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2020 Budget Advisory Committee

Oct. 27 Minutes/Recap Strategy #1 | Nov. 10 Minutes/Recap Strategy #2 | Nov. 17 Minutes/recap strategy #3 | Nov. 24. Minutes/Recap strategy #4

Budget Advisory Committee Review Human Resource Adjustment Strategy

At the Budget Advisory Committee (BAC) meeting on Tuesday, Nov. 24, members reviewed Human Resource Adjustments, the fourth and final strategy for dealing with the possibility of significant mid-year state aid cuts.

Review of Feedback from Previous Meetings

Before presenting the new material, the committee reviewed feedback from last week’s meeting. Some members were hoping for more details about the potential savings from particular program and service reductions. In response, co-chair Lakshmi Nagarajan reminded members that discussions about the four different strategies are still high level conversations focused on big picture ideas. She emphasized that drilling down to specifics within each strategy would be part of the next phase of work for the committee, if such reductions became necessary. Nagarajan took a moment to reassure members that not associating a cost to any one particular program but rather focusing on program and service reductions across the board was done intentionally to avoid any preconceived notions or prevent program comparisons at this point.

“I think it really shows something about this group’s dedication that its members want to start digging deeper into how to implement the strategies we as a group have outlined,” adds Nagarajan. “But right now we have to trust the process and follow through with our charge to look at each strategy as a whole and have high level, academic conversations about the impacts each strategy would have on the district, as a whole, in order to gain a better sense of what a $5 million reduction in revenue really looks like. ”

Nagarajan encouraged all members to review the minutes/recap of each meeting on the district’s website to get a more concrete and detailed picture of the work they’ve done thus far. She reminded the group that she and co-chair David Versocki would be presenting a condensed version of the committee’s work to the board this evening, and will also be directing the board to the detailed minutes/recaps on the website.

Superintendent Patrick McGrath stated that he also heard from some people that they too felt there was not enough details shared on specific program and services cuts. McGrath reiterated that the district had no specific programs in mind at this time.

“I can’t stress enough how important it is for people on this committee and within our community to understand that there is no master plan and that we do not have any preconceived ideas for where reductions would need to be made,” says McGrath. “It’s by design that these meetings are high level so that we can lay the groundwork and get everyone on the same page should the district need to make reductions. We don’t want anyone to be surprised by this. We are talking about sensitive topics and being open and honest in our communications and encourage everyone to read the information on our website and share it with others so we are all informed. If the Board makes the determination that reductions in programs and services need to be part of the equation for dealing with a state aid reduction, there will be a thorough community-wide discussion that informs all related decisions.”

Nagarajan pointed out that BH-BL, along with all other districts throughout the state, has no control over the amount of aid loss it could experience. The financial forecast is unclear. There could be no reductions or there could be a very significant cut. But, as of now, things look rather bleak for school districts given the projected 20 percent reduction in state aid payments in the current school year. This uncertainty is what makes the groundwork being done by the BAC so important.

“Throughout this process, the committee has learned that waiting rather than making large scale decisions involving only one strategy to save money during the current school year actually puts the district at an advantage. If the financial state of New York improves or if federal funding helps districts plug the holes left by state aid loss BH-BL may not have to make such deep reductions to this year’s budget,” explains Nagarajan. “This puts us ahead of the game by addressing cost saving and reduction possibilities for the 2021-22 school year within our usual frameworks that specifically solicit community involvement and transparency. If reductions do become a reality, the Board of Education will be prepared to draw upon multiple strategies to ensure the burden does not fall disproportionately on one part of the district or another.”

In practice, Nagarajan added, this commitment to using multiple strategies means that we may have some time before a decision such as going to full remote for budgetary reasons needs to be made. We are hopeful that this additional time gives our leaders at the state and federal level every opportunity to implement solutions that would help the district’s situation.

Human Resource Adjustment Impacts

Today’s discussion looked at human resource and contractual adjustments from a high level lens. The conversation was focused on broad concepts and numbers. The reality, says Nagarajan, is that while this strategy requires a great deal of input from many people, including employees, the administration and the board of education, any proposed changes must ultimately be approved by members of the individual bargaining units.

Human Resources Director Michael Nickson agreed with Nagarajan and stated that he wouldn’t be addressing specific positions or numbers associated with them, and that if or when it comes to that there would be meaningful and thoughtful conversations with each bargaining unit.

Instead, stated Nickson, we want to discuss standard ideas that many organizations look at when addressing human resource costs in a budget. He reminded the committee that public sector compensation packages are governed by state and federal laws, contractual relationships, pension obligations, and many other complicating factors.

When looking at BH-BL’s overall budget, Nickson points out that the human resource aspect of the budget (consisting of salaries, benefits, worker’s compensation, unemployment, and pension benefits) makes up about 75 percent of the budget, with 51 percent going to salaries, 12.25 percent for health insurance benefits, 5.5 percent for pension contributions and approximately 6.25 percent for other requirements.

One strategy often employed by organizations is to ask for a concession on salary. In aggregate, a 1 percent decrease in salaries across all BH-BL employees would yield an estimated savings of $36,000 monthly. (Any changes would need to be negotiated and approved by bargaining unit members.)

