2 nd Annual Survey of C AN ’ T G ET T HERE F ROM H ERE New York State School Superintendents on Financial Matters November 2012 Budgeting challenges call for new directions in state policy to help schools raise student achievement 1
The survey: • Between August 16 and September 3, 2012, the NYS Council of School Superintendents conducted an online survey of superintendents on budgeting concerns for their districts. • A total of 249 superintendents submitted complete responses, a response rate of 40.4%. Incomplete submissions from 47 superintendents were also included in the results. • Superintendents serving the Big 5 Cities (New York, Buffalo, Rochester, Yonkers, and Syracuse) and Boards of Cooperative Educational Services were not included in the survey because their systems’ budgets are not subject to voter approval and consequently do not report some of the financial data available for small city, rural and suburban districts. • The Council conducted a similar survey in 2011. 2
The report: • Introduction • Overall Fiscal Condition • Budgeting Choices • Impact of 2012-13 Budgeting Decisions • Adapting to the Tax Cap • Implementing New Evaluation Procedures • Looking Ahead – Which is the greater concern – state aid or the tax cap? – Priorities for mandate relief – Priorities if new funding becomes available 3
Introduction (pages 3-6 in the report) 4
Concern about the future is widespread Why? Districts have already endured several tough budgeting cycles: 1. • Average spending increase over the last 4 years = 1.7%. • 83% of districts are receiving less state aid 4 years ago (2008-09) Some hard to control costs have been surging (e.g., pensions and health insurance): 2. • New TRS rate increase – like requiring districts to absorb a cost equivalent to giving employees 3.6-4.6% raises, whether or not they receive any actual raises. • Statewide cost of TRS increase likely to approach or exceed benefit of a 3-3.5% state aid increase. Districts have relied on reserves to avoid more damaging program reductions or tax increases: 3. • SED estimates unrestricted fund balances have shrunk from $2.76 billion in 2009-10, to $1.21 billion this year. • Without appropriated fund balance, districts would have needed to raise taxes by 7% more than they did this year (9.2%, instead of 2.2%); poorest 10% of districts would have needed 21% more in local taxes. Other than Tier VI, no significant mandate relief has been enacted so far. Relief through Tier VI 4. will happen only over the long-term. Meanwhile, new mandates have been added. 92% of total school revenues (local taxes & state aid) are now subject to limits. Federal aid (most 5. of the remainder) is now at risk too. 5
Even prior to tax cap, schools were holding down tax increases Districts have responded to voters – have been holding down spending and taxes % Change in proposed tax levy % Change in proposed school spending 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 10% 8.7% 9% 8.2% 7.5% Percent change over prior year 8% 6.9% 6.3% 6.6% 7% 6.1% 6.1% 6% 5.3% 4.8% 5% 4.3% 3.7% 3.4% 4% 3.2% 2.3% 3% 2.2% 2% 1.4% 1.3% 2.1% 1.7% 1% 0% SOURCE: Council analysis of NYSED Property Tax Report Card data ; Big 5 Cities not included 6
Districts have been using reserves to spare students and taxpayers from more dramatic changes – but reserves run out Districts grouped by property wealth per pupil Change in Unrestricted Fund Balance from 2011-12 to 2012-13 Additional tax increase which would be necessary without use of fund balance (i.e., Appropriated Fund Balance as % of Tax Levy) -40% -30% -20% -10% 0% 10% 20% 30% 1 (Proorest 10%) -31% 21% 2 -23% 17% 3 -9% 11% 4 -18% 10% 5 -22% 11% 6 -10% 8% 7 -9% 6% 8 -12% 5% 9 -4% 3% 10 -7% 3% NYS -14% 7% SOURCE: Council analysis of NYSED Property Tax Report Card data 7
Overall fiscal condition and outlook (pages 7-12 in the report) 8
Alarm over the future: Insolvency – financial & educational Financial Educational 9% foresee financial insolvency within 2 years 19% foresee educational insolvency within 2 years 41% within 4 years 51% within 4 years 77% at some point 84% at some point Do you foresee a point at which your district would be Do you foresee a point at which your district would be unable to ensure that some of its financial obligations will unable to fund all the instructional and other student EVER be paid? service requirements established by laws or regulations approved by the state and federal governments? 0% 10% 20% 30% 40% 0% 5% 10% 15% 20% 25% 30% 35% Yes, we are currently unable 1% Yes, we are currently unable 5% Yes, within 1 year 2% Yes, within 1 year 5% Yes, between 1 and 2 years 6% Yes, between 1 and 2 years 9% Yes, between 2 and 4 years 32% Yes, between 2 and 4 years 32% Yes, beyond 4 years 36% Yes, beyond 4 years 33% No, I do not foresee that time 15% No, I do not foresee that time 12% Unsure 9% Unsure 4% 9
