The Third Budget!

[justfacts]

The Third Budget.[/b]

Very shortly the BOE is going to have to move to adopt a Budget. This is the Budget that we all will have in front of us when we vote on it.

So far, we've had one ridiculous and incredibly inept First Draft Budget put up by the BOE. It should never have been presented.

Next, we have the Richman partial Second Draft Budget. It calls for another round of Administration increases and has "pork pockets" and errors in it in abundance. Plus, it lacks essential parts of what a Budget should be - the most glaring being the Revenues section of the Budget! You can identify it by the Expenses part, it's increased by $6.1 Million. That, in a 6242 home District, is about $1,000 per house.

A final Budget, complete in all details, Expenses, Revenues, District Report Card, Salaries listings over $104,000, one that has all account codes in their proper place, and presented in their proper three part breakdown, is going to have to be moved by the BOE for public review. No "Draft", "Preliminary" or other weasel-wording label attached to this one to excuse any mistakes readily found by the public! This will have to be a Final document.

I suggest that this one be a corrected and completed version of the Second Draft - but with the following changes:

▄ No round of Administration increases - this'll "cut" about $0.63 Million from the $6.1 Million increase.
▄ No padded TAN cost in the Capital part - this'll cut about $0.27 Million from that account.
▄ Pry similar fat (about $0.5 Million) out of other Capital accounts.
▄ No increase in legal fees to $137,500 - negotiate them back to $90,000 - and put the right amount in Administration, don't lump all legal fees in Programs.
▄ Cut "Coffee Hour", "Refreshments and Meals at Meetings" and "BOE Conference Fees" for Albany "perk" trips. (They have enough to straighten out here, before finding out about State-wide problems)
▄ Etc, etc.

All told that'll bring the increase in Expenses down to about $4 Million - a figure consistent with what has been asked for in the past two years at least. That's still a whopping $642 increase in expenses per home - whatever that figure means! (It's that tax increase that matters - but no budget to date has given any indication as to what that will be!)

Let's called this fixed up and trimmed down Budget the BOE Budget[/b] - as opposed to the Richman partial Second Draft Budget, or a new third version of that one that makes cuts to the Children's' Programs.[/b]

Now! Which will it be BOE? Will you put a Richman budget in front of us - or one that stands a chance of passing - the BOE Budget?

You live in the community - and that is who you took and Oath of Office to represent. You see your neighbors on a daily basis - Richman a few times a month. Who are you going to try to please?

Move the corrected and complete Third budget, without a round of Administrative increases and wrung free of fat, as the BOE Budget for this Plainedge community to vote upon. It's a trimmed Third Budget that doesn't make any cuts to the Children's' Programs.

Breathe new life into the BOE! Give it C_P_R !

Make sure the children get their fair share! - First!

Ed.

[thewildrover]

Anguish Before Another Big Test
By FAIZA AKHTAR

STUNG by a record-setting wave of budget defeats in 2005, school districts across the Island are digging in to the budget process early this year.

Especially in the 21 districts now on bare-bones contingency budgets, the mission for administrators and school boards is twofold: to propose a budget and tax rate that voters can stomach, and to win back enough of their trust to avoid a budget defeat at the polls on May 16.

The public hearings, information sessions and workshops have already begun. And the mood among parents and voters at some of these meetings has been ugly. But not always the same species of ugly.

Public sentiments in the Plainedge and Sachem districts, both trying to climb out of the austerity hole, offer a study in contrasts — one simmering in anger, the other sunk in despair.

After its budget went down to defeat twice last year, the Plainedge district in southeastern Nassau made headlines by wiping out all extracurricular sports to save money, only to have shocked parents and students mount a community-wide fund-raising effort to restore the sports programs. Using bake sales and car washes, raffles and appeals to local businesses, volunteers raised almost $500,000 in two months.

But it was clear at a budget workshop meeting at the district's central office in North Massapequa on March 14 that for many in the community, that energetic reaction has given way to resignation and despondency over the district's continuing financial squeeze. Parents attending the meeting nodded silently, some of them in tears, as officials discussed a long list of cutbacks they are proposing in next year's budget.

"There is no way we are going to raise those funds again this year," said John Hanrahan, 47, a retired police officer whose son is due to graduate from high school in June. "It's just not going to happen. That was a one-time deal."

