School taxes fall unequally

School taxes fall unequally

At a time that school districts try to cope with declining state aid and rising tax obligations, the disparity in residential and commercial tax support between districts is becoming increasingly important.

When a school board member in Mineola recently floated the idea of that school district merging with Herricks, school board members in both districts immediately noted the large gap in school taxes paid by businesses between the two districts.

According to 2008 records of the state office of real property tax services, Mineola drew 40 percent of its tax revenue, nearly $28 million, from commercial sources, while Herricks drew only 3 percent, or about $2.5 million from commercial entities.

The weight of the tax burden on homeowners was also seen as one reason the Herricks school budget was defeated by one vote earlier this year before a revised budget was approved in a second election. Voters ultimately approved a $96.5 million budget – reflecting a 2.9 percent increase over the previous year – on a second ballot.

By contrast, Great Neck whose budget passed overwhelmingly – 1,863 to 545 – on the first vote receives 31 percent of its budget from businesses.

“I think the [state aid] system makes it very difficult for people in communities like this,” said Herricks Superintendent of Schools John Bierwirth. “We certainly have to watch carefully because our homeowners are paying 95 percent of the school taxes.”

A similar ratio exists in the East Williston School District, where just 4 percent of district revenues come from commercial sources and nearly 94 percent of the tax revenue comes from residents. An anti-school budget campaign brought out large numbers of voters against the budget, which ultimately survived by a 34-vote margin.

“Basically we have no offsets in this district. This district made a decision to exclude commercial properties from its perimeter,” said East Williston Superintendent of Schools Lorna Lewis. “We’ve always been very conservative, trying to keep our costs down because of the tremendous burden that puts on our residents.”

East Williston’s $50.2 million budget represented a 2.43 percent increase over the prior year’s budget.

The recent imposition of a sewer tax and the levy of last year’s MTA tax have complicated the economics for all school districts, despite the gradual reimbursement of the MTA tax anticipated from the state each year. More onerous for all school districts is the prospect for the elimination of the county guarantee, which obliged Nassau County to cover the gap between each school district’s tax levy and the unpaid taxes due to assessment appeals.

Nassau County Executive Edward Mangano recently pointed out that homeowners in districts with a low commercial base would actually benefit from the loss of the county guarantee, while districts higher commercial bases would have to assume a greater liability.

With 40 percent of its school budget covered by commercial property taxes, Mineola and Great Neck could face a significant liability when commercial businesses are successful in their assessment appeals.

In a region where the cost per student in each school district typically equals or exceeds the nation’s highest statewide average of more than $17,000,

Mineola’s currently ranks near the top of the charts at approximately $29,630, but in the face of rising costs a declining school population it is seeking to shutter two of its elementary schools.

Mineola Superintendent of Schools Michael Nagler said he anticipates a $1 million savings from closing one school next year. But pension costs of $1.6 million and the need to start bracing for the tax certiorari fallout if a certain legal challenge by Nassau school districts can’t save the county guarantee means that Mineola’s budget could increase by 5 percent or more.

“Even closing a school, I’m going to cut some of that money out, but the tax levy is going to get walloped,” Nagler said.

Nagler thinks that escalating budget costs that give school districts little chance of keeping the financial impact under control begs a much larger question.

“It’s the haves and the have-nots. It’s who can afford the kind of education you want. How do they keep up with each other? If one district starts something, another district wants it,” Nagler said.

And inevitably, something’s got to give, either in the quality of educational programs that school districts are able to offer or in their ability to maintain their viability.

Initiatives such as the county-wide effort to pool transportation resources among adjacent school districts, increasing cooperative purchasing efforts – and consolidating administrative positions in the process – take on greater urgency.

John Powell, assistant superintendent of business for the Great Neck school district said the district’s priority is to consolidate certain aspects of its operations including transportation, purchasing with BOCES, and using Nassau County auditors and legal services.

“If we have an opportunity through partnerships with other school districts, villages, the county and the Town of North Hempstead to save money, this district will pursue that,” Powell said. “We want to deliver the best product at the lowest cost to be economic and effective.”

“We do whatever we can do to save taxpayers money. The Nassau County school districts are trying to do transportation on a county scale,” said Warren Mierdiercks, Sewanhaka superintendent of schools, who added that one concurrent result of cost-cutting will be “to consolidate some of the [administrative] functions.”

Sewanhaka represents an anomaly among school districts, as a single administrative entity overseeing a district composed of five high schools. Its origins date back to the early 1950s when the population was sparsely distributed over a large geographic area.

Cost-cutting has been an urgent issue since state aid started declining in recent years, according to Mierdiercks. Sewanhaka’s costs per student stand at a relatively low $13,000. And given its history, consolidation with any neighboring districts isn’t a likely scenario.

“Consolidation has been talked about the past. I don’t see this as an avenue in which the district is looking,” Mierdiercks said.

Apart from economics, there is a culture specific to school districts that naturally resists the idea of merging with another district and violating the integrity and tradition that is an integral part of each community.

“You have to go back to why the districts were created the way they were,” East Williston’s Lewis said. “Who would you partner with? People value the Wheatley School, graduating from this intimate environment where you have a special relationship with your students.”

The high percentage of Wheatley students who get into top-flight colleges is just one reason that taxpayers are content to carry the more than $21,000 per student costs in the district.

Mangano recently asserted that a root problem with school budget costs is administrative waste. While he declines to address the issue of administrative salaries, he has created an entity intended to reduce costs of supplies and services through a bidding cooperative called the Long Island Purchasing Council.

But the initiative is raising more issues than it purports to solve for superintendents aggressively seeking to cut costs.

“The concern that’s being raised is, if you sign onto this, whether you are committed to all of your purchases through the Long Island Purchasing Council,” Bierwirth said. “What we do right now is we look at a variety of cooperative bids and we pick the best one.”

One attorney familiar with the purchasing council agreement said it does seem to obligate participating municipalities or school districts to do all of their purchasing through its vendors, relying on its seven-member executive board to make all purchasing selections.

“This is like being asked to buy a pig in a poke. That’s what it sounds like,” the attorney said. “You’re locked in unless you can make an argument that it’s not in our best interests for this contract.”

School districts currently work with BOCES to improve their buying power.

BOCES recently outlined a plan for voice over IP systems and phone lines, according to Robert Katulak, superintendent for the New Hyde Park-Garden City Park school district, who sees the potential for savings and autonomy in such a configuration.

“We become our own network so we have our own network and accomplish reductive costs,” he said.

Katulak agrees that cultural distinctions work against consolidation.

New Hyde Park-Garden City Park is another anomaly, composed only of elementary schools, but with a typical balance of 77 percent of its tax revenues coming from residential property and 22 percent from commercial sources maintaining a per student cost of $12,000. But Katulak doesn’t rule consolidation out.

“It might be a survival thing eventually. If the economy doesn’t get any better and the state aid continues to decline, it might be a matter of necessity,” he said. “I don’t think we‘re at that point yet, but that doesn’t say we won’t get there quickly.”

Many observers foresee pressure on smaller school districts that maintain the same major costs as their larger counterparts. Whether consolidation becomes a widespread reality, it will continue to be a subject of speculation.

“There’s a huge amount of discussion at the state level and I assume, given the state of New York state finances, there’s certain to be more discussion,” said Bierwirth.

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