Fantasy Budgeting: The School Budget that Doesn't Matter and the Coming Funding Crisis for the Hudson City School District

An Opinion Piece by Ken Sheffer
May 20, 2020  

On Tuesday, May 19, the Hudson City School District downgraded its ambitions and set its sights on a lower budget with a lower tax levy increase. Instead of asking the taxpayers of the Hudson City School District for $52,132,420, a budget increase of nearly $3 million and a property tax levy assessment of somewhere between 1.99% and 2.43%, the Hudson Board of Education is now officially asking for $50,684,738 (an increase from last year of $892,275) and a tax levy assessment of 1.99% (the same as last year). While this may sound like a great deal on an ocean voyage, it is merely the School Board’s reckoning that it is really out to sea with the Titanic. Let me explain why I say this and what is really going on inside the HCSD especially regarding your money.

The New York State School system and upstate and rural schools are in trouble. The Governor of New York, the U.S. Senate, and Bill and Melinda Gates have new ideas for schools in New York. Relief funding may never come, and in fact the budget passed on Tuesday night by the HCSD is a fantasy. The Board does not know what they are doing and where this will end. Not just because of the way they operate, but also because of the magnitude of the dysfunction everywhere. The Senate may not bail out States; the Governor may not bail out schools; the Gates couple may rewrite the New York school system; the taxpayers may not be able to pay their taxes; the schools may not re-open; the virus may not go away or, worse yet, may roar back; and the vote you make today may not matter tomorrow. That is how life is everywhere now. Today is today and tomorrow is, well, next month or next year.

So now this Board of Education is going to send to the “community” a ballot that contains its latest and greatest proposal:

• A proposed $50,684,738 total bill for '20-'21. Again, an increase from last year of $892,275 instead of the $3 million increase they wanted two weeks ago.
• A proposed 1.99% tax levy increase (the legal cap is 1.81% but don't ask about the District's tax cap formula unless you are taking Dramamine)
• A proposed $5 million capital fund reserve taken from surpluses through the years (although the vote is not on whether to finance it right now. Still with me?)
• A use of $500,000 of the current capital RESERVES the District has to offset some of these cutbacks! (Did anyone know that there were significant capital reserves up at HCSD? It surely has never come up in a Board meeting!) It turns out that the District has been reprimanded by the State Audit Department for its liberal use of "reserves" yet it is still moving public money all over the place from one reserve to another. Shouldn't this money have been returned to the taxpayer? When pressed on how mich was in the reserve account on Tuesday night, Superintendent Suttmeier initially avoided the Board-member question but said something like "it's $2 million." It was nearly inaudible. $2 million?! Wow! Shouldn't all that be deployed NOW?

Should the public decide to vote “NO” in the mail-in budget referendum on June 9, the District seems intent on avoiding a second vote and would rather choose to freeze everything at the levels from last year in a contingency budget. They could try to revote it all, but that isn’t a popular thing to do with schools these days, and the Board does not seem interested in a second vote.

So, to set things straight, the capital reserve monies held by HCSD don’t belong to the HCSD they belong to YOU the taxpayer. The District treats the money like its own and counts only the Board’s opinion on the use of the money. (Hint, hint–if you are a taxpayer, go to the BOE meetings!) So, the $500,000 in reserve funds they have so graciously offered to throw into the budget is still money from the pockets of the stressed taxpayers of Hudson. In this case, though, the Board of Education is throwing a little money back in your face, just to be generous with YOUR money. Money you had no idea existed.

Secondly (are you sitting down?), the District charges ALL OF US, ALL RESIDENTS OF THE DISTRICT a 3% utility tax. Yes, that’s right. Look at your AT&T, Verizon, propane, National Grid bills, and more, and you will see a 3% tax on your entire life. Assuming you are home now, go to your desk and look at all your bills. The bill might say “sales tax,” but you’ll know it when you see it. Anyone can smell a rat. It is the secret, insidious tax that, until I came along, the District called the “non-property tax tax.” I’m not kidding. On my insistence, for transparency, they renamed it the “utility tax” since, well, that is what it is legally. Here’s the skinny, this 3% tax is optional. School Boards (not the people) can opt in or out by State law. About half of the 57 “small city school districts” (population under 125,000) in New York State opt in like Hudson. Only one other district in the Patroon Conference opts in. Why? Because it is political and budgetary suicide to try this tax on the people in modern times. Hudson did it 20 years ago or so. Auburn Central School District, in the Finger Lakes, attempted to approve the tax in January this year, and one week later the school was under lockdown from voter protests. The proposed utility tax was finished. So just know that nearly everything you do in your home or beyond is taxed by the HCSD. And on an annual basis that brings in an un-voted-on amount of about $700,000 to $1,000,000 per year to the District. Neither the optional nature of the utility tax nor the amount collected is on the ballot. It never is. Quite simply, the utility tax is one of the more significant run-arounds on the State-mandated tax cap and unlike property taxes it isn’t even deductible on your own tax return!