Pervading the meeting was a feeling that, with mandatory costs rising, state aid failing to keep pace, and many residents unable or unwilling to engage themselves in the district's problems, Plainedge may never recover from last year's budget debacle.

"It's the same 30 or so people who show up over and over again," said Dana Dougherty, 39, who has two children in the district's elementary schools. "Our biggest problem is lack of community awareness, despite all these meetings. Plainedge just isn't a community."

Ms. Dougherty and another mother at the meeting wept as the board outlined proposed spending cuts in the grade school, including the end of all club programs and extracurricular activities. The district's business adviser said the step would save about $57,000, an amount Mr. Hanrahan likened to a spoon on the Titanic.

The Plainedge board said it plans to propose an overall budget of $63.6 million for next year. Some of the eliminated sports programs and clubs in the junior high and high schools would be reinstated, but not all. The budget represents a 10.7 percent increase from this year's contingency spending; without the cutbacks detailed at the meeting, the increase would have been 13.6 percent.

"People don't seem to understand that many of these things are mandated by New York State, yet paid for by us residents," said Lisa Bailey, who has three children in Plainedge schools. "If more people would come to these meetings, then they would understand what is really going on."

Parents at the budget meeting said they trusted the Plainedge board to do the best it could for the community, even though none of its current members has a professional background in finance. "How can we knock what they do, when they are the few people in this community who are making an effort to care?" said Nancy Giris, 41, who has three school-age children.

Ms. Giris said she was disappointed that the board did not heed her repeated calls to spare the elementary schools from the brunt of the new budget cuts. But the board members are not the villains, she said, echoing a widespread view at the meeting.

"Last year there was cynicism and frustration," she said. "But this year we have just reached a point of desperation."

John A. Richman, the district superintendent, told attendees at the budget workshop several times that a second year of budget defeats and austerity would do deep and lasting damage to the district and the community. Even so, many in the audience said they thought voters would probably reject any spending increase above the austerity level of about 4 percent for the coming year.

"It's not the people in this room who will vote the budget down," Ms. Dougherty said. "It's the ones who don't come that will."

Ed Parlow, 51, the father of two Plainedge students, echoed the bleak assessment. "This district seems to run the 99 yards and fumble on the 1-yard line, because it can't get this community to vote yes," Mr. Parlow said. " 'Death of a school district,' that's what your headline should be."

Optimism was just as hard to find when residents of the sprawling Sachem district, with 18 schools and 15,000 students in central Suffolk, gathered March 9 at Seneca Middle School in Holbrook to discuss next year's proposed budget with the board. But instead of gloom, the atmosphere was electric with hostility.

Asked in 2005 to approve double-digit tax increases for the second straight year, Sachem residents voted no by overwhelming margins. And judging by the mood at the meeting, many in the district remain deeply suspicious of the board, even though its 2006-7 proposal called for an increase of just 4.87 percent over this year's contingency budget.

(After the meeting, the board decided to cut the proposal further, to an increase of 3.78 percent, less than the state would allow in a contingency budget.)

ONLY a handful of people stood up to speak publicly at the March 9 meeting about the board's proposed budget, and it appeared that most of those who did were candidates for board seats or were affiliated with a tax-protest group.

But the anger and distrust felt by residents was evident in the rolled eyes and scornful whispers in the audience when a member of the district's community budget advisory board rose to praise the administration for its hard work on the budget.

Board members at the meeting refused to be drawn into back-and-forth discussion with audience members, saying they were there to listen, not to argue.

Barbara McNamara, 39, who has three children in Sachem schools, asked the board repeatedly, "Where are we cutting, outside of the academic day?" but got no response.

The district posts minutes and audio recordings of board meetings and copies of written reports, including the budget proposal, on its Web site, and it has scheduled more than a dozen public meetings to discuss the budget. Still, several residents said the district did not do a good job of informing the public about decisions regarding their children's education.

"They have created this false aura of openness that in reality doesn't exist," Ms. McNamara said. "Their response to my simple question today was met with such condescending remarks that if I would have continued to press for an answer, I am sure they would have gotten much worse."

Steven Hellreich, 44, the father of two Sachem students, said, "This board is too cozy with the administration now, and they have successfully created a blockade against us parents who want more information."

