At the February 14th New Rochelle City Council meeting there was a lengthy discussion about the Main Street Core project which proposes to add 500 residential units to our downtown while also dramatically upgrading the parking facilities in the area.

It’s a complicated deal due to the conflict between the City’s desires (better parking, affordable housing and tax revenue) and the developer's need to earn a reasonable return on investment. Our Commissioner of Development, Michael Freimuth, is working hard to structure a deal that works for all the parties involved. As part of his efforts, he sat down with the School Administration's finance team to find out how much tax revenue would be required to support a possible inflow of new students from this project.

Mr. Freimuth is to be commended for this, showing once again that he will try his best to get to the right answer on development issues, rather than the politically expedient answer.

The old adage in real estate is location, location, location. Well, for the purposes of future development in New Rochelle, it should be parking, parking, parking.

The parking situation in downtown New Rochelle is woeful. Since 1995 we have lost about half of our on street parking inventory and consolidated into the New Roc lot which is difficult to access and not centrally located. Recently my wife and I went out to eat at Alvin & Friends. It was fantastic but we had to park at the HSBC lot next door and risk having our car towed. A few weeks later we went to Bar Taco in Port Chester and had no trouble at all parking in their enormous and free parking lot that parallels the main strip downtown.

Dear Neighbors,

Election Day is next Tuesday, November 8th, and I have been working on the campaign to elect Ilyse Spertus to represent District 5 on City Council. I would like to let you know why I’ve suddenly gotten involved in local politics.

For some time now I have been frustrated with the pace of development in New Rochelle. White Plains has sprinted ahead of us and now even Port Chester (Port Chester!!!) is thriving with new commercial and retail development. Fairway opened in Pelham and Whole Foods is opening in Yonkers.

Relatedly, last May I tried to get a reform candidate onto the School Board when I found the school budget to be grossly mismanaged. Some of you know that I found $20 million hidden in reserve accounts, unspent and growing, while the administration was cutting services and claiming poverty. Many members of the Board of Education (or perhaps all of them) did not know about these funds. The next few school budgets will be even tighter than the last one and we need significant financial help to maintain the current level of service.

A vote for Ilyse Spertus in November is a vote for rebirth in New Rochelle and a way to help our talented Mayor achieve his vision for our city.

I am the Treasurer for the campaign to elect Ilyse Spertus to District 5 City Council. Ilyse is running on the Republican and Independent lines, so you might think that I am affiliated with one of those parties. I am not. In fact, I am not affiliated with any political party. When it comes to politics, I support individuals based on their abilities, their effectiveness, and their intentions. And in this election, I will be voting for Ilyse Spertus for District 5 City Council and Noam Bramson for Mayor.

Mayor Bramson has some excellent qualities that make him well suited to be our mayor. He is smart, personable, articulate, and very knowledgeable about how government works. But if you’ve walked around our city lately, it’s clear that his terrific skill set has not been enough to improve our quality of life. Mayor Bramson needs some help as all executives do.

I am the Treasurer for the campaign to elect Ilyse Spertus to City Council representing District 5. Ilyse asked me to join her team after examining some of the analytical work I did for Bob Cox when he was running for School Board. So, in addition to managing the campaign’s cash flow, Ilyse has asked me to look into the state of affairs for our city.

Where the school had a spending problem, the city has a revenue problem. Unfortunately, that means the city’s deficiencies will take more time and effort to correct. A lack of engagement by the community (myself included) has led to the creation of a local government that is lacking in some needed skills and, worse, has a mindset that we need to beg for business. But New Rochelle has some fantastic assets: an ethnically diverse population with a wide range of skills (from real estate to finance to contract negotiation to marketing and more), fantastic topography like our crown jewel waterfront properties, and a fair amount of affluence. These assets are just begging to be tapped, and one reason I support Ilyse is because she wants to lean on the community to help our city realize its potential.

When I first started paying attention to matters of the school board back in March, I was shocked with what I had found: out-of-control spending, a broken budgeting process, and a seemingly disengaged Board of Education. As I dug into the school’s finances, I turned up more and more disturbing information. For example, the sum of the Principal’s salaries in Appendix C don’t match the budget line item on page 42 (Section 2020.150). The over-budgeting in that line could fund 2-3 more teaching positions alone! To hear the whole sordid tale, read my full account in the following links:

A Financial Analyst’s View of the New Rochelle School System - Part 1

A Financial Analyst’s View of the New Rochelle School System - Part 2

A Financial Analyst’s View of the New Rochelle School System - Part 3

A Financial Analyst’s View of the New Rochelle School System - Part 4

A Financial Analyst’s View of the New Rochelle School System - Part 5

Adam D. Egelberg, CFA

For this article, I’m going to move away from story telling and get right to the point. Here are my preliminary findings from reviewing the budget history and the audited financial statements of the school district.

It appears the Board of Education is making staffing and programming decisions without critical financial information that they need. One would think that if there was any single item in the budget that should be accurate, it would be the Superintendent’s salary. But even that appears to be off, as you will see below. I believe that many of the staffing cuts planned for the upcoming school year are not necessary, and I encourage the Board to bring in an outside party to perform a forensic accounting analysis of the school’s financial position and produce a plain language report that is easily understandable for the layperson.

My earlier findings that the Administration’s budget projections were too high appear to be correct. From 2006 through 2010 it appears that the school system generated a “profit” of almost $16 million by spending less than it was allocated.

The Importance of Accurate Budgeting

The creation of an accurate budget is crucial when it comes to figuring out how much money we have to spend and where to spend it. If the Board of Education accepts budgets that are inaccurate, they could end up spending money they don’t have, or lay off staff they might otherwise keep. In my mind, the annual budget is the key tool available to the Board for managing the finances of the school system.

Before I start going into the numbers, I want make a brief mention of those expensive budgets I purchased. Nine of the ten were left-over bounded copies from prior years. Only one was a photocopy. So the Administration, with the full knowledge of the School Board, charged me for budgets which I had already paid for with my property taxes.

Now that you have the background story, it’s time to dig into the numbers. I believe the New Rochelle school system is facing a $35 million cumulative deficit over the next five years as shown in the chart above. If this comes to be, then we will have to make massive cuts in staffing and elective programs. For those who may think I’m crying wolf, consider that we are already cutting teachers, nurses, busing and other services despite a rising revenue base.

How did this happen?

In Part I, I explained how I came to be involved with the New Rochelle school budget. In Part II, I explain why the school budget provided to the public makes a performance evaluation difficult.

The preliminary budget presented to the School Board and the community in early March of this year was more remarkable for what it did not contain than for what it did contain. The first section of the budget book shows 11 years of enrollment trends, 11 years of state aid, and 22 years of history showing the decline in New Rochelle property tax assessables. But there was no history for school spending beyond a single year, and without that it is impossible for the Board to gauge the long term effectiveness of the administration in spending its funds wisely. So I set off to create that history.