Budget 101: How the District budget is developed

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Although district administrators start poring over balance sheets and cost projections as early as September, the budget development process doesn’t truly kick into gear until January. That’s when several key pieces of the puzzle start clicking into place. During this period, the district receives word about projected retirement system costs and health insurance premium increases for next year. In mid-January, meanwhile, the Consumer Price Index (CPI) for the month of December (which is used to determine the district’s tax levy limit for next year) is announced. Finally, Gov. Andrew Cuomo unveils his annual executive budget proposal by the third week of January, when the district learns how much state aid, if any, it can expect to receive. Screen shot 2013-08-22 at 7.30.26 PMIn February, district administrators begin to construct in detail the draft 2013-14 schools budget, which they then present to the Board of Education in a public meeting. Throughout March and into early April, district staff continues to tweak the plan, based on feedback from board members, faculty, staff and the community at large. On April 22, Superintendent Robert Dubik and Assistant Superintendent William Furlong formally present the proposed budget to the Board of Education for review and adoption. Next, a public budget hearing is held May 14, one week before the May 21 school election, which by state law is scheduled for the third Tuesday of the month. So that’s the timeline. But what about the mechanics? How does the district go from blank ledger page to multi-million-dollar spending plan over the course of those four or five months? Some organizations use what’s called a “cost-plus” budgeting model, in which a baseline budget is created by taking the cost of existing programs and adjusting for inflation. Others use “zero-based” budgeting, which begins with a clean slate and builds a budget from the bottom up. Historically, Cazenovia has used a combination of those two methods to build a budget around the instructional programs the district wanted to offer or enhance. But state aid reductions over the last three years have forced the district to employ an approach Mr. Furlong refers to as “budgeting by subtraction.” Administrators start with the funding they know the district already lost, as a result of the Gap Elimination Budget (GEA) law. The law was first introduced for the 2010-11 fiscal year by then-Governor David Paterson as a way to help close New York’s then $10 billion budget deficit. Under the legislation, a portion of the funding shortfall at the state level is divided among all school districts throughout the state and reflected as a reduction in school district state aid. The GEA is a negative number, money that is subtracted from the aid originally due to the district. Hence, budgeting by subtraction. “Because of the GEA, which has reduced our state aid by $1.5 million this year and $4.4 million over the last three years, and because of the tax levy limit in place, we’re in a position where we must answer every cost increase with a corresponding cost reduction,” Mr. Furlong explained. “If utilities costs go up, we must cut athletics or academics. If special education costs go up, we have to cut something else. And so on. Any significant increase calls for a corresponding cut.” That’s why it’s so important for community members to participate in the budget development process between February and April, Mr. Dubik said, as administrators and the Board of Education decide what stays and what could end up on the budget chopping block. “Now is the time for people to take the opportunity to attend Board of Education meetings and advocate for the programs they most value in our schools,” the superintendent said.

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