School districts that operate under a contingency budget in the 2007-08 school year will have their spending increase capped at 3.84 percent over last year's budget. According to the law, the contingency budget cap is equal to the lesser of 120% of the calendar year average CPI increase or 4.00 percent. In 2006, the average calendar year increase in the CPI was 3.2% and increasing 3.2% by 120% equals 3.84%. Therefore, the contingency budget cap for 2007-08 will be
3.84 percent.

Under a contingency budget, a district may only fund those items that are deemed to be an "ordinary contingent expense." Although an item may be an "ordinary contingent expense," the total amount of a contingency budget may not exceed the contingency budget spending cap. Certain expenditures, such as those for voter-approved capital projects and expenditures attributable to increases in enrollment, are exempt from the contingency budget cap.

Spending increases for the 2006-07 school year under a contingency budget were capped at 4.00 percent over their 2005-06 budget. The following chart shows what the cap has been in previous years:

Fortunately, relatively few districts have been subject to the contingency budget cap. The following chart shows the number of districts on a contingency budget since the contingency budget cap took effect.

Consequences of Contingency Budgets —

An analysis conducted by NYSUT Research and Educational Services of the 21 districts that adopted a contingency budget in 2006-07 found that, in total, there was a $24.4 million difference between the budgets that were first presented to the voters on May 16, 2006 and the contingency budgets that were adopted by the board of education. This means that as a result of the contingency budget law, these 21 districts were forced to make $24.4 million in cuts to education spending. A similar analysis of the 40 districts that adopted a contingency budget in 2005-06 found that, in total, these districts were forced to make $68.69 million in cuts in order to comply with the contingency budget cap.

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