ACS budget figures add up, despite state aid projections

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By Matthew J. Perry
When Governor Paterson unveiled an austerity budget last week that would include $9 billion in budget cuts, there was plenty of pain to go around. Education administrators, noting a proposed $700 million reduction in state aid to schools, could be forgiven if they felt singled out for abuse.
Some lawmakers have since speculated that the aid cuts will not be so drastic once a state budget is finalized. Nevertheless, John Bernhardt, acting superintendent of Andes Central School, anticipated that the school board would be anxious to know just how bleak the financial forecast would be for the 2009-10 school year and beyond. He took advantage of the board’s monthly meeting last Thursday and invited Greg Beale, a consultant from the BOCES shared business office, to provide historical budget information and a comprehensive analysis of the impact the proposed aid cuts could have on the school and its programs. For the time being, the school’s finances are in order.
“You are not in crisis,” Beale told the board. “In the past several years you’ve been very conservative in making your budgets. For three to five years, minimum, the school should be financially sound.”
That assessment, according to Beale, is based upon the worst-case scenarios of aid reduction. While drafting budgets over the last several years, the school has created a line item, emergency money category, separate from its reserve fund, which can offset a loss in state revenue and keep future tax increases minimal.
Aid cut projections
The governor’s proposal would cut aid anywhere between 3 and 13.04 percent, the percentage being determined by the amount of aid each school receives. ACS is on the low end of aid received, and would experience a13.04 percent cut, roughly $120,000, if this proposal were adopted.
“They said it’s going to be a one-time reduction,” Bern-hardt said. “But we don’t believe that we’re going to get out of this mess in just one year.” He expects that aid cuts could continue for several years to come.
Beale created a chart that outlined the mitigating effect of applying 10 percent of the school’s emergency funds to next year’s budget. Assuming a budget increase of one percent, and the projected loss of state aid, the school district would be facing a tax increase of 6.26 percent. However, with $83,000 of the fund applied, the increase could be cut to just beneath 3 percent. Of course, if the aid reduction is less drastic, these figures would be adjusted yet again.
But even with options on the table, Bernhardt was careful not to present Beale’s projections as good news. “This is still a huge challenge,” he said. “It’s very difficult to keep the budget increase this low.” What is more, the school’s emergency fund is not inexhaustible.

Changes considered
There are areas of operation where ACS feels comfortable, even abundant. Bernhardt noted that the school has computers for all students and smart boards in all but three classrooms.
“We might not refurbish these tools at the rate we’d like, but we’re far from maximizing the potential of what is inside the school right now.”
There are downsides to the financial restraint that has kept ACS solvent. Bernhardt noted that some capital improvements on the school building have been put off as the administration has tried—successfully—to reduce its debt service payments. The school will have to seek funding for special projects, most notably the repairs of the gymnasium roof that is leaking badly. Bernhardt advised the board that these problems will have to be dealt with in 2009 and could lead to the need for more debt service.
Other factors could have a negative impact on the school beyond state aid reductions. Federal grants could be reduced as well; currently, ACS receives $22,000 to help fund its pre-kindergarten program, and this funding may be cut, requiring reductions in other parts of the budget or the use of more reserves. The continuing drop in student population is another ongoing source of concern. Also, if property assessments in the school district drop, the amount of collectible tax could be affected as well.
But with an Albany budget still riddled with question marks, ACS is prepared for hard times. “We have to show the public that we’re being cautious,” Bernhardt said, “and thinking in the long term.”