Auditor: Levittown School District Likely to Operate at Deficit Next Year

One of the Levittown School District’s internal auditors hit the board of education with a dose of reality Wednesday, warning that the district will likely operate with a budget deficit in 2014-15. 

While other school districts on Long Island might be in worse shape than Levittown, Internal Auditor Donald J. Hoffman said the district needs to be prepared to make tough choices going forward.

"You’re at a crossing pointing terms in terms of financial operations of the district," Hoffman said at Wednesday's fourth budget planning session. "When in the past you’ve operated at a surplus, next year you’ll operate at a deficit, in all likelyhood around $3-5 million."

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That means the district is going to have to start utlizing their fund balance next year, which Hoffman said is a significant change that school districts need to recognize. 

The rising costs of employee benefits - pensions, social security and health insurance - was listed as the biggest contributing factor.  In the 2013-14 proposed budget, the rising costs of benefits accounts for a $6.4 million or 15 percent increase from last year, according to documents. 

In the short term, Hoffman said the Levittown School District will be fine and will manage, but in future years he said the district needs to limit spending growth to its revenue growth. 

Hoffman added that his firm serves 60 districts on Long Island, and almost a third of them operated at a deficit in 2012.   

Still, Hoffman said that the projections for the current year sees the district running at a surplus of $1.5 million, which is a substantially less suplus that what they've operated over the past several years.

"I'm sort of here to alert you to this fact," he said. " You will require strict financial management going forward, to make sure that deficit does not grow to levels that then require significant and drastic cuts to programs and spending or anything else.”

“I think the key of the equation is to limit the growth of the deficit,” said Board President Michael Pappas. "Manage the gap at which is grows, at both sides of the equation, because you can’t tax your way out of this mess. “

Reduced Assessments Could Mean Higher Taxes

If the assessed value of your home didn't go down or has remained the same, you will most likely pay more in taxes this year, said Mark Flower, Assistant Superintendent of Business and Finance.

The board said they received tentative assessed values from the county, which shows a drop of 2.77 percent for Levittown as a whole this year. 

The presentation explained that a hypothetical 3.54 percent school tax levy increase for 2013-14 would result in a tax bill change of 3.57 percent or an increase of $284 from last year. However, that is assuming the residents assessed value dropped 2.77 percent. 

If your assessment went up or remained the same, the tax rate increase could be as high as 6.4 percent, without any change in the schools tax levy, Flower explained.

"I don’t have any control over the assessors system, which everybody recognizes is woefully broken, to say the least," one board member said. "They said the average accessed value dropped 2.74 percent, I don’t know why they automatically drop everybody a corresponding percentage." 

"It's just a word of caution when looking at your taxes," Flower said. 

Changes Made to 2013-14 Proposed Budget

The board has eliminated plans for the purchase of four new school buses ($448,000) and generators for Division and MacArthur HS ($600,000). 

The budget has come in at $195,590,207, an increase of 2.94 percent or $5,593,626 from 2012-13. 

Pensions ($4.49 million increase), salaries ($3.419 million), health insurance ($1.956 million) and buildings and grounds ($1.13 million) are the biggest areas impacting the proposed budget, according to the presentation.

If this district plans to use the maximum tax levy limit of 3.54 percent, it would result in the district using $3.95 million in reserve funds and $4.09 million in the applied fund balance.    

The board of education will give a fifth budget presentation and adopt the 2013-14 budget on Wednesday, April 24. A second budget hearing will be held on May 14, with the budget vote taking place on May 21. 

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