karlsson, Asst Supt of Finance and Operations): Surplus funds can be reallocated, but those decisions are made at the Board-level to ensure transparency.
Q16: Since Brewster hires full-time bus drivers and pays for their training, can it be a requirement that they remain in Brewster for a certain number of years after we have paid for training?
A16 (Kathleen Culligan, Director of Human Resources): Training is a provision included in the collective bargaining agreement, but we are having a driver recruitment fair and stipulating that prospective employees possess the appropriate license for driving a school bus upon application.
Salaries & Benefits Q & A
Brewster Central School District
Budget 101 Workshop: Salaries & Benefits
December 12, 2018
Questions & Answers
Q1: Do the “step” increases range from 1.0 -6.7% in every year?
A1 (Victor Karlsson, Asst Supt for Finance & Operations): It depends on the employee’s position and how many years of service he/she has (ie: where he/she falls on the salary schedule), so it can vary. In a given year, there may not be any employees on the step which is valued at 6.7%, or there may be several.
Q2: What is the difference between a “step” increase and a “schedule” increase?
A2 (Victor Karlsson, Asst Supt for Finance & Operations): A step increase is an incremental increase in salary based upon years of service, while a schedule increase is an annual increase applied to the salary schedule as a whole.
Q3: What are “tiers” within the New York State Pension Systems?
A3 (Victor Karlsson, Asst Supt for Finance & Operations): Tiers are levels of retirement provisions based on an employee’s initial date of membership in the system. The pension systems (and not the District) determine the retirement benefits afforded to its members. Generally, employees with membership dates in the retirement system on/after January 1, 2010 have a longer vesting period, higher employee contributions amounts, and reduced retirement benefits.
Q4: In the example provided, an employee on top step only receives the schedule increase. Why are there two increases in salary (step plus schedule)? Is it market-based that drives the schedule increase? Is there schedule increase every year?
A4 (Victor Karlsson, Asst Supt for Finance & Operations): The example shows a “traditional” contract settlement, which was common before the “Tax Cap”. It typically resulted in a percentage increase being applied to the salary schedule as a whole, while the step increases were previously established many years ago through past collective bargaining negotiations. Since the implementation of the “Tax Cap”, negotiations have not followed a traditional schedule increase technique as shown in the example. The actual settlements for each of the District’s bargaining units are covered over the next several slides.
Q5: What would happen if the salary schedule goes lower?
A5 (Victor Karlsson, Asst Supt for Finance & Operations): The salary schedules (in terms of steps) have existed for many years. Collective bargaining agreements typically last three to five years, and the District and the bargaining unit are bound to the schedule increases for the duration of the contract until it is negotiated again. The amount of the schedule increase is based on market conditions of what other school districts are paying their employees. In order for there to be a decrease in the schedule, the bargaining unit would have to agree to it.
Q6: Do these salary schedules apply to all New York State employees?
A6 (Victor Karlsson, Asst Supt for Finance & Operations): No, each local government and their associated bargaining units negotiate their own local contracts and salary schedules. For example, Brewster’s contracts are different from Carmel’s, and different from Mahopac’s, etc.
Q6: Why can’t these be renegotiated, in light of the fact that there are some step increases which are as high as 6.7%?
A6 (Michael Skerritt, Director of Human Resources, PNW BOCES): Part of the role of the Putnam-Northern Westchester BOCES is to gather collective bargaining contract data from its component districts. This information is then shared with the other districts in order to identify the market for future negotiations. In New York State, there is something known as the “Taylor Law” which protects the provisions of an expired contract (ie: the salary schedule) during the negotiations of a new contract. It was enacted to incentivize both sides of the table to continue constructive dialogue in hopes of establishing a new agreement.
Unlike private industry, local governments in New York State cannot unilaterally reduce salaries and benefits from year-to-year. If both sides of a negotiation are unable to reach an agreement before the expiration of the current contract, the “Triborough Amendment” to the “Taylor Law” requires that the provisions of the expired contract remain in effect until a new contract is negotiated. In other words, the salary schedules remain intact unless the schedules are negotiated to change by both parties.
Q7: Steps are awarded based on years of service. There were years in which the bargaining units agreed to 0% schedule increases. During those years, the members on top step would receive no raise at all, and only those members who were eligible to advance a step would receive an increase, is that correct?
A7 (Victor Karlsson, Asst Supt for Finance & Operations): Yes, and we will see that as we review each bargaining unit’s current contract provisions over the next several slides. The majority of our employees are on top step, and therefore, they are only eligible to receive the schedule increase. They have reached the ceiling and are no longer eligible for a step increase.