Insolvency – by region Educational Financial % of districts foreseeing financialinsolvency within 2 years % of districts foreseeing educationalinsolvency within 2 years 0% 5% 10% 15% 20% 25% 30% 0% 10% 20% 30% 40% 50% 60% Total 9% Total 19% Long Island 0% Long Island 11% Lower Hudson Valley 6% Lower Hudson … 17% Mid-Hudson Valley 0% Mid-Hudson Valley 14% Capital Region 15% Capital Region 22% Mohawk Valley 7% Mohawk Valley 14% Central New York 6% Central New York 12% North Country 25% North Country 50% Southern Tier 8% Southern Tier 8% Finger Lakes 6% Finger Lakes 15% Western New York 12% Western New York 21% 10
43% of small city superintendents now describe their districts’ financial condition as poor or very poor How would you describe the current financial condition of your school district, in terms of its ability to fund services meeting the expectations of parents in your community? % Responding Poor or Very Poor 2011 2012 0% 10% 20% 30% 40% 50% 24% City 43% 12% Suburb 10% 20% Rural 18% 17% Total 17% 11
Reliance on reserves is a widespread concern (83% of superintendents somewhat or very concerned) To what extent, if at all, are you concerned that your district is drawing upon reserves to pay for recurring operating costs? 0% 10% 20% 30% 40% 50% 60% Very concerned 49% Somewhat concerned 34% Not concerned, our use of reserves is 11% limited Our district is not drawing upon reserves to pay for recurring operating 6% expenses 12
Other financial condition measures… Various measures of fiscal condition, by region Financial Financial Reserves Concerned condition condition less than about poor/very worse than adequately reliance on Region poor 1 year ago funded reserves Total 17% 52% 31% 82% Long Island 2% 43% 21% 75% Lower Hudson Valley 13% 34% 32% 77% Mid-Hudson Valley 7% 53% 33% 73% Capital Region 27% 59% 42% 81% Mohawk Valley 18% 56% 30% 89% Central New York 20% 35% 25% 70% North Country 39% 54% 39% 94% Southern Tier 27% 65% 49% 87% Finger Lakes 6% 48% 13% 87% Western New York 17% 64% 29% 88% 13
Budgeting choices and impact (pages 13-20) 14
Where school spending goes… Where school spending goes -- by commodity Employee benefits, Salaries & 20.2% wages, 54.5% Everything else, 25.2% Source: Council analysis of 2009-10 NYSED Source: Council analysis of 2009-10 U.S. School District Fiscal Profiles Census Bureau data Implication: If 3/4ths of school spending goes for instruction or personnel, then about 3/4ths of cuts will come from those areas – especially since this is the third year of austerity and districts have already made “easier” cuts. 15
Two ways schools save on personnel costs: (1) Spend less per employee; (2) Employ fewer people At least Percentage of positions eliminated by type, once in last 2012-13 PERSONNEL 2012-13 2011-12 2010-11 3 years Total Salary freeze or other cost reduction Positions in salary or benefits for Layoffs Attrition Eliminated superintendent 45% 59% 34% 79% Classroom Cost-reduction concession in salaries 2.2% 1.4% 3.6% teachers or benefits for other central office Other instructional administrators 36% 50% 22% 69% or student support Cost-reduction concession in salaries personnel 3.9% 2.0% 5.9% or benefits for building level Administrators 3.1% 2.1% 5.2% administrators 35% 45% 20% 66% Other Employees Cost-reduction concession in salaries 1.7% 1.0% 2.7% or benefits agreed to by teacher TOTAL 2.4% 1.5% 3.9% union 35% 31% 15% 54% Cost-reduction concession in salaries or benefits agreed to by any other union 30% 28% 13% 48% Reduction in central office administration positions 22% 25% 22% 47% Reduction in building-level administration positions 18% 25% 20% 43% Reduction in teaching positions 67% 72% 62% 87% Reduction in other instructional support or student services positions 56% 60% 46% 76% Reduction in other positions 59% 60% 47% 79% Other reduction in personnel costs 38% 33% 27% 47% 16
Key point: Many budget actions are cumulative in impact Example: Position reductions Percent reduction in positions by category, 2011-12 and 2012-13 2011-12 2012-13 0% 2% 4% 6% 8% 10% 12% 14% Teachers 4.3% 3.6% Other Student Support 8.0% 5.9% Administrators 7.5% 5.2% Other 3.6% 2.7% Total 4.9% 3.9% 17
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