Another standard, states Nickson, is unpaid furlough days. Meaning employees’ work week would be reduced and they would not be paid for days they didn’t work. To put the value in perspective, furloughing all District employees would yield a savings of $180,000 per furlough day. The average daily impact per person for a furlough would vary depending on salaries and an individual’s daily rate of pay, adds Nickson. (Unlike layoffs, the terms of a furlough would need to be negotiated with bargaining units.)

Committee member Bonnie O’Rourke asked if a furlough decision would impact employees’ health and other benefits. Nickson stated that, depending on how a furlough is structured, it would be a method to reduce costs that would not impact an employee’s health and dental insurance coverage.

Another standard within Human Resources are savings realized through retirement and the potential of a retirement incentive. School districts are composed of many different types of employees that receive different levels of compensation. Nickson gave the example that if five instructional staff retired mid year, it might yield an estimated savings of approximately $350,000. If five non-instructional staff retired mid year, there’d be approximately $150,000 in savings. However, these savings would be realized ONLY if those positions that become vacant were not filled and there were no special incentives given for retirement. If these retirements occurred with an incentive and replacements were needed, those costs would need to be backed out of the equation.

“These are just estimates. It’s hard to give quantifiable figures when talking about these impacts in broad strokes,” explains Nickson. “But because there aren’t any details worked out or ideas in place, we need to stick to overall numbers and possibilities.”

Payroll lag is another standard HR strategy. This approach involves withholding salary (with agreement from bargaining units) from one fiscal year to be paid during another fiscal year. This standard is generally not helpful for this budget crisis as the salaries would still need to be accounted for during the 2020-2021 school year. While such a payroll lag might assist with cash flow issues, in the long run, there are no real savings to be had, but rather just a shifting of payments from one year to the next.

Besides changes to salaries, another option is to review health insurance standards, which make up 12.25 percent of BH-BL’s budget. One possibility is working with the bargaining units to increase premium contributions for all active employees (It should be noted that retiree contribution levels cannot be changed and the district is contractually obligated to adhere to the terms that were set at the time of their retirement).  For active employees, this district’s share of health and dental insurance premiums is  approximately $500,000 a month. Therefore for each 1 percent increase in employee share of the premium, the district would save about $5,000 per month. Again, this idea would need to be discussed with and approved by bargaining units, and at this stage is just presented as a standard approach.

Another idea is to revisit the health insurance plan design. Currently, BH-BL is part of a consortium, or a larger group of capital region schools, that purchase health insurance together.

“We participate in the consortium to get the most savings through traditional bargaining,” says Nickson. “And while we don’t have too much leverage in changing the plan design, we could implement a drug formulary that’s more restrictive and/or requires other options to be utilized before certain medications, such as costly experimental drugs, are approved for use.  The  elimination of  a health insurance reimbursement account that some employees have access to could also be explored as an option for savings.”

If both of these changes were implemented, the savings would be about $5,000 per month.

“We’ve never had any reason to believe our bargaining units wouldn’t work with the district to find a fit that works for their constituents and the district,” adds Nickson. “That being said, however, it’s not being recommended that the district try to handle a potential $5 million loss in state aid solely from this bucket, or any bucket.”

When looking at budgetary savings in the future, there could be a different possible buyout option for employees, such as choosing not to take health insurance during their active employment and sharing that savings with the district, as well as employees opting for a lump sum upon retirement as opposed to receiving offsets to the cost of their health insurance over time.

Assistant Superintendent Dr. Christopher Abdoo explains that some ideas can actually be  beneficial to both the district and the individual employee if there are  a significant number of employees that chose to participate. Abdoo cited the example of employees potentially obtaining their health insurance elsewhere (when possible) with the district providing a cash payout for a portion of the cost the district would otherwise have incurred to provide the employee with medical coverage. For this reason, agreements such as retirement incentives or health insurance buyouts often include a threshold number that “triggers” the various incentives.

Committee Discussion

Committee member Eric Devine asked how many employees are planning to retire mid-year or at the end of the year? Nickson said that at this point, we don’t have any numbers and wouldn’t feel comfortable taking a guess.

Committee member Therese Brigham asked if there was a time frame associated with furlough option, such as one month or one year? And would the furlough include all bargaining units, administration, support staff, and faculty? Nickson stated that the raw numbers shared above were based on a one day furlough for the entire district. But he cautions that these are specific conversations that would have to happen with each employee group, and at this point are just options within the strategy bucket. If the board wanted to go this route, HR would need to figure out if this could even be feasible.

BAC Co-chair David Versocki added that these are very difficult conversations but it’s a testament to everyone on this committee that they are willing to participate in this process in a professional capacity, especially given the sensitive topics discussed. He encouraged all members to reach out to him and Lakshmi through their shared email address to provide feedback, ask questions or share comments.

Versocki and Nagarajan will provide the board of education with a summary of the committee’s work and share with them the minutes/recap of each meeting. [WATCH VIDEO OF NOV. 24 BAC SUMMARY TO THE BOARD OF EDUCATION]

The committee will take a pause in December to digest what was learned over the past five weeks before reconvening on January 6, 2021. Hopefully by this time, there’s an update about the state’s financial situation which will give school leaders a clearer idea of the impact it will have on state aid. The committee’s next steps are to break into smaller groups and begin drilling down into the four buckets and discuss what strategies the district can implement and the time frame for doing so.

