An independent audit has resulted in a “clean opinion” on Bethlehem Central School District operations, but it has also given weight to a few troubling trends that have been brewing in recent years.
The figures were presented by Chief Business and Financial Officer Judith Kehoe at a meeting of the school board on Wednesday, Oct. 5. The full report, which covers a 12-month period from the end of June 2010 to June 2011, should be online at the district’s website in a few weeks.
Perhaps the most dramatic finding was one the district was already aware of: The fund balance shrunk over the past year. Though the undesignated fund balance (a rainy day fund) is right around the state-mandated maximum, the district spent some of its savings to offset the tax hike in the most recent budget, which played a big role in shrinking that fund by $2.1 million to about $8.9 million.
“We are in good fiscal shape, but the trend is something that’s not positive,” Kehoe said.
“The budgeting process moving into the next year will sadly look much like other years,” she added.
Expenditures were predictably up during the past school year by about $2 million. That’s mostly accounted for in increased employees benefit costs, namely the ballooning amount the district is mandated to pay into the retirement system for its employees.
Simultaneously, revenues shrunk by $2.4 million, mostly due to less state and federal aid coming in. That still includes about $1 million of Recovery Act money, the last the district will see from that program.
In other fiscal news, the district’s cafeterias are in the black for the first time in the past few years.
After operating at a $162,00 loss last year, the first few weeks of the 2011-12 school year has the meal program making a few thousand dollars. This year, the district raised meal prices. At the high school, they went from $2.25 to $3.25 for a full lunch.
While the bottom line is better, the cafeteria is serving up fewer full meals. The district is averaging about 1,325 meals sold per day versus last year’s average of about 1,600 per day.
The reduction is mostly at the high school. At the same time, it’s not entirely clear this is due to the price hike — more students are forgoing lunch to take extra classes and the sale of a la carte items is up.
Tax cap will be key issue
The upcoming school budget will be the first time the school district contends with the new property tax cap. Though it’s advertised to keep tax levy increases to 2 percent or lower, Kehoe noted there are exceptions to the rule.
As described by the state’s own guidelines, figuring out the tax cap for each municipality is an eight-step process. Take a deep breath, because here it is:
Take the prior year’s tax levy to start; then, multiply by a “tax base growth factor,” which is a figure provided by that state; then add in any payment in lieu of taxes; take out tort action payments exceeding 5 percent of the previous year’s annual tax levy; then multiply by the “allowable levy growth factor,” which is 2 percent or the consumer price index, whichever is lower; take out PILOTs scheduled for the coming year; add in any carryover funds (extra taxes from the previous year); and carry forward eligible exclusions.
The result is the tax levy limit. It’s a far cry from a simple 2 percent cap (thought it could conceivably end up being that figure), and Kehoe said impressing this upon the community is likely to be a big challenge in the coming budgeting process.
“At the end of the day, because of those pieces, it might not actually be two percent,” Kehoe said. “Confusion is the bottom line, I think, for a lot of people.”
The school district also has the option of putting forward a tax levy hike that’s above the limit and hoping for at least a 60 percent “yes” vote. Of course, it can also propose a figure under the limit.
In May, BC’s budget was passed with a 66 percent “yes” vote.
