Budget FAQ's

Local property taxes, state aid and some federal funds.  

The tax levy is the total amount of money to be raised, while the tax rate determines the actual tax bill based on property assessed values.

The New York State tax cap is a law that limits how much a school district can increase its property tax levy each year without getting special voter approval. Despite being called a “2% cap,” the actual allowable increase can be more or less than 2% and is based on a complicated formula set by the state that takes into account things like:

• Inflation (measured by the Consumer Price Index)
• Growth in the local tax base (like new construction)
• Certain exemptions (such as costs related to pension contributions or large capital projects)

Each year, the district uses this state formula to calculate its own “tax levy limit” (see FAQ: “How is the New York State tax cap calculated?”). If the proposed budget stays at or below this limit, it only needs a simple majority (more than 50%) to pass. If it exceeds the tax levy limit, the budget would need a supermajority (60% or more of voters) to pass. The tax cap law only applies to a district’s tax levy, not the tax rate or your tax bill. 

Every year, districts in New York State must calculate their tax levy limits based on the following eight-step formula set by the state. That levy limit then determines the level of voter support (majority or supermajority) needed for budget approval.

Definitions:

• Prior School-Year Tax Levy: Total amount of property tax revenue levied by the district for the current school year, adjusted for any excess tax levy identified for a previous year, including any interest earned.
• Tax Base Growth Factor: Year-to-year increase in the full value of taxable real property in a school district due to a physical or quantity change (e.g., new construction). Increases in full value due solely to assessment changes are not included.
•  PILOTs Received in Prior School Year: Amount of revenue receivable by the district in the current school year from PILOTs (payments in lieu of taxes).
• Tax Levy to Pay for Some Court Orders/Judgments: Amount of the district’s current-year tax levy needed to pay for court orders or judgments arising out of tort actions (only the amount that exceeds 5% of the district’s total prior-year tax levy). Tax certioraris do not qualify.
• Tax Levy to Pay for Local Capital Costs: Amount of the district’s current-year tax levy necessary to pay for construction/renovation of capital facilities/equipment (including debt service and lease expenditures) and transportation capital debt service (e.g., bus lease or purchase). Does not include state building or transportation aid received.
• Allowable Levy Growth Factor: Accounts for inflationary change—limited to the lesser of 2% or the change in the consumer price index (CPI).
• PILOTS Receivable in Coming School Year: Amount of revenue the district expects to receive in the coming school year from PILOTs (payments in lieu of taxes).
• Available Carryover (if any): If a district’s current-year tax levy was less than its tax levy limit, it must increase the coming year’s tax levy limit by that amount or 1.5% of the current year’s tax levy limit, whichever is less.
• Tax Levy Limit: Highest allowable tax levy (before exclusions) that a district can propose for which a simple majority of voters (50% + 1) is needed to pass the budget.
• Exclusions: The law excludes certain portions of a school district’s tax levy from the base formula outlined above. A district can add these exclusions to its tax levy limit, increasing the amount of taxes the district is allowed to levy while still only needing a simple majority. ○ Tax Levy to Pay for Some Pension Contribution Costs: Applies only when the employer contribution rates set by the statewide pension systems (TRS and ERS) increase by more than 2 percentage points from one year to the next. Even with this exclusion, most—if not all—pension costs must be funded within a school district’s tax levy limit. Tax Levy to Pay for Some Court Orders/Judgments: Amount of the district’s coming-year tax levy needed to pay for court orders or judgments arising out of tort actions (only the amount that exceeds 5% of the district’s prior-year tax levy). Tax certioraris cannot be excluded. ○ + Tax Levy to Pay for Some Local Capital Costs: Amount of the district’s coming-year tax levy necessary to pay for construction/renovation of capital facilities/equipment (including debt service and lease expenditures) and transportation capital debt service (e.g., bus lease or purchase). Does not include state building or transportation aid received.
• Maximum Allowable Tax Levy: Tax levy limit plus exclusions. Highest total tax levy a school district can propose for which a simple majority of voters (50% + 1) is needed to pass the budget. (Source: New York’s Tax Levy “Cap” Formula: How does it add up?, Capital Region BOCES Communications Service, in consultation with the Questar III BOCES State Aid and Financial Planning Service) What are Reserves and Fund Balance? 

A district’s fund balance represents the amount of unrestricted money remaining at the end of the fiscal year due to either expenditures being lower than anticipated, revenues being greater than projected, or both. The total fund balance is divided into two categories: unassigned and assigned.

Unassigned fund balance is the portion of a school district’s general fund that is not legally restricted or designated for specific purposes. It represents the district’s primary fiscal safety net, available to manage unforeseen expenses, revenue shortfalls, or emergencies. New York State sets the maximum amount of the unassigned fund balance at 4% of the following year’s budget.

Assigned fund balance represents funds that the district has intended for a specific purpose, but which are not legally restricted. These assignments are usually made during the budgeting process and reflect planned uses of fund balance to support operations in future years. 

It takes many people to create and maintain a safe and productive learning environment. Employees teach, transport, coach and care for the community’s children. They clean buildings, mow playing fields, order supplies and make decisions so that schools run effectively and efficiently.