Mr. Hellreich said that he and others suspected that political rivalries and tensions within the board may also have played a role in last year's budget debacle as well. Three seats on the nine-member school board are up for election and are being contested this year.

Ms. McNamara said her biggest frustration with the district was the mixed and conflicting signals it had been sending about the impact of budget constraints.

"At the last meeting, the board only suggested program cuts," she said. "But guidance counselors began advising the students that the cuts were final, and then tonight, the board re-instated those programs. What I want to know is, how do we go from a suggestion to a final decision without notifying the public officially?"

Charles Murphy, superintendent of the Sachem district, said in an interview last week that people sometimes misunderstand the budget process, which is still in the discussion phase. "Nothing we say now is firm and done until March 30, when we put our name to it," he said.

Budget priorities are also a sore point in Sachem, as in many districts. But in Sachem, known for its large array of sports programs and activities, parents are complaining not that sports have been cut too much, as in Plainedge, but that they have not been cut enough.

The district had 214 teams last year, even while on a contingency budget, and it has not proposed dropping any; two ninth-grade teams that were cut last year are to be reinstated. But the new budget would eliminate six speech teachers and scrap an honors ninth-grade social studies program and an accelerated 12th-grade math course.

Mr. Murphy described those steps as "programmatic changes" to help the district run more efficiently.

Deborah O'Rourke, 43, a business owner with two school-age children in the Sachem district, said she was disheartened by the board's choices. "If you want to play a game, then this is the district to be in," Ms. O'Rourke said. "But if you should want to excel in the academic arena, then you are pretty much on your own."

[Go Plainedge!]

Wildrover:

Thank you for the article. It's a little disheartening to read and doesn't paint a good picture, does it?

I also didn't like to read some of the quotes that were in there. Some just don't have any basis for truth:

"People don't seem to understand that many of these things are mandated by New York State, yet paid for by us residents," said Lisa Bailey, who has three children in Plainedge schools. "If more people would come to these meetings, then they would understand what is really going on."

This is not a completely accurate statement. There are many that attend the meetings and still don't know whats going on. Misleading information from the source has been the theme here for many years. Additionally, the state doesn't mandate certain thinge like SALARY INCREASES and BONUSES to the tune of $500,000 for top Administration people.

Parents at the budget meeting said they trusted the Plainedge board to do the best it could for the community, even though none of its current members has a professional background in finance. "How can we knock what they do, when they are the few people in this community who are making an effort to care?" said Nancy Giris, 41, who has three school-age children.

Then we should blame ourselves for voting those people in. Many people voted based on popularity and number of signs posted, NOT on a candidates knowledge and experience

"It's not the people in this room who will vote the budget down," Ms. Dougherty said. "It's the ones who don't come that will."

Really? That's painting with a VERY broad brush and couldn't be any further from the truth. Wild, these are the people that you and I talk about. They think just because certain people don't show up to the meetings that they are immediately against ANY budget.

Are we the people of the district to blame for this predicament? ABSOLUTLY. We are to blame because we vote the wrong people to hold a seat on the BOE. When I say "wrong", it's because many past and current BOE members (to no fault of their own) simply don't have the right skills to handle a role like that.

We, as a community, need to be more diligent in choosing and voting for the right people to represent us and the KIDS. As I have said before, a BOE seat is not there as a means to enhance your social standing in the community.

[justfacts]

So very true Go Plainedge!

We see and hear from many viewpoints on this Forum. The press releases to date however have been of a one-sided nature, much like what has been presented at District meetings.

The best illustration of the one sided nature of this poor fiscal management is in the Plainedge review where it is noted that further cuts are (or will be) in the children's programs.

Of telling note is the $57,000 intended cut highlighted by the District's business Adviser. As noted by Mr. Hannaran, the that is an insignificant amount. What is not noted is the significant amount that could be cut - ten times that amount!

It never occurs to those so tightly controlling the cuts to put a hold on their own salaries - which are substantial! A salary freeze would cut over $600,000 from the increase this year. All Administration salaries have grown 7.4% per year for the past few years. None are starving or deprived!

Cutting $57,000 from the children's programs is not a reasonable option in the light of such facts.

