PT Council Poses Budget Questions to the School Board

(This statement was read at the November 17, 2025 meeting of the Scarsdale Board of Education, by the PT Council Budget Study Co-Chairs)

Good evening.
We are the Scarsdale Parent Teacher Council Budget Study Co-Chairs this academic year, Mayra Kirkendall-Rodríguez and Rachana Singh. Since September, we have been communicating with the PTC and PTAs and appreciate their engagement. Even more so, we have happily dedicated many hours to reaching out to individual parents and taxpayers, via emails, announcements in PTA newsletters, and speaking with them at local community events.

This year, we also sent out a Google Form to facilitate parents’ feedback. And of course, no one on local Facebook sites could have missed our many missives encouraging Scarsdale residents to be part of the budget process.

This is a key year for residents to recognize that the District faces a projected operating deficit. Additionally, proposed capital project bonds are under consideration both within the School District and the Village. Any debt issuance affects servicing costs, which are borne by taxpayers. Another significant challenge for the District is the reliance on the fund balance to prevent even greater tax increases.

Section 1 - Themes and Observations for 2026-2027 Budget

Based on our due diligence, here are our observations and questions:

1. Our most significant fiscal concerns include rising healthcare costs, the projected operating deficit, and the low level of the fund balance. These issues, combined with the proposed capital bond, underscore the importance of transparency in the budget process so that residents can see what the tax impact will be.

2. For many Scarsdale residents, there is uncertainty in determining budget priorities for 2026-2027 and beyond, since they are awaiting clarity on the scale and scope of the proposed bond for capital projects. Additionally, knowing what is included in the proposed capital projects bond would help community stakeholders determine whether anything left out would be a budget priority presently or in the longer-term.

While many parents, taxpayers and we realize that the scope of the bond project is not complete, it is important to understand how this project will affect the budget this coming year and the District’s long term financial plan.

To ensure transparency and fiscal prudence, we recommend that as soon as it is feasible, the District please share with our community the following scenarios for the proposed bond:
● a “tax-neutral” option — approximately $40 million, as referenced by the administration,
● an infrastructure-focused option that includes only Priority One items from the BCS report along with air conditioning which would be above $40 million, and
● the current $108 million bond proposal. (Note: the $108 million was in the presentation we had late Friday; this evening the amount rose to $113m)
3. Various members of the community told us that they would like a detailed rationale for prioritizing investments in our schools.
● For example, parents and taxpayers have asked “why is the District spending on cafeterias, fields, and libraries over investing in more math courses, science labs at the elementary schools and SMS, and/or adding Advanced Placement courses at SHS?”

4. Parents from several schools and the Scarsdale CHILD Committee have stated that an anonymous special education needs assessment survey of parents and teachers, would be valuable to identify what staffing and spatial additions are needed.

Section 2 - Proposed Capital Bond and Budget Planning Impact

As the District considers the proposed capital bond, the community would appreciate understanding how this significant borrowing initiative is being integrated into the long-range budget planning process. Taxpayers will benefit from clarity on how the bond’s debt service schedule will align with other budgetary obligations and existing or anticipated capital commitments. Specifically:

● How does the District plan to model the annual tax impact of the bond — both the magnitude of the increase and the timing of when those increases would appear on the tax bill?
● Has the District projected how this new debt service will affect the overall property tax levy in the first five years following issuance?
● Given that the Village and District are proposing bonds that ultimately draw from the same taxpayer base, how is the District managing overlapping liabilities to ensure transparency and to avoid possible “bond confusion or fatigue” among residents?

Understanding these details will help community stakeholders assess not only the merit of the capital projects, but also the sustainability of the overall tax implications in light of multiple major borrowing initiatives.

Section 3 - Questions and Requests From Previous Years

Last year, the PTC asked the District to assess rising health plan costs and identify what is driving these increases. The new Long Range Financial Plan projects healthcare costs rising about 8% each year over the next five years, which continues to put pressure on both the fund balance and the tax levy.

