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Harlem school administration recommends deficit spending vs budget cuts

Harlem School district administration is recommending that the board of education exhaust all their education fund cash reserves, plus $1.5M more, instead of any further cuts in spending.

Excerpt:

Administrators are asking the board to pass a deficit spending plan Monday that puts the education fund — which pays for salaries, benefits and supplies — $1.5 million in the red. That includes spending the remaining $245,000 in education fund reserves.

This isn’t the first time that officials have agreed to spend more than the district takes in. And it isn’t likely to be the last.

It may not be the first time the district has deficit spending in the education fund, but how long has it been since the district actually created an accumulated deficit over $1.5M dollars in their education fund?

Board President Heather Kelley said she doesn’t expect to need drastic cuts and that it may take two to five years for the district to get back into the black, but “We are heading in the right direction,” she said. Right direction?

Harlem leaders said they would transfer money from other funds into the Education fund if necessary. Since the aggregate levy is made of up of many funds – some may be transferred to the education fund by tapping the Harlem’s Operations and Maintenance Fund, balance of $4M – the Transportation Fund, balance of $1.5M – Working Cash Fund, balance of $600K – even the Tort Fund in special circumstances, with a balance of $943K.

But is the problem overspending or lack of revenue?

In the article, Harlem’s declining fortunes were blamed on the housing bubble with spending overtaking flattening revenues. However, local taxes based on property values are less than half of the Harlem School District’s Budget.

Budget figures in the article show that from 2005/2006 through 2013/2014 that total revenues increased 21% from $68.8M to $83.3M, while total spending in education increased 28.4% and total expenses increased 35.5%, despite a $4M decrease in spending during the past three years.

At the rate of deficit spending allowed this school year, the district could soon be using Tax Anticipation Warrants, which allow school districts to borrow from future property taxes to pay for the current school year, using taxes to pay interest for the privilege.

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