Contingency budget cap will be 4% in 2009-10
Thursday, January 22nd, 2009 at 11:03 pm by Robert Lowry
Last week, the federal Bureau of Labor Statistics announced that the Consumer Price Index for December was up 0.9 percent from a year ago.
With that figure it is now possible to say that the school district contingency budget cap for the 2009-10 school year will be 4 percent.
The cap is calculated as the lesser of 4 percent or 120 percent of the average monthly increase in the national Consumer Price Index over the calendar year preceding the school year – in other words the average increase for 2008 is used to calculate the cap for the 2009-10 school year.
Although, inflation in December was very low, it was much higher for most of the year. The average monthly increase was 3.8 percent. 120 percent of that figure would be 4.56 percent, so that cap is set at the lesser figure of 4 percent.
These details raise a concern for the future.
With the drop in fuel prices and the downturn in the economy, we are in a period of low inflation. The state budget that Governor Paterson released in December projected that the increase in the Consumer Price index for 2009 would be 1.4 percent. Last week, however, his Budget Division revised that estimate downward. to 0.1 percent.
If that prediction comes true, the contingency budget cap in 2010-11 would be 0.1 percent.
The same calculation would apply in setting the school property tax cap in the Governor’s proposal.
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