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April 01 2011

Proposed operating & program changes will reduce
budget gap by more than $6 million

Superintendent Yagielski continues to work toward balanced budget

Superintendent John Yagielski presented to the Schenectady City School District Board of Education on March 30 a list of items that can help close the $9.6 million budget gap by more than $6 million.  The proposal includes alternative ways of operating, program changes and a multi-year plan for use of fund balance and reserves.  While the changes to the baseline budget make a significant difference, the superintendent stresses that there is still much work to do.  Over the next week, Yagielski will draw a plan to remove additional items and positions in order to balance the budget.   

Yagielski presented the first draft of the 2011-12 Budget to the board on March 16.  He outlined a baseline expenditure budget and reviewed revenue projections.  The superintendent produced a draft budget package of $159,200,397 which is $1.5 million less than the current year budget.    

Yagielski reviewed his first step proposal which included moving to a new model for legal services, establishing a program to bring back students from BOCES, hiring district staff to cover BOCES itinerant services, restructuring the elementary school day, implementing an Early Intervention Model, and cutting costs for transportation.  The savings for these changes total $3,062,300. 

On Wednesday evening, Jesse Roylance, director of Washington Irving Adult and Continuing Education Center presented a proposal to reorganize the ATLAS tutoring program, which would result in an additional $103,200 savings.  The proposal included reducing the program from two sites to one site.  This would in turn reduce the number of tutors, merge the program and expand the model for tutoring.  The proposal does call to add a school counselor position at a cost of about $71,100.  However, after subtracting the cost of rental, transportation and tutor costs, the proposal results in significant savings.  

Total Savings for alternative ways of operating:  $3,165,500

Increased Funding

Yagielski explained to the Board of Education that he has been looking at different ways of doing business in a less costly manner and looking at fund balance and reserves to see if the district can develop a multi-year plan.

Fund balance is made up of two specific pieces:

    Reserve Accounts –  These are set up for specific purpose and with
    rules on spending.

    Unreserved Accounts

        Designated Reserves – Amount used to balance the budget

        Undesignated Reserves – “Rainy day” account.  The district can
        only save  4% of next year’s budget.  (For example:  4% of
        $159,200,397 or $6.3 million can remain in this account.) 

Yagielski reviewed eight different reserve accounts with the Board of Education.  He told the board that he took a historical look at the balance in each account and actual spending over the years.  After completing the analysis, Yagielski determined that many of the reserve account balances should be adjusted.   He presented the following outline of reserve account balances and what the targeted balance should be.   

The General Fund Appropriations for the Workers’ Compensation and Unemployment Insurance are as follows: 

Yagielski said the district would maintain an annual appropriation for each of these accounts, adjusting the level to reflect a three year average of actual payments.  If actual expenses exceed the appropriation in a given year, the district would cover the overage with a transfer from the appropriate reserve account.  If the expenses are less than the appropriation in a given year, the remaining balance would be transferred to the appropriate reserve account. 

Yagielski is reducing the balance in the Employee Benefits reserve by $2.6 million. “Rather than carry it at the level it’s at, we will reduce to a more realistic level,” he said.  The amount currently in this account represents accumulated unused sick leave times the daily rate for all district employees.  “It’s on the high side,” said Yagielski.  “We took a look instead at all employees 55 or older (eligible for retirement) and used that figure.” 

The targeted balance for Tax Certiorari reserve is increased by nearly $3 million.  “We went back and looked at all outstanding claims from the 2009 tax roll and 2010 tax roll,” said Yagielski.  “We did an analysis between final settlements and claims and think a reasonable estimation is $3.5 million.”  This increases the account balance by nearly $3 million. 

Yagielski said that after talking with representatives from the insurance company, the Liability reserve can be reduced by $3.4 million.  “We pay for good insurance policies,” he said. “We only had one time when we had to go beyond insurance coverage to make payment.  Do we need to put this amount aside?”   He added, “we don’t believe we are putting ourselves at risk by taking this money and putting it someplace else.” 

The Capital reserve relates back to renovations and upgrades to bring the private schools that the district is renting up to code.  Yagielski said the amount appears to be what was remaining.  He said the funds were put in capital reserve and shouldn’t be there without voter approval.  “The right thing to do is to close the account out and move it to fund balance.”  

Prior to reviewing the accounts, the general fund reserves totaled about $11.3 million.  Yagielski said after “shaking the bushes," the targeted total balance is reduced to $6.2 million, making $5,160,295 available. 

Yagielski presented a plan for “Multi-Year Use of Fund Balance.” 

“We have a need to restructure our costs and bring them down,” said Yagielski.  “There are other changes that need to be looked at over time.”

The chart below includes the superintendent’s  proposed net changes to the 2011-12 baseline budget thus far.   

Please note that the total fund balance applied totals $6,150,000.  $3,150,000 has already been applied in the first draft or original proposal.  

Yagielski pointed out on March 13 that a total of $9,658,594 needs to be addressed.  If his plan, including adjustments are applied, the difference is $3,484,894.  This takes into consideration anticipated State Aid revenue.  The total will be adjusted to reflect actual State Aid. 

“We have made progress,” said Yagielski.  “But we have many miles to go.”  He said additional positions and items will need to be removed.”   Yagielski said he will be working on additional cuts in the next week.  “The road gets really bumpy as we move on.”

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March 17 2011
Supt. Yagielski presents first budget draft District faces $9.6 million gap More