Fulton’s Board of Education met Saturday morning to start building a budget that voters will accept or reject next May. The first thing they learned is that last year’s $2 million gap that was covered by using district reserves is right where they left it.
It’s actually a little higher than that. There will be no federal stimulus funds to support teaching positions next year. $400,000 supports 6 full-time-equivalent positions this year.
“Our programs and operations are in jeopardy,” said Superintendent of Schools Bill Lynch.
The district is not only being squeezed by its deficit and the end of the federal stimulus money. It remains up against:
- Another sharp rise in what it must contribute to the retirement funds of teachers and of its other employees;
- It’s legal debt limit and a BOCES construction project that will force Fulton to borrow money and may count against that limit;
- Very small or no increases in state aid as the state continues to deal with its own deficits;
- The Race To The Top program embraced by the state, which imposes new mandates, and;
- The state’s new 2% cap on property tax levy increases, which will force the district to keep its increase under the cap or gamble on getting the 60% approval needed for a higher increase.
In the last 3 years, the district has cut more than 50 positions in order to trim its budget increases. The district has hired a consultant, Dan Porter, to take a wider view of Fulton’s financial issues and will deliver in January a report on whether there are ways to consolidate some district functions or buildings.
But barring a major development, the board will have to find a way to fill a huge gap.
“We have a healthy fund balance as of today,” said Kathy Nichols, the district’s top business administrator.
District reserves are about $12 million, or about 20% of its current $60 million budget. But most of those reserves can only be used for particular problems. There’s a reserve to help pay unemployment claims, and there’s been a lot of unemployment of district employees in recent years. There’s a $4 million reserve to help pay the accumulated sick days of retirees. There’s a reserve for insurance, for property tax refunds, and for capital projects.
That leaves a much smaller amount that can be applied to general budget deficits.
The district has generated increases in those reserves in recent years by, as Lynch put it, deliberately underspending its budget. But with times growing tougher, “the assumption is that we won’t be generating any surpluses,” said Nichols.
A recent report from consultant Porter showed a growing, massive gap between spending and income over the next five years, assuming no major changes in income and expenses.
“We purposely rebuilt these reserves for situations just like these,” said board President Robbin Griffin, who was on the board in the 1990s, when reserves were spent down, resulting in a 10% tax hike in one budget.
“Revenue is the issue,” said Lynch. “It’s crippling us.”