School Budgets Strained
A .12-percent cap on tax levy increases this year, which was recently announced by the New York State controller, is expected to put additional pressure on school districts around the state, including those on the South Fork, which are already under stress as they begin budgeting for next year. The near-zero cap is significantly lower than last year’s 1.62 percent.
Although some officials have said it is too early to tell just how the cap will affect their budgets, they agree that budgeting is likely to be tough. In an interview on Tuesday, State Assemblyman Fred W. Thiele Jr. said he expects more districts to attempt to pierce the cap, meaning they will try to convince a 60 percent supermajority of voters to support a higher tax levy increase.
“There is less of a penalty for school districts that do so. At 0.12 percent, if they put up a budget that pierces the cap and it fails, well, they only go from a 0.12 percent increase to zero.”
However, Katy Graves, superintendent of the Sag Harbor School District, said in an email yesterday that Sag Harbor has no plans to pierce the cap. “We have and continue to focus on capturing savings for the district. Even the smallest savings, shared service, or revenue generation can net large enough savings to maintain student programs,” she said.
As for the East Hampton School District, Richard Burns, the superintendent said Tuesday that it would try its best to stay within the cap. “Point one-two is a barebones increase,” he said. “There’s just not much room.”
For the districts that send students to the East Hampton district, Springs, Amagansett, Montauk, Wainscott, and Sagaponack, the tax cap is adding pressure to a budgeting problem most already have: the effect of enrollment fluctuations on the nonresident tuition they pay East Hampton for students who have finished school in their home districts.
Many local officials say that enrollment is unpredictable in part because year-round housing can be difficult to obtain and that families are sometimes forced to move between districts. The sending districts must find a way to pay for tuition, which usually changes every year. This year’s East Hampton High School tuition is just under $25,000 for general education students and just under $69,000 for those in special education classes.
Springs, for example, is paying tuition this year for 66 12th graders who are expected to graduate in June. However, its class of 8th graders has 77 students, indicating an increase in tuition even if 10th and 11th grade enrollment stays the same. This year, the district’s tax levy is about $24.45 million; a 0.12 percent increase would be $29,343. But with 11 more high school students alone, assuming they are in general education rather not special education and that high school tuition doesn’t increase much, Springs estimates that it will have to pay about $260,000 more next year.
Southampton School District’s high school tuition is a little lower: $23,009 for general education and $66,632 for special education. Still, Dean Lucera, the superintendent of the Tuckahoe School District, which sends students to Southampton, said in an interview that “the tax levy increase, the enrollment increase, and the tuition system have put a tremendous pressure on us. It either forces us to go into our fund balance or pierce the cap, two things that are dangerous in this time.”
One effect of the way in which enrollment and tuition interact is that sending districts have found themselves over-budgeting. “We budget for extra students all the time. . . . Do we need all that money? Probably not. It goes back next year as fund balance,” Jack Perna, superintendent of the Montauk School District, said. “I think it causes us to over-budget out of caution. It’s a smart thing. You’d be foolish not to.”
Mr. Perna believes the East Hampton High School tuition rate is fair, especially given the 5 percent discount East Hampton has given sending districts in exchange for five-year agreements to exclusively send students there.
That East Hampton reduced tuition by 5 percent this year raised some questions about whether the sending districts were subsidizing East Hampton and whether the tuition could be further reduced. Mr. Perna said that is not the case. “Montauk a lot of times would say we subsidize them, but East Hampton people probably feel like they’re subsidizing us. I don’t think it’s either way.”
Tuition is a critical source of revenue for East Hampton, so much so that its administrators say the district actually does feel the loss of that 5 percent. Mr. Burns said the idea that the tuition system yields flush coffers in East Hampton is a common misconception. In fact, he said, some years East Hampton takes a loss in revenue when it comes to tuition versus enrollment; like other districts, East Hampton is constrained by the housing market and enrollment fluctuations.
“The school board was saying, ‘We don’t know if we could really afford [the discount] with the tax cap.’ . . . I don’t think we can even cut pencils anymore,” Mr. Burns said. “It’s at the point now where it’s going to affect programs. We don’t have these deep pockets that people expect.”
Paying tuition to larger school districts is not the only way that small schools can provide education through the 12th grade. For example, the Bellmore-Merrick Central High School District educates students from 7th through 12th grades from four elementary school districts. The central high school district has its own school board and budget, but it is funded through taxes residents pay to each component school district, with residents getting one school tax bill.
“What’s advantageous about it is that the high school district has the tax cap,” Dominic Palma, superintendent of the Merrick School District, one of Bellmore-Merrick’s sending districts, explained. “They’re developing a budget that is responsive to the cap, as opposed to . . . elementary districts that have the tuition they have to pay that may not be responsive to the cap.”
And then there’s the idea of consolidation. Patricia Hope and Chuck Hitchcock, organizers of the group SCORE, for School Cooperation Regional Effort, said this week that some form of consolidation should be considered by the leadership on the state, town, or school district level. Consolidation could occur, they point out, if only two districts join together, or districts could redraw their lines so that enrollment is more balanced. In addition, they say smaller districts could share superintendents to cut administrative costs, as has been done in Greenport and Southold.
“You’re going to run into immovable objects, irresistible force. . . . That’s what the tax cap is pushing us to,” Ms. Hope, a former East Hampton School Board president and teacher in the district, said. “The immovable object is the fixed costs in each district, and the irresistible force is the constraint applied by the tax cap.”
Asked whether the tuition system is sustainable given the tax cap, several East End school officials declined to answer. However, the Tuckahoe superintendent, Mr. Lucera, immediately said it is not. Assemblyman Thiele, who has several times introduced a bill in the State Legislature to exclude nonresident tuition costs from the tax cap, agreed with Mr. Lucera.
“For smaller districts that have fluctuations in enrollment, which is out of their control . . . I think over the long haul, it is not a sustainable system,” he said.