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Tiny LI school district to offer cap-busting budget

Wainscott's proposed $3.32 million spending plan for the 2019-20 school year lowers spending, but taxes would rise 18 percent. The system this year has 28 students in kindergarten through third grade.

David Eagan, president of the Wainscott district's school

David Eagan, president of the Wainscott district's school board, stands in front of the Wainscott School in the small East End community on Friday. Credit: Randee Daddona

Tiny Wainscott in the Hamptons, which operates a one-room schoolhouse, has emerged as the third district on Long Island this year to seek an override of its state-mandated tax cap. 

The system's proposed budget for the 2019-20 school year, which will go before voters next month, carries an 18 percent tax hike that will bring total revenues raised through property taxation to $2.66 million.

The district's allowable tax increase under state rules is 2.97 percent, so the increase will require approval by a supermajority of at least 60 percent of those voting.

The proposed $3.32 million spending plan is about $8,600 lower than the current year's budget.

May 21 is the date statewide for budget votes and school board elections.

David Eagan, Wainscott's school board president, said that budgeting for such a small district presents special problems, because an unplanned increase in expenses — the enrollment of a few students who have disabilities, for example — can have an outsized impact. As a result, the district finds itself in the position of needing to rebuild cash reserves that were ample only a few years ago.  

"It's always been a problem for us," said Eagan, an attorney who has served on the board since 2004. "But we've still got the lowest tax rate in the East End, and probably most of Long Island." 

Eagan added that the district's problems have been compounded in recent years by overall enrollment increases and by efforts to spend down cash reserves in response to state criticism that balances were too high. 

Wainscott this year enrolls 28 students in kindergarten through grade three. The district sends 85 older students to neighboring districts on a tuition basis. 

Like some other property-rich districts nearby, Wainscott has attracted the scrutiny of state auditors because of the size of its cash surpluses in past years.

Last month, the state comptroller's office reported that the district's unrestricted reserves — that is, surplus funds not earmarked for specific purposes — totaled about $2 million at the close of the 2017-18 school year. That was more than 10 times the amount of unrestricted money Wainscott was allowed to bank under state law. 

Auditors, in their latest report, noted that they had warned Wainscott once before, in 2013, that it was stockpiling too much cash. 

"Even after our last audit brought the issue to the attention of district officials, the board continued to adopt budgets that resulted in further accumulations of fund balance," the comptroller's office stated.

Wainscott, in response, acknowledged it was not in compliance with state law limiting unrestricted reserves to 4 percent of a district's opearting budget. The district went on to contend, however, that state monitors had not recognized the "unique facts and circumstances" under which it operated. 

"Since 1730, the Wainscott School has continuously operated a 'one room school house' on the hamlet's most historic setting," stated a letter signed by Eagan.

The letter also noted that the district had never borrowed money to finance its operations and that it had reduced its tax rate in each of the seven prior years.

Other districts that have announced their intent to pierce cap limitations this year are Eastport-South Manor, which has proposed a tax-levy increase of 3.69 percent, and Wyandanch, which is seeking a 40.9 percent hike. 

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