Ramapo Central Set to Vote for 2012-2013 School Budget

Thursday, 10 May 2012 07:38

Written by Richard Gandon

2 Comments

Tax Levy Increase Below the Cap

Tax levy caps, decreased state funding, state education mandates and contractual cost increases present a significant challenge to every school district in New York state.

Ramapo Central School District’s new Superintendent of Schools, West Point graduate Dr. Douglas Adams seems to have parachuted into the middle of a perfect storm.

Having already been falsely accused of giving RCSD teachers a 5% pay increase, even a casual glance at the actual numbers shows that a great deal of time, effort and resources have been allocated by the Superintendent and his staff during the first ten months of his tenure. The Superintendent has presented a fiscally responsible budget while keeping the programs in place that make Ramapo Central a desirable school district.

5% pay raises for teachers? Utter nonsense. To present anything otherwise is irresponsible at best as RCSD employees are operating with an across-the-board pay freeze under their current contract.

The so-called 2% tax cap isn’t really 2% after all. There are exemptions and penalties involved to increase or decrease the tax cap. One school district actually has a tax cap that is less than 2%. After factoring in all of the exemptions that RCSD is entitled to, the actual tax cap is 2.86%.

The proposed budget-to-budget increase is 3.28%; the actual tax levy increase is just 2.68%. Contrast this to the district’s prior ten year average tax levy increase of 6.40% and the budget-to-budget increase of 6.46%; clearly the Superintendant has already looked to increase the district’s efficiency and effectiveness by cutting these increases in half.

The district has managed to carve $1,515,740 in cost savings from a variety of areas without affecting quality educational outcomes.

Technology savings amount to $464,452 while still still enabling the district to accomplish all technology related goals including the replacement of outdated computer labs and equipment.

Personnel savings of $425,549 were realized because of retirement and voluntary departures, Buildings and Grounds savings of $276,309 as the result of an energy performance contract that will pay dividends in the form of reduced energy costs going forward and $198,220 in special education savings without eliminating any positions or services.

The special education savings are particularly interesting and quite possibly provides a glimpse into the future as the Superintendent commissioned an internal study that showed that special education students were better served and their needs better met by keeping them in the district rather than sending them to BOCES while at the same time saving taxpayers almost $200,000 each year.

During the three year period including the 2012-2013 budget year, RCSD will have utilized $7,101,721 in reserves in order to reduce the tax burden leaving a reserve balance of just $886,040.

Mandated healthcare costs are increasing 10% for the coming year, while pension expenses are increasing a whopping 8%.

Pension Cost Increases Explained

Did teachers and district employees receive an 8% retirement boost? Despite rumblings to the contrary, no they did not. To help clarify the issue, here’s a general tutorial on how public employee pension plans work.

Defined benefit plans (pensions) use investment return assumptions or an assumed rate of return when calculating contribution costs. In theory, the assumption should smooth out pension contributions over time as they are generally longer-term moving averages. A few good years of returns compensate for a bad year here and there. By inflating the assumed rate of return, contribution rates are artificially low for a period of time meaning that elected officials can shift tax dollars away from pension contributions and toward pet projects. If over a number of years returns don’t meet expectations, eventually the taxpayers have to foot what at times can be a massive bill. Case-in-point; CALPERS the largest pension fund in the United States with $232.5 billion in assets is faced with a possible $213 million contribution increase to cover shortfalls including investment losses and the effects of using a generous investment return assumption of 7.75% since 2004. CALPERS did reduce their assumed rate of return to 7.5% despite the California State Employee Retirement System’s Chief actuary recommending that the assumed rate of return be reduced to even further to 7.25%.

The quarter point assumed rate of return reduction implement in March 2012 will cost California taxpayers an additional $167 million this year; add the now proposed sum and $213 million and pretty soon you’re talking about real money. Had the CALPERS board adopted the recommended 7.25% assumed rate of return, the cost to taxpayers would have risen to $425 million this year. Because public employee pensions are ‘defined’ benefit plans, meaning retirees are guaranteed a certain percentage of their pre-retirement income, taxpayers are on the hook for investment loses and optimistic assumptions.

This year’s budget increase is far more reasonable than those of the past ten years but there is trouble looming on the horizon across the state and across the country.

RCSD is currently facing $10 million in unfunded state education mandates. Costs are increasing while tax revenues are decreasing as housing prices continue to be depressed. In short, we are on a structurally unsustainable path.

Governor Cuomo has promised mandate relief however it has not been forthcoming as of yet. The result is an increased, mandated burden on taxpayers.

Dr. Adams and his staff have prepared forecasts going out two, three, four years and beyond in order to fully assess the multitude of challenges that lay ahead.

While a frightening proposition at best, bear in mind that Adams’ doctoral dissertation is entitled “Using Data Envelopment Analysis to Assess the Technical Efficiency of School Districts in Arkansas”.

‘Go Army, Beat Navy’ may very well become the rallying cry in Ramapo Central School District as the West Point graduate seems uniquely better-equipped than even an Annapolis graduate to navigate RCSD through turbulent economic waters in the coming years.

Ramapo Times recommends a ‘Yes’ vote for the 2012-2013 RCSD Budget.  The Budget vote takes place on Tuesday, May 15th between 6:00am and 9:00pm.

Voting locations:

Comments  

 

+1 #2 2012-05-10 15:49

Great story on the challenges ahead for Dr. Adams and his colleagues across the state. Before any real relief will be felt, the compensation system must change. It will take decades to fix the state's bloated pension system, but we are on the cusp of a unique opportunity to bring education staffing costs, benefits and incentives in line again with those of the people who pay the bills. Although it will cost millions to implement, when RCSD officials invest the huge dollars that will be required to fund the new state-mandated principal and teacher evaluation framework, I hope they look for a return on that investment in the form of a new approach to the contracts they will be negotiating with their bargaining units.

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0 #1 2012-05-10 08:42

"During the three year period including the 2012-2013 budget year, RCSD will have utilized $7,101,721 in reserves in order to reduce the tax burden leaving a reserve balance of just $886,040."

How much of the 7 million was used each of the 3 years? Is the bulk of it being used this coming year to make the budget look so good?Leaving less than a million in reserve sounds risky for a quality school district of this size.

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