Franklin-Essex-Hamilton BOCES' Adirondack Education Center near Saranac Lake is seen in January. (Enterprise photo — Chris Gaige)

SARANAC LAKE — Local school boards of education are preparing to vote on Franklin-Essex-Hamilton BOCES’s proposed $4.6 million administrative budget later this month.

The “cooperative” part of the “Board of Cooperative Educational Services” name refers to the fact that BOCES allows schools to share costs of large purchases and services. It also offers career and technical education classes to the 10 North Country school districts in its reach.

At a Saranac Lake School Board of Education meeting last week, FEH-BOCES Superintendent Dale Breault said the BOCES budget is often misunderstood, and explained the intricacies of how it works.

On April 29, school boards around the region will vote on the administrative budget, and on several people nominated to fill vacant BOCES board seats.

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The budget

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FEH-BOCES has a $36,399,884 total planned budget for the coming year — a $32,599,452 program budget, a $4,558,444 administrative budget and a $412,062 capital budget.

The total budget is up $2,398,348 from last year, a 7% increase. The program budget is up $2,166,748 from last year, a 7.12% increase. The capital budget is the same as it was last year. The administrative budget is up $1,401,674 from last year, a 44.4% increase. Breault said this increase is actually an accounting move — mostly because they are moving all retiree health insurance into the administrative budget.

The program budget is significantly larger than the administrative budget — around 10 times as big — as it funds the core of what BOCES does: offering niche educational programs, hiring personnel and buying supplies and services which are shared by its member districts. Part of the point of a BOCES is to make large purchases that individual districts can’t afford on their own — things like technology, professional development or labor relations.

Breault said the “administrative budget” is a bit of a misnomer. Although there are BOCES administrators at each of its locations, their funding comes from the program budget, which each district agrees to pay a portion of to get services and programs as part of being in a collective. The administrative budget does fund the superintendent’s salary, as well as a fraction of the deputy superintendent, but it funds other things like supplies and equipment, central office staff — payroll, treasurer, travel or BOCES board expenses.

It’s all the stuff that keeps the wheels of BOCES moving — non-instructional shared services.

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Explaining the increase

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The tentative administrative budget is 44.4% higher than last year’s, but the administrative budget would have been around the same as last year otherwise, Breault said.

BOCES’ “legacy costs” — paying for retirement benefits for former BOCES employees — are rising, according to Breault, and are the largest part of administrative budget. In the past, only two-thirds of retiree health insurance was in the administrative budget, with the other one-third in the program budget. This year, they’re shifting it all in, after an audit suggested they do that to be in compliance with the law.

Because FEH-BOCES has a smaller staff than it did before the Great Recession in 2008, its staffing-to-retirement ratio is “upside-down” with 145 active staff and 160 retired.

FEH-BOCES’ once-healthy reserve has dwindled because claims have been higher than expected, Breault said, which he attributed to a combination of many things, including “medical inflation” and people needing to travel for medical care in the Adirondacks. He said health insurance costs will be this heightened rate or higher for years.

He added that the BOCES “health insurance pendulum” is on the upswing with a 12% rise in cost from last year. Usually, the year-to-year increases are around 3% or 5%. There were several large claims in the consortium in the last year, which are impacting rates for districts around the area that participate. Health insurance alone makes up 65% of the administrative budget.

In addition to trimming its “no fluff” administrative budget, Breault said BOCES is planning on partially offsetting that major increase with new revenue. With this, the overall increase in billing to districts falls to a 7.5% increase — a percentage Breault said he’s not proud of, but that he is proud of keeping it that low despite the challenges.

The revenue to offset the increased health insurance expenses will come from other districts around the state who use FEH-BOCES’ consultation and training services for human relations, labor relations and transportation. Breault said dozens of districts statewide are signed up for these services and that FEH-BOCES has a “good reputation.” These districts purchase the services from the BOCES. Breault said FEH-BOCES plans to add a 6% tax on these services when they’re purchased by other districts, which is expected to generate more than $100,000 in revenue.

Breault said when the people FEH-BOCES hires to run these services retire, only FEH-BOCES districts pay for their retirement.

“It would not be fair for us to have this really robust statewide service, and once those people retire, only the local districts pay for those expenses,” he said.

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Changes in billing districts

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Breault said FEH-BOCES had a business office audit recently because they knew it wasn’t running efficiently. He said they were trying to do too much — sharing business office services with districts and running BOCES educational programs at the same time. He admits they weren’t doing either well and that BOCES wasn’t paying its own bills on time. He compared them to a contractor with the worst house on the block.

Fixing this took some “tough decisions” and “tough conversations,” he said.

BOCES is sending out bills to districts on schedule now, so they expect to get paid on time now. Breault said they have to cut down on BOCES borrowing money to pay its bills, so they are introducing late fees to incentivize districts to pay on time.

If all districts pay their bill on time, BOCES shouldn’t need to borrow. Breault said BOCES paid $160,000 in interest from borrowing money in 2023-24, are expecting to have paid $96,000 in interest when the 2024-25 year is finished and have budgeted for an expected $100,000 in interest costs for 2025-26.

Breault said it’s unfair to have a “Bank of BOCES” where districts who pay bills on time are “subsidizing” ones that don’t and the districts racking up interest on BOCES’ end are costing all the other ones unnecessary money.

FEH-BOCES’ renovations to its centers in Saranac Lake and Malone in recent years have depleted its capital project fund, Breault said. He added that they are looking at a $10 million to replace the roofs on these buildings. In the future, he said BOCES may ask for more than the typical $400,000 annual addition to the capital project fund to speed up the timeline of getting to that $10 million cost.

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Local districts

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Payment of the administrative budget is divvied up by district based on each district’s “resident-weighted average daily attendance,” a formula of the number of students in the district and their attendance rate. Breault said FEH-BOCES has just under 7,000 students across all of its districts.

SLCSD is one of the larger districts, with around 1,039 students.

TLCSD has around 733 students.

LPCSD has around 530 students.

SLCSD Superintendent Diane Fox said that although her district’s budget made cuts to BOCES services, BOCES expense increases for local districts are expected for several years into the future. SLCSD is budgeting for just under $3 million on BOCES services for the coming year — $78,000 less than last year. Fox said the district is adding to its reserves to balance this payment into the future.

Breault said FEH-BOCES has six vacancies on its nine-member board after several resignations. He said four people have been nominated to fill seats — from Lake Placid, Malone, Raquette Lake and Salmon River. There will still be two vacancies, so the rest of the BOCES board will appoint people to serve in the interim.

Last year, the Lake Placid and Malone districts voted against passing the BOCES administrative budget, but were outvoted by a majority of the 10 total districts in the BOCES. Breault said he feels confident this year the budget will pass.