So what’s up with this Board of Education and the District’s chief administrator, the Superintendent? Well, quite frankly they are lost. They are trapped in a political cyclone, the likes of which they and we have never seen before. However, had the Board been governed properly over the past ten years, not all of this would be so insurmountable. The Board leadership is amateur, unfit for the job, and needs to change. The Superintendent is not properly supervised and has had numerous chances to turn things around academically in Hudson but has failed. In the private sector the Superintendent would have been shown the door.

But that’s not how this Board works. And as for taxpayers the answer is equally disappointing. In my two years of fighting with this Board, NO ONE else has ever shown up for a Board meeting or community budget meeting. NO ONE! Let me be clear, there are good and great people on the Board, but the seat currently occupied by Carrie Otty needs to be rotated out NOW. New blood at the top is needed. There are rising stars and highly intelligent people on that Board. They just aren’t allowed to speak or make the Board more interactive with the public or community.

So, what does all this mean for the ballot that is about to be mailed to you? First and foremost, don’t miss it. Read it. Vote. It’s your chance to say what you think about the spending over at HCSD! Before that, there is a May 26 Public Hearing on the fantasy budget which you should attend by Zoom. Keep in mind that the budget numbers are now passed, so your input is relegated to cheerleading, weeping, or screaming.   

In short, the shame is that this is a school district without a community. It is funded by people who don’t know the Board nor do they know the students, unfortunately. People get their tax bill, complain, then pay it. 

On Tuesday night, I read the following paragraph from the State School Board Association New School Board Member Handbook to the HCSD Board of Education (all new Board members are supposed to read this book): “Community members are both the district’s ‘owners’ and its clients. They pay for the district’s products and services and incorporate its graduates. Keep in mind that people help support what they help create. If the district’s stakeholders don’t help to create the district’s vision, goals, standards, plans, budgets etc., they may feel no ownership of them.” Well, welcome to the Hudson City School District. The community feels zero ownership of this secretive Board’s vision.

So, two final issues. The first is, when will the financial backs of HCSD residents finally break?  If not now, then . . . never? This is the moment when all of us can hear the breaking of spines and bones and budgets. It is going to happen to rich and poor, rural and urban, and beyond. In normal circumstances, the school taxes are too much for many people. Already, under normal circumstances, this school budget is unaffordable given dwindling taxable homes and incomes. As well, the District faces the real prospect of massive uncollected taxes this year. Then what? Just what are we going to do then? What is the fantasy plan?

This all comes down to innocent kids who just want to go to school and learn and achieve. The political and financial storm they are in was not created by them nor are they part of the general incompetence of the Hudson Board of Education and District leadership. So they must be protected, along with their teachers. For us to toss this budget overboard might be too much for any of us adults to handle right now, let alone those who are too young to grasp why school doors aren’t open. In the end, it will be the kids that get hurt the most.

This is a special crisis in that we must leave lessons behind for the young, that we were there for them when the chips were down, and that we understood what being brave meant at the very peak of the crisis. That we were brave enough to vote yes on a school budget that is nearly entirely indefensible. To give from our pockets to pay these taxes when our pockets were empty. Or to say, no, I can’t afford these taxes, but I support our kids. In my estimation, the budget storm that is coming will make the questions over this current school budget look insignificant. There is chaos ahead. A fight to protect the kids of Hudson has to start with our community demanding a joint effort with its Board of Education so that when things get really bad, very soon, someone competent has their hands on the steering wheel. And that all of us who pay the bills at HCSD have a say.

Today we go forward, one crisis at a time, one fantasy budget at a time. Hopefully in a unified mission to save Hudson’s kids. Vote your hearts out on this school vote, one way or the other, and call or write your elected officials and tell them trouble is ahead! Let the kids know that you were there for them and their educations in 2020!