We are asking for more detail on what strategies the District is exploring to help manage these increases—whether through plan design, cost-containment efforts, investment strategies within the self-insured model, or through future labor negotiations.

The LRP notes that “recent plan and labor contribution changes may improve trends,” and we would appreciate clarity on what those changes are and whether they are showing early results.

We also note that the Health Insurance Reserve, currently $2.85 million, is projected to decline to zero by 2028–29. Once it is depleted, all future health cost increases will need to be absorbed directly by the operating budget.

Given this, we ask how the District plans to manage rising healthcare volatility once the reserve is exhausted, and whether alternative reserve strategies are being considered to help stabilize long-term costs.

Section 4 - Fiscal Questions and Concerns

Because maintaining a high credit rating directly affects the District’s borrowing costs, we have several observations and questions regarding the November 2025 Long Range Plan (LRP), particularly around fund balance, available cash, and leverage (the District’s level of debt).

We are concerned about the District’s operating deficit forecast. If a bond is issued within the next two to three years, the community needs clarity on the combined tax impact of both an operating deficit and debt service.

The District’s current five-year expense forecast projects total expenses of $222 million by 2029–2030—a 21% increase—with instructional expenses up 16% and employee benefits up 28%. Could the District please explain what steps are being taken to moderate these significant projected growth rates?

The current District Long Range Plan forecasts a significant operating deficit for 2029–2030. Please update the community on how the forecast operating deficit could affect the District’s credit rating and borrowing costs, particularly since Bond Anticipation Notes (BANs) and bonds may be issued between 2027 and 2030.

Interest Earnings

With both long-term and short-term rates starting to come down, we would like to know:

● how has the District adjusted its assumptions for interest income in the later years of the five-year plan?
● what reduction in yield is built into those projections, and
● how sensitive are our revenues if rates drop more quickly than expected?

Questions about Fund Balance and Reserves

With the Health Insurance Reserve expected to be depleted by 2028–29 and the unassigned fund balance already at the 4% legal limit, we ask:
● At what point does reliance on reserves become unsustainable?

● What is the District’s long-term plan to rebuild reserves once the Health Insurance Reserve is exhausted?

● How will flexibility be maintained to absorb unexpected costs when reserves decline?

● Has the Board considered setting target levels or replenishment plans for each reserve fund?

● Could the District share an updated model showing how deficits change under varying assumptions for healthcare or wage growth?

Credit Ratings Implications

Scarsdale currently holds a Moody’s AAA rating, which is very important because this rating lowers borrowing costs for taxpayers when the District issues debt. However, with decreases in the projected fund balance since 2020 and increased indebtedness of the District, could Moody’s lower Scarsdale’s rating to AA+? If so, what can the District do to decrease borrowing costs? Higher debt service could influence the community’s and the District’s decisions about what might have to change in the budget, possibly impacting student experiences.

Under Moody’s methodology:

● Fund balance as % of operating revenue (20% of the ratings methodology weighting): Scarsdale is about 13%, below the AAA median of 24% (equivalent to a single A rating on this metric).

● Net cash ratio, a metric to measure an issuer’s liquidity, (10% weighting in the methodology): Scarsdale is around 15%, below the AAA median of 25%.

● Leverage ratio (20% ratings weighting): While currently manageable, an additional $68 million in borrowing, above the $40 million be retired, could raise debt levels enough to affect the District’s overall rating.

All the above factors are half of the methodology, and they are not at AAA for the Scarsdale School District.

Concluding Comments

Thank you for holding this session for residents; we look forward to this months-long budget process and definitely encourage Scarsdale residents to participate in sessions and forums about the proposed budget as well as the capital projects bond throughout the coming months.

PT Council Budget Study Chairs:
Mayra Kirkendall-Rodríguez, PTC Budget Study Co-Chair
Rachana Singh, PTC Budget Study Co-Chair