Two years ago Westchester Parent reported that over half of the county's districts had proposed bond issues for school construction due to a significant increase in enrollment. As of this past May's budget votes, enrollments have continued to rise but state aid has been flat or down in a difficult economic climate. So while school districts continue to grow and build, will state aid be able keep up with them? The answer is, as always, uncertain. The impact of lower and slower state aid on Westchester school building projects has so far been felt mainly by taxpayers.
SPRING 2002 BUDGET VOTES
The spring of 2002 brought high marks for continued voter support of Westchester school budgets and building projects, despite double-digit property tax rate increases in 10 districts. Three of these districts — Irvington, Byram Hills and Pleasantville — were interviewed for this article, and all report their building projects are in good health.
While some districts fought such increases, causing some budgets to be approved by a very slim margin, they have for the most part been absorbed by a largely pro-school population. Mount Vernon, which is in the middle of a $123.8-million building project, was the only Westchester district to vote against its budget. It went back to its voters in late June with more state aid, but was again rejected. Yonkers, where the school budget is determined by the city council, also faces cutbacks in school spending this year.
THE MAZE OF STATE AID
School budget planning always involves an element of uncertainty regarding state aid. That is simply the nature of the beast. Local budgets are developed and voted on before the state budget is set, so there is a degree of guesswork at the district planning level. Aside from the time lag between local and state budgets, school aid from the state changes from year to year. Janet Walker, executive director of Westchester-Putnam School Boards Association, characterizes budget planning as "very cyclical; districts try to anticipate what the state will do and include that in their budgets. Subsequent decisions regarding state aid impact planning of next year's budget." She elaborates that, "There's a flow to a project ...building aid comes in only after money has been spent, and the amount districts receive depends on where they are in their repayment cycle of a building project."
Five years ago, Gov. George Pataki and the State Legislature created generous building aid subsidies that encouraged many districts to move quickly on bond acts to help finance their building projects. If approved by June 2000, they were able to take advantage of a 10 percent incentive on the aid-able portion of cost, in order to improve their building aid ratio. (In Westchester, high property and income wealth versus state averages result in relatively lower building ratios). But last year the state scaled back its building aid with a revised formula for its reimbursement schedule, causing delayed payments to school districts, many of which had already begun their building projects and had to find other means to repay their bonds. And this year the Governor held the state school aid budget, offering no increases in building aid.
So while some districts may have been caught off guard when a change in state budget last year delayed much of expected state aid, other districts may have been better protected by the flexibility they built into their budgets to offset unpredictability of state aid, such as surplus appropriation and debt services reserves. Gregory Carlson, Byram Hills assistant superintendent for business and management services, says, "State changes are retroactive and unpredictable... It can be hard for boards to put out accurate information. A moratorium on changes after voters approve would be ideal."
The three districts interviewed for this article all had approved significant building projects by 2000 and raised their property tax rates more than 10 percent in their most recent budget votes.
IRVINGTON has been the fastest growing Westchester district over the last 10-12 years. It has seen an "enormous amount of building for a relatively small district," according to Janet Walker, with a $50 million building project started in 2000 to build a new middle school and add a new wing, gymnasium and auditorium to the high school. When Irvington learned late last year that a change in the state budget would delay much of its expected state aid (18 percent of project), it was forced to raise local taxes +13.9 percent. According to James Reese, assistant superintendent, because state aid is coming in six months later than expected, the district is receiving half the building aid it anticipated, and therefore went to voters with a tax increase. They had originally expected state aid to coincide with bond payment. Because of the delay, Reese points out, "Ironically, after the last bond payment (30 years down the road), we will still get building payments from the state. It helps the state cash flow and reduces their expenses."
BYRAM HILLS presented the biggest spending increase in the county for June’s votes, with tax increases ranging from 7.9-11.7 percent for different areas of the district. Assistant superintendent for business and management services Carlson says Byram Hills was not affected by changes in state aid in its budget planning, "except for the complication of anticipating what we would receive." The Byram Hills project was well under way so they didn't have to reduce the size of buildings or program components. Carlson explains that Byram Hills was not negatively impacted by delayed payments from the state because of their building fund balance and financial reserves, which add flexibility to the budget.
PLEASANTVILLE raised local taxes +14.4 percent, leaving the district with the highest tax rate increase in the county but the second lowest budget increase. Factors cited for the tax increase include reduced state building aid, revenue loss, increase in staff salaries and benefits, and lower amount of tuition paying students. The Bedford Road elementary school construction is in progress, with minimal impact from state reimbursement, according to business administrator David Quattrocchi. "For other districts, anyone with outstanding debt could have been gravely impacted,” he says, “but our budgeting for 2002-03 was more conservative after 2001-02. In the past, the Governor's budget was always lower than what the district was receiving, so it was unexpected last year when it didn't happen that way... It left everyone a little over-exposed, so we took a more conservative approach this year.”
Janet Walker speaks of the "tremendous statewide support for budgets after the May vote," but cautions that "we all need to be very strong supporters of public education. The state has definitely made strong efforts, although the economy is shaky right now; if it doesn't turn around, there is concern over the impact on next year."
Gregory Carlson addresses the same point. "If the state is now spending its own fund balance,” he asks, “where will the money come from next year — new taxes? Delayed payments help the state balance its books but hurt the schools. Most Westchester schools have the means to weather this, but districts more dependent on state funds are more hurt."