Archives for category: Tax cap

Property Tax Cap Fiscal Years Beginning 2014 | Thomas P. DiNapoli

From The Torch:

Under the law passed in 2011, the cap on tax levies is set at the lesser of 2 percent or the rate of the growth in an “inflation factor,” calculated as the average monthly change in the Consumer Price Index (CPI) for the 12-month period ending six months before the start of the fiscal year.

The actual cap will differ by locality, depending primarily on the amount of allowable exclusions for growth in the local property values. Localities also will be able to exclude the amount by which the change in pension contributions exceeds two percentage points. DiNapoli will be announcing 2014-15 contribution rates any day now.


The cap is more difficult for school districts to exceed, since school budgets (outside the “big five” cities) are subject to approval in a public referendum. Their cap is based on the average of 12 months ending in December — a number that won’t be known until mid-January. Based on current inflation trends, however, schools should also be ready to deal with a starting-point cap of less than 2 percent next year. This time around, their pension exclusion won’t kick in, so the average effective school tax levy cap will be much closer to 2 percent than it was in 2013-14.

Local tax cap drops to 1.66% for 2014 | E.J. McMahon | The Torch | August 16, 2013

Though it was originally billed as a 2 percent property tax cap, the formula for calculating local levy limits is complex and provides exceptions for specific sorts of spending. The average levy limit this year was 5.1 percent, compared with 3.5 percent last year.


Some 97 percent of proposed budgets relied on reserve funds to help stay within the cap without cutting educational programs and services next year, according to a NYSSBA analysis. In all, districts expected to use $1.3 billion in reserves.

Exceeding tax cap proves big risk
On Board Online • May 27, 2013
Budget votes
By Cathy Woodruff

Irvington UFSD did not use its $2 million-dollar fund balance to stay within the cap.

IUFSD Fund Balance (Property Report Card)
Only 4% of districts try to break tax cap
Singapore Math explains the budget

If the budget does not pass on the first vote, the district will put up the same budget, with a smaller “fund balance” (surplus), and we will vote again. The second budget will use the surplus to stay within the cap.

Here’s a picture: Singapore Math explains the budget.

If that budget fails, then, yes, we go to a 0% budget-to-budget increase.

Tuesday’s vote is on the size of the surplus, nothing more. We are voting on whether we want to run a $2.1 million surplus.

From the BOCES explainer posted on the district’s website:

If a proposed budget is defeated by voters, a school district—as in the past—has the option of putting the same or a revised budget up for a revote, or adopting a contingent budget. If a proposed budget is defeated twice by voters, a district must adopt a contingent budget. Certain existing contingent budget requirements remain in effect that prohibit spending in specific areas including community use of buildings, certain salary increases and new equipment purchases.

More significantly, under the new law, a district that adopts a contingent budget may not increase its current tax levy by any amount—which would impose, in effect, a zero percent cap. As of this writing, it is unclear if exemptions will apply.

Click to enlarge
Taxable Assessments 3.5.2013
source: Superintendent’s Proposed Budget March 5, 2013 | page 39

  • Roughly a 1% increase in taxable assessments.
  • Proposed budget increase, excluding $3.5 million borrowed to pay tax certs: 5.7%.

Tax cap: 4 Westchester districts will seek override

Written by Joseph Spector | Albany Bureau Chief
May 9, 2013 |

ALBANY — A mere 4 percent of school districts will try to get voter approval to override the state’s property-tax cap, data released Thursday from the state Education Department showed.

Only 28 of the 669 school districts who filed their budgetproposals with the state said they would seek the approval of 60 percent of voters to override the tax cap, the records showed.

Last year, in the first year of the cap, about 50 districts sought an override and nearly 20 failed to win approval from voters. If a budget fails twice, a district can’t increase their tax levy at all.

“The cost of failing to get your budget approved is huge,” said Robert Lowry, deputy director of state Council of School Superintendents.

The districts seeking an override are mainly from Long Island and Westchester County, including the wealthy districts of Scarsdale, Briarcliff Manor, Ardsley and Irvington. Officials in Ardsley and Irvington said they hoped that if they could grow their tax levies for one year, it would allow them to raise more revenue in the future under the tax cap. The cap is a percentage of the base tax levy.


The average tax-levy increase planned for next year among school districts in Westchester, Rockland and Putnam counties is 3 percent. The average spending increase is 3.7 percent.

Briarcliff Manor, which is looking to override its cap, plans to reduce overall spending for the fourth straight year.


in The Hudson Independent:

Meanwhile, in early March the Board of Education informally approved a recommendation from Harrison to suspend the current search for a new Main Street School principal based on a consultant’s building utilization study that may suggest closing the school based on projected declining enrollment.

