MASSENA - Not knowing whats ahead financially, the executive director of the New York State Association of School Business Officials says he believes Massena Central School District officials are correct in not using more of their reserve funds in their 2013-14 budget to save positions or programs.
A lot of school districts that are drawing down their fund balance are going to be exhausted by the 2016-17 school year. The board and administration are being prudent in putting aside money for next year, Michael J. Borges said Wednesday.
During their budget presentations this year, Massena Central School officials have shared the same concern - that the well would be dry by 2016-17 if they kept using their fund balance at its current pace.
At the current rates, the Massena Central School Districts unrestricted reserves will be exhausted by 2016-17, Finance Committee Chairman Michael J. LeBire has noted in budget presentations to the board and public.
Board President John R. Boyce echoed those sentiments during Tuesdays public hearing on the 2013-14 spending plan.
While maintaining programming is important, we also realize the well is only so deep, he said.
The district had $23.5 million in reserve funds in 2012-13. They allocated $4.1 million in reserve funds to balance the 2012-13 budget, leaving $19.4 million for the 2013-14 school year. Of that, $13.5 million is in restricted reserves, meaning its money that is designated for specific purposes and is unavailable for general fund expenditures.
That leaves $5.9 million in unappropriated reserves that are available for general fund expenditures, and the 2013-14 budget proposal uses $3.1 million, leaving $2.8 million for future use.
Even using $3.1 million in reserve funds, the district has still had to make severe cuts to its programming to balance the 2013-14 budget. The budget approved by the board of education calls for the elimination of 29.25 full-time equivalent positions to save approximately $1.77 million. That spells the end for the Delta School of Choice, formerly the Alternative Education School.
Three other positions were eliminated through attrition and retirement; 1.5 positions were replaced with a lower salary; and two positions will be transferred to the St. Lawrence-Lewis Board of Cooperative Educational Services.
During this weeks board of education meeting, some speakers asked board members to revisit their plan to shut down the Delta School of Choice. Among them was retired teacher Loretta Perez.
This program deserves to be saved any way we can save it. Nobody wanted this program cut. Why was this chosen to cut when there are other alternatives that would have less impact on students? There were programs that you could have cut that would have had less impact, she said.
Some suggested board members could dig further into their reserves to save the program. It would come with a price tag of nearly $800,000.
Teacher Joseph Mittiga had suggested the money could be found somewhere, including additional use of the districts fund balance. Although the board has already adopted the budget, he said his understanding was that they were allowed to modify it seven days before the vote, which will be on Tuesday.
You could get together tonight, propose changes and adopt the changes, Mr. Mittiga said. I think its worth taking a second look.
Mr. Boyce, however, said he had been advised by legal counsel that they could not use additional money from the fund balance if they made any changes to the spending plan. He said, if they were to resurrect the Delta School of Choice, they would need to make corresponding cuts in other areas.
Mr. Borges said, even if they could, he would not advise Massena Central School officials to use more of their fund balance while not knowing what awaited them for aid in future years. He said they should hang on to reserves to avoid future cuts, something districts across the state are struggling to do.
According to NYSASBO officials, unrestricted fund balances at school districts throughout the state - used to plug holes in budgets to prevent layoffs and loss of programs - declined on average by approximately 13.8 percent last year and are expected to decline an additional 8 percent this coming year.
Massena is not unique. School districts around the state have been drawing down their fund balances steadily since 2008. The last two or three years they have steadily been drawing it down in bug chunks. Once school districts exhaust these fund balances there will be nothing standing between them and fiscal or educational insolvency, Mr. Borges said.
Although schools received a 4.7 percent increase in state aid for the next school year, he said it only slows and not cures the ailments plaguing our school districts. Without addressing major cost drivers like health insurance, workers compensation and special education, the fiscal and educational integrity of our schools will continue to be undermined.
Schools need to be hanging on to as much of their fund balance as possible in anticipation of future year expenses, according to Mr. Borges.
If theyre prudent they will save something for next year and the year after. The economy is slowly getting better, but not to the point where theyre going to see huge increases in state aid. It would not be fiscally prudent to spend all of the fund balance. Revenue has sort of been flatlined, but expenses continue to rise. If they use more of it this year, theyll have less next year. Then cuts next year will be even worse. They need to cut a little and spend a little to balance the budget, he said.
New York state law sets a limit of up to 4 percent of the approaching years budget that can be retained in a rainy day account and spent as needed. But many districts have been over that limit, something thats been to their advantage, Mr. Borges said.
One one hand, they have been criticized for having too much in their fund balances. But thank God they did. Otherwise they would have no rainy day fund, he said.
One way to ease the burden on school districts is to remove some of the mandates they face, Mr. Borges suggested.
Legislation gave us a 4 percent increase in school aid. But your pension costs are going up 14 to 16 percent and health care costs 7 to 10 percent. Costs continue to rise and revenue is flatlined. What we need is significant mandate relief. There are still tons of them out there, he said.