District expects $400,000 budget deficit

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The Cazenovia Central School District needs to reduce its dependence on fund balance to offset the money it continues to lose to the state’s Gap Elimination Adjustment, board members agreed during a March 10 budget work session. “Over the past four years, the GEA has cost Cazenovia taxpayers more than $5.3 million,” Assistant Superintendent William Furlong said. “And in the governor’s proposal for next year, we stand to lose another $1.04 million.” The GEA law was introduced in 2010-11 as a way to close the state’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 district has had to use fund balance and reserves to offset the loss of state aid revenue for the last four years,” Mr. Furlong said.  “But those balances are beginning to run dangerously low.” The Board of Education has decided to limit the district’s use of fund balance in 2014-15 to $750,000, which is $368,000 less than was appropriated in 2013-14. The goal is to gradually bring the district’s use of reserves down to $500,000 in 2015-16, Mr. Furlong said. The executive budget unveiled by Gov. Andrew Cuomo in January not only continues the GEA for the 2014-15 school year, it also includes a proposed increase of $21,406 (or 0.32 percent) in state aid for Cazenovia. That small increase comes despite an estimated increase of $568,000 (or 2.15 percent) in district expenses for the 2014-15 year. Most of those increases are coming in the areas of special education ($278,000), health insurance ($177,000) and employee retirement ($130,000). Of the 5 percent increase the district will realize in health insurance premiums, 3 to 4 percent stems from federal taxes and fees imposed on the district’s health insurance company by the new Affordable Care Act, Mr. Furlong said. Cazenovia Central Schools will reduce its utilities costs by $35,000 next year, thanks to the continuing benefits of energy-saving renovations undertaken in 2010 and 2011. Since the installation of a new roof, new windows and more energy-efficient heating and ventilation systems, the district has reduced its utilities expenditures by $215,000 (or 34 percent) over the past five years. And because the district refinanced a $3.3 million bond issue at a lower interest rate in 2013, the district’s debt service costs also will be $80,000 lower in 2014-15. (The district’s tax levy limit, or the maximum amount the district can raise through property taxes without supermajority voter approval, also decreased as a result of that debt service savings. The taxy levy limit for 2014-15 is 1.13 percent.) Despite these savings, the district faces a projected budget gap of $400,000 – assuming Cazenovia receives the same amount of state aid as in 2013-14 ($450,000). If the district receives less aid, the budget gap will grow. “It’s a big assumption,” Mr. Furlong said. “So the Board of Education and administration are now reviewing all areas of the budget, including staffing, in order to come up with a plan to eliminate the budget deficit.” The board will continue its budget discussion at its March 24 meeting, and is scheduled to adopt a proposed budget April 14. The public hearing on the budget is May 13. The annual budget vote is May 20.

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