Financial adviser warns Saugerties district to prepare for lower state aid, rising costs and shrinking reserves

Rick Tims, a financial adviser engaged to prepare the district's long-range plan, told the Saugerties Central School District Board of Education at its Jan. 14 meeting that projected revenue growth from state aid is largely flat and the district faces several cost pressures over the next five to 10 years.

Tims said the district must plan for the end of federal COVID-era grants, sharply higher Employee Retirement System (ERS) and Teachers' Retirement System (TRS) rates and increasing health insurance and construction costs. "The loss of those federal grants is catastrophic," he said, adding that ERS and TRS rate increases are a "big ticket item" and that ERS rates alone were rising significantly in the current year.

The presentation and supporting slides outlined several specific risk areas: foundation aid appears to be leveling off, building-aid payments can fluctuate, special-education excess-cost reimbursements cover only part of expenses, and some state aid lines (for universal pre-K and other programs) require slots or local capacity to translate to revenue. Tims also described the district's reserve structure and warned that planned uses of reserves for pensions and a capital project would substantially reduce the district's total available balance: "That 12,000,000 turns into 1,000,007 pretty fast," he said when summarizing the combined effect of planned reserve draws and capital spending.

Tims urged the board and administration to tighten discretionary spending, to project June 30 fund balances in February, to develop a vehicle and technology replacement schedule, and to create a capital plan that coordinates the timing of debt issuance, the use of capital reserves and state building aid. He recommended pausing nonessential purchases and noted that bond ratings and future borrowing costs depend on cash-on-hand and fund balance levels.

Board members asked about reserve uses, technology and data-security elements of capital reserves and how the district could preserve debt capacity for future projects. Interim business officials Michelle (first name only in the transcript) and Dan were identified as working with Tims on detailed projections and document collection.

Tims concluded that the district has time to respond but must act now to build a realistic long-range projection and contingency plans: "We have to figure out how much money to carry over because we need to either build reserves or use the balance in this year's budget," he told the board.

Ending: The board did not take immediate districtwide budget votes at the Jan. 14 meeting but directed the administration and Tims' team to continue the long-range plan, produce the February cash and reserve projection, and bring a draft capital-replacement timetable and budget-impact scenarios to a future meeting.