“I think the combination of excess building capacity and projected declining enrollment will compel us as a community to have conversations about how we use our building assets going forward,” Harrison said. “This will take a good amount of time and focus, especially into the next school year, and does not necessarily mean that change is going to occur. But it will be a very significant challenge, and perhaps our most prominent focus next year.”

16 new houses, not 50
Irvington Parents Forum at Yahoo

In The Hudson Independent

UPDATE 5/9/2013:

  • Estimated tax increase: 4.85%
  • Percent increase in budget: 5.7%
  • Actual tax increase for single-family homeowners who have not won a tax certiorari case this year: 7% to 8%

Under New York’s Triborough Amendment, the only law of its kind in the country, union contracts negotiated during good times cannot be re-negotiated during bad times. Not unless the union agrees.

That is our situation in Irvington today. We are saddled with a legacy contract negotiated during the boom, and nearly all of the provisions agreed to by the board when home prices were rising 10% a year live on in the new contract. Meanwhile the district reports that taxable assessments are down 10%, and the data I’ve seen suggest that individual homes have lost 20% of their value since the crash. Some residents have lost jobs, and wage growth across the country slowed radically after 2007, which means wage growth slowed radically for many here as well.

But Triborough, the single largest mandate imposed upon school districts by the state, has meant that the district must continue to fund roughly 4% increases for school employees each year. Funding 4% annual increases when your own compensation is not rising — and your home value has dropped — is pretty much the definition of “unsustainable,” and that is why the tax cap passed.

In truth, it’s the contracts that need to be capped. Not the budgets. But since Albany does not have the wherewithal to repeal Triborough, the problem has been left to voters to address inside the privacy of the voting booth.

Worker pay 2011 and 2012 (CLICK TO ENLARGE)

Worker Wages 2011 & 2012
“Most Americans are still far from the income they had before the crisis, and many of the new jobs are not particularly stable or high paying.”
After Cashing In on Job Cuts, Wall St. Looks to Worker Upturn
Published: March 10, 2013

Sticky wages in 2011 (CLICK TO ENLARGE)
Not your Father's bell curve - sticky wages

The tall bar in the middle represents workers who had a wage increase of $0 in 2011
People to the right of the bar had pay raises
People to the left of the bar had pay cuts
Why Has Wage Growth Stayed Strong?
By Mary Daly, Bart Hobijn, and Brian Lucking

IUFSD taxable assessments (CLICK TO ENLARGE)

3.5.2013 Taxable Assessments
Superintendent’s Proposed Budget
March 5, 2013

New York State School Board Association opposes Triborough, and Irvington’s BOE has voted to approve NYSSBA’s position.

Per pupil spending $28,517
ELA scores 12.18.2012
13 million jobs gap
Irvington Parents Forum at Yahoo
Irvington Union Free School District

Letter: School districts need real reform
To the editor
Published 11:46 pm, Tuesday, February 12, 2013
Times Union

How can Gov. Andrew Cuomo say school officials do not have any mandate relief ideas that will save significant amounts of money (“Schools raise uproar for help,” Feb. 1)?

The New York State School Boards Association has repeatedly offered solutions for saving school districts money. We have even submitted written proposals to lawmakers to:

Place a limit on employer contributions to employee and retiree health care premiums. This would save taxpayers millions of dollars.

Eliminate automatic raises under expired teacher contracts. We estimate the Triborough Amendment costs districts $113 million annually.

Eliminate seniority as the sole criteria for staff layoffs. Given the needs of today’s students, the most qualified teacher may not be the one with the longest tenure.

Enact legislation to form regional high schools statewide, which are good alternatives for communities with declining enrollments and dwindling ability to offer college- and career-ready prep programs.

Authorize the state Education Department to hire hearing officers for teacher disciplinary cases, competent and trained professionals who would decide cases more quickly and save money.

Real relief requires reforming big cost drivers such as the ones mentioned above, rather than trimming around the margins. But if these issues are “political non-starters,” as the governor said, then real mandate relief will remain nothing more than a lofty goal.

We laud the governor and legislators for passing significant pension reform and cooperative purchasing last year that will save school districts and other local governments significant amounts of money in the long term. But school districts need immediate relief as well.

Executive director
New York State School Boards Association

The basic issue we face is simple arithmetic:

Taxes are capped at two percent, but the contract promises 4.

According to an estimate provided by the Assistant Superintendent, under the new contract the average teacher in Irvington will receive roughly a 4% increase in compensation each year until June 2016 next school year.*

Four is not two. That is the problem.

Although “four is not two” is obvious, percent change is not. With percent change, a number that sounds “small” can actually be “large” if it represents a large percent change (and vice versa).

