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District wants new money put in funds
May 15, 2008
Surplus estimate is $5.1 million
The Katonah-Lewisboro School District has increased its surplus estimate for this year from $3.1 million to $5.1 million, including about $4.6 million in unspent money and about $500,000 in higher-than-expected revenue. The administration is recommending the additional money be put into various reserve funds and the general fund.
The district administration is also recommending that $2 million of the overall $5.1 million in total be returned to voters in the form of tax relief, with the remainder transferred into district funds. But the final decision on what to do with the money will likely not be made by the school board until after the surplus is finalized, in August.
“The projection is still that ... a projection,” wrote board President Peter Breslin in an e-mail to The Ledger. “We wanted to keep the community up to date on a possible surplus as we received the information. We believe that the discussion this year is much timelier than in prior years.”
The new surplus number is about $2 million higher than that estimated at the end of March, the last time the district reported on its finances to the public. According to Interim Assistant Superintendent for Business Mary Cronin, the majority of the additional money comes from unfilled positions, heating oil, health insurance under-spending and the settlement of the school’s contract with the teachers’ union.
The largest chunk of the additional money the district expects to save — about $600,000 — would come from positions in the district that the administration had expected to have filled by now, or that had become empty since March. These positions, such as Ms. Cronin’s second in command, the assistant business manager, or the director of technology, had been budgeted for, but the district has had a difficult time in finding employees to fill them. That amount also would include money saved by replacing retirees with employees at a lower pay scale.
About $450,000 would be saved by the district’s management of heating oil, numbers that had not yet come in when the surplus was reported in March, Ms. Cronin said. Because the schools had negotiated such a low price for oil — $2.22 per gallon — and because of an unexpectedly mild winter, a significant part of the heating oil budget was left unspent.
An additional $400,000 is now expected to be left unspent from the district’s health insurance budget, bringing the total unspent revenue expected to be left from that budget line to $900,000. This would be the second year in a row where the health insurance budget was significantly underspent. In previous years, health insurance had been chronically underbudgeted.
Although the district’s new contract with the teachers’ union was negotiated in December, it has taken several months to determine how much money would be remaining in the fund that the district had set aside for retroactive salary increases. After the final numbers came in, Ms. Cronin said, the district had about $200,000 left over in that account, which would be added to the surplus.
The remainder of the new money in the surplus — about $350,000 — comes from a variety of areas, including about $84,000 in lower electricity bills, about $64,000 in unexpected interest, about $60,000 in reimbursements for previous years from the Board of Cooperative Educational Services (BOCES), about $48,000 in other money from BOCES, about $40,000 in unspent debt service and about $57,000 in extra state aid.
Where will it go?
Although the final decision on what to do with the surplus will not be made by the school board until the fiscal year is over and the reports are completed in August, the administration is recommending that the additional $2 million be transferred into various funds, including the district’s general fund. Ms. Cronin had previously recommended that $2 million be used to lower taxes in the 2008-09 school year, a number that would not change with the announcement of the additional surplus.
About $1.2 million of the total $5.1 million is being recommended to be transferred into the district’s general fund, in order to bring it from just under 3% of the budget to about 4% of the total budget. State law allows that the district maintain a general fund balance of 3% of its budget, a number that will increase to 4% after June 30.
An additional $731,000 is recommended to be transferred into the district’s reserve for encumbrances, which pays for items that are ordered or planned during this school year, and were budgeted in that year, but may not be bought until next school year.
Ms. Cronin is recommending that about $614,000 be transferred into the tax certiorari fund, in order to prepare the district for an upcoming case. That fund is used to pay for tax certiorari claims made against it, where a property owner successfully challenges a tax assessment and is thus entitled to a tax refund. The district is not allowed to carry money in the tax certiorari fund unless that money is linked to an actual case.
The remaining money, about $540,000 in total, is being recommended to supplement various of the district’s other reserves, including those set aside for worker’s compensation cases, risk financing, debt service and pre-paid expenditures. About $75,000 of that money was interest on the $3-million repair reserve fund, which Ms. Cronin said is legally allowed to be returned to that fund.
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