WITH THE SCHOOL BUDGET SEASON HERE, BOTH UNWELCOME POSSIBILITIES AND IMPROVED FISCAL OUTLOOK
January 12, 2014 -- North Shore Schools Superintendent Dr. Edward Melnick will be presenting his initial budget proposal for the 2014-15 school year at this Thursday evening's Board of Education meeting.
Although the spending plan is being developed at a time of potentially significant financial challenges, the fiscal outlook has also brightened considerably over the last several months.
Among the challenges and uncertainties that all Nassau County school districts face are the likely reduction in the state imposed tax levy limit for the 2014-15 budget, and the possibility that legislation repealing the "County Guaranty" will be upheld when it is reviewed by the state's highest court.
Under New York's property tax cap law, for a school budget to pass with a simple majority vote, the total school tax levy increase must be limited to 2%, or the rate of inflation over the previous 12 month period - whichever is lower. Although the figures for school districts have yet to be released, the State has already set the tax levy limit for county, town and many city and village governments for fiscal year 2014 at a 1.66% increase.
According to the Bureau of Labor Statistics data released in December, the 12 month inflation rate from December 2012 through November 2013 was 1.48%. The tax levy limit for school districts, which will be announced this month, will therefore almost certainly be lower than 2%. However, that figure is really only a starting point for determining each individual school district's allowable tax increase. Because of a complicated formula which exempts certain types of expenditures from the tax cap, such as debt service and the prior year's capital expenditures, tax levy limits for individual districts can vary widely. For instance, for the 2013-14 budget, the tax cap for East Meadow was a 5.24% increase, while Manhasset's was .15%. North Shore's increase was limited to 3.51%. If a School Board decides to put up for a vote a budget that would require a higher tax levy than what the state's formula has determined is the limit for that individual district, a 60% majority would be required for passage.
A second uncertainty and potential challenge facing districts is the possibility that the New York State Court of Appeals will uphold the repeal of the Nassau County guaranty on challenges to tax assessments. A 1948 amendment to the Nassau County charter requires that as the assessing authority, the county, not local municipalities and school districts, pay tax certiorari (assessment challenge) refunds to homeowners on properties that are improperly assessed. In 2010, County Executive Edward Mangano signed a bill passed by the legislature along a party-line vote repealing the county’s obligation to refund school and local tax payments on over-assessed properties, thereby shifting that responsibility to school districts and local governments. The law has yet to be implemented, as 40 school districts, the Town of North Hempstead and several special taxing districts have brought lawsuits challenging the legality of the repeal. This past February, a four judge panel at the appellate level unanimously struck down the 2010 law. Mr. Mangano has promised that the County will appeal that decision.
While the tax cap and the possible repeal of the county guaranty present challenges and uncertainties, Dr. Melnick stated at the November 21 Board meeting that the fiscal outlook for the district has been brightening in many respects. The improved forecast is due to lower than initially expected employee health insurance premiums, what appears to be near certainty among school district and other public officials that the tax shift from the Glenwood Landing LIPA ramp down will have far less of an impact on residential tax rates in the short term than once feared, and a reduction in the anticipated district contribution to the Teachers’ Retirement System (TRS). (Click here for November 23 article).
The district had been basing its TRS figures for the 2014-15 budget on projections from the Empire Center on New York State Policy that school district contributions would increase from 16.25% of payroll this year to as high as 23% next year. Dr. Melnick reported in November that the numbers provided by the Teacher’s Retirement System showed that the increase in the district's contribution will still be high at 17.25 to 17.75% percent of payroll, but significantly less than the 23% that the district had been anticipating.
In addition, recent approval of the $19.6 million bond issue by district voters allows spending on the many capital projects included in the referendum to not only be exempt from the tax levy limit, but to be spread out over a number of years and among more taxpayers at historically low interest rates. (Click here for Bond Referendum Article).
Thursday night's presentation at the Sea Cliff Elementary School Auditorium at 7:30 pm, will start a four month-long process during which the Board and Superintendent will review the spending plan and consider changes, while residents will have the opportunity to ask questions and offer their own thoughts on the proposal.
The Board will review the budget at its February 13, March 6, and March 20 meetings, and on April 3 will vote to adopt a final version. On May 8 there will be a “Budget Reading” and Town Hall meeting, and the community will have the final say on May 20th when the budget vote and School Board Trustees election will be held. READ MORE