Nagarajan thanked everyone for their input and patience as the group navigated through uncomfortable situations. “No one wants any of these options,” she adds. “No one wants to see a significant tax increase. No one wants to take days off without pay or end the school year early. And we don’t want to eliminate positions. All of these options impact our students, our staff, and our community in one way or another. I’m glad that we could talk about these topics and that we were all committed to collaborating rather than being taken by surprise or jumping in to make massive changes without giving these strategies and options their due diligence. And hopefully, we won’t have to make any of the reducations this school year and we can be thankful that we are ahead of the game in planning the 2021-22 school budget.”

McGrath added that it is still too soon to know whether or not the projected cuts to state aid will be as significant as predicted. Either way, he cautions, it is likely that we will be dealing with budgetary impacts of the pandemic for several years to come. For this reason, he believes the time everyone has taken to learn the major factors affecting the budgetary process is time well spent. He expressed his thanks to the many voices from our different stakeholder groups who are involved in the process and helped shape the conversations.

Budget Advisory Committee Reviews Strategy #3

At the district’s Budget Advisory Committee (BAC) meeting on Tuesday, Nov. 17, members were presented with an overview of a third strategy for dealing with the possibility of significant mid-year state aid cuts–Program and Service Reductions. As in previous weeks, the committee was asked to look at this strategy from a high level perspective. Superintendent Dr. Patrick McGrath said there would be future meetings dedicated to looking more closely at costs associated with specific programs and services but for now it was important to look at this strategy in a more general sense.

Addressing Meeting Feedback and Misinformation

Before moving forward with the presentation, McGrath took a moment to address feedback received from the prior meetings. He said there seems to be misinformation circulating around the community that the district already has illustration of school buildingplans in place to pivot to fully remote learning during the holidays. He stressed that BH-BL has no plans to do this and read a letter he would be emailing to all parents later that evening. [READ THE LETTER]

McGrath reminded the group that the strategies discussed at meetings are only theoretical, and emphasized that there are no underlying plans. He added that there have been no cutbacks, layoffs or program reductions. The strategies discussed are theoretical cost saving exercises ONLY, at this point.  Ultimately, it will be up to administration to figure out how to fill any revenue losses that occur, and these discussions will be used to guide them in that effort. However, these are only discussions. They are very similar to the discussions McGrath has every budget season with Assistant Superintendents Collins and Abdoo. The difference this year is the anticipated mid-year cuts to an existing budget and the significant loss of state aid funds associated with these potential reductions.

Strategy #3: Reductions to Programs and Services

McGrath and Collins began the presentation by encouraging the committee to treat strategy #3 as a high level conversation that should be considered an introductory step with further exploration at later meetings.

“Today’s discussion is not meant to threaten or single out any particular program,” said McGrath. “Instead, we want to look at this strategy in broad strokes and start the conversation with our community. The next phase of this whole process will be to process the parts that make up the big picture and decide how best to get community input. It’s important that this conversation not be superficial only, but rather a thoughtful, gradual move from the high level toward viable, practical solutions.”

In the past, to get the community involved in such discussions the district held public forums. In some cases that included assigning people to breakout groups where different tiers of options were presented and the pros and cons of each tier were discussed in small groups. The feedback from each group was then shared with the board and the entire group of attendees. Another format included residents sharing their feedback individually in a large group setting. Whatever the method used, it’s important to gather community input, adds McGrath. This BAC will play an integral role in helping define those tiers or options during that stage in the process should this become necessary.

To begin the exercise, Collins said it would be helpful for the group to understand how to quantify the category of Program and Service Reductions in terms of FTE estimates. This is similar to how the committee approached the two strategies previously discussed. “We will start by examining how to understand how the strategy of cuts to programs and services alone might mitigate cuts,” he added.  (It’s important to remember that the $5 million shortfall in state aid funding would not be filled through just one bucket but likely through a combination of two or more of the buckets/strategies discussed. However, for the purpose of big picture views, the group has been exploring each bucket in isolation.)

Currently, the district currently employs 598 full and part-time staff members. Its annual payroll is approximately $36 million and total benefits are approximately $16.4 million. To find savings through this strategy that would yield close to the 20 percent (or $5 million) in potential loss in state aid, there would need to be about a 10 percent reduction of staff across all departments, programs,  and services.

“This is only a theoretical exercise to put numbers with overall program reductions,” explains Assistant Superintendent Dr. Christopher Abdoo. “A 10 percent reduction across the board would likely bring us more than halfway to a $5 million reduction in expenditures.  However, as has been stated earlier, we are not recommending that reductions be made from this bucket only–and we do NOT currently have any plans to implement this reduction. We just want to give people a starting point.”

Abdoo indicated that if an across the board 10 percent reduction to programs and services were to be implemented at the beginning of an academic year, as opposed to being introduced for only a portion of an academic year, this would result in an estimated $3.6 million salary reduction and a $700,000 reduction in the district’s social security, medicare, and pension expenditures.  There would likely be further reductions to the district’s health insurance expenditures in this scenario as well. “Any mid-year reductions to programs and services would yield a prorated amount of the expenditures described above depending on the timing of their implementation,” he adds.

Abdoo also explained that there are significant differences in expenditure reductions depending on whether positions are reduced through layoffs versus non-replacement of retirements. For instance, layoffs may result in unemployment costs, and the impacted employees are typically on the lower end of the district’s salary scale. On the other hand, not filling the position of a retiring employee would eliminate unemployment costs, and generally results in a greater financial impact because retiring employees are typically on the higher end of the district’s salary scale.

