Letters to the BOE Regarding the School Budget from Mary Beth Evans and Claudine Gecel

Mary Beth Evans of Edgewood Road read the following on the ZOOM meeeting of the Scarsdale Board of Education on March 30:

Dear Members of the Board of Education: Thank you for this opportunity to comment on the budget and especially for carrying on as a District during this crisis on behalf of the community.

We recognize the need to prepare for a potential loss in State aid and support your prudent approach to the 2020-21 proposed school budget presented last week, which includes postponement of certain expenses that are not core to your mission of maintaining and enhancing the quality of our schools.

We oppose the notion that the School Board should act immediately to, in the words of a few, dig into the “muscle” of the proposed school budget. We are at a loss to see the logic in crippling the very institution that supports our home values during this uncertain time. We further believe that our students and our teachers need the support of the entire community now more than ever, and we especially reject the notion that eliminating teaching positions or cutting teacher salaries is a productive way for us to respond as a community to current uncertainty. With regard to staffing as it relates to enrollment, in particular, we urge the Administration to make sure to clarify for the community that the relationship is not linear but is shaped by various considerations, including mandates.

Cutting the school budget to the level you’ve recently proposed already does have a long-term consequence. As the Board and the Administration have acknowledged, resident taxpayers generally prefer to avoid sudden spikes in their tax bill. The State imposed tax cap additionally, and more profoundly, affects the Board’s ability to restore or add new funding to future budgets. The tax levy law not only sets an arbitrary cap – disconnected from educational costs -- on each district’s ability to raise local taxes to fund its schools but also enforces this mandate by replacing democratic majority rule with the requirement of supermajority voter approval should a local district try to exceed the State’s cap. Even if a local school board believes it important for the school budget tax levy to exceed the State-determined local levy limit increase, the law empowers a minority of local voters to defeat that effort. Thus, to convey now to the public that the Board can readily convince the voters to exceed the tax cap, as needed, at any time down the road is both unrealistic and disingenuous. We therefore urge the Board and the Administration – along with the PT Council -- to focus on explaining to the public the predicament of the tax cap, which is real.

We are resident taxpayers who no longer have children in the schools, but we continue to subscribe to the unwritten “compact” that has sustained the Scarsdale schools at the current level for what is now coming on some 100 years. Just as the entire community supported school budgets for the duration of our children’s attendance, so do we now support the same high level of education for our neighbors’ children.

This compact is in large part what makes the geographic place known as Scarsdale a community, especially in difficult times. And proof of that this compact was in force even during the Great Depression can be found in a Scarsdale Inquirer article dated May 8, 1931 (“Scarsdale School Budget is Adopted at Large Meeting”). It describes public support at a meeting that resulted in the school budget’s passage. Among those speaking in favor were:

• “Harry E. Lesan who showed that the increase in this year’s budget over last year’s would amount to about $1.10 per thousand dollars of property valuation and offered to contribute his $1.10 to keep up the high standards of Scarsdale schools;

• “Pliny W. Williamson who declared that the schools would unquestionably suffer if [teacher] salaries were decreased or classes enlarged […and] that property values in Scarsdale were due in large measure to the high standard of the school system;” and

• “Dr. Howard J. Savage, a member of the Board of Education, [who] said that he had been a teacher himself for many years, and that he would like to remind those present that, while business men were having lean years now, they had had fat years [adding], ‘ There are no fat years in the teaching profession, however,’ he said, ‘I believe it would be a serious mistake to cut salaries in our schools, and I, as a parent, would like to disagree emphatically with this suggestion, for I do not want second-rate teachers to experiment on my children.’”

Later that same year, in October 1931, the Scarsdale community again voted to invest in education when it approved a $1,150,000 bond to add classrooms to Edgewood School and to build “part of a new High School at a cost of $745,000 and part of a new elementary school on Kelwynn Road at a cost of $350,000.” (Scarsdale Inquirer, October 30, 1931)

Sincerely,

Mary Beth Evans & Daniel Moretti
16 Edgewood Road

[Note: The 1931 Scarsdale tax rate of $1.10 per $1,000 of assessed value is the equivalent of $18.72 per $1,000 of assessed value in today's dollars. This amount is $2.11 more than the 2020 proposed Scarsdale tax rate of $16.51 per $1,000 of assessed value in the District's initially proposed school budget, which the Board now proposes to cut by some $3.6 million. The $1,150,000.00 bond that Scarsdale voters approved in 1931 to expand school facilities is the equivalent of $19,571,032.89 in today's dollars.]

