POTSDAM - Potsdam Central school board officials are scheduled to begin work on the 2013-14 spending plan, and the first numbers they will see will not be encouraging.
District officials have been informed by the state to plan for significant hike in the $400,000 range in their pension contributions for the next school year, and health care costs are also expected to jump by $410,000 next year.
The 2013-14 budget also includes a 3 percent raise for its teachers in the final year of a three-year contract that has also seen their health insurance premium contributions jump from 3 percent to 8 percent next year. The current premium for a single employee is $7,740 per year and the family rate is $19,320 per year.
The district is currently in negotiations with its CSEA employees. Their contract expired on June 30.
Potsdam Central School Superintendent Patrick H. Brady said the state aid increase anticipated in 2013-14 wont cover the hikes in those fixed costs.
We will fix challenges with fixed costs. Our efforts have been lobbying the state Legislature and the Budget Office that there needs to be equity in education funding, he said.
He noted average needs districts, like Potsdam and Canton, have been hard hit by funding issues in recent years.
We were the last district in the area to have a Latin program, and we had to cut it to half-time. The person in that position understandably left to take a full-time position in a middle school in a wealthy suburban school district, he said, suggesting it was evidence of the inequity in the states current school aid formulas.
Well face another challenge this year with our budget. Weve cut 15 percent of our staff, more than 30 positions, over the past three years. There is only so far you can go and still maintain a high-quality education, he said.
The district has and will continue to look at ways to save money, according to Mr. Brady. The district now shares its building and grounds superintendent with Norwood-Norfolk, its food service manager with Parishville-Hopkinton and has used BOCES staffs to fill some positions that were previously held by district employees, a move that lowers the cost to the district for the posts.
Were also using considerably more fund balance than we had in the past. Prior to the stock market crash in 2008, we typically budgeted a half million from fund balance and were even able to lower our tax rate. Now were using $2.1 million. That wont be sustainable in the long run, he acknowledged.
Mr. Brady, in a recent update to his school board, said the State Teachers Retirement System recently sent out an administrative bulletin advising that its mandated employer contribution rate for 2013-14 will be between 15.5 and 16.5 percent, a jump of at least 3.6 percent from the current rate of 11.84 percent.
At the higher end, this would raise our TRS contribution from $856,899 to $1,194,158, or $337,259, he said.
The remaining district employees, about 20 percent of the districts workforce, are covered by the State and Local Employee Retirement System (ERS). Those employees including bus drivers, clerical support staff, cafeteria workers, some administrators and some student support employees.
State Comptroller Thomas DiNapoli has announced the average ERS contribution rate for employers for 2013-14 will rise from 18.9 percent to 20.9 percent.
This would raise our ERS contribution from $484,433 to approximately $550,000, or $65,567, Mr. Brady noted.
Pension costs total approximately $1.5 million in the districts 2012-13 spending plan, approximately 5.5 percent of expenditures.
Mr. Brady, in his board update, said school districts received a small break in this years budget because the TRS contribution rate only went up 0.73 percent, from 11.11 to 11.84 percent. He said employer contribution rates for each of the funds had climbed approximately 2 percent in each of the previous two years.
With those rate increases, we estimated pension costs alone would have driven up total school spending by about the amounts districts actually proposed, suggesting that districts cut other spending on balance in order to absorb those costs within the budgets they asked voters to approve, he noted.
We are looking at a similar scenario for 2013-14. We estimate that pension costs alone would drive up total school spending by 1.5 to 1.9 percent, even if all other costs could be frozen, he added.
Mr. Brady said the mandated pension cost increases will likely be more than the additional dollars districts will receive in additional state aid monies in 2013-14.
Future growth in school aid is to be capped at the rate of increase in personal income of state taxpayers. Accordingly, the two-year appropriation for school aid in this years state budget assumes a 3.5 percent, $712 million increase in school aid for 2013-14, according to the Potsdam school superintendent.
The TRS rate increase is likely to cost most districts more than the aid increase they would receive, Mr. Brady said.
The news on the health care front is equally grim.
Business Manager Laura Hart provided the board last week with an update on the St. Lawrence-Lewis Health Care Consortiums quarterly report.
She noted the consortium had been using fund balance in recent years to keep the premiums at a relatively stable level in recent years. But Ms. Hart noted the fund balance has now been depleted to a level that will require a premium increase in the 9.5 percent range - a hike of approximately $400,000 for Potsdam Central - for the 2013-14 school year.
We are required (by the state) to reserve 25 percent of anticipated medical and prescription costs. We have a waiver and only have to reserve 17 percent for the coming year, Ms. Hart said.
She also noted there is legislation pending that would reduce the mandated reserve for prescription costs down to 5 percent, a potential savings in the $2.5 million range for the St. Lawrence-Lewis Health Care Consortium.
She said that potential cost savings has been included in the budget proposal that still calls for the 9.5 percent premium hike.
The district is also expected to see its contribution to the consortiums workers compensation fund jump by approximately $9,000. The districts contribution to the workers comp fund was $91,400 for the 2012-13 school year.
She said the self-funded workers compensation fund is stable but feeling cost pressures requiring a rate hike in the 7.5 to 10 percent range.
One concern is the maximum weekly workers comp rate has almost doubled from 2007 from $400 per week to $700, $800 per week. There has been a 30 percent increase since June 2010, she told school board members.
She said the maximum payout for carpal tunnel surgery, for example, during that same time period has jumped from $29,280 to $57,579.
Ms. Hart said the St. Lawrence-Lewis BOCES Consortium will be finalizing its rates for 2013-14 in February.