At the Katonah-Lewisboro school board meeting on Thursday, Jan. 24, board member Charles Day sent up red flags that have been circulating around the board for a number of months concerning the financial health of the district, particularly as the district prepares to enter its budget season with an initial budget presentation at the end of February.
“This has been something that has been percolating with me for several months,” Mr. Day said as he began his presentation.
On a simple spreadsheet Mr. Day showed combined data from the recent Finance Advisory Committee Expenditure (FACE) report, an economic forecast for the district, and the recent external demographic study of the district’s significant decline in student enrollment. In his presentation he drew specific attention to 2016, the last year the district’s student population is forecast.
“Not only are these numbers bad,” he said, “now they are getting worse over time.”
In 2009-10 the district’s budget of $106.6 million served 3,774 pupils at a cost of $28,249 per student, according to Mr. Day’s presentation. By 2016 the district budget is estimated to rise by nearly $20 million, to $126 million, while the student population is estimated to drop by more than 800 students to a total of 2,946 students district-wide, according to the presentation. He estimates the district’s per-pupil cost will be $42,781 in 2016, a 51% increase from 2010.
A large part of that is not within the district’s control, he said. Declining demographics are a significant factor in the rise of per-pupil spending. Superintendent of Schools Dr. Paul Kreutzer pointed out that if the budget was to be frozen, the per-pupil cost would still increase based on the decline in student enrollment alone.
Dr. Kreutzer said that those numbers and fears are accurate, considering the estimates for 2010 through 2012 were accurate and the 2013 budget will be presented at an estimated $116.3 million, he said.
“Charles’ numbers are probably, I would almost say, conservative,” Dr. Kreutzer said.
“They’re designed to be conservative and it is still really bad,” Mr. Day said.
The tax cap
“I think the message from this is just staying in the tax cap isn’t necessarily going to lead to a number the community is going to accept,” Mr. Day said. “This is a community that really values education. We bought ourselves an excellent school district. We want to keep the district we have. We have outstanding teachers, but without hyperbole, this is kind of terrifying having a number like this.”
The tax cap, championed by Gov. Andrew Cuomo last year, stipulates that school districts may not raise their tax levies more than 2% or the rate of inflation — whichever is lower — without 60% approval by taxpayers. The law has had mixed reception, with some applauding the effort to rein in taxes and others criticizing it as an impractical financial ceiling.
“Staying within the tax cap alone will not be enough,” Mr. Day said.
Where to cut
Mr. Day acknowledged that there will need to be a multitude of cuts in order to get the district’s financial house in order, but how to accomplish that without sacrificing the improvements made to the school system over the years would be the major challenge.
“There is no one magic bullet,” he said. “If we pare down or redo our facilities, that will solve a fraction of the problem. If we change some of the health benefits of some of our staff, that will solve a fraction of the problem. There isn’t any one thing we are going to have to do. We are going to have to do a whole bunch of things, but we have to have a really sharp eye out on what these numbers are going to look like, because we want to preserve the school system we built here over a long time and it is not going to be tenable to do that just staying within the bounds of the tax cap.”
Driving it home
Emphasizing the need for fiscal reform, Mr. Day also included in his presentation a comparison of the district’s per-pupil spending with that of five districts similar in size and educational quality — Harrison, Bedford, Scarsdale, Byram Hills, and Chappaqua, which together average $26,236 compared with KLSD’s current $32,677 per-pupil cost.
“Those five are all, on an income basis, considerably more wealthy than we are,” Mr. Day said. “The significance of that is not only are we not keeping up with them educationally, but we are spending more to do it and the money we are spending is supported by less income.”
Mr. Day said he specifically brought up these issues as the initial budget is prepared for presentation later next month to inform the process.
“This is something to keep in mind when people are preparing the budget,” he said, “because the numbers are scary, and the longer you wait the scarier they get. I think just coming in a hair under the tax cap won’t be enough.”
Board member Dr. Peter Treyz, who serves on the board’s finance committee, has said that the finance committee’s assessment is that passing budgets right at the tax cap or just below it is unsustainable.
“Theoretically, we should be coming in with a zero [percent] increase, and the next year should be zero or below,” he said. “That is what they are advocating. I am not exactly sure what would have to be cut to do that, but that should be part of an agenda discussion, to have the administration say, ‘You know what? It is finally hitting the fan and we are going to have to make some serious, serious decisions,’ because this whole thing is unsustainable, it really is,” he said.