I got a request on TikTok to look into a budget crisis situation in Long Beach City School District in Nassau County, Long Island. I found some stuff I'd ask the district if it's not too late. (Apparently the budget vote is happening in May.) The crisis revolves around a school closure and decreasing funding on various fronts, which district officials claim has to do with reductions in state aid and "interest earnings."
"Due to uncertainty about foundation aid and interest earnings, the school board is taking a cautious approach to its financial planning."
Let's dig into this. In New York state there was actually an increase in overall state aid for public schools, but ultimately a decrease for Long Island, with 34 districts losing funding. The LBSD stands to lose 12% of state funding. But there's also some decrease in the district's funding for itself, so it's a decrease on both counts. But I can't figure out just how much they're actually losing.
In the governor’s proposed budget, the district would receive just over $25 million in 2024-25, a decrease of $3.3 million, or just under 12 percent. The district’s foundation aid would drop from $19.5 million to just over $15 million.
Does this mean that the district's losing about $8 million? That's pretty significant for a small district with only a few thousand students. Why are these numbers going down?
This must be because of population/attendance decreases, right? To some degree. The census shows some decreases in population in the city between 2020-2023. Apparently, Nassau county has experienced 1% population decrease in that period. I can't find current numbers on the population of students, which I imagine is decreasing.
At the same time, it looks like taxable property values are going down. According to a bond statement from 2020, assessed property values decreased slightly 2015-2020, by between 5-10% over that period. That means the district was getting less revenue from its local sources, which is really relies on. (An odd thing I noticed is that while the assessed values are decreasing, the full value and special values are increasing. What's up with that?)
Decreasing population, decreasing property values all mean decreasing revenues.
So all eyes have gone to East School, an elementary building that they're thinking about closing. This is always a tough experience. A parent told a vivid story about her kids going to East, but her testimony has a curiously capitalist turn at the end:
“My children both took their first big steps into the world in this building, as they began to navigate their new lives outside our home. The transformation between the children who first entered this building to the little people today is tremendous. They’re thriving and excelling in their academics and numbers. I want to thank the staff, who has my gratitude always for being my kids’ first teachers, and for starting them off with a positive association with education. That’s why I’m here to say I care, to take care of my family. I’m more than just a mother, I’m a homeowner, astounded by the lack of preparation, foresight and transparency when it comes to East School.
This parent’s statement is a perfect encapsulation of the dynamic between real estate values and public education. When a school closes, one feels concern not just for the little children and their futures but also for the value of one’s property. If a school closes, that’s not great for the real estate market.
The concern about property value decreasing seems in line with the numbers I'm seeing. But I noticed something that I’d ask about before all this happens.
Two questions
According to audited financial statements from 2023:
The District’s general fund fund balance, as reflected in the fund financial statements was $26,007,763 at June 30, 2023. This balance represents a $8,318,320 decrease (24.23%) from the prior year due to an excess of expenditures and other financing uses over revenues and other financing sources…: Nonspendable fund balance decreased by $156,724, due to the elimination of related advances. Restricted fund balances decreased by $3,280,855, due to the use of the reserves, offset by funding of reserves and interest allocated to the reserves. Assigned fund balance decreased $4,869,356, as the District decreased the fund balance appropriated to fund the 2024 budget and had fewer encumbrances outstanding at year end. Unassigned fund balance decreased by $11,385 to $6,065,250, primarily the result of the May 2023 proposition approved by the voters to expend for capital projects, which amount was $5,200,000.
I'd ask about the general fund decreases here. How'd it go down by 24%? What are the "excess of expenditures and other financing uses over revenues"? There's a missing $8 million! Is it a coincidence that this missing $8 million--what came in before the Hochul 2024-25 budget, has something to do with the $8 million they're reporting as decreases in that budget allocation? That's a weird coincidence. I'd ask them about that.
My second question is about that "interest earnings" concern they professed to have. I think this maybe refers to earnings the district gets on investments due to higher interest rates. But this is strange because there was actually a $2.1m increase in "other local sources" from increased interest rates. Yes, there was a roughly 40k decrease in "other financing sources" in that same period, but that's not that bad relative to the $8 million decrease in the general fund that the audited statements show above. What gives?