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The School Budget Explained


Contingency Budgets

This article is one of a series to help explain to residents some of the more arcane and complicated aspects of school budgets.

When the voters of a school district fail to approve a school budget, the district is required by law to operate under what is called a contingency budget. In such circumstances, the school district is restricted to what are defined as "ordinary contingent expenses" — in other words, expenditures that are necessary to operate the regular instructional program, preserve the health and safety of students and staff, and protect the district's property.

When voters reject a school budget, the Board of Education has three options under the law:
     (1) submit the same budget for a second vote;
     (2) submit a revised budget for a second vote; or
     (3) adopt a contingency budget.

If the budget is rejected a second time, the board must adopt a contingency budget.

Under current New York State law, spending in a contingency budget is capped at 120 percent of the rate of inflation. For example, if inflation is 3 percent, the contingent budget cap would be 3.6 percent. This means that a school district may increase its spending no more than 3.6 percent above the prior year's budget. The inflation rate used in the calculation of a contingency budget is announced annually by the State Education Department, which bases its designation on the Consumer Price Index issued by the U.S. Department of Labor.

Please note that the contingency cap is not calculated simply by multiplying the previous year's school budget by 120%. The formula is a bit more complicated. Certain items, such as repayment of debt, are subtracted from the budget before the cap is calculated. Furthermore, school districts are allowed to exceed the cap to accommodate growth in student enrollment and debt service payments previously approved by voters.

While a school board has some latitude in determining what constitutes ordinary contingent expenses, some expenditures are expressly prohibited: for example, equipment purchases that are not related to health and safety, and new capital projects. It is often thought that extracurricular activities, including interscholastic athletics, may not be included in a contingency budget, but this is not the case. However, because activities like after-school clubs and sports are not mandated under the law and fall outside of the regular instructional program, school districts often find it necessary to reduce or eliminate such programs in order to meet the requirements of a contingency budget. This is why we sometimes hear about parents raising private funds for sports in districts operating under contingency.

When a school district states that a proposed budget is "below contingency", it means that the proposed budget-to-budget increase is less than what would be allowed under a contingency budget.

A contingency budget is also sometimes called an "austerity" budget, which is a more descriptive term but is not technically correct.


Note: "Tax cap" measures are under consideration in Albany that would supersede these formulas and effectively turn all school budgets into contingency budgets, regardless of the outcome of local budget votes.