Purpose of Budget Review

The purpose of our budget review was to determine whether the significant revenue and expenditure projections in the City’s proposed budget for the 2017-18 fiscal year are reasonable.

Background

The City of Yonkers is authorized to issue debt not to exceed $45 million to liquidate deficits in the City School District’s general fund as of June 30, 2014. Chapter 55 of the Laws of 2014 requires the City to submit its proposed budgets for the next fiscal year to the State Comptroller and the Commissioner of Education for review while the deficit obligations are outstanding.

Key Findings

• The Yonkers Public School District’s budget request is $589.4 million for appropriations; however, the City’s Executive budget contains revenues for the District of $572.9 million, resulting in a shortage of approximately $16.5 million.
• The District’s budget request does not include an appropriation for textbooks and underestimated the appropriations for Social Security tax and charter school tuition payments.
• The City continues to rely on nonrecurring revenue, such as fund balance, to balance its budget.
• The City transferred $600,000 to its Community Development Fund, leaving a budget shortfall in the general fund.
• Revenue estimates for mortgage tax, income tax surcharge, parking violations, metered water sales, and other fees may not be achievable.
• The City’s appropriations for tax certiorari settlements may not be adequate, the appropriation for police overtime could be underestimated, and Social Security tax is underestimated.
• The City’s proposed budget does not include a contingency appropriation. The lack of a contingency fund, along with the near depletion in the City’s unassigned fund balance, leaves the City vulnerable to unexpected events.

Key Recommendations

• Work with District officials to eliminate the $16.5 million gap in the District’s budget.
• Work with District officials to identify alternatives to borrowing funds to purchase textbooks.
• Recalculate the estimated amount of Social Security tax payments the District and City will be responsible for and amend as necessary.
• Develop a plan to maintain fund balance at a reasonable level.
• Adjust the transfer from the Community Development Fund to accurately reflect the transfer and address the budgetary shortfall created.
• Review the revenue estimates for charter school payments, mortgage tax, income tax surcharge, parking violations and amend as necessary.
• Develop a plan to maintain fund balance at a reasonable level.
• Consider adjusting the appropriation for tax certiorari payments and provide a financing source for the tax certiorari settlements.
• Review the estimates for police overtime and amend it if necessary.
• Consider establishing and funding a contingency fund.
• Pass the necessary amendments to change the fees for parking violations, and other fees.
• Pass a resolution to raise water rates prior to the adoption of the budget or lower the estimate for water rents.