Tuesday, May 26, 2020

Dear North Shore Parents, Community Members, and Faculty,
I Hope you had a restful Memorial Day weekend. Below please find Budget Blast #3.
Reserves are important and are among the most frequently asked question that I receive. Each district has them and each district has a different approach to how they are formed, funded, and utilized. Some districts have more in reserves and some have less. That said, reserves are very important to us in North Shore as a result of our on-going litigation with LIPA and the taxes that are generated from the decommissioning of the Glenwood Landing Power Plant.  This is a question that has come up before, so I thought it would be helpful to resend to you today. It's a little long, but it is important to explain them fully to you.
Q. Dr. G., can the District use the monies currently in reserves to pay for the scope of items within the budget?
A. It’s actually an interesting question, and the truth is that it really depends on whether the reserve is considered Restricted or Unrestricted. In the interest of full and complete transparency, let me take you all through a full accounting of the District's reserves. Most of us have had to rebuild a bank account in our lives. Savings usually take a long time to build, can disappear very quickly, and are likely to take a long time to re-build. Reserves are no different. We actively use our reserves each year to offset taxes and again throughout the year for the purpose of reducing our expenses. 
The Proposed 2020-2021 Budget utilizes $1,773,516.26 to offset the levy.  Proposition 2 uses an additional $3M in reserves to fund the renovations of the Nurse's Office at Glen Head Elementary and both locker rooms at North Shore Middle School.
Restricted Funds
Restricted reserves can only be used for specific purposes and they can only be accessed with voter approval for their intended purpose. They help us to plan against existing liabilities in all facets of our operations. We use these monies to protect ourselves against existing liabilities such as building repairs, workers’ compensation claims, unemployment claims, retirement system payments, and capital projects approved by the voters.
Based upon our most recent audited financial statements, our Restricted Reserves total approximately $16,328,322.49. These can only be used for a specific purpose as outlined in statute and with approval from either the voters or sometimes from the Board of Education in special circumstances.
Assigned Fund Balance from 2018-2019: $2,300,000.00
These are monies from additional interest income earned on investments last year and savings from the 18-19 budget that are being used to offset the 2019-2020 tax levy. It includes money from the special legislative grants, also used to offset the tax levy.  
The total is comprised of the following:

Fund Balance from the prior year $1,200,000.00

Designated Special Grant to offset the razing of the Glenwood Landing Power Plant from Senator Marcellino and Assemblyman Lavine: $1,100,000.00

Assigned Encumbrances: $1,660,895.37. These are funds that are carried over from 2018-2019 purchase orders that were issued, but not fulfilled by the end of June 30, 2019.  They must be used to pay for our outstanding expenses.

Subtotal: Total Restricted Reserves: $20,289,217.86
Unrestricted Funds
The District has much more flexibility when using our unrestricted reserves and we can use them at our discretion. However, it is important to preserve the existence of these monies. This is essentially our savings account of accessible money that we would only use in the most serious of circumstance to fund a project that would not have been budgeted for or not covered by the District’s insurance carrier.
These unrestricted reserve funds can be used at the Board’s discretion. However, a portion of the special grants are being used each year to offset the tax levy. We've already been using a portion of these, judiciously and openly each year, to deal with previous tax effects related to the demolition of the Glenwood Landing Power Plant. Since the impact of the tentative LIPA settlement with Nassau County remains largely unknown, some of these reserves are specifically intended to help with a LIPA settlement - and we will use them in that manner since they are intended/ restricted to be used for that specific reason.
Unrestricted Reserves: $4,311,997.44

Special Designation- LIPA: Balance of unused Special Grant to offset razing of Glenwood Landing Power Plant from Senator Marcellino and Assemblyman Lavine  $2,884,879.53

These unrestricted reserve funds can be used at the Board’s discretion. However, a portion of the special grants are being used each year to offset the tax levy.  We've already been using a portion of these, judiciously and openly each year, to deal with previous tax effects related to the demolition of the Glenwood Landing Power Plant. Since we are simultaneously studying the financial impact analysis of the tentative LIPA settlement with Nassau County, some of these reserves are specifically intended to help with a LIPA settlement - and we will use them in that manner since they are intended/ restricted to be used for that specific reason.
Subtotal: Total Unrestricted Reserves: $7,196,876.97
Grand Total: $27,486,094.83
It would be impractical at this time to use the monies in our reserves to fund projects identified within the school budget for these reasons:

New York State Statute would prohibit the District from using any of the Restricted Reserves for anything other than their intended purposes.

The long-term financial health of the District is dependent upon our ability to hold available and unrestricted funds to meet the complex needs of a complex organization.

I am always available to the community and I welcome anyone with any general or specific questions to contact me directly. While some of this can be confusing I wanted to be sure to be upfront right away and address the community about how we hold and utilize our reserves.
Please know that I will continue to answer budget questions in these weeks leading up to the Budget Vote on June 9, 2020. Please learn the facts and stay informed. These Budget Blasts as well as my school closure updates will be posted to our school website at www.northshoreschools.org as well as to our social media pages. As a reminder, all absentee ballots must be received by the district clerk on Tuesday, June 9, 2020, no later than 5 PM. 

All the best,
Dr. Peter Giarrizzo
Superintendent of Schools