Q8: How many steps are included in each schedule across the different collective bargaining units?
A8 (Victor Karlsson, Asst Supt for Finance & Operations): Each bargaining unit’s salary schedule is different:
- SEIU: 7 steps
- Clerical (members hired before 7/1/17): 13-16 steps
- Clerical (members hired on/after 7/1/17): 24 steps
- BTA (members hired before 5/24/16): 21-24 steps
- BTA (members hired on/after 5/24/16): 30 steps
- AAB: no steps
- Non-Union: no steps
Q9: Since a large number of teachers are on top step, is a retirement incentive being considered?
A9 (Victor Karlsson, Asst Supt for Finance & Operations): We have not yet discussed a retirement incentive for this year.
A9 (Valerie Henning-Piedmonte, Superintendent): Each year, there are between eight and 12 teacher retirements. Retirement is something very personal and there are a number of variables that go into each person’s decision whether or not to retire and it requires a lot of planning. Their decisions are based on the same things as anyone’s, such as whether they have children in college, whether their mortgage is paid off, or any other number of variables.
Q10: Are the increases based on performance, or are they just across the board increases?
A10 (Victor Karlsson, Asst Supt for Finance & Operations): The increases provided in the collective bargaining agreements apply universally to all members of those units. The BTA contract runs through June 30, 2020, while the Clerical, SEIU, and AAB contracts run through June 30, 2021.
Q11: Are the pension systems defined benefit plans? Is a change to a defined contribution plan being considered in the future?
A11 (Victor Karlsson, Asst Supt for Finance & Operations): Yes, the ERS & TRS pension systems are both defined benefit plans. The New York State Comptroller’s Office maintains authority over the plans, so New York State would have to legislate a change to a defined contribution plan. In 2010, the State did make changes to the systems for new members generally hired on/after January 1, 2010 that call for extended vesting periods, higher employee contribution rates, longer service careers, and reduced retirement benefits.
Q12: Why has the average ERS contribution rate increased so much more so than the TRS contribution rate?
A12 (Victor Karlsson, Asst Supt for Finance & Operations): It depends on how the two systems were managed by New York State. There are a number of different variables that affect the contribution rates, such as investment portfolio performance, life expectancy of the membership, and pension benefits owed to retirees.
Q13: Are the contribution amounts different for each school district?
A13 (Victor Karlsson, Asst Supt for Finance & Operations): New York State determines the contribution rates for the ERS & TRS, which apply universally to all local governments throughout the state.
Q14: How are the funds in the systems invested?
A14 (Victor Karlsson, Asst Supt for Finance & Operations): The New York State Comptroller’s Office manages the plans, so that information can be found on the State’s website.
Q15: For years in which the TRS rate goes down and the District is able to reduce the TRS expenditure budget, can the District set aside the savings for use in future years?
A15 (Victor Karlsson, Asst Supt for Finance & Operations): Currently, New York State Law does not allow school districts to establish a TRS reserve. For the past decade, legislators have been attempting to create a TRS reserve, but it seems to be defeated each year by one of the two chambers of the State Legislature or by veto of the Governor. New York State Law does, however, allow for the establishment of an ERS reserve to protect the District from future ERS volatility.
Q16: Since a reserve does not exist, could we instead save the difference for use in a future year?
A16 (Victor Karlsson, Asst Supt for Finance & Operations): For years in which the TRS decreases, we would reduce our TRS expenditure budget and reallocate those funds to other areas of the budget.
Q17: For years in which budget reductions are required, how is it determined which programs get cut?
A17 (Victor Karlsson, Asst Supt for Finance & Operations): It is a discussion between the Superintendent and the Board of Education, which takes place from February through April in the development of the subsequent year’s budget.
Q18: Are there any programs which are absolutely forbidden from being cut?
A18 (Victor Karlsson, Asst Supt for Finance & Operations): Mandated services are forbidden from being cut.
A18 (Valerie Henning-Piedmonte, Superintendent): Special Education and English as a New Language (ENL) services are mandated services.
Q19: Does retiree health insurance coverage remain in effect until the retiree reaches Medicare eligibility?
A19 (Victor Karlsson, Asst Supt for Finance & Operations): Yes, and beyond. Medicare becomes the primary insurance provider, and the District’s coverage becomes the secondary provider.
Q20: What is the average retirement age?
A20 (Victor Karlsson, Asst Supt for Finance & Operations): Eligibility for retirement is defined by the ERS & TRS pension systems. For employees hired on/before January 1, 2010, the service requirement is 30 years and the age requirement is 55 years. However, it is rare that employees retire at age 55 and typically delay their retirement until they become eligible for social security benefits, between ages 62-67.
