Tax legislation needs review
Roxbury Central School Superintendent Thomas O’Brien submitted the following op-ed piece to the NYS Rural Schools Association, of which he is a member of the board of directors. He requested that the article be reprinted in the Catskill Mountain News.
As we enter into our third year of the new tax levy legislation, it is time for it to be reviewed. Like all new laws, after time, there are evident unintended consequences. As this discussion continues about a logical means to adequately fund schools this issue is timely.
If it is the intent of the “tax levy limit” to provide optimal tax relief then we must be able to follow through during the entire levying cycle. Under the current guidelines, school districts must report to the New York State Comptroller by March 1 their anticipated “Tax Levy Cap” calculation. Once the Board of Education adopts a budget, by late April, we must re-report and update the calculation based on what the final budget means to the levy calculation. At that time, the budget and levy are set and presented for a vote on the third Tuesday in May.
This is the issue. During July and August, the equalization rates are set by the Office of Real Property and the tax rolls are determined for each of the municipalities within a district. These factors then are applied to a tax rate calculation spreadsheet to determine the actual tax rate by town. Depending on all of these factors, each town’s rate will be affected differently. Prior to the “Tax Levy Cap,” school districts, before the issuance of the tax warrant, could apply additional surplus fund balance (determined after the close of the fiscal year) to reduce the levy. This would be done to help offset any imbalance due to any changes from equalization rates or tax roll swings, a problem we are presently experiencing with a portion of our district.
Having the wrong impact
There is now a “perverse disincentive” to take such action with this new legislation. If a school district chooses to take such action to offset the imbalance in tax rates, it would be starting out next year’s levy calculation in the hole by any additional surplus applied to reduce the levy. This problem arises due to the fact that the new year’s levy calculation starts out with the last tax levy reported to the Comptroller’s office. I propose that school districts be given flexibility in August after the warrant is set, to be able to go on to the Comptroller’s website and revise the levy calculation a final time to reflect the levy actually raised by the school. This will enable us to assist our homeowners as much as possible, without hindering next year’s levy.
Without this flexibility, school districts face another great challenge. When we balance our books and our fiscal house is in order and the fund balance is higher than the statutory limit of four percent, the only option that we have is to place it into non-voter referendum reserves, or be cited for being over the four percent limit. These reserves are important to maintain the long-term viability of a district in meeting its future obligations. Per recent Comptroller audits, school districts are being cited for over-funding these reserves. This leaves us in a no-win situation. The Comptroller finds fault with us if we fund our reserves with this money, and we limit our ability to raise funds in future years if we use it to reduce this year’s tax levy.
At first blush a school district could be accused of over-budgeting and that is the reason for the surplus. In some cases that may be so, but in this age of spiraling unpredicted special education costs and other expenses such as fuel oil, I believe a sound fiscal manager can report the rationale for a surplus. A very basic example would be that if an area experiences a mild winter and uses less oil, in the spring there could be $30,000 in fuel expenses left over. $30,000 could have a significant impact on tax bills in small rural school districts like ours.
New York State school districts attempt to effectively strike a delicate balance between fiscal accountability and effective educational programming. We are sensitive to the challenges facing our taxpayers and many districts carried a de facto cap prior to this legislation. We need to ask our legislators, as I have already done, to assist us in analyzing this issue and help us find a solution to the unfortunate, unintended consequence of this new legislation. The “Tax Levy
Cap” was not enacted to create an impediment to lowering taxes, “Right now, it does!”
Thomas J. O’Brien, Superintendent
Roxbury Central School