Here is the way I’ve started to think of it:

Under the Irvington contract, if you pay a teacher $100K this year, you have to pay him or her $104K next year, on average.

That is a 4% increase, but we are capped at 2, so you have to find $2K in cuts to ‘pay’ for the raise.

Hence: layoffs. Some teachers are laid off so that other teachers can have 4% raises.

But if you paid a teacher $1.00 — just one dollar — for an entire year’s work, you would still have the same problem. The contract would require that he or she be paid $1.04 next year, and you would have to find two cents in cuts to pay for the 4-cent raise. Four isn’t two, and four never becomes two no matter how “small” the numbers you’re dealing with.

In short, the absolute dollar amount doesn’t matter; it’s the percent change that counts. So the problem isn’t that Irvington teachers are earning “too much;” the problem is that the yearly increase in their compensation is twice the tax cap. The increases are increasing too fast. 

THAT is the issue, and we can’t ‘cut’ our way out of it.

Yes, we can close Main Street School and potentially save a great deal of money. But in terms of the tax cap, closing Main Street School is a one-time deal. We wouldn’t need layoffs the year we closed Main Street, but the very next year we’d be back to square one because teachers are still getting 4% increases, and four isn’t two. To my knowledge, there’s no provision in the law allowing districts to ‘bank’ big savings in one school year to apply against the tax cap the next year. **

Yes, we can raise class size and save money, but that, too, is a one-time bonus to the budget. We would avoid layoffs that year, but the next year we’d be back to cutting.

Yes, we can cut electives. Again: a one-time bonus.

In each of these cases, cuts reduce spending, but they don’t fix the rate of increase. As long as we have a union contract in place that guarantees average annual increases of 4%, we can’t meet the tax cap without layoffs. The contract is funded by layoffs.

The logic of percent change also means that encouraging older teachers to retire so we can hire much less costly young teachers actually makes the problem worse because new teachers receive Step increases every year (usually 3%), while older teachers don’t.

We have only two possible solutions:

  • Persuade the union to agree to cap raises at 2%
  • Raise taxes by roughly 5 to 6% every year (a 4% budget increase is a 5 to 6% tax increase because of tax certs.)

It’s conceivable there is a third option: generate enough revenue outside of the tax levy to make up the shortfall. Perhaps parents could fund raise as they do in California (where property taxes are much lower and must be shared with all schools in the state – very different situation) or the district could rent out Main Street School and increase the rent enough each year to make up the shortfall —- ?

* update 5/26/2012: Looking at the terms of the contract again, I’m wondering whether 4% is too low an estimate for the year after next, when the one-year freeze on “increments” (steps) comes to an end.

** Apparently you can “bank” a savings from year to year up to 1.5% (of the budget you would have been allowed under the cap? Not sure; I’ll look it up. I don’t know how the sale of property applies to the budget.) The principle remains the same, however. If you bank a savings, you must use it to pay 4% compensation increases the next year, and the problem begins anew.

What people who do not have children in the schools pay
to educate the children of people who do
How we got here
4 is not 2
Budget vote
Core Knowledge: curriculum & property values

Here’s a quick back-of-the-envelope calculation to estimate the shortfall we face in 2013-2014.

Assuming no change to “Other” expenses (which is probably unrealistic), I come up with a $610,000 shortfall. Personnel is 80% of the budget, so If the union does not agree to cap raises at 2%, that would mean roughly 6 teachers laid off in order to fund 4% raises.

(6 teachers because under LIFO the teachers earning the lowest salaries are laid off first. You have to lay off more of them to make up the shortfall.)

Obviously, these are very rough calculations, but they’re not a bad place to start.

FTE = full-time equivalent Essentially, 1 FTE = 1 teacher.

2012-2013 BUDGET
Personnel $40,800,000
All other $10,200,000
TOTAL $51,000,000
 2013-2014 BUDGET
 4% increase Personnel  $42,432,000
 All other (0% no increase)  $10,200,000
TOTAL  $52,632,000
 budget w/2% increase $52,020,000
SHORTFALL  $612,000

4 is not 2

The problem we are having with the school budget is that the average increase in teacher compensation is 4 percent, while the tax cap is 2.

4 is not 2.

Do IUFSD teachers earn more than IUFSD residents?
Why we can’t cut our way out
5/2013: Inflation at 1.26%
Raises and benefits at IBM
“Step” and “column” raises for teachers explained
Budget surpluses since 2008-2009
7th grade reading curriculum (curriculum & property values)
What people who do not have children in the schools pay
to educate the children of people who do

How we got here
All student achievement scores & posts

Irvington Parents Forum at Facebook
Irvington Parents Forum at Yahoo
IUFSD Factoids

Irvington Union Free School District
Irvington IUFSD at YouTube #SENDOUT