Nanuet School Budget: Possible Depletion of Reserves

At Tuesday night’s board of education meeting, Superintendent Mark McNeill presented a power point slide to the board of where the district stands. All numbers are estimates because it’s so early in the school year. The power point is also attached to this Patch article.

This year they projected they’ll need to close a $3.5 million budget gap to get under the 2 percent tax levy cap.

Nanuet Patch will be going into detail on each of these topics in a series of articles in the following days. In earlier Patch articles, McNeill:

• Reviewed the last two budget years 
• Broke down the budget numbers
• Explained the proposed 2013-14 budget actions

Looking Forward

“This is going to be year two of the tax levy limit. We need to look at how we can preserve instruction programs and class sizes,” said McNeill.

School administrators have been brainstorming different ideas and strategies on how to tackle the $3.5 million budget gap. The following have been proposed:

• Reconfiguration of K-5
• Reduce Transportation
• Additional cuts
• Apply reserves to reduce the levy

Closing the Budget Gap $3,551,543 Proposed Cuts in 13-14 -Grade Reconfiguration    $800,000 -Transportation/Schedule Change    $200,000 -Transportation/Busing              $0 -Additional FTE              $0 -Additional Cuts      $80,000 Total Cuts $1,080,000
Reserves needed ($3,551,543-$1,080,000) $2,471,543

Reserves

“We also have a debt service fund. That’s how much money we have that we can withdraw to run the system. We’ve been borrowing from reserves every year,” said McNeill. “How it gets replenished is, at the end of the year, if there’s money left over, it gets appropriated back into the accounts.”

According to the proposed 2013-14 budget, the schools need $2,471,543 from its reserves to close the budget gap of $3.5 million.

Current Total Reserves $5,520,510 Reserves needed for 13-14 $2,471,543 
Projected 2014 Reserves $3,798,967

*This is with all instructional programs and reasonable class sizes preserved. The projected '14 reserves includes $758,771 of balance of debt service fund added back in and an estimated $750,000 being deposited back in as well.

“We estimated, that by the end of this year, when the accountants come back in and do another audit report … we’ll have around $750,000 left over … to go back into our reserve fund. That comes from, if there’s a budget line for something, we probably overestimated what that line would cost and we have a little bit of savings,” said McNeill.

“And we may get more revenue that we had anticipated,” added Phil Sions, assistant superintendent for business

Board Member Karen Franchino pointed out that if there are any unforeseen expenses or emergencies, such as a severe winter, the amount left over could be much less than $750,000.

On top of the reserves, there is also a fund balance.

“NYS says that we’re permitted to have 4 percent additionally called fund balance. That fund balance is 4 percent of the ensuing year’s budget,” said McNeill.

Depletion of Reserves

“This is the scenario of how we see the next three years with the depletion (of reserves) in 2015-16. Next year we can preserve programs and class sizes, the following year, we’re going to be cutting programs and increasing class sizes, then 15-16, it’s over. There are no more reserves.”

McNeill forecasted some very difficult budget decisions the board will need to make.

“You heard North Rockland and other school districts say that kindergarten isn’t mandated … We’re going to have to look everywhere, we don’t know what kind of decisions we’re going to make.”

“We have a tall order this year where we need to develop a budget where we can stay the course. Maybe at the end of this year, there will be exclusions … or the legislature will wake up and (eliminate) the levy limit law, maybe the state will come down (give us) more state aid. The more revenue we get, the less we have to draw on the reserves and the reserves can last more years into the future.”

Bonding

Board Member Ron Hansen asked what would happen when the reserves are depleted. Sions answered that the board would have to start bonding everything.

Franchino said that was not a smart move because the district would be bonding with interest and have no reserves to pay it back or maintain a budget.

“Before we get to that point (of bonding everything) there will be school districts this year and many more next year that will become insolvent so (legislators) have to wake up,” said Anne Byrne, Nanuet School Board president. “I think when they see all these school districts (becoming insolvent) by next year, they’ll have to do something. They can’t expect us to raise the bar, which we’ve been very good at doing here in Nanuet … when we don’t have teachers in the classroom with a decent class size. Now we’re going to have 40, 50 kids in a class.”