Even with no increase in the total tax levy in the proposed 2021-2022 budget, even with approximately $1 million in unexpected COVID-19 related expenses in 2020-2021, even with socking away nearly $1 million into other reserve funds, the unrestricted fund balance for the Greater Amsterdam School district’s 2021-2022 fiscal year is projected to rise from $13.8 million to $14.5 million, according to the New York State Property Tax Report Card filed by the district on April 25. The amount is nearly five times as large as the limit set by New York State law.
While district officials had previously projected a $10 million fund balance for 2020-2021, according to the same report card, the actual amount came in at $13.8 million, even as the district dealt with late payments from the state and extra costs associated with the pandemic.
At least this year, unlike the last, there are no cuts to any programs, and the fifth-grade band program, which was cut in 2020-2021 for absolutely no good reason, is reinstated with the hiring of a new teacher. That’s good news. You can read a summary of the proposed budget in the school district’s budget newsletter.
According to the newsletter, the district is receiving an increase in state funding. This is good, as officials were understandably concerned last year as the state was withholding payments to many districts.
The board has also approved a resolution, which will need approval by district voters, to establish a capital reserve fund which could hold up to $5 million over ten years and which would be used to fund capital projects. This is also a good move.
However, the fact remains that the district’s fund balance has exceeded the amount allowable by state law since 2014, as reported by the New York State Comptroller’s office. The report determined, “The District’s consistent practice of adopting budgets with conservative estimates for appropriations has led to the accumulation of excess fund balance.”
A healthy fund balance is a good thing. However, state law sets a limit on the size of the fund balance at 4% of the budget. That would put the limit for Amsterdam’s $79 million budget at just over $3 million.
School district officials, both the administration and school board members, have simply refused to comment directly on this subject when I’ve asked.
At the meeting on April 21, there was absolutely no mention of the fund balance, much less any detailed discussion of the budget. Board members had a brief discussion as to whether to go with a 1% tax levy increase or with no increase, that was it.
So what should the district do? A series of small tax cuts followed by a series of small tax increases over several years seems like the way to go. The problem with cutting taxes is that we have a tax cap law which makes it difficult to raise taxes rates back up again if needed. The tax cap can be overridden by a super-majority vote, but elected officials know that this would be politically unpopular.
As a taxpayer, I don’t want a huge tax cut one year, followed by a big tax increase the next anyway. I want small changes which are less disruptive to my personal budget.
If that isn’t possible, the board should consider the possibility of tax rebates, issued directly to district tax payers, as a way to return the unnecessary taxes we’ve paid in the past, to finally bring the fund balance into the range required by the state.
Don’t hold your breath though. Administration officials seem intent on keeping that money in the name of fiscal responsibility. In several meetings, Business Officer Colleen DiCaprio painted a theoretical picture of a “fiscal cliff” scenario, in which state funding drops by a large amount. A large fund balance could cushion such a drop.
To suggest keeping such a large amount just in case there is a hypothetical large drop in funding from the state someday, strikes me as alarmist. If a sudden one-year decrease does happen, a healthy $3 million fund balance should be enough to mitigate the problem. If the “fiscal cliff” lasts several years, even an eight-figure fund balance won’t be enough to avoid raising taxes after too long.
The other reason brought up is that the fund balance cash can be used to put more toward capital projects, allowing the district to get lower interest rates on bonds for the remaining amount. That’s nice, and the $5 million capital reserve fund can be used for that. It still doesn’t justify a $14.5 million fund balance.
In my opinion, after watching the district board meetings this year, it’s clear the administration is running the show with board members doing little more than rubber stamping what’s put before them. Board members haven’t given me any indication they understand the nuts and bolts of the budget. If they do, it certainly didn’t come out during the meetings.
It would also have been nice if the public could have gotten some of the details before the board vote. My request for a draft version of the budget before the April 21 meeting was denied. So no detailed information was available to the public before the vote, when public comments could have actually provided some value in shaping the budget.
Fortunately, parents speaking out about the 2020-2021 cut to the fifth grade band program seems to have been effective in getting it reinstated. Now if we could just maintain that same level of public dialogue on other aspects of the budget.
You have an opportunity to speak your opinion at a state-required public hearing on the proposed budget which is being held today, May 4. However, none of your comments will make any difference, as the proposed budget that will go up for a vote on May 18 is finalized and can’t be changed. If voters don’t approve the budget, then the district can come up with another version, and then maybe they will go back to the public hearing for ideas. Maybe.
The entire process, in my opinion, is backwards and severely limits public input on the creation of the budget. Without being able to see the draft of the proposed budget before the board votes on it, public input means nearly nothing at this point.
School board members are supposed to be our representatives who are ultimately responsible for how money is spent in the district. Unless board members can understand, question, or possibly challenge the line-item details in the budget, they cannot truly fulfill their job to keep administration officials accountable.
Until board members and/or the general public, starts talking about the massive growing fund balance, nothing is going to change. We will continue to be over-taxed, and remain out of compliance with state law.
Will the state step in and do anything? Probably not. As I was told by the comptroller’s office when I asked about the City of Amsterdam finances, “OSC provides guidance, local officials are responsible for compliance.”
While in extreme cases, the state steps in with financial control boards, that’s for municipalities that are struggling to maintain services, not ones that are doing too well. We’re on our own folks.
A full, detailed version of the 2021-2022 budget, as well as other related documents including the report cards, can be found on the district’s website.