School districts must get smarter about reserves
People turn out to vote on Tuesday, May 19, 2015, on the school board, budget and issues at the Alverta B. Gray Schultz Middle School in Hempstead. Credit: Howard Schnapp
It’s not really shocking that the East Meadow School District has built up large cash reserves at the expense of taxpayers. From 2010 to 2016, enrollment in the district dropped 2.5 percent to 7,033, but the district’s annual budget rose almost 10 percent, to $195.8 million. For those scoring at home, that’s $27,840 per student this year, so it’s almost nice to hear some of it is still in the bank.
According to the state comptroller’s office, the district overestimated expenses by nearly $30 million over three years, beginning with the 2012-13 budget, leading to a bulging, unrestricted fund balance. In addition, reserves are enough to pay six years’ worth of bills for workers’ compensation, and 24 years’ worth of bills for unemployment insurance.
District officials contend that the property tax cap, unreliable state education funding and up-and-down pension expenses create a need for high reserves. But the district’s other reserves are about one and a half times the 4 percent limit allowed by law.
The unpredictability of school costs is a decent excuse to overbudget once. But in each of those three years in a row, the district asked residents for tax increases of around 2 percent.It shows an administration afraid to hold or cut taxes because it’s so much harder to raise them later. But that’s the point of the tax cap, which voters overwhelmingly support.
East Meadow isn’t alone in overcharging residents and stashing away money for a rainy day. Since January 2014, the comptroller has criticized about a dozen Long Island school districts for excess reserves.
The practice needs to stop. Property taxes are out of control, and they pinch taxpayers. That’s bad enough when the districts need the money, but when they’re collecting it to stow away, it’s inexcusable.— The editorial board