Q21: Can the retirement benefits of retired non-union employees be changed?
A21 (Victor Karlsson, Asst Supt for Finance & Operations): No, the provisions of the contracts that were in effect on the date of their retirement survives in perpetuity.
Q22: Can future contracts with new non-union employees include provisions for a longer service time in order to qualify for retiree health insurance coverage?
A22 (Victor Karlsson, Asst Supt for Finance & Operations): Yes, and that would be a negotiation between the new non-union employee and the Board of Education. A22 (Valerie Henning-Piedmonte, Superintendent): PNW BOCES collects data on contracts throughout the region which is used to formulate future contracts that are competitive with the demands of the market. We would need to be careful not to offer or require something that is inconsistent with other Districts in the region.
A22 (Michael Skerritt, Director of Human Resources, PNW BOCES): It is a competitive marketplace. So while it may be great for a district to boast that ‘we pay the lowest salaries and require the highest employee health insurance contributions’, a district may find it difficult to attract new employees. And keep in mind that you are competing against all of the other districts in your region to attract new employees.
Q23: When the budget is being developed for the next year, is the information available with regard to the employee step and schedule increases?
A23 (Victor Karlsson, Asst Supt for Finance & Operations): Yes, provided all contracts are settled at the time of budget development. In the event that a contract is not settled at the time of budget development, the anticipated cost of the settlement must be estimated. Fortunately, all contracts are settled as we enter the 2019-20 fiscal year.
Q24: Since the next Budget 101 Workshop (Equipment, Contractual, Supplies, and BOCES Services) contains budget items that are more controllable, how will it be presented?
A24 (Victor Karlsson, Asst Supt for Finance & Operations): Each of the Principals/Directors will present their departmental or building-level budget to provide a greater level of detail of their department’s needs.
State Aid and Tax Levy ("Tax Cap") Q & A
Brewster Central School District
Budget 101 Workshop: State Aid, Tax Levy (“Tax Cap”) and Other Revenue
February 11, 2019
Questions and Answers
Q1: Is the State Aid calculation the same for every school district (in every county) throughout the State?
A1 (Victor Karlsson, Asst Supt of Finance and Operations): Yes, the calculation is the same, however, the results (State Aid amounts) vary for every school district throughout the State.
Q2: Does the New York State Education Department (NYSED) recommend a limitation on the percentage of students classified as having special needs?
A2 (Victor Karlsson, Asst Supt of Finance and Operations): The State does recommended a benchmark for students classified as having special needs, however, the benchmark does not factor into State Aid calculations. Instead, NYSED would cite a school district in the district’s annual report card if the percentage of special needs students exceeded the State’s benchmark.
Q3: Has anyone considered suing New York State to demand an increase in Foundation Aid?
A3 (Mike Los, Questar III Boces): Yes, there are several lawsuits still pending. Recently, a group of “small cities school districts” sued, but were unsuccessful. There are other pending lawsuits, but it is the Governor’s belief that the formula in effect is unenforceable because it was enacted by a prior governor. It is also challenging because some school districts are actually receiving more than the full phase-in Foundation Aid formula, so logically they are reluctant to want to change anything.
Q4: Are there any exceptions for non-allowable transportation expenses since public transportation (ie: transportation provided by the Town or County) is not available?
A4 (Victor Karlsson, Asst Supt of Finance and Operations): No, there are no exceptions. There are different rules between city school districts and central or union free school districts. City school districts are not required to provide transportation at all. And there are a number of city school districts that do not provide transportation. It is up to the residents of the local school district to vote on a referendum eliminating transportation limitations. Here in Brewster, there are no transportation limitations because of a referendum passed many, many years ago, which eliminated transportation limits. Brewster transports all students, even those who live within 500 feet from a school building.
Q5: Based on the Governor’s State Aid proposal, it seems Brewster’s increases were mostly in Transportation Aid and Building Aid. Is it possible that these increases are reduced in the enacted budget?
A5 (Victor Karlsson, Asst Supt of Finance and Operations): Certain factors are accurate in the State Aid runs, while others are not. One inaccurate item that was included in the Governor’s calculation is a provision to pay the entirety of Building Aid for a repair project in 1 year (2019-20), when in reality the Building Aid will be spread out for 10-15 years. I urge everyone to use extreme caution when reviewing the State Aid runs because it often requires a significant amount of reconciliation in order to identify the amount Brewster actually expects to receive. And for the past four years, Brewster has received, on average, $400K less than what the State said Brewster would receive in the State Aid runs.
