Financial Consultant Dr. Rick Timbs, from the firm of Bernard P. Donegan, painted a grim projection of the Onteora Central School District as it approaches its first tussle with New York State’s now mandated two percent tax cap. With the cap squeezing the budget into a nearly impossible scenario due to spiking increases in employee benefits, once again a recommendation was made to close one of the district’s three elementary schools, or as Timbs explained, “right-sizing” the district. At the Board of Education meeting Tuesday, September 27 in the Middle/High School, Board members listened, absorbing the task put in front of them during the two-hour presentation.
“You’ve got three buildings, this is not going to be popular and I’m trying to be honest,” Timbs said, “but I’m not sure you’re going to be able to maintain all three buildings in their current configurations unless you can curtail expenses unbelievably dramatically or you’re going to get unbelievably dramatic increases in expenditures. So you may want to start a study to right-size the buildings in your district.” He suggested hiring architects and coming up with plans.
His recommendation places a dilemma in front of the board, some of whom were elected for the express purpose of keeping Phoenicia Elementary open — a school once slated to close by a previous school board. But the future has such a bleak outlook, Timbs said, that he was baffled how any school district in the state will be able to maintain under the cap without falling into heavy debt, calling the set up “unsustainable.”
“Your expenditure is escalating very rapidly and your enrollment is declining pretty rapidly and they just don’t match up,” Timbs said. He presented a 27-page financial report along with an additional six pages of recommendations that he deemed as urgent. The report states with a two percent tax levy cap the district will go into red by 2016 and by 2017 have a deficit of $11.3 million. Timbs commended the district for having a healthy cash flow and reserves to tap into. But he cautioned trustees. “Lets put it this way, the things you are doing now, are going to turn into a luxury in two years,” he said. In the next couple years the district will need to tap into more reserves in order to stay afloat with no new revenue. If the tax levy was rejected by voters two times, an austerity contingent levy would allow no increase in spending, creating a deficit much quicker. His 2015 projections show a $2 million deficit, which then jumps to $11.6 million by 2016.
The largest projected impact stems from employee benefits. Health insurance is projected to see a possible ten percent increase yearly and retirement contributions, 11 percent. Timbs explained that this could fluctuate. Trustee Tony Fletcher pointed out that last year health insurance increased only three percent, however the previous year saw a 14 percent jump. He asked how Timbs came up with those projections. Timbs said the Health Insurance Consortium has managed to maintain reserves, “but what has happened is they are no longer able to maintain those reserves to keep the rates down — we believe they will escalate.”
The cuts that have already been made are beginning to reveal a decline in classroom instruction.
Between 2006 and 2011 cutbacks of staff have affected those with disabilities and students across the board, a trend Timbs warned would only get worse.
Timbs blamed an unsustainable mixture included declining State aid, unfunded mandates, decreased enrollment, increases in benefits and the two percent tax cap. “I think you need to lobby for greater state aid, I don’t think the aid that is being distributed is very equitable in particular based on the demographics of the school district and I would also lobby the board of regents on unfunded mandates…because some of them are going to be counter productive to your mission of trying to right-size your district.”
Trustee Rob Kurnit expressed frustration. “I don’t know how we can get a groundswell from people in the district or even in the state,” he said. “We keep hearing things about everybody backs education but we never see the support.” School Board president Ann McGillicuddy said the district is still looking for people to join the Legislation Action Committee recently created for the purpose of lobbying.
Timbs said to look for shovel-ready construction within the district with the possibility of creating revenue. In a separate interview he said the Woodstock 52-unit RUPCO housing project was not considered in the report because there is no property evaluation to date. There was also no projection given for additional growth of student population as a result of families moving in.
Other recommendations Timbs made included negotiating expenses for employee contracts in order to curb benefit costs; bringing in larger capital repair projects that would offer state aid as opposed to smaller single repairs; and casting a wider bid on projects.
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