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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 2018-19 fiscal year are reasonable.

Key Findings

• The Yonkers Public School District’s budget request is $604.8 million for appropriations. The District has appropriated all of the $24.1 million projected unassigned fund balance at the end of the 2017-18 year; however, this appropriation must be approved by the Board of Education and City Council before it can be used. If the fund balance is not approved or available at year end, the District could have a $24.1 million budget gap.
• The District’s budget request does not include an appropriation for textbooks, and underestimates the appropriation for personal services.
• While the District’s proposed staffing reductions create a balanced budget, after they are implemented, the District will have no remaining fund balance. Therefore, when preparing the 2019-20 budget, the District will have to find additional funding sources and/or reduce services, which may have a significant impact on students and residents.
• The City continues to rely on nonrecurring revenue, such as specialized State aid and fund balance, to balance its budget.
• Revenue estimates for metered water sales and income tax surcharge may not be achievable.
• The City will incur additional debt and interest costs by bonding the cost of tax certiorari claims instead of financing them through the operating budget.
• The appropriations for overtime (firefighting and police) and workers’ compensation insurance could be underestimated.
• The City’s proposed budget does not include a contingency appropriation. The lack of a contingency fund, along with the decrease in the City’s unassigned fund balance, leaves the City vulnerable to unexpected events.

Key Recommendations

• Either approve the appropriation of fund balance or eliminate the potential funding gap.
• Identify alternatives to borrowing funds to purchase textbooks.
• Develop a plan to limit the impact of staffing cuts.
• Evaluate the expectation of receiving $5 million in specialized State aid and amend it as necessary.
• Develop a plan to maintain fund balance at a reasonable level.
• Review the revenue estimates for metered water sales and income tax surcharge, and amend as necessary.
• Consider adjusting the appropriation for tax certiorari payments and provide a financing source for the tax certiorari settlements.
• Review the estimates for overtime and workers’ compensation insurance and amend as necessary.
• Consider establishing and funding a contingency fund.
• Pass a resolution to approve the appropriation of fund balance for the District, identify alternate funding, or lower appropriations.
• Pass a resolution to raise water rates prior to the adoption of the budget or lower the estimate for water rents.