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School Faces Loss of Revenue While Costs Rise

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Len Bernard, business manager of Sag Harbor School District gives presentation on 2009-2010 budget

In light of the current economic climate, the Sag Harbor school district has decided to begin delivering the expected budget for 2009-2010 to the community in chunks, prior to board of education meetings over the next few months.
There will be five or six budget meetings in total. The first of these meetings was on Monday when the school’s business manager, Len Bernard, presented a proposed budget for certain departments of $9.7 million — up from $9.4 million for the 2008-2009 school year.
Departments included under this portion of the budget are the board of education, district clerk, district meetings, chief school administrators, auditing, treasurer, purchasing, legal, personnel, public information, transportation, recreation, employee benefits, and insurance and debt service.
According to Bernard, the district is expected to lose 11.6 percent in state aid next year, the highest amount among East End schools. In response, the district has been looking at ways to reduce costs.
One cost saving plan the district is considering is the purchase of a school bus and a van for the transportation department, which would lower the total of this portion of the budget from $9.7 million to $9.6 million.
Currently, the school district contracts for bus service and in his report, Bernard outlined the benefits of purchasing the two vehicles, indicating that a savings of $684,133 could be realized over the next six years.
“You are talking about quite a bit of savings,” Bernard said on Monday, “It’s kind of a no-brainer.”
Bernard presented two different analyses, one for the bus and one for the van. The bus, he said, can be used for school trips, while the van could be used for sports activities and transportation of BOCES students, which Bernard said is expensive through contracted bus service, even for one-way trips. The van could also be used for district students who travel to the Ross School or Stella Maris. Bernard explained the district is expecting teaching assistants and custodians to become the drivers.
“We could pay them to do the extra work,” Bernard said.
In his analysis, Bernard included $10,000 for the cost of the drivers, which he added could increase if the district has to find outside drivers.
School board member Ed Haye asked if those numbers reflected vehicle insurance and maintenance that the school would have to pay on both the van and the bus. Bernard said that he talked to the district’s current bus company and found that it would fall under the umbrella of insurance they already have.
Superintendent Dr. John Gratto said the useful life of a bus is 10 years, “But in all likelihood, it would last longer.”
Bernard also said that he talked to the bus vendor and said the company was willing to give the school a bus for lease for a trial run.
The van could transport up to 30 kids and would be wheelchair accessible, according to Gratto.
“We have a lot of flexibility here,” said Gratto.
A few weeks ago, the school district held focus groups for different community groups, parents, students and faculty asking for suggestions on how to cut costs in light of the reduction in state aid. Some of the ideas generated from the forum were also mentioned in Monday’s presentation. Of those suggestions, the bus and van were the most frequently mentioned idea, according to Bernard.
In the chief administrator’s office both the superintendent and the superintendent’s secretary and the administrators in the business department will all receive five percent raises in next year’s budget. Bernard also said that there was a reduction of one full time staff member in the business department that will not be filled for next year. The two departments combined are projected to cost just over $530,000 for 2009-2010.
Another idea that came from the focus groups was to explore health insurance and dental coverage options, which Bernard said is being considered; but some of that depends on the on-going contract negotiations with teachers, custodians and secretarial unions. Bernard said during his presentation that the school does have another health insurance provider that could give better rates.
Of the departments that were presented on Monday, health and dental insurance had the biggest portion of the proposed budget. It is projected to cost the district $2.7 million for 2009-2010, up from $2.6 million for 2008-2009. Bernard said that this number was determined from an estimate of a five percent raise for the teachers, custodians and secretarial contracts that are still being negotiated.
Of the departments talked about on Monday, debt service represented the second highest dollar amount for next year’s budget.
“We sold a note the first week of September,” Bernard said and then talked about the economic climate crisis that hit the following month. “Then everything hit the fan, now rates are down again.”
He said the interest rates keep coming down and “it will change on a day to day basis.” Next year, Bernard said, will be the last payment of the 1997 bond — which was used to make improvements to the high school.
When asked if there is any consideration for changes to the other existing bonds for new interest rates, Bernard responded, “No, but we are always looking for windows of

