NORWICH – Norwich’s top school business official painted a grim portrait of the district’s financial outlook for members of the Norwich City School board Tuesday night.
According to Deputy Superintendent Robert Wightman, the gap between the district’s revenues and expenses will only widen over the next few years, as Norwich and its fellow school systems face decreasing aid and rising pension and benefit costs.
The school business official’s first slide illustrated the depth of the district’s dependence on state and federal aid – which accounts for 74 percent of the school’s total revenue in the 2010-11 budget. The remaining 26 percent is derived from the local tax levy.
The good news, Wightman said, is that the district now knows how much it will receive as its share of the Emergency Jobs Bill: $538,000. The bad news? New York’s schools still haven’t been given guidelines for spending that money. Race to the Top funding remains another unknown, he added.
The most “noteworthy concern,” according to the school business official, is the anticipated loss of American Recovery and Reinvestment Act (ARRA) and other federal stimulus funds at the end of the 2010-11 school year.
“We’re going to hit the cliff with these funds,” he said. “That’s $1.6 million in our budget that is going away next year.”
If that burden were to be shifted to district taxpayers, it would equate to a 16 percent hike in the local tax levy, he explained.
Wightman then turned his attention to the expenditure side of the budget.
“We are obviously a people business,” he said, explaining that the “lion share” of the district’s expenses were related to payroll and benefits. According to the numbers he provided, $23,463,223 – 63 percent of the district’s total budget -– falls into this category. The other two largest categorical expenses are Debt Service, which accounts for $5.2 million or 14 percent of the budget, and BOCES services, which comprise 13 percent or $4.87 million.
The school business official then focusing on what called “alarming” upward trends in pension contributions and health insurance premiums.
Those two line items totaled $4,969,732 in 2009-10, he reported. By 2012-13, that amount could jump to just shy of $6.6 million.
“These are just projections,” Wightman stressed, explaining that fluctuations in pension contributions will depend on how Wall Street rebounds.
In conclusion, the deputy superintendent showed a slide of the compound effect of both the loss in aid and the increase in expenditures. It illustrated a gap of close to $5 million by the end of 2013, which Wightman said represented “the local share shifting from state aid to the property tax levy” if nothing was done. “Doing nothing” wasn’t an option, however.
Board Member Perry Owen asked how Norwich’s declining enrollment played into the district’s overall financial picture.
According to Superintendent Gerard O’Sullivan’s response, it makes future budget cuts even more likely.
“We have to right-size the organization,” he said.