Comments from Claudine Gecel

Claudine Gecel, A Chartered Financial Analyst, lives at 10 Kent Road, and spoke at the online BOE Meeting. These are a few of the points she made:

1.) Concerning the potential items for savings, it is probably not a good idea to pre-pay the Computer Lease. In a difficult financial environment, every institution and every household in the US will be conserving cash. Our School District should be doing the same. And while the US Federal Reserve is flooding the system with liquidity, all the large banks are asking their corporate clients not to draw down on their credit lines - unless absolutely necessary. Most of us have seen the classic movie “It’s a Wonderful Life”. We all can’t take out money from the bank at the exact same time, and we should just continue to pay the lease, as usual. That will continue to establish Scarsdale Schools as an excellent credit, who pays bills even during a difficult financial time. And that ability to continually pay bills during all economic cycles is one reason why Scarsdale Schools maintains a Triple A Credit Rating.

2.) Concerning the maintenance of Financial Reserves, it is also probably not a good idea to immediately start dipping into any of the District’s Reserves. Financial Reserves are set up specifically for emergency situations. And in highly leveraged institutions, the reserves are set up because the institution is operating at a higher financial risk than comparable peers. Our School District has recovered nicely from the Real Estate and Banking Financial Downturn that we all experienced beginning in 2008. As a District, we have been working very hard to build up the Financial Reserves that we do have. And the reality is that those Reserves could be a bit bigger, and they wouldn’t be hurting anybody. Nevertheless, the School District is not presently in a Financial Emergency. Let us all try to remember what it was like in 2008, 2009, 2010, 2011, etc. It was painful to manage the School Budget during those years. There were clearly insufficient Reserves existing at that time. This time we have higher Reserve Levels, and we should keep them that way, until we actually experience a major financial emergency. These Reserve Levels are another reason why we maintain that Triple A Credit Rating.

3.) Concerning the maintenance of the Triple A Credit Rating, it is probably not a good idea for the District to become a slave to that Rating. As anyone who invests knows, there are very few institutions in the ENTIRE WORLD that maintain a Triple A Rating!!!! Yes, the entire world!!! So we all need to give ourselves a pat on the back, shake each other’s hands (when the virus is over) and bask in the glory of a Triple A Rating. Once we are done doing that, we need to move on, and manage the School District in a way that is Financially Responsible. What that might mean is that if we are confronted with a Financial Emergency, we can either raise the tax levy or dip into the appropriate Reserve. If we are in a Financial Emergency, it will obviously be very difficult to replenish the reserve for an entire economic cycle. The rating agencies understand this cyclical process. In the meantime, the Ratings Agencies will become very busy downgrading highly leveraged entities of all stripes. If they do end up downgrading Scarsdale School District because we draw down reserves, we will still be rated higher than the MANY institutions on this entire earth.

4.) Concerning each household’s payment of a 1Plus Percent increase in the tax levy, it is probably a good idea to make that concept a bit more relatable to each individual homeowner. When we are all feeling financially flush, we don’t manage our finances down to the penny. That is natural. When we feel that we might have to tighten our belt, all of a sudden we are scrutinizing each and every request that we receive for our precious funds. (Go back to Point Number 1, concerning the conservation of cash). So if we do need to ask homeowners to increase their school tax payment by 1Plus Percent, maybe it might be MORE HELPFUL to actually explain what that means. I am suggesting a LARGE, ONE PAGE CHART. On that Chart, the District would list several popular House Prices. A Suggestion: is $1 Million, $1.5Million, $2 Million, $2.5 Million and $3 Million. A very quick and dirty estimate is that those theoretical home values would encompass roughly 70-75% of the roughly 5000 Plus single family homes. Each home value could be listed on the one page chart, and right next to it would be a calculation of the exact tax increase the homeowner is expected to pay if the taxes are to be raised by 1Plus percent. If the potential tax increases are listed by home value, residents could see what sort of cash outlay they are being asked to make, and we could all see that the amount requested is in the hundreds of dollars. People who are busy and tired are not going to whip out their calculator and figure out “basis points”. And unless you are employed by a Financial Institution in a Financial Role, you will not even know what a Basis Point is!!!

Thanks for taking the time to consider these comments, and thanks for all the hard work which has already gone into revising the District Budget. It seems like we do run a bit of a tight ship, and yet there is always room for improvement!!