Schools May Tap Reserves

New York school districts may be forced to reduce fund balance levels to meet rising expenditures in the absence of revenue growth, Moody’s Investors Service said in a report.

Under a new property tax cap, which affects their largest source for revenue, and facing rising fixed expenditures, school districts will be cutting costs and likely appropriating greater portions of their reserves to balance budgets, the report said.

Analysts said that only 53 of 677 school districts attempted to override the new property tax cap, suggesting strong public support for the cap and little appetite among districts to try to override it.

“The budget votes indicate school districts will face continued financial pressure in the face of the cap, despite the option to request an override from voters,” said analyst Larry Bellinger.

In the past eight years, districts proposed 4.4% levy increases on average.

For the fiscal 2013 budget votes on May 15, districts proposed an average levy increase of only 2.2%.

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New York
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