It should be noted, said McGrath, that BH-BL has experienced level enrollment and has employed nearly the same number of staff for the past 10 years even while adding programming. This has been done strategically by examining every vacancy that occurs for the best way to fill that position.  This demonstrates how the district is always looking to grow and adapt while at the same time avoiding layoffs and containing overall cost. This same principle should be followed to the greatest extent possible as we look at potential program reductions.

“Every year, we review the budget for cost savings measures. We look at delivery methods and practices with an eye on efficiency,” says Collins. “We question whether we can deliver the same to our students but in a way that yields savings. Sometimes there are short-term solutions for reducing costs other times there are long-term savings realized by smaller changes over the years.”

Impacts of Program Reductions

When considering reductions to programming, the committee was also asked to keep practical considerations at the forefront and think about what’s required of a district versus what’s essential. “We need to be realistic about certain reductions and be sure the district is still adhering to state and other mandates,” said Collins. “In the end, we still have an obligation to adhere to State Education Department guidelines.”

Collins asked the committee to consider that what is required and what is essential when it comes to education may be two different things. He gave the example that outcomes like a merit or technical diploma are achieved by taking certain courses and programs that may not be required, but those options are part of BH-BL’s culture, offer students an opportunity they might not get elsewhere, and, in some cases, puts them at an advantage for post-graduation plans. The committee should weigh whether or not that, or any other example, is something the district should consider changing.

“When exploring this strategy, we need to ask ourselves how we keep the programs and offerings that make BH-BL a top-notch educational institution while still producing a fiscally responsible budget for our community,” said Collins.

The committee briefly discussed other ideas that could fall within this strategy, such as increasing class sizes and transportation, maintenance, and school lunch program changes, as well as the impact of other extracurricular activities (fine arts, athletics, clubs, drama, etc.). This is a worrisome topic for many because research has shown that most of these extra curricular activities often help establish a strong connection for students and their school community which results in improved academic outcomes.

A few BAC members expressed an interest in looking at cost comparisons of individual programs and services rather than as an across-the-board savings. McGrath cautioned the committee that it was not yet time to single out particular programs. He emphasized that looking at the total cost for this category is similar to how we approached the other two buckets, and reminded the group that there would be future meetings where the committee would delve deeper in the details that make up each bucket/strategy.

“The conversations that need to be had about program and service reductions are very delicate because they include the possible elimination of positions,” said McGrath. “At this stage in the exercise I do not think we want to identify any one program and tie a cost to it. I want to be very sensitive to the realities of the strategy, and all the strategies for that matter, and refrain from creating any undue anxiety. We’d rather look at each strategy as a whole and decide as a group what parts of each bucket should be further explored.”

BAC Co-chair Lakshmi Nagarajan adds: “These early meetings are introducing all of us to the different strategies that the group identified at our first meeting. We are just beginning the process and should think of it as the informational phase. At this time, we want to outline what the costs, savings, and impacts of each area would look like. Once we have an idea of what fiscal impacts need to be addressed and if any changes need to be made, then we could drill down into each bucket with specific numbers attached to specific line items.”

At its next meeting, Nov. 24, the BAC will begin discussing the fourth and final strategy, Human Resource Adjustments. That same evening, the Board of Education at its meeting will be given an update outlining the four strategies the BAC has explored and defining the next steps for the committee. After the holiday break, the committee will reconvene to decide how to take their exploration of strategies to a deeper level.

Nov. 10 Meeting Recap

Budget Advisory Committee Discusses Revenue Increase Strategies

Second of Four Options Being Explored

On Tuesday, Nov. 10, the BH-BL Budget Advisory Committee (BAC) met for its third meeting, focusing their time on the strategy of using fund balance as a means of making up for a potential 20 percent cut in NYS aid. As part of this topic, the committee also discussed the tax levy, tax cap requirements, and the impact school tax increases could have on the community.

Before the presentation and discussion portion of the meeting, BAC co-chair Lakshmi Nagarajan took a moment to thank everyone for their time, efforts, and feedback and reminded the 59-member group that what they discussed at the last meeting and what they will be discussing at the current and future meetings are only theoretical options to be explored and discussed. The research will then be reported to the Board of Education.

The co-chair also reminded the committee of its charge, which is to gather ideas so that if mid-year  reductions in State Aid become a reality, they’ve taken the time to plan and gather input thoughtfully from many different stakeholders to ensure there aren’t any last minute, non-transparent decisions.

Nagarajan pointed out that because the committee is looking at the four different areas, or “buckets”, (short-term structural changes to the delivery model, revenue increases, program reductions, and human resource reductions) in a vacuum, it’s really important for committee members to remember that this is just a theoretical exercise.

“There are no preconceived plans or bias about any of the options we are discussing,” she said. “We are researching a variety of areas in no particular order and having open discussions. The reality is that if we have to make adjustments, it is possible that we will need to use options from two or more of the four buckets we are exploring.”

The whole purpose of what we are doing, Nagarajan adds, is to plan for the worst case scenario.