But this is the option that this Administration in Plainedge has chosen to take - even during the contingency cuts in sports last year! They still pocketed Salary, Bonus and Benefit increases of over $550,000 then. And worst of all, these actions have been sanctified and approved by the BOE.

So it is up to the Plainedge residents to make the BOE bend to the wishes of the community. Cut only where it makes a significant impact - and does no harm to the children's programs.[/i]

This recent budget has many pockets of fiscal fat that should be cut away long before a single program is cut - starting with the Salaries, Bonuses and Benefits of those making the decisions about the cuts.[/b]

Breathe new life into the BOE! C_P_R it!

Make sure the children get their fair share! - First!

[justfacts]

A note to the Fiscal Experts who bought into some of the lame excuses by the Administration for why the TAN costs are so high this year.

Actually, the Capital portion of the present Budget is based upon a mistake in the Capital portion of last year's budget. Richman improperly added the Packard fund's $390,000 to the Capital portion of the Contingency Budget calculation for cuts last year. It does not, and never has, belonged there.

For if the Budget did not pass, which would force a Contingency Budget, the Packard Fund transfer does not happen and the $390,000 is out of the Capital portion of the Budget and out of the Contingency Cuts calculation!

Therefore, despite what Richman did, the Packard Fund money never belonged in the Contingency Budget Calculations. This erroneous calculation had two major very bad impacts - It caused the "Cuts to be $2.5 Million instead of $2.1 Million and it caused the Property Tax levy to be $390,000 too high for this year because of a falsely "kited" Capital portion of the Contingency Budget.

However, this year there is no charge code for the Interfund transfer in the Capital Budget - so the excess $390,000 had to be "schmoozed" into other code charges to have the same, or greater, Capital portion of the Budget. About $200K of it went into the TAN interest code and the other $200,00 went into the Maintenance account. People caught on to the exorbitant TAN Interest cost - going from $285,000 to $495,000 it stuck out like a sore thumb.

After a few meetings the Administration came up with the story that the TAN would increase from $9 Million of last year to $12 Million this year - without ever producing the prerequisite Cash Flow report to back up that statement. They also said that the Interest rates for these tax deferred Notes would go to 4.5%.

Now, can any of you Fiscal Experts tell me what is so obviously wrong with that story?

It's true, that an annual interest rate of 4.5% on $12 Million comes to $540,000, and since the note is for 11 of the 12 months this reduces its total cost to $495,000. That math works out.

But what's neglected? And what has been traditionally neglected in prior years on these calculations?[/i]

There's a nickle waiting from me for the first of the Experts that gives the answer. Any Takers? The following are excluded from this offer - Dierdre, Raymond, Cantatore and Presuto. They each have my Spreadsheet calculations that show how even this year, at a $9 Million TAN, there is over a $200,000 cash input that is not reported to the community from these TAN transactions.

That is money that stays in the Capital portion of the Budget and is eventually added to the Encumbered Fund Balance (about a total of $4.9 Million this year)

At $12 Million and a 4.5% TAN interest cost - the amount is very much greater, Great enough to pay for several Children's programs - except it is all in the Capital portion of the Budget and not the Children's portion where, with proper budgeting, it belongs!

So, any Financial Majors, CPAs or others that want to take a shot at solving the missing accounting for Capital funds handling? It's worth a nickle. I'll give the answer in another post in a few days.

Ed.

Make sure the children get their fair share! - First!

[gopybl]

Ed - Great analysis...now we just need to feed this info to C_P_R_ so that when they revitalize the board, they can take the corrective action necessary against these items in the future.

Remember Vote Yes for the Kids....

[justfacts]

About ten days ago I presented a question to any "financial wizards" in our district. That post is shown again at the bottom of this post to refresh any memories.

What is missing from the "Reverse Engineered" numbers for the $495,000 in TAN interest charges is the Broker's fees for the TAN. Last year they amounted to $4,135. Proportionately, this year the could run $5,500 to $6,000. So the nice "even number" of $495,000 shown to us might be "short" that amount.

But then again, there is something else that is missing - and always has been in these numbers. The District doesn't call out the fact that 1/2 that TAN interest amount is paid to them in the first Town tax payment - and the interest is not paid back until June! That means that half of $495,000 will be sitting in a Bank account somewhere earning interest for six months.

