NEW SCOTLAND — With the federal government filling a million-dollar pandemic-sized hole in Voorheesville’s state school aid, the district’s first-draft budget for next year is anticipated to be $26.7 million, up about 2.58 percent from this year. 

With a forecasted budget shortfall of close to $1.4 million, the district already anticipates having to ask voters to approve the maximum levy allowed by the state for 2020-21 — an increase of 2.72 percent.

During a presentation to the Voorheesville School Board at its Feb. 8 meeting, new Assistant Superintendent for Finance and Operations Jim Southard said that state aid is down in part because of a drop in capital project aid and because of the coronavirus pandemic.  

For the 2021-22 school year, state aid is due to make up nearly 19 percent of the projected budget, based on the governor’s executive budget. Property taxes account for the lion’s share of next year’s budget, over 70 percent.

The state was due to send the district about $6.13 million in aid next year, but that was before a “local district funding adjustment,” a $1.12-million deduction, placing the state aid to the district at about $5 million. At $726,000, state building aid for next year is expected to be about 45 percent of what it was this year, $1.3 million. The reason for the decrease was the district paid off a 2001 capital project. 

But included in the 2021-22 school-year budget is a one-time federal COVID-19 stimulus payment of $1.13 million, which is about 28 times more than Voorheesville typically receives in federal dollars; usually, the district gets about $40,000 for Medicaid.

State aid for this school year has yet to be finalized.

The district was initially counting on $6.5 million in state money, but the state withheld some transportation aid and Voorheesville appears not to be counting on those dollars. Southard noted in his presentation that the district is now projected to take in about $6.37 million in state funds. 

As of Jan. 12, the district had received about $2.25 million in state aid and was still due another $4.15 million, according to previous Voorheesville projections shared with The Enterprise. 

The anticipated $1.37-million budget deficit for next year was presented to the board as the most severe gap possible; it did not account for the maximum levy increase, about $511,000, or use of fund balance, “the usual $300,000” that is allocated every year, Southard  said.

So, the district is looking at a 2021-22 budget gap that is closer to about $560,000, 2 percent, which Southard noted, “is not an unusual place to be at this point in the year.”

He said that the budget gap “will be addressed with any new state aid, potential use of reserves, and potential reductions” from this year’s rollover budget.

Levy limit

Addressing the increase in the state-set levy limit, which is often characterized as a 2-percent tax cap, Southard said of the levy increase, “We know it is not 2 percent; it is a string of calculations that starts with 2 percent.”

The levy limit is calculated as the lesser of the rate of inflation or 2 percent with certain exceptions, and a complex formula is used to determine the exact rate for each school district.

 The state’s comptroller, Thomas DiNapoli, released data on Jan. 13 showing property tax levy growth for school districts will be capped at 1.23 percent, down from 1.81 percent last year.

Were Voorheesville able to use a 2-percent CPI factor in determining its allowable levy growth for next year, Southard noted, it would yield an additional $146,551 for the district. 

After crunching all the numbers and accounting for exclusions, the district arrived at a tax-levy limit of about $18.76 million for next year.

To go over that amount would take a supermajority, 60 percent, of the vote at the polls. 

Superintendent Frank Macri recommended increasing the levy the maximum amount allowable, 2.72 percent, in large part because of the district’s projected worst-case scenario budget shortfall of $1.37 million.

STAR 

New York State established the School Tax Relief (STAR) program in 1997.

The STAR program’s goal was to reduce residents’ school property-tax burden, while not affecting the overall amount of revenue going to school districts. Whereas other exemptions just shift the tax burden from one property owner to another, New York makes up the difference with increased state aid to the school districts.

Since STAR was first introduced in Voorheesville, it was noted during the Feb. 9 meeting, a number of changes and instituted-income caps made to the program have led to fewer STAR Aid dollars for Voorheesville.

For 2020, the district received about $1.27 million in STAR Aid, which was a decrease from $1.44 million in 2019 and from $1.46 million in 2018. For the five years prior, 2012 to 2017, the district’s annual median STAR payout was about $1.5 million. And in 2007, the most-distant-dated data available from the state, Voorheesville received close to $1.8 million in STAR Aid.

Southard said that the executive budget presented by the governor in January proposed further reductions to STAR Aid, and that it looks like the state will try to do away with the payments. 

What Macri and Southard discussed doing, while fully acknowledging its difficulty, is to ask Voorheesville residents to forgo their STAR exemption and instead ask taxpayers to apply for a STAR tax credit.

“Beginning in 2019,” according to the state Department of Taxation and Finance, “the value of the STAR credit savings may increase by as much as 2 percent each year, but the value of the STAR exemption savings cannot increase. The STAR exemption savings can never be higher than the STAR credit savings.”

For Voorheesville, the switch from an exemption to a STAR credit, would allow the school district’s tax levy to increase as STAR Aid payments continued to go down, ultimately minimizing future STAR-reduction impacts.