The BAC co-chairs and school leaders have received a lot of feedback after the last meeting’s discussion about short-term structural changes to the delivery model. The biggest feedback being reported is that students want to be back in school, parents want their children back in school, and there are real concerns about shifting to a fully remote learning environment.

Superintendent Patrick McGrath adds that these exercises are a way to educate the community on the different options available to the district in the event of a significant mid-year state aid cut. He noted that the Board selected short-term structural changes to the delivery model to discuss first because, ironically, they thought it might be the least controversial of the four controversial topics. Because some of our neighboring school districts had already shifted to fully remote, the board thought it might be a topic on people’s minds. However, it turned out that by focusing on this topic first, people thought we were already planning on going fully remote after Thanksgiving. Over the course of the past two weeks, the school board and district administration received significant opposition to the idea of solving a budget gap by increasing the amount of remote learning. McGrath emphasized that the district has no plans or desire to transition to fully remote.  Absent significant state aid reductions that could not be addressed in another manner, this would only occur if we were directed to do so by state or local health officials. Last meeting’s discussion was just an exercise in learning what might be saved if the district sought to close a budget gap by implementing one of a variety of delivery models this year, adds McGrath.

Based on reports from the state, the board of education may potentially have to deliver bad news to the community about a possible $5 million loss in state aid this school year. In fact, Superintendent McGrath was part of a meeting recently with area superintendents who received information at the state level indicating that there will be a significant cut this year from the state level.

“It’s very possible that the state will not be able to give schools the funding they had promised,” said McGrath. “It’s being predicted that the 20 percent cut at the state level will likely happen. The main question at this point is whether or not federal funding will backfill any or all of that state-level loss.”

McGrath explained that the district has never experienced this level of cuts during the middle of a school year: “The last time there was a mid-year budget cut was in 1991. The budget cut BH-BL experienced back then would be equivalent to about $1 million today. So we are looking at a cut that is potentially five times bigger than what was experienced then. This is why it’s important the committee starts having these real conversations,” adds McGrath. “Mid-year cuts in aid are particularly difficult because the budget and tax levy have already been set for the school year based upon state aid allocations provided by New York state in the budget development process.”

[WATCH RECORDING OF BOARD MEMBER NAGARAJAN & SUPERINTENDENT MCGRATH’S OPENING REMARKS]

Feedback from Community

In addition to the feedback addressed by Nagarajan and McGrath, Assistant Superintendent Dr. Christopher Abdoo addressed inquiries about whether or not the district could stop the current building project and use that money to fill the hole from the potential state aid loss. Abdoo explained that there is a difference between capital project funding and general budget funding, and that it’s actually illegal in New York state to use voter-approved capital project funds for anything other than what they were  approved for. Most of the funds used to pay for improvement to school facilities comes as extra aid from New York state and is only payable upon completion of the construction project. Therefore, the funds earmarked for specific projects must stay within that project, and cancelling Phase 7 of the project would have no impact on the general operating budget.

Strategy 2: Short Term use of Fund Balance with Potential Tax Cap Override

After these introductory remarks, the focus turned toward a second strategy that could be tapped to close a mid-year budget gap: use of fund balance. Abdoo began the discussion by providing the committee with a breakdown of the district’s fund balances and reserves.

He explained that the district currently has an appropriated fund balance of $2.75 million that is built into the budget, partly as a planned reduction of fund balance, and partly as a provision for risk. This provision for risk means it is part of the budget not earmarked for anything specific should there ever be a need for one-time unexpected expenses, such as if a boiler broke and needed to be replaced, etc. This fund balance helps the district balance the budget and is carried over from year to year if these unexpected situations do not occur.

The district also has several reserves that can only be used for their specific intended purposes (i.e., workers’ compensation, unemployment insurance, retirement contribution, tax certiorari, employee benefits & accrued liabilities) and nothing else.

There is also an unappropriated fund balance of $2.43 million, which is akin to an individual’s savings account, but shouldn’t be used all at once or for expenses that are recurring, such as salaries.

“Depleting the district’s fund balance in one year is very dangerous and has several negative aspects,” explains Abdoo. “Most importantly, the district loses the flexibility to respond to unexpected needs without cutting other areas of our budget. When there is no fund balance, every unexpected increase in cost must be immediately countered with a corresponding reduction in some other program or service which can have a very negative impact on students.”

Other negative effects are more subtle but important to healthy financial operations. For instance, low fund balance leads to a deterioration to the district’s credit rating, resulting in higher interest rates for short- and long-term borrowing. Low fund balance also deprives the district of important interest revenue and forces costly short-term borrowing to address cash flow issues within a school year.

“Because of the estimated $1.25 million in additional expenses associated with the state’s COVID-19 regulations released in July, we are spending more within the budget this year than we thought we would,” explains Abdoo. “But we are prepared for this because of the provision for risk built into the current budget, in the form of appropriated fund balance. What we aren’t prepared for is the possible $5 million cut in state aid on top of the additional expenses. We simply do not have the resources for this level of funding loss.”

Overview of District Revenue Sources

To help committee members gain a better understanding of where funding for BH-BL comes from, Abdoo explained the major revenue sources for the 2020-21 school year.

