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November 20, 2017
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Stillwater News

Stillwater begins 2013-14 budget planning

Discussions focus on eliminating budget gap, preserving programs

March 8, 2013 – The Stillwater Board of Education is continuing efforts to develop a proposed budget for the 2013-14 school year. The district has held two workshops where Superintendent Stanley Maziejka and Business Manager Mark Methe provided the board with recent revenue, expenditure and fund balance projections.

Understanding the Gap Elimination Adjustment (GEA)

As it now stands, Gov. Cuomo’s proposed budget would reduce Stillwater’s promised state aid through the Gap Elimination Adjustment, or GEA, next year by more than $1.4 million. The GEA was originally introduced in 2010-11 by then-Governor Paterson as a tool to close the state’s budget deficit. Under the legislation, a portion of the funding shortfall at the state level is divided among all school districts throughout the state and reflected as a reduction in school district state aid. The GEA is a negative number, money that is deducted from the aid originally due to the district.

“Thanks to careful budget planning and the GlobalFoundries PILOT, we’ve been fortunate that we haven’t had to make many cuts to programs or haven’t had double digit tax increases in recent years. But, the reality is that the state is not living up to its promise,” said Superintendent Stanley Maziejka. “If Stillwater received the entire amount of state aid that was promised years ago, we would not have a budget gap going into next year. We might have a greater ability to lower the tax levy or add programs for our students.”

After accounting for the GEA, any discussion of state aid is complicated by Gov. Cuomo’s Jan. 22 announcement that school aid will increase by 4.4 percent compared to last year. Although his executive budget calls for additional funds, the majority of that money is targeted for expense-based school aid estimates, one-time payments to offset cost increases, or competitive grants. The proposed state budget would increase general support for everyday operating expenses to Stillwater by less than $100,000—$1.5 million below 2008-09 state aid levels.

Learn more about the GEA by watching an informational video.

According to the latest working budget figures, continuing all programs from the current school year into the next school year would leave the district with an estimated budget gap of approximately $1,129,228, before any tax levy increase. That gap is due in large part to the increasing cost of health insurance and pension contributions, general increases in the cost of running a school district, and state aid that is not keeping up with promised levels.

To close the gap, the Board of Education can look at three different options: reduce spending by reducing or eliminating programs, allocate money from the undesignated fund balance, or generate more revenues through property taxes, or a combination of the three.

“It’s early in the process, and many factors are still coming into play,” said Maziejka. “We’ve tried to take a conservative approach to budgeting over the past several years. We’re also fortunate that we have the Global Foundries PILOT (payment in lieu of taxes) that has helped offset cuts to our state aid. We’re going to continue to be conservative, but there are difficult decisions ahead of us.”

Tax levy “cap”

Maziejka and Methe are also projecting the district’s maximum allowable tax levy – also referred to as a “cap” – will be 5.2 percent, as determined in a complex formula outlined by state law.

Although the law, which went into effect last year, has been referred to as a “2 percent cap,” it does not in fact restrict any proposed tax levy increase to 2 percent. The law does, however, require at least 60 percent voter approval for a school budget if the proposed levy increase exceeds the calculated limit, as noted above with the 5.2 percent.

“This does not necessarily mean that the district will go out with a 5.2 percent tax levy increase for next year, it simply means that under the tax levy cap formula, Stillwater can legally ask residents to vote on a tax levy increase of up to 5.2 percent without needing a supermajority,” said Maziejka.

Last year, Stillwater’s maximum allowable tax levy was -4.43 percent because the GlobalFoundries PILOT to the district increased significantly from the 2011-12 to the 2012-13 school year. PILOT payments are factored into the tax levy limit calculation. The 2013-14 GlobalFoundries PILOT payment is estimated to increase by $195,000, a much smaller increase, which has less of a negative effect on the formula.

One of the major factors for the 5.2 percent maximum allowable tax levy is due to the large growth in NYS Teachers’ Retirement System (TRS) and NYS Employee Retirement System (ERS) expenditures for the 2013-14 school year. Stillwater’s ERS contributions are expected to increase by 10 percent and TRS contributions by 37 percent, totaling $249,248 in added expenditures for next year.

Closing the gap

The tax levy is just part of the budget development puzzle. Changes in federal aid and other miscellaneous revenues also affect the budget. The board must also await final state aid figures, which will become available once the state adopts its budget. That is expected at the end of March.

At this point officials are trying to find the right balance with the tax levy. The board is considering several scenarios, for example, if taxes went up by 4 percent it would bring the overall budget gap down by $344,108. Refer to Feb. 27 PowerPoint presentation (PDF)

In the meantime, Stillwater will consider a number of options to close the estimated gap between expenses and revenues for next year. Those options include:

  • Reduce expenditures by either rethinking the delivery of programs and services or reducing/eliminating programs;
  • Utilize some fund balance (“rainy day” savings); and/or
  • Bring in more tuition students (the district currently brings in students with special needs from outside school districts).
 

The district is also anticipating some savings with retirement breakage, since new hires typically cost less than veteran staff.

“The reality is that we’ll most likely use a mix of all of these options to find the right balance between what our students need and what our taxpayers can afford,” said Maziejka.

Upcoming board workshops

Residents are encouraged to come and learn more about the budget process. There are two remaining budget workshops on March 12 and April 2. Both workshops will begin at 6:30 p.m. in the high school library media center.
Up-to-date budget information can be found on the district’s budget page.

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