Hampton Bays officials are facing the tough task of closing a nearly $900,000 gap in order to stay within the 2-percent tax levy cap for the 2013-14 school year, a much larger hole than anticipated, they announced on Tuesday night.
During the district’s first budget workshop, Business Administrator Larry Luce said the Board of Education would need to adopt a $47.9 million budget—one that is almost $2 million higher than this year’s $45.8 million spending plan—in order to maintain programs and services, and cover hikes in pension costs, salaries and employee benefits. That plan would increase overall spending by 4.5 percent.
The budget allowed under the cap, however, would need to total about $46.6 million—$1.3 million less than what is needed to maintain the status quo in terms of programming. Though he was able to reduce that figure to $895,000 with state aid and by making some preliminary adjustments to program costs, Mr. Luce said administrators and board members would need to either find additional sources of revenue or trim spending to avoid piercing the cap.
“It’s a daunting figure, especially if you’re me and you’re sitting behind your desk for the first time figuring out that, ‘Oh nuts, this doesn’t work,’” Mr. Luce told board members and community residents during the meeting.
He added that he anticipated a shortfall of about $200,000. “This kind of a challenge is a bit more than I expected,” he said.
This is the second year that school districts in the state must comply with the cap, which limits the amount they are allowed to raise in school property taxes. If the district proposes a budget that pierces the cap, 60 percent of taxpayers must approve the financial plan in order for it to pass. If it fails, the district can either pitch the same or a revised budget for a second vote. If it fails again, the district will be forced to adopt a spending plan with zero increases from the current year.
During the 2012-13 school year, the district levied about $41.4 million in property taxes. Under the cap, the district will be able increase that figure by about $774,000 for the 2013-14 school year, plus an additional $407,000 that is permitted due to a 37 percent increase in pension costs, which Mr. Luce estimated to be a hike of about $1 million.
He said he was paying close attention to a plan Governor Andrew Cuomo introduced last month that would stabilize pension contributions over the next 25 years and, if approved, would save the district about $400,000. The downside, Mr. Luce said, is that the district would be tied to fixed contribution rates that could be problematic down the line.
Though he and Schools Superintendent Lars Clemensen said they weren’t ready to discuss specifics about spending cuts, they presented a four-part plan to help the district close the gap. Under that strategy, Mr. Luce said he expected he could come up with about $275,000 in program efficiencies, $260,000 in new revenue from sources such as tuition and additional state aid, and about $85,000 from teacher retirement, attrition and vendor contracts.
District officials would need to use about $275,000 in reserve funds to close the rest of the gap, Mr. Luce predicted. He said the district currently has about $800,000 in its reserves.
“This is the first time we’re talking about that in Hampton Bays,” Mr. Clemensen said. “As time goes on, you’re going to see more and more districts in that boat.”
Board of Education Vice President Chris Garvey criticized the state formula that determines how much state aid each district receives based on property values and income. Mr. Luce said Hampton Bays could expect about a $65,000 increase in state aid for the upcoming school year.
Officials will meet on Tuesday, March 12 for the next budget workshop.
“Tonight is really about laying out the landscape,” Mr. Clemensen said. “At our next meeting, we will have a pretty specific menu of things to discuss.”