  1. BH-BL’s total tax levy for 2020-2021 is $42,363,777.
  2. Total state aid is roughly $24M
  3. Appropriated fund balance equates to $2,750,000.
  4. Other revenue sources total approximately $1.8M (this revenue source consists of items such as tuition charges to other districts for foster students attending BH-BL , Interest on district bank account funds, Refund of expenses from the previous year, (chiefly NYSMEC & BOCES) , Use of Facilities (largely to cover the increased expenses incurred), Medicaid Assistance , Admission Fees for District Events , Transfer from the Debt Service Fund, and Continuing Education Tuition.

School Taxes

It is unclear whether this proposed 20 percent cut in state aid would be a one-time cut or if it would represent a new baseline for state aid. If this becomes a permanent cut, regardless of whether the district uses fund balance this year, tax graphic and percentage symbola long-term reduction in state aid could lead to a shifting of the burden to local property tax. Again, it is worth noting that there is no proposal or agenda that the problem should be solved through increasing property taxes either in part or in full. Abdoo’s entire presentation is a hypothetical exercise in understanding the role that property tax has in funding the district’s operations, stated McGrath.

When revenue sources became one of the bucket options decided upon by committee members at the first meeting, members asked what the district’s tax levy increase would need to be to supplement the potential significant loss in state aid. Abdoo explained the difficult truth that in order to make up for a 20 percent loss in state aid solely through property taxes, the district would need to increase its tax levy by approximately 12 percent.

For perspective, a 1 percent change (increase or decrease) in the district’s tax levy equates to $423,364 in revenue gained or lost by the district. Using the approximate median full-market value of residential properties across the four towns making up the district, a home valued at $240,000 would see a $49 increase for every 1 percent increase in the district’s tax levy (before any exemptions or other mitigating factors are applied).

Going out with a hypothetical 12 percent tax increase would mean the district would need to override its tax cap. Abdoo explained that there is a formula used to determine districts’ tax cap. BH-BL typically has an allotted tax cap between 2.9 and 3.1 percent based on the numerous factors associated with the tax cap calculation. If the district were to try to exceed the tax cap, it would need a supermajority of the voters (or 60 percent) to approve the budget. In the 10-plus years the tax cap has been in effect, BH-BL has never attempted to exceed it.

McGrath made it clear that the district does NOT have any plans to go to voters with a 12 percent tax rate increase. That is simply the number that would be needed to close the $5 million state aid gap using only taxes.

“None of this is being recommended,” McGrath stressed. “If we have to close a $5 million gap we would likely take water from more than one of the buckets being researched and discussed. Again, this is just information sharing so people have a reference, can see the worst case scenario, and have discussions about the realities.”

“This information also helps us all quantify what is in each bucket or strategy,” added Co-Chair David Versocki. “We can’t stress enough that this is just information sharing.”

Committee Questions & Discussion

Committee member Bonnie O’Rourke kicked off the discussion portion of the meeting by asking if anyone anticipated there being a lift on the tax cap, given the situation everyone is in?

Abdoo explained that the tax cap is permanent and has been written into law, so that while a change is certainly possible, it’s not likely that it would change.

Committee member Tom Lavertu commented that he would request that the board please consider people’s income and residents’ hardships due to the pandemic when considering tax increases.

Abdoo responded that the two metrics he presented to the committee to assess the district’s tax levy relative to the full-market value of district properties and aggregate income in the community were based on overall averages. The district realizes, and is sensitive to the fact, that specific circumstances will differ among community members.

Committee member John Kelch reiterated the concern about large tax increases, especially for those on fixed incomes or who lost jobs due to the pandemic. He stated that raising taxes should be a last resort, not the norm.

Co-Chair Nagarajan reassured them that the board would not ever arbitrarily raise taxes. Abdoo stressed that the 12 percent tax increase is only a mathematical calculation to show what using ONLY property taxes to fill the potential $5 million loss would look like. This does not in any way mean the district was planning to do this.

Superintendent McGrath concluded the meeting by stating that he’s aware they are running the risk of people getting upset or worried with this particular exercise but that they need to be completely transparent about what a $5 million loss really looks like.

“These are certainly uncomfortable conversations and our intentions were never to replace the $5 million cut in state aid through ONE particular source or strategy,” says McGrath. “Rather, we are gathering information and educating people on what this loss looks like in different areas of the budget. It’s likely that, if necessary, more than one of these areas will be tapped.”

Visit the 2020 Budget Advisory Committee webpage to learn more about the committee’s charge; read articles about earlier meeting, and more. The next Budget Advisory Committee meeting is Tuesday, Nov. 17 at 3:30 p.m. via Google Meet. The committee will be discussing program reductions.

Committee Topics of Discussion and Timeline

  • Short Term Structural Changes to Delivery Model (Discussed Oct. 27)
  • Revenue Increases (Discussed Nov. 10 from 3:30-5 pm)
  • Program Reductions (Discussing Nov. 17 from 3:30-5 pm)
  • Human Resource Adjustments (Discussing Nov. 24 from 5-6:30 pm)
  • First Report to the Board of Education (Nov. 24 @ 7 pm)
October 27 Meeting Recap

Budget Advisory Committee Explores Short-Term Structural Changes

Meetings of the Board of Education’s Budget Advisory Committee continued this week as district leadership also continues to prepare for the possibility that the district may face a cut in NYS aid of up to 20 percent.

