Tuesday, September 24, 2013

PCS: Financial Snapshot Analysis

What are the major costs facing the PCSD for the 2013-14 school year?
  • $ 17.1 Million.....Personnel Costs (payroll of $8.9M and benefits of $8.2 million)
  • $   1.5 Million.....Special Education (after NYS aid)
  • $      558,000.........Debt Service (after NYS aid)
  • $         -7,000.........Transportation (NYS aid exceeds projected costs - thus a net gain of $7K)
Transportation is expensive (the total cost is expected to be just over $1 million) but the PCSD usually has 90% of it paid by NYS. This year, the district will receive more NYS aid for transportation than they expect to spend. Why? Aid comes a year after the expense is paid so the aid the PCSD is receiving this year for Transportation is based on last year's costs. Bottom line, about 90% of transportation costs are paid for by NYS - not local taxpayers. Thus, when a transportation employee is laid off, only 10% of his/her salary is saved by the district. 

Debt Service (principle and interest to be paid) is also aided at a high level. Four years ago, NYS paid 91% of the cost. It appears that this year, NYS is providing aid at a lower level of 82%.)

Special Education is costing the district about $1.5 million for the current year. NYS will pay a large portion of this cost. The district projects a total Special Ed. cost of $3.9 million so NYS will pay about $2.4 million or about 62%.)

Personnel Costs which are made of of salaries ($8.9 million) and benefits ($8.2 million) are, not surprisingly, the biggest expense facing the PCSD. 

For Boards of Education to fulfill their fiduciary responsibilities, they must examine spending trends that have recently occurred (say over the last ten years) and project forward based on those trends.

How has spending changed in Personnel, Special Education, Debt Service, and Transportation from the 2010-11 school year to the 2013-14 school year?

  1. Salary costs have dropped from $10.4M to $8.9M. (Layoffs and cuts by attrition)
  2. Benefits have increased from $6.7M to $8.2M. (People are losing jobs due to the alarming increase in health insurance costs. Potsdam has cut positions and laid off employees and HI costs still went up by $1.5 million.)
  3. Special Education has remained approximately the same at about $1.5M.
  4. Debt Service has increased about $150K, from approximately $308,000 (Potsdam's share) to approximately $558K (PCSD share after NYS aid).
  5. Transportation has dropped from $100,000 to -$7,000 (after aid).
The central concern is the impact of severely escalating benefit costs. Salaries used to cost millions more than benefits. (Three years ago salaries were $3.7M higher than benefits.) This year, the difference between the two is only $600,000. School officials have told the public that next year benefits will cost more than salaries. No other expense in the district comes close to the $17.1 million set aside for this year's salaries and benefits. The next highest cost comes in at $1.5 million (Special Ed.).  Health Insurance costs have been rising at an alarming rate and will bury the district if all interested parties do not address this critical issue. The small changes that have occurred have not had any significant impact. 

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