Newfound school district facing deficit; school board blames tax-cap laws
"It's crazy legislation," School Board Chair Vincent Paul Migliorie said. "It means that school districts with a tax cap can't keep a fund balance."
District Business Administrator Daniel Rossner said that through frugal management and smaller expenses than anticipated, the district finished the school's fiscal year in June with a $700,000 fund balance, or surplus.
In March, district voters passed a $22 million school budget and a 2 percent tax cap on future school budgets.
Last week, it was discovered that by state law, school districts with a tax cap must spend any surpluses immediately. If not, any surplus money must be applied to district towns in setting their tax rates.
Department of Revenue Administration administrators have applied the $700,000 surplus to the base numbers for the school portion of each of the towns.
"The surplus has been applied as a tax credit, which reduces the tax bills now, but because of the rules of the tax cap, we have had $700,000 taken off what we can raise in taxes (for the 2013-14 budget)," Rossner said.
Rossner added $185,000 to that number to represent a drop in state aid to the district.
"We've just had a revelation and we will deal with it," Migliorie said.
School board members said they were surprised by the news, and are looking for other school districts in the state that have faced a similar situation.
Budget Committee Chair Fran Wendelboe of New Hampton, a former state legislator, said she had spoken with DRA representatives, who are investigating if there is any "wiggle room" in the law. She has also been working with legislators in hopes of "fast-tracking" a change in state law that would allow Newfound to better deal with the situation.
"People should know that this will get fixed one way or the other; we aren't looking at drastic changes in the schools," she said. But school board members and district residents in attendance questioned how the district will deal with a nearly $900,000 loss if the efforts on the state level come to nothing.
One audience member said the money could be added in at Town Meeting on Feb. 4 by residents. Board members said that was too much of a gamble.
One board member suggested that an alternate budget be developed to present at town meeting with $885,000 cut from it. As the meeting continued Monday night, Migliore asked board members for ideas on where the cuts could come from.
"The public should know that we want to fix it and we are on top of it," he said.