New Paltz School District Faces Fiscal Distress

Photo by Lizzie Nimetz.

The New Paltz Central School District has been named as one of three institutions in the Mid-Hudson Valley to be under moderate fiscal stress in 2014, according to reports from the New York State Comptroller’s Office.

The state Comptroller’s Office measures school district’s fiscal state each year by conducting an audit monitoring a blend of the district’s financial information — operating deficits, complete budget, debts, employee benefits and fund balances. They are then able to assess the fiscal conditions of each district in the state.

Auditors who checked in on the New Paltz Central School District for their 2014 report found that the district had depleted the majority of a fund balance that’s intended purpose is for emergency use. The district received a 50 percent fiscal score, 20 percent worse than last year’s ranking.

According to District Assistant Superintendent for Business Richard Linden, the root of the district’s fiscal stress classification for 2014 can be found in a combination of a tax cap on their budget and the lack of state aid that they have received in the past few years, causing them to spend this emergency fund balance down to preserve student programs and teachers’ jobs.

“The problem is the state law doesn’t allow us to propose that luxury of a budget increase anymore because of the tax cap,” Linden said. “The option that we have always had to provide programs in New Paltz just doesn’t exist and we’re stuck. Because of the tax cap, the board has chosen intentionally to use more of its fund balance than you normally would use in order to save staff — otherwise, we’d have to cut teachers. [Spending fund balance] was an intentional decision by the board and I agree with it.”

The comptroller’s fiscal stress monitoring system is what provides an early warning to school districts about their budget utilization, according to the office’s website and also gives feedback to taxpayers about fiscal stress conditions to help them prioritize the needs of their community, understand trade-offs and follow through with budgeting decisions.

New Paltz School District Superintendent Maria Rice said in a phone interview with The Daily Freeman that the district had expressed concerns that taxpayers would claim overtaxation if there were large reserves of money their taxes had supported that necessarily weren’t being used by the district.

“During those difficult times we [spent down the fund balance] because they were concerned that if we had a fund balance then we were overtaxing the taxpayers,” Rice said.

In the 2014 financial condition report obtained by The Oracle, auditors noted that the expending of fund balance in efforts to lower taxes would not prove sufficient if the district were to be faced with an emergency.

“District officials told us that the Board has tried to recover from previous decisions to use fund balance to offset real property taxes,” auditors wrote. “While a reduced tax levy benefits taxpayers in the short term, fund balance should not be depleted to the point that there is insufficient cash available for managing potential unforeseen events.”

Board of Education President Brian Cournoyer said he believes the taxpayers of New Paltz recognize the importance of the fund balance to the district.

“Although restoring the fund balance is a priority, I think that in times like these, taxpayers are watching every dollar; and rightfully so,” Cournoyer said. “We’ve been lucky that the taxpayers in our district have always put a high value on educating our students and routinely approve our budgets. I also think they understand that having a ‘rainy day fund’ for unforeseen events is a fiscally prudent course to take.”

This concern of the district having a low fund balance is not the first time that it has been addressed by the auditors, according to their 2012 report. In the 2011-2012 school year, the New Paltz School District’s fund balance totaled in at a dangerously low .01 percent of their general fund; any number lower than 3.33 percent is considered to be at a maximum stress level. This contributed to the district’s 2012 fiscal score of 51.7 percent — only 1.7 percent worse than the most recent 2014 audit.

According to Cournoyer, the low fund balance in 2011 had to do with the tax cap then as much as it does now. The cap gave the district little option but to cut preschool programs as well as fire 42 staff members that year, Cournoyer said, and they decided to use cash from the fund balance to potentially save other programs for the students — which is what they are currently doing.

“When the tax cap was first introduced, the board was faced with the prospect of having to make deep cuts to the programs the district offers to students [and we] attempted to override the tax cap budget — but lost by 18 votes,” Cournoyer said. “That board chose to expend the fund balance in order to alleviate any further impact to the students.”

Auditors provided recommendations in their 2014 report, suggesting that the district sets a minimum fund balance level that is not to be utilized for anything else besides the case of emergency.

“Although the district does have a fund balance policy, it does not address the minimum amount of unrestricted, unappropriated fund balance that the district should maintain to remain stable in case of unanticipated events,” the auditors noted. “The board should revise its current fund balance policy to specify the minimum amount of fund balance that the district retains to provide for a financial cushion in the event that unforeseen expenses should arise.”

Unless state aid is restored back to a manageable level, Linden said the district will have no choice but to spend down their fund balance once again this year to make up the differences.

“We will almost certainly try to use as much fund balance as we have available again this year to minimize staffing cuts,” Linden said. “We may be able to bring teaching positions back and cut class sizes down again if our state aid is increased. We could bring back a lot of positions that we cut and have a lot more choices for students to take classes in the high school level and a lot smaller class sizes in the lower level.”

Although the board has faced difficulty in securing an appropriate fund balance throughout the past few years, they are looking to improve the current state of the fund balance while simultaneously ensuring that the students of the districts are provided adequate programs.

“We take our responsibility to the taxpayers very seriously,” Cournoyer said. “Both the State Comptroller’s Office and our own external auditors have recommended that we work to restore the district’s unassigned fund balance to a level between two percent and four percent our total operating budget. Our board agrees with that recommendation and we have committed to working toward that goal.”

About Kristen Warfield 72 Articles
Kristen is a fourth-year journalism major and editor-in-chief of The Oracle.