“The possibility that the district will face a multi-million dollar reduction in state aid this year is still very much unknown,” explains Assistant Superintendent Dr. Christopher Abdoo. “There’s a chance that New York state will fare better than expected and there could also be some federal support, but without knowing for certain it’s extremely important that we be prepared for a significant loss in revenue for the 2020-21 school year.”

With this in mind, the committee suggested further exploration of four broad areas over the coming weeks:

  1. Short Term Structural Changes
  2. Increasing revenue
  3. Program Adjustments
  4. Human Resources Adjustments.

Superintendent Dr. Patrick McGrath reminded the committee early in the meeting that the charge from the Board asked the committee to review possible strategies for addressing a significant state aid cut and to provide feedback on the pros and cons of each strategy. McGrath emphasized that we would be exploring these topics in no particular order. “There is no ranking or preference for any of these options. We have to start somewhere and over the next four meetings we will work our way through all of them,” McGrath said.

At the Budget Advisory Committee on Tuesday, Oct. 27, co-chairs David Versocki and Lakshmi Nagarajan led the group through an exercise to review the first of these categories–Short-term Structural Changes. The three specific ideas explored were pivoting to fully remote learning at some point during the 2020-21 school year; reducing the school week to a 4-day week; and ending the school year early.

Pivoting to Fully Remote Learning

If the district pivoted to fully remote learning (for example, from January through June 2021), this delivery model would require fewer faculty and staff thus resulting in layoffs or furloughs of support staff, teachers, and administrators. This option would be similar to what the Albany City and Schenectady City Schools are currently doing for budgetary reasons. The entire district would be impacted by this option and reductions would be made across the board, although under this approach some departments would be impacted more than others. One potential example showed the furlough of all bus driver and monitor positions, a large percentage of teaching assistant positions, custodial positions, 50 percent of food service positions, all playground monitor positions, 50 percent of nurse positions, and all security monitor positions. It would also eliminate all temporary positions recently added to accommodate the needs of both hybrid and virtual learning. This model would consolidate teaching positions and also reduce or furlough several administrative positions.

All of those reductions would result in an estimated $4.8 million expense reduction or savings. Superintendent McGrath emphasized that this was just an example, that variations on this strategy could take many forms and durations. The intent was to use a large scale example to give the committee a sense of scope.

Members of the committee raised many concerns and objections to this plan. President of the local CSEA, Peg Ostrom, pointed out that this strategy, if used alone, placed a disproportionate burden of reduction on support staff members. “We are all willing to do our part…and I know this is just for everybody to get some ideas,  but I don’t think support staff should be taking on 90 percent of the reductions,” Ostrom commented.

Several parents pointed out the difficulties caused by fully remote learning. It was pointed out that students value in-person learning and would lose many opportunities if the district adopted such a large scale remote approach. However, one committee member pointed out the recent successes of virtual school in the past two months in comparison to the difficulties faced in the spring.

Four-day School Week

Another possible model discussed was a pivot to a shorter school week. The district could alter the school day schedule so it operates on a four-day a week schedule but with longer weekday work hours to continue to fit in the required instructional hours each week. In doing this, transportation, custodial and food service payroll expenses might be reduced by 20 percent. Additionally, one less day of transportation would result in 20 percent reduction in mileage-related expenses monthly. Furthermore, one day of full building closure per week might result in a reduction of natural gas expenses by 10 percent, and electricity costs reduced monthly by 5 percent.

It is unclear at this point whether the district would be further penalized in NYS aid for having less than 180 school days, even if the days were longer.

This type of schedule would lead to a more modest savings than a fully remote delivery. Abdoo estimated the option could result in an estimated savings of between $500,000 to $1 million depending on the specific structure and length of the change.

End the School Year on May 31

A third variation on structural changes discussed involved reducing the total school year by one month, ending school and closing all buildings on May 31, 2021. This option would result in laying off or furloughing all 10-month employees on May 31 with the understanding that they would return to work on Sept. 1, 2021. This model would also furlough the vast majority of 12-month employees from May 31 to June 30, 2021. The small group of 12-month employees that would need to remain would be asked to accept different concessions through June such as reduced salaries, higher health insurance contributions, etc.

As with the four-day week option, it was unclear whether the district would have state aid further reduced for having less than 180 school days. It was also noted that this option would only be possible if Regents exams were cancelled.

It was pointed out that this option spreads the burden equally across all employees, but it does so at a cost. It may result in a significant loss of employees as they seek other employment.

This plan would also affect the amount of content teachers would be able to cover as many of the typical year-end events would be moved up into May. It would also reduce many opportunities for students at the end of the school year.

This option could potentially reduce expenses in the range of $4 million to $5.5 million depending on how health insurance might be handled in a furlough situation. For example, the school district could agree to carry the health insurance of all affected employees for the duration of the furlough.

A benefit of this model is that it would allow the district to wait longer to see if the threatened state aid cuts become a reality before reducing programming for students.

Board Vice President David Versocki cautioned: “None of these are good choices. Nothing we will be exploring over the next four weeks is in any way definite or specific. These are all just ideas. The Board of Education would like to hear the pros and cons of each approach from a wide variety of our stakeholders.”

Next Meeting

At its next meeting in November, the committee will discuss revenue increases, which includes taking a closer look at the district’s fund balance, educational opportunities as revenue sources, property tax, lobbying efforts for federal and state financial support, and how to use existing district resources (facilities, food service catering) to generate revenue.