A5 (Mike Los, Questar III Boces): Here’s an example: Transportation Aid is an expense-based aid. It is a projection on what New York State thinks Brewster is going to spend based on their projections for the current year. The State is often very conservative in their estimate based on the remote possibility that they may have to pay it out in that year.
Q6: Does New York State assume the District would complete a capital project by a certain date? If Brewster did not get the Building Aid this year, will that money carry over to next year?
A6 (Victor Karlsson, Asst Supt of Finance and Operations): Yes, Building Aid is never lost, but it can be deferred. The Building Aid process consists of:
- Submitting of a Letter of Intent to perform a capital project
- Securing funds through referendum vote
- Submitting scope documents for the work to be performed
- Commissioner approval
- Bidding/contract award/actual work is performed
- Final Cost Report filed after project completion
New York State expects that the work for any project will be completed within 18 months of the Commissioner’s approval date. For the most recent projects, the District needed to back-out the Building Aid that New York State assumed would be due because the District would not actually receive it until the following year.
A6 (Mike Los, Questar III Boces): It is a good practice on the State’s behalf to make sure that money is earmarked and available in case school districts meet the arbitrary timeline.
Q7: Is the Algonquin Natural Gas Transmission property included in the Tax Base Growth Factor?
A7 (Victor Karlsson, Asst Supt of Finance and Operations): Yes, it is a new building that was added to the assessment roll and is affecting the 2019-20 “Tax Cap” calculation.
Q8: In the long range financial plan, it was suggested that it is a good practice to issue a new bond as an older bond is paid off. Is that done to stabilize the Capital Exclusion in the “Tax Cap” formula? And what is the range that should be established for this district?
A8 (Victor Karlsson, Asst Supt of Finance and Operations): Yes, issuing new debt as old debt expires stabilizes the Capital Exclusion to the “Tax Cap”. One of the challenges that the District has is that there is Building Aid from projects completed 10-20 years ago, which may not meet the life of the bonds associated with them. So the Building Aid revenue may end, but the debt expense continues for another year (or more). The “Tax Cap” calculation allows for an exclusion, or an “add-on”, to make up for the difference which increases the “Tax Cap”. The rationale behind this provision is that the voters have a already approved the expenditure through a separate proposition, so the expenditure does not require a second approval.
Q9: Why has the Governor not supported a Teacher Retirement System (TRS) Reserve fund to protect school districts from future rate increases?
A9 (Mike Los, Questar III Boces): It is the Governor’s position that there are already too many reserve fund options available to school districts, in addition to unreserved fund balance (“rainy day” funds). As mentioned earlier, any increases to the TRS rate can have a devastating impact on school districts, so a TRS reserve would go a long way in protecting school districts from volatility.
Q10: Is there any portion of New York State that drives the belief (that there are already too many reserve fund options available) more than other portions of the State?
A10 (Mike Los, Questar III Boces): The economy has improved Statewide over the past several years. The pension system is largely influenced by stock market activity, so as long as Wall Street is strong then the TRS contribution rate should remain consistent. If Wall Street has a downturn, then that reverberates into the TRS contribution rates which can skyrocket quickly. The State as a whole is very reliant on Wall Street for tax revenue and stock market activity.
Q11: Is the District allowed 4% per reserve fund or is there a cumulative limit of 4% for all reserve funds?
A11 (Mike Los, Questar III Boces): 4% is the limitation for unreserved funds, which can be used as “rainy day” funds. There are reserve funds available for school districts to utilize, which are limited individually based on General Municipal Law or Education Law.
Q12: What are there other reserve funds besides unreserved fund balance?
A12 (Mike Los, Questar III Boces): Just to name a couple: there is a capital reserve (not utilized by Brewster) that can be used to fund capital projects and there is a reserve for the Employees’ Retirement System (ERS) that can be used to fund pension contributions for non-instructional employees. The ERS Reserve does not help school districts much because most of salaries are instructional and applicable to TRS. There can be multiple reserves but because the focus is so narrow, they do not necessarily provide meaningful help to significant spikes in expense.
Q13: Is there a specific reason why certain districts are overfunded in terms of Foundation Aid?
A13 (Mike Los, Questar III Boces): Since Foundation Aid is based on enrollment, those school districts who have experienced significant enrollment decreases since the 2010 census are being overfunded. If the formula was fully phased-in, those districts would see less in Foundation Aid. It really highlights the fact that the Foundation Aid formula is broken.