East Hampton will bear the Brunt of Taxes in Sag Harbor School District

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Both Southampton and East Hampton town finalized their tentative budgets last week, with the maximum increase allowed by law for Southampton and a considerable increase for East Hampton residents.
Adding a further burden, residents on the East Hampton side of the Sag Harbor School District will see an increase in their school tax rate this year, while those on the Southampton side of town will see a rate decrease.
In a report on the Sag Harbor School’s website earlier this month, business manager Len Bernard, outlined that the expected increase for Sag Harbor residents in East Hampton will be 17 percent while district residents on the Southampton side will see a decrease of 4.5 percent. The total tax levy for the school district is expected to increase by $471,762 from $24,650,798 in the 2007-2008 school year to $25,122,560 for 2008-2009. The total increase is 1.92 percent and will be paid solely by the residents on the East Hampton side of the village. Bernard explains that’s because of the recently revised equalization rates set by New York State that found a higher market value for homes in East Hampton and a lower rate for Southampton town homes.
“Homes in East Hampton have not had new equalization rates for probably 50 years,” Bernard said on Tuesday, “I remember back to the mid-90’s where the assessors said we need to reassess there.”
Bernard said that last year, Southampton Town residents paid 89.55 percent of Sag Harbor School districts’ property tax levy while East Hampton residents paid 10.45 percent. The changing market values caused primarily by the changing equalization rates, will now require Southampton residents to pay 87.82 percent of the tax levy and East Hampton to pay 12.18 percent in the upcoming tax bill. Southampton property is assessed at 100 percent of market value, whereas East Hampton is only assessed at .61 of a percent.
Bernard, a former East Hampton Town councilman and budget advisor, said, “The continued downward movement in the East Hampton Town equalization rate and Southampton’s work to assess at 100 percent of market value has created this situation.”
To arrive at the tax rate for Southampton residents in the district, Bernard explains that the assessed value of the property is divided by the equalization rate.
“In Southampton, there is a $1,000 total assessment, equal to 100 percent,” Bernard said on Tuesday. That means that Southampton Town residents in the district are assessed on the full value of their properties.
The new assessed rate for Southampton Town was set over the summer, up from 89.7 percent to 100 percent for town residents in the district.
“In East Hampton, on the other hand, the assessment went up a little bit, but their equalization rate went down. For example, if there is $1,000 of assessed value in East Hampton, it would translate into $163,000 of market value — the equalization rate would translate into less than one percent.”
Bernard noted that for East Hampton, the assessment number can’t be used to determine the tax rate. Instead, the equalization rate must be used to arrive at market value. He explained that if the assessment rate goes up while the equalization rate goes down, market value becomes higher.
Last year, Southampton’s equalization rate was 87.5 percent and East Hampton’s rate was .67 of a percent, according to Bernard. The district predicted last winter that Southampton would see a 2.30 percent decrease in 2009-10 while East Hampton would see a 2.23 percent decrease — but the new equalization rates that were recently adopted by both towns changed those predictions.
“When I did the budget presentation [earlier this year] I based the projection of tax rates on the equalization rates then,” Bernard explained. “Then in October I explained at the monthly key communicators meeting that the numbers had changed.”
He added though the numbers have been public for a while, he is expecting there will soon be some rumblings from residents.
Ed Deyermond, Southampton’s sole assessor and a resident on the East Hampton side of the village, said on Monday, “It’s going to be a really difficult time for people in East Hampton.”
Deyermond explained that there could be a 39 percent increase in school and town taxes for some village residents in East Hampton.
Bernard said that the number of homes on the East Hampton side of the Sag Harbor School District are far fewer than those on the Southampton side of the district. The number of parcels eligible for STAR exemptions in the Sag Harbor School District, according to Bernard, are 1,563 in Southampton Town jurisdiction and 226 on the East Hampton side. The STAR program is the New York State School Tax Relief program.
“It is unfortunate that with such a small increase in the tax levy one segment of the taxpaying public has to bear the full burden of paying for it,” Sag Harbor School Superintendent Dr. John Gratto said. “The district, though, has no control over how the towns assess their properties, how the state sets equalization rates and how the law dictates the manner in which we allocate the tax levy across towns.”
State Aid
In a release sent out last week by New York State Assemblyman Fred W. Thiele Jr., he said that Governor David A. Paterson produced a Budget Deficit Reduction proposal calling for $2 billion in budget cuts for 2008-2009 and $3.2 million for the state’s 2009-2010 budget.
The reduction as proposed by the governor and as explained by Thiele would have been a reduction in $162,924 for the Sag Harbor School district and Bridgehampton was expected to see a loss of $73,925. Southampton town would have seen a reduction of $231,650, and East Hampton would see the biggest loss on the South Fork — $246,347.
Of the state legislators, none supported the proposal and no action was taken. A release last week from assemblyman Thiele’s office stated, “The Governor’s meat axe approach to cutting aid to education, local governments and hospitals was ill-considered,” it further added, “The result would have been higher property taxes, loss of essential services and a further economic decline.”
Thiele argued that the state has a rainy day fund with $1.7 billion – which he suggests should be applied to the deficit. Thiele also said that since January 2007, the state bureaucracy has added 6,000 positions. He asked that a retirement incentive be created to reduce the size of the workforce. Thiele also suggests the possibility of a hiring freeze, a freeze on state employee travel, and other small eliminations that could save some dollars.
A statement released on Tuesday from the Governor’s office said Paterson wrote an open letter to New York State school board presidents and district superintendents to notify them that “because the mid-year reductions were not enacted, deeper reductions in education spending will now be required in next year’s budget to close the State’s budget gap,” and that he is notifying them now to allow them to plan accordingly.
“The rejection of a mid-year School Aid reduction by the Legislature means that deeper declines in funding for school districts will now be necessary in 2009-10 to ensure a balanced budget,” Governor Paterson said.