Typically, since the TANs are Tax-free items, a normal bank account will pay a percentage point more interest than what the TAN costs! That means the District will get about 5.5% interest for six months on a $247,500 account (using the District's assumptions for interest rates). That comes to about $6,800. OH! Wait! That covers the Brokers fee and could explain why it wasn't itemized!

But wait again! If the Interest charge on the TAN is earning money, what about the TAN itself? It's for $12,000,000 and is in an account that pays interest. That account is depleted in six months - or at a rate of $2 Million per month as equal expenses like Teachers salaries are regularly taken out of it. So - the calculation is a little more complicated.

But it turns out that the TAN money itself of $12,000,000 should earn about $139,189 for the six months! That same account earns another $196,328 for the next six months when another $12 Million in tax money is put into it. That comes to a grand total in earnings of $335,517 for moneys during the year in the TAN account.[/i]


Since the banks charge a TAN interest of $495,000, and the money held in deposit earns $335,517 - the net cost to the taxpayer for the year should be - - - $159,483! That's a far cry from the $495,000 shown on the Budget! The cry is about $1/3 Million long!

The TAN interest charge is shown without the offsetting interest gained. It should only cost the taxpayer about a third of what is shown in the Budget!


Last year the earnings never showed up anywhere that the public could see! They should have been about $150,000 to $187,000 depending upon how vigorously the Administration worked at getting the best paying interest rate from the local bank!

That extra money was entered into the Capital part of the Budget and never once went to the Children! Even just $150,000 would have went a long way towards paying for programs! As such - it ended up as part of the "Extra money" in the Unencumbered Fund Balance this year!

Will the $335,517 end up the same way this year? As a part of the Fund Balance? OR, can we get a refreshed BOE to force the Administration to change it's bookkeeping methods to track the earnings of the TANs against their cost?[/i]

What say you accountants, bookkeepers and CPAs of the District? Can this be done or not? It is mentioned in the State Financial Laws and State Education Laws and Regulations that this shall be done. There is even a Uniform Accounting Code number for tracking these earnings and a spot on the SBM-1 State Budget form for reporting this interest.

The concept of the "Time-Value of Money" is lacking in our present bookkeeping and money management methods - and it is costing the children a pretty penny!

Ed.

To the non-financial Plainedge residents - It would be very much worth your while to have discussions about this with your expert neighbors. You might "draft" MaryAnn or Diedre into giving a talk about this topic to a couple of interested residents!


*********************************************

Background: Prior Post Challenge to Financial experts in District.

However, this year there is no charge code for the Interfund transfer in the Capital Budget - so the excess $390,000 had to be "schmoozed" into other code charges to have the same, or greater, Capital portion of the Budget. About $200K of it went into the TAN interest code and the other $200,00 went into the Maintenance account. People caught on to the exorbitant TAN Interest cost - going from $285,000 to $495,000 it stuck out like a sore thumb.

After a few meetings the Administration came up with the story that the TAN would increase from $9 Million of last year to $12 Million this year - without ever producing the prerequisite Cash Flow report to back up that statement. They also said that the Interest rates for these tax deferred Notes would go to 4.5%.

Now, can any of you Fiscal Experts tell me what is so obviously wrong with that story?

It's true, that an annual interest rate of 4.5% on $12 Million comes to $540,000, and since the note is for 11 of the 12 months this reduces its total cost to $495,000. That math works out.

But what's neglected? And what has been traditionally neglected in prior years on these calculations?

There's a nickle waiting from me for the first of the Experts that gives the answer. Any Takers? The following are excluded from this offer - Dierdre, Raymond, Cantatore and Presuto. They each have my Spreadsheet calculations that show how even this year, at a $9 Million TAN, there is over a $200,000 cash input that is not reported to the community from these TAN transactions.

That is money that stays in the Capital portion of the Budget and is eventually added to the Encumbered Fund Balance (about a total of $4.9 Million this year)

At $12 Million and a 4.5% TAN interest cost - the amount is very much greater, Great enough to pay for several Children's programs - except it is all in the Capital portion of the Budget and not the Children's portion where, with proper budgeting, it belongs!

So, any Financial Majors, CPAs or others that want to take a shot at solving the missing accounting for Capital funds handling? It's worth a nickle. I'll give the answer in another post in a few days.

Ed