Honeoye Central School District warns reserves will be needed to balance future budgets; plans five-year instructional and budget alignment

Honeoye Central School District officials told the board during a budget workshop that rising costs and disputed state aid formulas leave the district projecting multi-year shortfalls and likely dependence on reserves to balance future budgets.

The district’s presentation said the state tax-cap calculation allows a 2.03% increase in the local levy without further approval; staff said that increase would yield roughly $221,824 if the board used the full cap. On state aid, administrators said the district’s model run initially showed only 1% growth in foundation aid but the district is budgeting on a 2% foundation-aid assumption based on advocacy feedback.

“Given the signals we’re getting, we feel comfortable moving forward with the 2% foundation aid,” said Derek, the presentation’s lead respondent. He cautioned that state reports are hard to parse and that some aid categories — notably UPK — do not flow to the general fund and must be excluded from comparisons of revenues to operating expenditures.

Why the district expects continued pressure: officials pointed to the state’s wealth calculation, which divides community valuation by pupil counts and can make districts with high property values and low enrollment appear wealthier for aid formulas. The presentation said Honeoye receives among the lowest foundation aid per pupil in its regional component districts, a factor staff and local advocates plan to raise with state lawmakers.

Staff outlined how reimbursable aid components — building aid, transportation aid, excess-cost aid for special education, and BOCES reimbursement — interact with the budget. Administrators said recent state-policy changes are making more BOCES salaries aidable, which increased the district’s BOCES-reimbursable amounts in their run; at the same time transportation and instructional-material aid formulas create volatility as enrollment declines.

“We are looking at a multi-year projection that is concerning,” Derek said. He told the board the district is using $665,000 of reserves to balance this year’s budget and that, under current projections, the district may need about $7 million in reserves to get through the 2028–29 school year. The district reported roughly $7.7 million in total reserves but noted constraints on some of those funds: about $3 million in a capital-building reserve that is only spendable with voter approval and other reserves that are restricted by law.

To bridge the gap without immediately raising the tax rate beyond the cap, administrators outlined a three-part strategy: (1) pursue a five-year instructional plan tied to a five-year budget so program reductions and staffing changes are coordinated; (2) continue advocacy for changes to the state aid formula and monitor proposed foundation-aid increases; and (3) explore targeted use of reserves as a temporary runway while the district implements efficiencies.

“Reserves give us a runway while we align curriculum, staffing and the budget,” Derek said, urging prudence in which reserves are deployed because some are legally restricted.

Board members asked whether the district would pursue a supermajority to exceed the tax cap; staff said that option is not being pursued at this time and the district prefers to use reserves while it completes the five-year plan. Superintendent Fluke and board members also noted that staff are exploring in‑district hires for certain services (for example, an occupational therapist) where contracting through BOCES may be more costly.

Next steps the presentation listed included: continuing advocacy with regional superintendent networks and state associations; asking BOCES to finalize program cost estimates; convening the finance committee (scheduled for April 6 in the presentation); and building the five-year instructional plan that will inform long-term budgeting.

The workshop portion concluded without a change in tax-rate policy; board members directed staff to continue refining numbers and to return with more detail on the five-year plan and recommended reserve strategies.