Potsdam Central is looking at ‘major’ gap in its budget

POTSDAM — It’s early in the budget process, but Potsdam Central School District Superintendent Patrick H. Brady said the Finance Committee’s preliminary look this week at the $27.5 million budget for 2012-13 showed a deep gap between revenues and expenditures.

“Based on our assumptions right now, if we lived within the tax cap and we put the same amount of reserves and fund balance in the budget that we did last year ($1.6 million), we are estimating the gap right now to be around $1.4 million. It’s a major gap. If that equates to teaching and non-instructional employee positions, that equates to around 25 to 28 positions overall,” Mr. Brady said.

The draft spending plan is up by about 6 percent from the district’s 2011-12 budget. Under the state’s new tax cap law, Mr. Brady said, district officials are estimating the tax cap to be about 2.88 percent. The law’s 2 percent cap is adjusted for certain costs, such as pension contributions.

“We are early in the budget process. There are still quite a few assumptions we are using in terms of funding and expenditures,” he said. “The Finance Committee meeting was held to look over our instructional and non-instructional parts of the budget and indicate what our projections are going to be at this time so the board and the community understand what the district will be facing as we continue to be underfunded by the state.”

Mr. Brady said the district is facing a perfect storm of sorts — decreased state aid, a loss of federal funding and increased costs, many of which it has no control over, such as retirement and health insurance.

The cost of doing business continues to rise, making it more difficult to balance the budget, Mr. Brady said.

“We’re looking at another very difficult year with reduced state aid and increased costs,” he said, noting taxpayers were “facing their own issues” and, if the spending plan is voted down twice, the district could not raise any funds above last year’s tax levy.

“In essence it will go back to zero. That’s another factor that the board and the administration are going to have to carefully look at as we craft a budget this year,” he said.

As in any other district, personnel costs, including salaries and benefits, make up the largest chunk of the spending. In Potsdam Central’s case, Mr. Brady said it’s close to 70 percent of the budget.

“Therefore, when we have a budget cap, that’s why the cuts tend to come from personnel,” he said.

The district is also losing federal funding that helped maintain positions, Mr. Brady said. He said the district had $547,000 in educational jobs funding “that saved a lot of jobs last year,” but that money isn’t available this year.

With what he called “flat state aid” and the loss of the federal funding, he said the district started out with a gap of $500,000. Adding in health insurance benefit increases, which he said are projected to be about 9 percent, took the gap even higher.

“If we were to put it in tax levy terms, the health insurance increases alone would be about 4 percent on our tax levy,” he said.

The picture gets even gloomier after adding in increases of $171,000 in teacher retirement costs and $60,000 in retirement costs for noninstructional employees.

“We start out with a half-million-dollar gap and start adding increases in pension, which we do not control, and health insurance, which we have limited control over,” Mr. Brady said.

Although it’s early in the budget process, “we have to prepare for the worst,” Mr. Brady said.

The district will continue to urge state legislators to address funding inequities, he said.

The Finance Committee will meet again at 5 p.m. Feb. 13 in the high school library.