Use of Reserves for Chappaqua School Taxes Becomes Tricky

In moving closer to adopting a budget to send to the voters, debate over using reserves for property tax relief is not about if but how much. Specifically, whether it should be more than the $3.5 million that the administration proposed.

"I think we should give the money back to the taxpayers," Board Member Jeffrey Mester said at a Tuesday meeting, asking that at least $4 million be used.

Fellow Board Member Randall Katchis supported the move to $4 million, citing concern about tax assessment challenges and settlements increasing as a factor. That particular issue was highlighted by Chow during the presentation as being a problem for a district, which has seen a drop in its total assessed value of properties by about $2.9 million for those in New Castle, and by $153,865 for the portion of Mount Pleasant that's in the school system.

Board member Gregg Bresner also cited challenges as a problem, and also supported using $4 million in reserves.

"I don't think we've bottomed," he said about the challenges.

Interim Superintendent John Chambers, and Assistant Superintendent for Business John Chow, while not necesarily expressing objections to spending $4 million - Chambers explicitly said there isn't a large difference between that and the proposed $3.5 million - they were concerned that using too much in reserves this use could pose fiscal problems down the road, arguing that it could leave the district vulnerable to larger tax increases, rather than a "smoothing" approach where the increases are kept smaller - and even pose a risk to the district's AAA bond rating, according to Chow. The bond rating is important for the cost of borrowing money, and the district anticipates doing that in the near future for an energy performance contract, according to Chow. Chambers also cited "cataclysmic events," which infrastructure problems or a large drop in state aid being examples in general.

Overall, the approach has been to wean the district off of high reserves spending, which it has done in recent school years in reaction to the tough economic climate and to stave off significantly higher property taxes. Last year it spent millions, both on the revenue and expense sides. This year it will only spend money on the revenue side of the budget, as part of the intent from Chambers and Chow to wean the district off of too much reserves.

President Janet Benton, while not having a specific opinion about $3.5 million vs. $4 million, was concerned about using too muhc in light of the potential for a state-imposed property tax cap, which was suggested by administration to take into conisderation when budgeting for 2012-13.

Members of the public weighed in on both sides, with their opinions falling towards their broader ideologies on government spending and taxes.

Judy McGrath, a member of the fiscally conservative New Castle Citizens for Responsible Education, said about the smoothing out strategy to control taxes, that "all you're doing is delaying the tax amount that has to be paid."She called for for the district to hold onto "just the minimum that we need to keep," in reserves.

Arthur Fried, a member of New Castle Coalition for Educational Excellence, a parents' group calling for easing of cuts in the budget, echoed similar sentiments as Chow and Chambers about the responsbility of using reserves.

Still board members were comfortable with the overall budget, which they are slated to approve at their April 12 meeting.

Updated Overall Budget Figures

The proposed budget spending increase has risen from 1.78 percent proposed in February, to 1.88 percent, or a difference of about $100,000 more. About 3.6 Full-Time Equivalents (FTEs) for teaching positions are being restored from the February proposal, brining the total number of job reductions to 29.4 FTE, down from 33 FTE proposed in February. Chambers noted that there are no full-time teachers who will also their jobs completely, but a reduction in work from full time to part time is still planned. Some teachers will work in other district schools. Retirements of current teachers since the February proposal helped make these changes possible, according to Chambers.

The overall tax levy, as presented at the meeting, was slated to rise by 1.59 percent, while the tax rates for slated to rise by 2.39 percent for New Castle and decrease by 6.14 percent in Mount Pleasant. However, those tax numbers were based on the use of $3.5 million in reserves. Chambers noted that they would be lower is $4 million is allocated as a majority of board members expressed interested in doing.

While no contingency budget - the one put in place if the proposed budget gets voted down - has been put in place, a majority of members expressed some support for making one that reaches the spending cpa, which must be at 120 percent of the Consumer Price Index (which means a 1.6-percent budget increase) or 4 percent, whichever is lower. This would translate to a contingency budget of $111,316,248, not much lower than the budget in its current proposed form, which is $111,448,488.