Taking a Scalpel to Proposed Budget in Sag Harbor School District

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Although the phone lines in the Sag Harbor School District have been working lately, the district has experienced major problems with them resulting in an irritating busy signal greeting callers over the past few weeks.
Callers trying to reach administrators at the school would hear busy signals, but school employees were able to call out. To rectify the situation, the district has announced it will be changing phone companies — from Metel to Optimum Lightpath — which will save the district approximately $30,000. Some administrators are suggesting some other creative ways to tighten the school’s spending belt, in an effort to save money in the district and decrease the chances of the current economic struggle hitting and impacting the education of the students. Total cost savings in the district so far this year are just over $300,000.
At a board of education meeting last month, superintendent Dr. John Gratto announced that there would be a spending freeze in office supplies, professional development and conferences for some departments, not to exceed $100,000. The purpose of the freeze, Gratto said, is to protect educational programs in the event of a mid-year state aid reduction and to possibly minimize a tax increase in next year’s budget. Gratto also said that programs and services directly impacting students would remain fully funded.
The district’s business manager, Len Bernard, also said on Monday that the district was able to cut costs on certain supplies that he, Gratto and some administrators felt were unnecessary, saving $100,000 out of the 2008-2009 school’s budget. He said the district would not have to delete any item in its entirety, but instead can reduce the amount of certain supplies and shave $1,000 to $3,000 off particular items.
Gratto also said that the district was able to reduce a data analyst position from two days a week to one day per week. Bernard said that the analyst was needed two days a week last year, but this year it would only be data entry and not require as much time as it had in the past.
“We went through the budget, not with a sledge hammer, but with a scalpel; we went through all the items with the administrators to make sure they felt comfortable,” Bernard said on Monday.
But there have been additional efforts to cut costs and save money for the district.
Gratto said in his message last month to parents, teachers, administrators and community members that the district has saved money by choosing not to re-hire an accounts payable/accounts receivable position that was left open at the beginning of the summer. By doing this, Gratto said they have saved $40,000. Also in his letter, which is posted on the school’s website, Gratto said that a position has been eliminated from the school’s lunch program, which also saved the district $49,000 and the building and grounds position that was given to the new athletic director was also a cost savings of $40,000 for the district.
Additionally, after a review in September, Gratto said the district was able to cut $51,000 by reducing services offered by BOCES, which was included in the 2008-2009 budget.
Bernard said that he went through the BOCES budget line by line to see in what areas the district could cut services offered through the program — and where instead of hiring costly consultants the district could choose to use in-house staff.
The school district is also working on the South Shore Purchasing Consortium, which was an idea pushed by the Sag Harbor District and Gratto, to combine the purchasing of nine area schools to attempt to get better pricing for things like paper and heating oil.