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Advisory Committee gets budget, fund balance overview

Superintendent Dr. Carol Pallas and Business Administrator Joe Lenz gave a budgeting primer and an in depth look at fund balance to the Schalmont Budget Advisory Committee when it convened its first meeting on Thursday, Nov. 9.

Lenz went over the three sources from which school districts can raise funds:

• State Aid - New York state provides funding for public schools in the form of aid for general operations and funding designated for particular expenses.

• Tax Levy - If there is a gap between state/federal funds and estimated total expenses, districts generally fill it with local property taxes. Districts are required to calculate a “maximum allowable tax levy” under the property tax cap law. Exceeding the cap requires approval by a supermajority of voters (60 percent or more).

• Fund Balance- If revenue collected for the school budget remains at the end of a district’s fiscal year, that money becomes part of its fund balance. Districts must adhere to state laws that govern how fund balance can be spent. Options include applying it to a future budget in the form of revenue, earmarking it for anticipated needs and/or saving it for unexpected emergencies.

Last year, approximately 30% of Schalmont’s $47.2 million operating budget was covered by state aid, about 67.5% was raised through local taxes, and the remaining 2.5% was made up through the use of fund balance, reserves and other sources.

The total year-to-year spending increase was only 1.45%.

“We make every effort to preserve our academic programs while being as frugal as possible,” said Lenz.

It’s also worth noting that Schalmont spends more on academic program than many surrounding districts – and less on administrative salaries.

The committee also went over the district’s fund balance, why we have it, and how it can and cannot be applied responsibly to the budget.

By law, a school district must have a balanced budget and cannot borrow money to pay for everyday expenses. It can, however, have reserves or fund balance on hand to offset some of the local tax levy and/or address unforeseen expenditures.

Just like someone may have money set aside to pay for unanticipated expenses, a school district has reserves or fund balance on hand to address things like increases in retirement costs, special education services, or uncertainty or shortfall of state aid. Unlike an individual, the district can’t take out a line of credit or choose not to address a problem by not paying for it.

A committee member asked why the district doesn’t just spend down all of its fund balance instead of raising more in local taxes? The simple answer is that it would cause increased taxes in the long run.

“Consistently appropriating fund balance to comply with the tax cap or to keep taxes low causes excessive tax increases in subsequent years,” said Lenz. “When you run out of fund balance, taxes have to generally increase exponentially.”

Having a healthy fund balance promotes fiscal responsibility and prepares the district for anticipated expenses and unexpected emergencies.

Want to know more about the basics of school budgeting? Click here for a primer [PDF].

You can view the entire presentation given to the BAC by clicking here [PDF].

The BAC will meet again on December 6, January 24, February 12, and March 28.

The members are:
• Felicia Amoroso
• Neal Fisher
• Val O'Dell
• Wendy Spina
• Michael Spina
• Jason Beck
• James Zido
• Michael Walker
• Lisa Jackson
• Angelo Pezzuto
• Lisa Shapiro
• Kate Kruk
• Katie Leroy
• Meghan Mulkerrin
• Mary Silvestri
• Carl Kramer
• Stephanie Carter
• Paul Dougall
• Robert Sheehan
• Amy Glick
• Jamie Bullock