Clarifying 'Costs' of Education in Southampton

It’s easy to get confused about the reported “costs” of education because similar terms with different meanings are used in media and state reports. When you read in the newspapers that Southampton spends, say, $34,000 per pupil versus a reported lower cost in another district or regional average, this figure is obtained by dividing the total budget by the total number of students.

Such quoted figures assume that we spend every last authorized dollar in our budget. We don’t. Our “cost” is actually lower. Other districts might spend a higher percentage of its budget, so the final “cost” for both districts could be closer. You need to know whether you are referencing budgeted or actual, final costs, and what kind of costs.

New York State differentiates between Total General Fund Expenditures per pupil (TGFE) and Approved Operating Expense per pupil (AOE).  TGFE includes all expenses, including a pro-rata share of district debt, while AOE excludes some overhead and focuses on yearly staff, materials, etc. expenses. Why is that worth understanding?  A district with a high level of debt would have a higher TGFE, while their AOE may be below that of other districts.  Similarly, a district with little debt would have a TGFE and AOE that are closer together.

How does this apply to Southampton’s costs per pupil? Several years ago, Southampton had no bonded debt and a high TGFE and AOE per pupil. When the $53.4 million bond project was approved, the debt-driven portion (principal and interest payment) of total “costs” began to go up.  However, the operating portion of the budget began to go down as a result of cost containment efforts initiated at the same time.  Southampton’s AOE cost per pupil has been going down about $2,000 per year.

Yearly operating budget increases have been below 2 percent for the past three years.  The proposed 2011-12 school budget has an operating increase of 1.12 percent.  The final step-up to level debt service will add 1 percent for a total budget increase of 2.12 percent in 2011/12.

Since 2008-09, the has added required debt payments, now totaling $3.97 million per year, to yearly operating costs, while seeing the tax rate decline from $2.32 per $1,000 assessed valuation to an estimated $2.26 per $1,000 in 2011-12.

This is due, in varying measures, to management of yearly budgets, fiscal stability and reserves, and increases in the real property tax base, resulting in the awarding of Moody’s top Aaa credit rating.  This, in turn, has contributed to lower bonded interest expenses and lower overall costs.

Starting with the 2012-13 budget, the Southampton School District budget will need to reflect only yearly operating expense increases. Debt payments will remain level.  It will then be easier to understand and compare the actual trends in “costs” of education in Southampton to that of other school districts.

If you have read this far, understand and care to learn more about school finance, I will be glad to to do a follow-up piece on clarifying school “taxes” to address such issues as tax base and assessed valuation, tax levy, rate, apportionment, and STAR and other exemptions.  All of these factors interact in different communities to determine an individual’s tax bill.

J. Richard Boyes, Ed.D., in the superintendent of Southampton Public Schools. The School budget vote is May 17.