MASSENA - The Massena Central School Board of Education has charged the districts administration with finding ways to reduce a projected $4 million gap in its 2014-15 budget proposal.
Finance Committee Chairman Loren Fountaine asked the administration to explore how to balance the budget by keeping the status quo, or by using $4 million, $3 million or $2 million of the districts fund balance.
We cant really make decisions until we get the information, Mr. Fountaine said during a Thursday evening Finance Committee meeting that was opened to the public, immediately following a regular session of the board.
He said their most recent budget projection shows revenues of $44.8 million, while expenses are pegged at about $48.9 million. Those include contractual obligations and increases in areas such as health insurance and services used through the Board of Cooperative Education Services.
That left a gap of about $4.1 million, Mr. Fountaine said. But at the same time, administrators have submitted their requests, which total about $2 million. Those, if honored, would take the gap up to about $6.1 million.
He said actions such as the elimination of the Gap Elimination Adjustment and restoration of Foundation Aid could help at this point.
Getting rid of the Gap (Elimination Adjustment) would bring us down to around $3.5 (million gap), Mr. Fountaine said, saying he hoped they would at least get more state aid than the governor has proposed by the time the state budget is passed.
Going on their current numbers, however, he said there were ways to potentially close the gap. Among them was petitioning elected officials to restore Foundation Aid and eliminate the Gap Elimination Adjustment. Board members passed a resolution earlier in the evening calling on the state Legislature to immediately eliminate the Gap Elimination Adjustment, a move that brought applause from the audience.
They said that since its inception, the Gap Elimination adjustment has reduced state aid to the district by $7.952.922, resulting in a cost shift to local property taxpayers.
Another way to reduce the gap, accounting to Mr. Fountaine, was to reduce staffing and program.
We are a service industry. When we say 70 percent of the money goes to salaries and benefits, its true because were a service industry. If we want to cut, the only way to do it is staff and program, he said.
They could also decide how much fund balance they wanted to use to close the gap.
Luckily we have some left, which is better than some schools, Mr. Fountaine said.
They could also consider extending the tax levy beyond its current 1.5 percent, but would need a super majority of 60 percent to pass it.
Im not saying these are things we should do. Im saying these are options, he said.
The financial noose has been tightening on the district over the past few years, according to the Finance Committee chairman. He said that in 2010-11 they had $43.1 million in revenue and $40.8 million in expenses, leaving a surplus of $2.37 million. In 2011-12, revenues were $42.5 million, with expenses of $41.5 million, leaving a surplus of about $1 million.
Last year is when things as we predicted started to go down. In 2012-13 we ran a $1.7 million deficit. I can tell you that the forecast going forward doesnt look all that much better. This year (2013-14) were looking at a $2.5 million deficit, which is about what we said we were going to be. Thats how much we would need to use out of our reserves, Mr. Fountaine said.
We have to start coming off these reserves even though we have $20 million of reserves, plus or minus a million. We cannot run in the red forever. It just doesnt work that way, he said.
Mr. Fountaine said he asked Nickolas Brouillette, the districts business manager, to project forward what they would need to cut and use from the reserves. In 2015-16, he said, they would need to cut $1.3 million and use $3.7 million in reserves. The following year, they would need to cut an additional $1.6 million and use $3.1 million in reserves.
If these numbers were true over five years, to get down to using just $2.3 million out of our reserves, wed have to cut $4.3 million out of our current program. That is a bleak outlook. But you have to think about this in terms of half empty or half full. We are pushing for things like Gap Elimination Adjustment reform, getting rid of that,and pushing things like fully funding Foundation Aid, which will help. But theres no denying the fact that we are going to have trouble in the next five years with our budget, he said.
For now, though, the concern is the 2014-15 budget, which currently has a $4.1 million gap between projected revenues and expenses.
Here are some assumptions weve made. Theyre just assumptions. Im sure that most of us here would like to maintain current program with the least impact to instructional staff. We need to recognize that we added almost $1 million back into the budget after last year in places where we felt we needed to support our programs, Mr. Fountaine said.
He noted that, by passing the Gap Elimination Adjustment resolution, which would bring in $630,000, that goes quite a way toward helping us close the gap.
But, at the same time, they had to consider requests made by district administrators.
We need to recognize those and look at each one, but I think they understand the situation we are in as well, Mr. Fountaine said.
He pointed out that not every fund balance was available for their use in helping offset increases. The restricted fund balance, for instance, could only be used for specific purposes.
The district does have about $10 million in a restricted Employee Benefits Accrued Liability Reserve (EBALR) fund. But that can only be accessed with the approval of the state comptrollers office. Mr. Brouillette said a representative from that office will be visiting the district Tuesday to talk about how much they may be able to pull out of it for use this year and next.
Just to quell any theories out there, we cant just grab any money out of these funds. They have to be used for specific purposes, Mr. Fountaine said. If the comptroller says we can not use EBALR any more, thats going to hurt us and its going to hurt us quickly. We have money in there that we cant access.
Mr. Brouillette said that how much theyre able to use is tied to the Gap Elimination Adjustment. If the GEA is eliminated, that would mean less EBALR funding they could use, he said.
If they continue to tie to the Gap Elimination Adjustment, the number gets very small what we can actually use out of the fund, he said.
As they continue to chip away at the gap in next years budget, board member Kevin F. Perretta said it comes down to how fast they want to spend their reserves.
How fast do we spent or not spend the fund balance to make it last? Thats the choice. If our expenses are here and our revenues are here, our choice is how do we get to this point? he wondered.
Board member Leonard A. Matthews said he wanted to have input from others before they make a decision.
Have some advice going ahead from our administrators and some of our stakeholders and see what they think, he suggested.
Mr. Fountaine said that, up to this point, one thing theyve lacked was a top administrator because of the transition between superintendent and interim superintendents. William Flynn began his duties as interim superintendent on Monday, taking over for former Interim Superintendent William W. Crist, who had been with the district since August.
We need someone to come in here and be a leader and look at programs so we can decide, if we have to cut program, where we can do that. Whats troublesome is we dont have someone that is that leader to have that discussion in this amount of time right now. I think it makes it tough, he said.
Board members needed to come up with a concrete number that they could ask the administrators to cut and report back to them, he said.
We can say, look, find a million to cut. Have a meeting, talk amongst yourselves and find a way to cut those dollars. Or you can say, find a way to save us money and you dont know what comes back, Mr. Fountaine said. What I would like to see personally is for them to get together as an entire group and start hashing it out. Its not going to be, I think so and so should lose their program. Theyre all in the same program.
Mr. Perretta said he wanted to rely on the administrators to make recommended cuts rather than the board.
The board isnt experts on specific positions to cut. The board can ask administration. Thats what I would hope for, he said, suggesting it was fair to ask administrators to explain the specific impact of each of the cuts. Ultimately that has to be part of the prioritization. Thats going to bridge the gap toward us understanding the impact of it.
Mr. Flynn said he would work to get the information the board was asking for, although it might be difficult before their next Finance Committee meeting at 5 p.m. on April 3. That will also be open to the public, but public comment will not be allowed. It will, however, be allowed during the regular session of the board at 6:30 p.m. that night.