By Kathryn G. Menu
Financial projections for the Sag Harbor School District through the next four years show the district operating at a deficit as of 2017, if revenues and expenses remain on their current track.
At a school board meeting on Monday, December 21, business administrator Jennifer Buscemi presented the board with a four-year, long-term financial outlook. The board will begin its budget process for 2016-17 on Monday, January 11.
“These projections can be used to assess future expenditure commitments, revenue trends, financial risks and the affordability of new services and capital improvements,” she said.
According to Ms. Buscemi’s figures, by the close of the 2016-17 school year the district could be operating at a $1.7 million deficit. That deficit could increase to $4.1 million by the close of the 2019-20 fiscal year. That said, the reserves the district has amassed – currently $9.5 million – can buffer the financial blow.
“They always say when you do a multi-year plan you have to expect there are going to be deficit situations going forward and you are just going to use that, putting it in the back of your mind whenever you are doing budgeting, and do whatever you can to minimize those deficits,” she said.
The financial plan is developed with a template used by many municipalities and developed by the Office of the New York State Comptroller. The district is projecting revenues and expenses assuming a mandated tax levy cap will remain in place, and that the school board will not ask voters to pierce that cap. It also projects revenues and expenses without being able to account for changes in out-of-district tuition, enrollment, or actual salary and benefit costs, expenses that are estimated based on collective bargaining agreements and contracts already in place, she said.
Ms. Buscemi noted the district recently boosted its reserves – something that she said will be critical for the district moving forward to ensure its financial health.
“The more money we are able to fund our reserves, the better off we will be in the future,” she said.
In terms of revenues, with the tax levy cap in New York State, Ms. Buscemi noted growth is limited. She projected total revenues, under the tax cap, would only rise between 4.13% and 5.04% between the 2016-17 school year and the 2019-2020 school year, or from $38.2 million to $43.8 million.
Tuition is one place Ms. Buscemi said revenues have declined, dropping from a high of $900,102 in the 2012-13 school year to projected $500,000 this budget year. Part of that decline, said Pierson High School Jeff Nichols, is attributed to the end of an arrangement with the Springs School District, which allowed students to choose what high school they attended locally. When that program ended, said Mr. Nichols, Springs students already enrolled were allowed to finish their high school education in Sag Harbor, but no new Springs residents were sent to Pierson.
Expenses rise between 6.2% and 6.4%, or between $39.8 million in the 2016-17 school year to $47.9 million in the 2019-20 school year. These expenses include salaries and benefits, transportation, community service, debit service that will cover upcoming capital project improvements and inter-fund transfers, like the $15,000 used in the general fund to support the food service program at Pierson.
Instruction costs are projected to rise from $22 million in the 2016-17 school year to $25.5 in 2019-20, with employee benefits rising from $10.6 million to $14.3 million during the same time period.
Looking at historic data, Ms. Buscemi noted the district has traditionally ended its fiscal year with a surplus of funds – anywhere between $1.1 million and $2.2 million from 2011 to 2015. While the 2015-16 budget projects a planned deficit of $910,000, that deficit is budgeted to be covered by $500,000 of appropriated fund balance and $410,000 from the employee retirement system reserve, said Ms. Buscemi.
According to projections, if the district did not add any money to its reserve accounts, made no changes in programming or revenue streams, the current fund balance could cover the cost of deficits in school budgets through the 2018-19 school year. In 2019-20, the fund balance would not be able to cover a projected deficit and would be depleted.
“You see, of course, every year does predict a deficit,” she said, “because this is based on us not making any changes and operating as usual, and also spending 100 percent of our budget for 2015-16 … which we usually don’t.”
Health insurance, for example, or electric costs can be over budgeted in an effort to be prepared for the worst, said Ms. Buscemi.
“These are always going to be the Doomsday projections,” she said. “It isn’t going to be this bad going forward because we will make changes.”
In other news, school board member Thomas John Schiavoni announced he would recuse himself from any discussions regarding a potential purchase of the former Stella Maris Regional School property on Division Street in Sag Harbor. Mr. Schiavoni’s wife, Andrea, is on the finance committee for St. Andrews Church, he noted, and works pro bono providing that body legal advice.