A collision between higher teacher salaries and state property-tax restraints is putting the squeeze on school budgets across Long Island and New York — a phenomenon that could worsen over the long run, education officials and financial analysts said.
Albany stepped into the gap last month with a $1.4 billion statewide increase in financial aid that allows the great majority of school districts to maintain existing services or even expand them. Many education leaders, however, worry that the reprieve may be temporary.
Islandwide, raises for teachers, guidance counselors and other professional school staffers will average about 2.5 percent in 2016-17, a Newsday survey found. Pay for teachers represents the single largest expense for districts, and contracts typically run for three or four years.
Meanwhile, the state’s baseline cap on increases in local taxation, driven by an unusually low inflation rate, is a historically small 0.12 percent — less than two-tenths of 1 percent.
This financial tension between pay raises and the legal limitations in districts’ taxing powers puts school districts in a risky fiscal position, analysts agreed.
“When you get into long-term contracts that guarantee something every year, you’ve really tied the hands of districts to maneuver and adjust,” said Tim Hoefer, executive director of the Empire Center for Public Policy, an Albany-based think tank that is fiscally conservative and has strongly supported the state’s tax-cap law.
“Now,” Hoefer added, “we’re in this situation where they’re going to have to pay these [salary] increases of 2 percent, 2.5 percent, without being able to raise the revenue to match them.”
Teacher pay raises consist of two main parts: contractual increases and so-called “step” raises that are built into pay schedules and are based upon years of employment. The biggest portion of teachers’ pay increases typically comes from the step increments. Salaries for teachers and other school professionals range from about $45,000 to $65,000 at the entry level, and from about $125,000 to $145,000 at top scale.
Newsday’s average 2.5 percent figure on pay raises comes from responses that districts gave on budget questionnaires the newspaper sent to the 124 districts in Nassau and Suffolk counties. Fifty-six districts gave specific amounts; many declined to do so, saying they are in contract talks with local unions.
District-by-district figures on school budgets, tax caps, pay raises and other data are included in Newsday’s School Voters Guide.
The Empire Center and local taxpayer groups said the state needs to give districts greater leverage in negotiating teacher contracts by amending a law that deals with pay scales and benefits.
One target is a legal provision stipulating that teachers and other unionized school workers retain step increments even after the local contracts expire — with the step raises required to be paid as new contracts remain under negotiation. Conservatives want that part of the law eliminated.
School administrators, for their part, noted that current teacher pay raises are running well below the 3, 4 or 5 percent increases common before the onset of the Great Recession. They added that it’s difficult to explain this spring’s low state baseline cap to taxpayers, who have come to think of it as a 2 percent limit. When supporters were pushing for the tax-cap law’s adoption in 2011, the shorthand reference of a “2 percent cap” was widely used.
In reality, the statewide cap is calculated annually on a sliding scale, with a ceiling of either 2 percent or the inflation rate, whichever is lower.
So, the baseline cap initially was set at 2 percent for the 2012-13 school year, and remained at that level the following year. It began to drop in 2014-15, and then — as inflation rates dropped — plunged to 0.12 percent for 2016-17.
Baseline caps are determined by increases in the national Consumer Price Index from the previous calendar year. The state comptroller’s office is not scheduled to announce the baseline cap for the 2017-18 school year until January, and state officials said this week that it was far too early to make any predictions.
At the local level, individual districts’ caps vary widely. The complex formula for calculating a district’s cap exempts a variety of expenses — most notably, interest payments on voter-approved bonds used in school renovations and construction projects, and permissible portions of pension contributions.
For next year, districts on the Island are boosting local tax collections by an average 0.58 percent — by far the lowest average so far.
Most school districts will not feel the full impact of tighter caps right away. Newsday’s survey found that the majority of districts will add at least a few new programs and staffers, or maintain the status quo, in 2016-17.
Local school officials said such expanded programs are largely because of Albany’s approval last month of $2.97 billion in total operating aid for Long Island’s districts — a record number and nearly $50 million more than the amount proposed by Gov. Andrew M. Cuomo in January.
On the Island, that meant an extra $155 million in aid to the 124 districts, a 6.16 percent increase — the greatest boost from the state since the economic downturn of 2008. Many districts also have been able to achieve some savings because of declining student enrollments and lower employee pension costs.
But school representatives questioned whether they can continue counting on the state’s largesse to balance budgets year after year. They noted that Albany lawmakers have tended to be less generous with school-aid packages in off-election years than in election years, such as the current one.
“Schools are handling the near-zero percent tax cap better than might be expected, and that’s largely because of the 6 percent increase in state aid,” said Robert Lowry, deputy director of the New York State Council of School Superintendents, headquartered in Albany. “But that’s probably not sustainable every year.”
Educators pointed to a recent series of announced school closings as evidence that some districts have started to feel a financial pinch. While the closings are tied to enrollment declines, they also mean significant dollar savings for the systems.
Earlier this month, Nassau BOCES announced the closing in June of the Doshi STEM Institute, a regional high school specializing in science instruction. The Sachem district — Long Island’s second-largest — plans to close a middle school and two elementary schools in September. Smithtown will sell an elementary school by the 2017-18 school year.
Kevin Coyne, president of Brentwood’s 1,300-member teacher union — the largest on the Island — noted that school closings often result in layoffs as districts seek to consolidate staffs and save money. Sachem already has announced plans to eliminate 54 staff positions.
Beyond that, closings have a psychological impact on communities, Coyne added.
“When you remove a school from a neighborhood, it becomes a black hole,” the union chief said. “That’s where neighborhood groups meet. That’s where the Boy Scouts and Girl Scouts meet.”
The state’s cap law, which has proved popular with the public, is a fixture for the foreseeable future. Cuomo and state lawmakers approved a four-year extension last June that will keep provisions in place through the 2019-20 school year.
A statewide educational coalition representing school boards, teachers and other groups is pushing for change in the law, seeking amendments to give districts more leeway in raising revenues. Those groups have proposed eliminating the inflation rate as a factor in setting caps, while maintaining the ceiling at 2 percent.
“The 2 percent tax cap is not really a 2 percent tax cap,” said Timothy Kremer, executive director of the New York State School Boards Association. “The quirks and vagaries of the cap formula mean it can fluctuate widely from year to year and district to district. It’s time for truth in advertising: Make the tax-cap growth factor a true 2 percent.”