Mineola Schools Explain Tax Levy Cap Formula

“It’s been a constant day-to-day conversation with everybody you can imagine in all walks of government life to try to figure this out,” Mineola Superintendent Dr. Michael Nagler said of New York’s 2 percent tax cap on school budget tax levies.

So confusing is the formula for determining exactly what the numbers are and so new is the concept that district officials were making adjustments “up unto a few hours” before the February 16 meeting of the at the “because it keeps changing,” the superintendent said.

Arriving at a 2 percent levy cap is not as simple as taking your current year’s levy, multiplying it by 2 percent and hitting ‘enter’ to arrive at the amount of the increase. Rather, the calculation for the levy cap formula resembles something more like a calculus equation seen on an advanced placement examination.

“There are things in here that we didn’t know about, we had no way of knowing about and we’re going to be fine but other district’s it’s punitive,” Dr. Nagler said, as some districts are reportedly arriving at a negative number for their cap, meaning cuts must be made.

In order to determine the district’s levy cap – 1.93 percent – they must begin by taking the prior year’s tax levy ($74,798,371) multiplied by a “tax base growth” (1.059) that is “designed to, if there’s a lot of growth in the community, to raise the levy,” Dr. Nagler explained. The growth increases the levy by about $440,000 to $75,239,687. However, the growth number changes every year and is not set by the district.

“It’s almost impossible to plan for what the number is until we get it,” the superintendent said.

Prior year PILOTS (payment in lieu of taxes) are added (Mineola has $0), subtract any tort exemptions ($0) and capital expense exemptions, which takes all of the debt in the budget ($2,509,500), bus leases ($295,000), energy performance contracts ($316,286), and in Mineola’s case, the transfer to capital to build the Meadow Library ($495,561), then minus building and transportation aid ($593,602) for $3,139,242. This then gives an adjusted tax levy of $72,216,942. This adjusted levy is then multiplied by 2 percent (or CPI – 3.2 in January), whichever is lower, yielding $73,661,281.

“This is where it gets interesting,” Dr. Nagler said. “Those are really based on last year’s numbers. Now we’re going to fast-forward to this year’s numbers so the numbers that you take out, you now put back in.”

The capital number of debt, bus leases and energy performance contracts ($3,139,242), minus building and transportation aid ($$622,319) is then put back in is then put back in to arrive at $2,516,923.

“We took out a little over $3 million, now we get to add back roughly $500,000 less,” Dr. Nagler said.

Teachers retirement (TRS) did not rise but employees retirement (ERS) did go up, so the district can add $63,976 back in and arrive at a levy that cannot exceed $76,242,180, or a $1.4 million difference between the old and new levy, or 1.93 percent.

Dr. Nagler described the formula as a “double whammy” for districts with debt as they must also take it out of their budget and their levy, giving the example that without the deduction, the permissible levy cap for Mineola would have been 2.6 percent.

“We know next year, we have debt coming off,” he said of the $10 million bond. “We knew exactly when the payment was coming off, we had always figured we were going to use that for something else in our budge; that has to come out.”

The superintendent added that for the next 2 years, Mineola’s cap would be under 2 percent, but that it makes creating the budget easy because “we know what our number is.” Due to the “natural attrition” with closing the Willis Avenue School next year, Dr. Nagler stated that he was with the excesses “and nothing else” and no program cuts.

In response to a question from board vice-president William Hornberger, Dr. Nagler said that “in general terms,” the money spent from the levy is different than that spent from reserve or a unappropriated fund balance. The district is reportedly currently running a surplus this year which would help fund reserves for next year. Voters approved a capital reserve fund 2 years ago, but money cannot be taken out without a vote.

“We’re probably going to look to fund our reserve as best we can for future capital work,” Dr. Nagler said. “It’s the same notion with bonding, that this is kind of set up to always keep you in debt. I think the intent was ‘it’s not your money,’ if you expire debt, you don’t have the right to keep it.”

In order for a school district to go above their cap, they must have a supermajority (60 percent or above) of the vote. It still requires only a simple majority to pass a budget that is within the levy cap. Last year’s budget of the vote.