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March 30, 2013

Area schools: Cap isn't realistic

By Mark Boshnack
The Daily Star

---- — Voters in area school districts could be seeing property tax levies of more than 2 percent on school budgets to be decided May 21, and it could be done without violating the state’s property tax cap, several superintendents said Friday.

While the state tax levy cap was touted last year by state Gov. Andrew Cuomo and others as limiting property tax hikes to 2 percent —  or the rate of inflation, whichever is lower — that’s not the way the law was written, Oneonta City School District Interim Superintendent David Rowley said. None of those interviewed said they’ve finalized their tax rates yet, and all said it would probably be lower than the maximum hike allowed, because the law allows for flexibility based on several exceptions.

In a recent budget presentation, Oneonta school business manager Lisa Weeks explained that a cap-meeting budget requiring a simple majority of voters can vary because of several factors. This includes such items as allowable debt service payments and retirement system costs that the district is mandated to pay into the teacher and employee retirement services. A district could have a budget above the tax cap but that would require a 60 percent supermajority — two of the three districts that tried that last year had budgets defeated on the first ballot.

In the 2013-14 budget going before voters, the Oneonta district will have more than $1.1 million in allowable exceptions and its allowable tax levy increase is $853,621, or 4.48 percent. However Rowley said, “It’s very unlikely we will go to the cap.”

“The retirement service payments are the real drivers here,” he said. All area schools face a large increase in those categories, and other superintendents interviewed said that’s a main reason for the pressure on the tax levy. If the formula didn’t allow some flexibility, it would be very difficult to deal with increases, Rowley said.

In the component districts of Otsego Northern Catskills BOCES, the allowable rates range from about 3 percent to more than 7 percent, Rowley said.

Schools have to use the formula and submit it to a state audit, so taxpayers can be assured it is accurate, he said.

This is the second year the law has been in effect. The levy at Oneonta was 1.81 percent for 2012-13. Because the vote was tied to a referendum to keep Center Street Elementary School open, the budget required the 60 percent majority but passed. The board of education will have to make a decision on the rate by its April 17 meeting.

Unadilla Valley Central School Superintendent Robert Mackey said his board will probably adopt a budget significantly below the allowable tax cap of 6 percent April 15. The biggest factors in the allowable rate are the retirement service expenses.

“It’s probably that way everywhere,” he said. The district is facing retirement service increases of about 20 percent.

The district tried and failed to have voters approve a budget above the tax cap last year, though they did approve one that fell within the acceptable limit at 2.4 percent. The key this year is to be open, and share how the process works, he said.

At Sidney Central School, the allowable cap is 5.9 percent because of retirement service and some other required costs, but Superintendent Bill Christensen said the rate will probably be zero or less when the board approves it. The levy increase for 2012-13 was 2.2 percent.

He said knows of very few districts that are at the 2 percent rate for the allowable cap for the upcoming year — most are much higher than that.

“We really struggle just getting people to understand how schools are funded,” and a 2-percent cap complicates the situation that much more, he said. Payments to the two retirement services have gone up for 2013-14 by 14 percent and 17 percent, along with transportation and capital costs.

The board of education is still deciding on the tax levy increase, but with the reduction of costs as revenues and enrollment have declined, it will probably zero or lower, Christensen said.