BKW super proposes 3.2-percent tax increase, addresses potential foundation aid changes

— Screenshot of presentation

This chart, presented by Berne-Knox-Westerlo Superintendent Timothy Mundell, compares the district’s tax levy and the amount it receives in state aid. In 2021, aid outpaced the tax levy in what Mundell has termed “the flip.” 

HILLTOWNS — Berne-Knox-Westerlo Superintendent Timothy Mundell drilled deeper into the school district’s proposed $25.5 million budget in a sobering workshop that included discussions about a proposed tax increase, and the potential for the district to lose out on some amount of Foundation Aid depending on how the state proceeds with changes to its aid formula. 

The proposed tax increase is 3.4 percent, which would be under the state-set tax cap of 4.1 percent. Mundell had said the tax cap was recalculated from February, when he said the cap was 2.5 percent. 

Unlike town tax limits, which are permanently set at 2 percent until a board votes to override it, school tax caps in New York are determined by a state-set formula that accounts for a large number of factors, such as payment-in-lieu-of-taxes agreements, reserve amounts, and capital tax and tort exclusions, among others. 

If a school district proposes a budget over the levy limit, it needs more than 60 percent of voters to approve it rather than the simple majority required to pass a budget under the tax cap.

Although the proposed BKW tax increase looks large, Mundell said, it represents only a 1-percent increase — or just under $123,000 — over nine budget cycles, after accounting for the various tax cuts the district has made since 2015.

The increase is largely due to health and prescription insurance costs, which add a combined $838,000 in expenses for the district, Mundell said. Prescription costs are the largest contributor, increasing by $500,000, according to his presentation. 

Mundell noted that the school’s provider, Keenan, has “implemented some cost-containment management strategies,” and that some people who are insured through the school are opting for a Medicare plan, “so the claims are shifted to the federal government … and that will hopefully reduce those costs to us.”

The $338,000 health insurance increase is much lower than had initially been proposed by the school’s carrier, Empire Blue Cross Blue Shield, which had asked for a 25 percent increase before the district negotiated it down, as The Enterprise reported earlier this month. 

Mundell said the school is also saving money from two retirements, one from a position that will not be restaffed, while the other was from a position that will be restaffed but at a lower cost. 

District residents will vote on the budget on May 16, along with an annual bus proposition and two open board-of-education seats. 

Board members Nathan Elble and Kimberly Lovell are up for re-election. The deadline for nominating petitions is April 17 at 5 p.m.; district clerk Anne Farnam said that no petitions have been submitted yet. 

Foundation Aid

Foundation Aid is the state’s determination of how much it costs to educate a student and takes into account how much capacity a district has to pay locally — through property taxes — as well as additional costs for students with disabilities, students living in poverty, or students who are learning English.

Despite a successful lawsuit that required the state to pay full Foundation Aid, the funds weren’t forthcoming until a phase-in plan was initiated two years ago, culminating in full Foundation Aid for the upcoming school year if the legislature backs the governor’s proposal.

Meanwhile, poor rural school districts had benefited from aid packages while wealthy suburban districts had suffered.

Although BKW is continuing to receive increasing levels of state aid, Mundell warned that changes to the Foundation Aid formula may make things difficult for the district in the future. 

BKW — a rural district with declining enrollment — has since 2021 received more money in state aid than it levies in taxes. The tax rate since 2015 has remained basically steady, while Foundation Aid increased over that time, rapidly growing during the pandemic years by about $2.5 million. 

The school’s budget for the 2022-23 school year is just under $25 million.

Mundell has said in the past that the district was “maxed-out” and “overfunded” in Foundation Aid, and that Governor Kathy Hochul’s pledge to deliver all schools the maximum amount of funding that had been intended when the aid formula was introduced in 2007, were unlikely to benefit BKW the way they would districts like Guilderland. 

The question going forward, he said at this month’s budget workshop, is whether the amount of aid the school receives will level out, or if the district will lose the amount that it’s overfunded by, $1.4 million. 

Mundell said he had met with the State Senate’s Ways and Means Committee to find out more about how things might play out, but “it was a pretty quiet room.”

“So that’s something we need to keep our eye on,” he said, “and our urgent message to legislators is, you need to figure this out sooner rather than later, and not wait until the governor proposes her budget in January, and then we all struggle to fix this between January and April.” 

The state currently forbids itself from decreasing the amount of aid a school receives by what’s known as “save-harmless,” according to a 2021 policy report from the New York State Council of School Superintendents. At that time, 283 districts were receiving more money in aid than the “pure formula” would grant them, according to the report. 

Mundell said this month that the number is now 238. 

“We wouldn’t be the only district in that position,” Mundell said of losing that extra money. “Every rural district is in that position.” 

“If we’re going to get no [additional] Foundation Aid, that’s our math problem to figure out,” Mundell said. “If we’re going to get that $1.4 million taken away because we’re overfunded, that’ll be a heavy lift, but we’ll figure that out. But we need to get [legislators] to work on this formula sooner rather than later, and then be at the table about it.”

In a discussion held in loose terms about how BKW would proceed if it were to lose a substantial piece of funding, Mundell and the board members all appeared to agree that cuts would best be made surgically, so as not to disrupt BKW’s recent trend of outperforming other nearby districts and significantly upgrading its programming. 

Pointing to those successes, Elble said that he wants to “mess with that [formula] as little as possible, because it’s working.” 

“We should continue to look for ways to maybe fine-tune something, or [make] little moderations here and there, but I think it would be a disservice to our students to just kind of say, ‘Nope, you guys had your good progress but that’s it.’”

 

More Hilltowns News

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  • Anthony Esposito, who lost his house along State Route 145 in Rensselaerville when an SUV crashed into it, setting it on fire, said he had made several requests for guide rails because he had long been concerned about cars coming off the road. The New York State Department of Transportation said that it has no record of any requests.

  • Determining the median income of the Rensselaerville water district will potentially make the district eligible for more funding for district improvement projects, since it’s believed that the water district may have a lower median income than the town overall.

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