The contingency budget is the budget schools can impose by fiat if voters reject the proposed budget.
Here is an explanation by the NYSUT:
the law defines the contingency budget cap as the lesser of 4 percent or 120 percent multiplied by the CPI increaseAssuming I'm reading this right (pdf file), the CPI for 2010 rose by 1.6%.
That would put the contingency budget cap at 1.92%.
(There are various categories that can't be excluded from a contingency budget, such as tax certs. I don't know how those relate to the cap.)
Inflation in one picture