Monday, May 21, 2012

QUESTION: What will the $59 million in State Incentive Aid be used for?

 What will the incentive aid be used for and what will happen when it is gone after year 14 (or after 2026)?

Primarily the money will be used in order to accomplish four goals - reestablish fiscally strong reserved funds for the new district; enable the first year of the transportation portion of the merger plan to go forward with no new impacts; pay down some of the debt that the new district will inherit from the three old districts; and reduce the tax levy that comes with assimilating the three districts into one.

Before talking about each of those, it is important to recognize that State Incentive Aid is often a driving force in deciding whether or not to vote for a merger. In the case of the Herkimer-Ilion-Mohawk (H.I.M.) merger, almost $59 million are projected to be available in incentive monies for the new district. This money is paid out at a flat rate for five years, then at year six begins to be reduced annually by roughly $400,000 for each of the next nine years.

So how will the four goals mentioned above be accomplished? 

  1.  Reserve Funds - Roughly $10 million dollars will be placed into the reserve fund of the H.I.M Schools over the 14 years that incentive aid comes to the district. This money will basically come (other than the first year) at a clip of $1.2 million for 4 years then a declining balance each year after that up until 2026. 
  2. Aid to Transportation - For the first year of the merge only, about $784,000 will be used to address any first year costs to establishing the new transportation plan for the district. 
  3. Debt Reduction of New District - $1 Million a year, for the first 10 years will be used to pay outstanding debt of the new district. While the total debt of the district is far greater than $10 million, any reduction of this debt helps free more money toward other costs in the district. 
  4. Reduction of the Tax Levy - $4 million will be used annually for the first 5 years to keep tax levies at or below current amounts for residents of all three current districts. This will then be reduced proportionately over the next 9 years.

So what happens when the money from state aid is gone in 14 years? There are several things that should help to ease the transition from having this state incentive aid to NOT having it. First, more than $10 million will have been placed in reserve. Part of those monies could be used to continue to help mediate the tax levies to some extent. Second, as the district begins to gel, undoubtedly there will be savings due to improved coordination and efficiencies. Third, there are already savings built into the present plan, through efficiencies in teaching and class sizes etc.

But more importantly that any of those, is that we, as voters, have the right and the obligation to hold the new Board of Education of the H.I.M. District responsible for properly maintaining the interests of all of those that pay taxes. So IF for some reason when the 14 years of incentive money is depleted we are not in a fiscally sound environment, we can and should hold those on the H.I.M. Board of Education responsible.

If you have other questions or comments please let us know at !

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