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December 1, 2012

Area school officials say insolvency is in sight

By Mark Boshnack
The Daily Star

---- — Area superintendents agree with the results of a recent survey that warned of financial and educational threats challenging state schools.

The report by the New York State Council of School Superintendents found that financial insolvency is on the horizon within two years for 9 percent of state districts. 

Eighteen percent said that within two years, their districts may become educationally insolvent, unable to fund all state and federal mandates for instruction and student services. 

The situation has been developing for at least three years, Unatego Central School Superintendent Charles Molloy said.

“The state has been balancing its budget on the back of school districts,” he said.

The $500,000 cash reserve, or fund balance, that the school had left after dealing with last year’s state aid cut of more than $1 million is not enough to meet the districts future needs, he said.

“We probably have enough left to put together one more budget,” he added. But unless something changes, “I see insolvency.”

For the 2012-13 budget, the district had to take drastic measures to deal with the state aid reduction that included a gap elimination cut of $1 million. Besides dipping into the fund balance, the district cut five teachers and eight teachers’ aides, as well as reorganizing the two elementary schools. 

Molloy previously said if the district faced a similar aid cut this year it would have no choice but to close Otego Elementary and cut unmandated programs, but that wouldn’t be enough. 

The state has already informed the district that it faces a $700,000 increase alone in mandated Teachers Retirement Service payments.

“We have to get rid of the gap elimination adjustment,” he said. “I can’t in good conscience cut programs that encourage kids to stay in school,” he said. 

At Franklin Central School, Superintendent Gordon Daniels said the formula the state uses to distribute aid is unfair to poor rural schools. For instance, with a student population of about 295, the district lost $2,800 per student during the last two years. A similar school on Long Island lost $750 per student, he said. 

The gap elimination adjustment cost the district $400,000 for 2012-13. The district’s budget gap was $357,000. To meet the shortfall, staff has been cut so “we are down to the bare bones. There is not much else we can do without affecting programs.”

If the state keeps cutting and shifting the burden to the local taxpayer, there will come a point where “we can’t do this anymore,” he said. “We are not there yet.”

He said he was waiting on “pins and needles” to see what a committee appointed by Gov. Andrew Cuomo would say about reducing costs and reorganizing schools. 

Sidney Central School Superintendent Bill Christensen said he agrees upstate schools don’t receive as much as their downstate counterparts. But, Sidney has taken cost savings steps, including closing two elementary schools in 2005, that have left the district in relatively good financial shape despite state cuts. 

The challenge is that while the district is taking steps to improve efficiency, including using more BOCES services and cutting three administrators and other staff during the past three years, there are huge increases in state and federal requirements, such as increased teacher evaluations. Because of this, state aid has to keep pace with the cost of living for the district to avoid a future problem, he said. 

Unadilla Valley Central School Superintendent Robert Mackey said that if state aid does not increase, insolvency is not imminent. His school is in a better position than others because about 38 positions out of a staff of about 200 were cut in the last two years. When someone retires, the district examines whether the position has to be filled to meet state requirements. The various unions have also been cooperative in helping keep costs under control, he said.

He added that this has been an  issue for several years as the state has cut aid, resulting in larger class sizes and cuts in electives. He couldn’t say what the future would be beyond five years if aid does not improve. 

Oneonta City School District Interim Superintendent David Rowley said the district has made some large cuts to deal with the reduced state aid, including closing Center Street School.

“We are in a similar situation to other schools,” with reserves dwindling to preserve programs, he said. There have been a number of staff cuts during the past several years. If the situation doesn’t change, more programs will be affected because so many cuts have been made, he said.

“Nobody’s immune anymore,” he said. “It’s extremely serious.”