Committee Topics of Discussion and Timeline

  • Short Term Structural Changes to Delivery Model (Discussed Oct. 27)
  • Revenue Increases (Discussing Nov. 10 from 3:30-5 pm)
  • Program Reductions (Discussing Nov. 17 from 3:30-5 pm)
  • Human Resource Adjustments (Discussing Nov. 24 from 5-6:30 pm)
  • First Report to the Board of Education (Nov. 24 @ 7 pm)
October 21, 2020

Budget Advisory Committee Brainstorms Cost Saving Ideas

At its first meeting on Tuesday, Oct. 20, the 2020 Budget Advisory Committee, lead by co-chairs David Versocki and Lakshmi Nagarajan, convened virtually to discuss the committee’s charge, learn more about the financial impact potential state aid reductions would have on BH-BL, and begin brainstorming cost saving and revenue generating strategies that could be implemented by the district to address this significant revenue shortfall anticipated for next school year.

Assistant Superintendent Dr. Chris Abdoo explained that the potential 20 percent cut in overall state aid (foundation and expense-driven aid) would result in a loss of approximately $5 million to BH-BL in the 2020-21 school year. He also explained that in addition to the district’s planned $750,000 deficit, there are approximately $1.3 million in COVID-related expenditures necessary to open the district in accordance with state regulations issued in July.  This $2.1 million initial deficit coupled with a $5 million revenue reduction, equate to a total potential deficit of more than $7 million.

“Over the years, we have conservatively budgeted, made reductions, and kept a fund balance to help the district weather various expected one-time expenses or fiscal storms, but the projected massive cut to state aid is just too damaging–we do not have the funds to plug this hole in our revenue source,” says Abdoo. “Replacing this lost state aid would require a tax levy increase of more than 12 percent, so obviously we want to make sure we are considering any and all other options that are available to us.”

The Budget Advisory Committee (BAC) spent the better part of the meeting brainstorming potential cost-saving measures. Superintendent McGrath explained that the next few meetings will be dedicated to exploring the ideas that were put forth by the committee. These ideas include, but are not limited to:

  • Short Term-Structural Change to Delivery Model of Services: Pivoting to fully remote at some point; significant change to in-person schedule; 4-day week
  • Reductions: Program reductions; staffing reductions; hiring freeze; non-replacement of vacancies; larger class sizes; transportation changes; combination of small and discretionary savings; food service changes; maintenance changes; etc. 
  • Exceed Tax Cap
  • Use of Fund Balance
  • Contractual Adjustments: Salary lag; retirement incentives; concessions on salary or benefits across the board. 
  • Non-Traditional (outside the box): More distance learning; shared services with other districts; transitioning school programs to community-based programs; offer educational opportunities as a revenue generator;  K-12 distance learning leader (as a revenue generator); “digital merging”; traditional merge; consolidation of buildings; reorganization of building use.
  • Lobbying

The BAC is expected to begin exploring these ideas, two at a time, at their Oct. 27 meeting. A recap of each meeting will be posted on this webpage.

The introductory BAC meeting can be viewed here.

October 7, 2020

Board of Education Forms Budget Advisory Committee

At its Oct. 6 meeting, the BH-BL Board of Education appointed 51 people to its 2021-22 Budget Advisory Committee.  The committee will begin by reviewing the district’s current and future budgets and delve into the impact the proposed state aid cuts will have on the district.

The committee is made up of (see member list below) school administrators, staff, parents of current students (selected by the schools’ PTAs) and community members at large. The board’s Finance Committee Chair David Versocki along with Assistant Superintendent for School Support Dr. Christopher Abdoo will lead the committee. They are expected to meet virtually two times a month beginning in late October. Budget Advisory Committee will serve through the completion of the 2021-22 budget process, ending with the board adoption and public approval of the 2021-22 budget.

Financial Impacts to be Discussed

As most community members have probably seen or heard in the news, New York state is facing a potential for large-scale budget cut between now and the end of the current school year. School districts have been told to prepare for revenue reductions of up to 20 percent of their total state aid payments.

At BH-BL, a state aid cut of this magnitude would result in a loss of nearly $5 million in anticipated revenue this year.  While the BH-BL Board of Education hopes that this level of reduction does not become a reality, the fiscal condition of the state and the continued gridlock at the federal level is making it appear more likely that the reductions will occur. In fact, BH-BL’s final NYS School Aid payment of the 2019-20 school year (last year) was just received and it was indeed reduced by 20 percent,  already resulting in a loss of $400,000 to the district.

“It is unclear at this time whether the state will make up that significant withholding in the future,” says Superintendent Dr. Patrick McGrath.  “The board believes, however, that it is prudent to make real and concrete preparations for managing a significant loss in state aid revenue in the coming months.”

The Budget Advisory Committee will assist the board in making the difficult decisions necessary to enable the administration to continue to operate the school district effectively in these challenging times.

The Budget Advisory Committee is asked to:

  • Review current budgetary landscape and become educated on the scope and details of the proposed reductions in the context of the current BHBL 2020-21 budget.
  • Identify strategies for managing potential revenue reductions this year and provide advice to the Board and Administration on what strategies to implement and when to implement them.
  • Review and monitor the factors influencing the development of next year’s 2021-22 SY Budget.
  • Identify and recommend strategies for the development of the 2021-22 budget.