After years of back and forth with New York, the Panama Central School District is no longer responsible for a hefty penalty thanks to changes in the state budget.

Panama was originally assessed a $4.9 million fine by the state Education Department that resulted from a late final cost report on a capital project from the early 2000s. During that time, the district completed a small maintenance project that it believed to be properly documented as “closed.”

In 2012, the district, upon reviewing the state’s website, found that it still had an “open” project on file. The information was not made available to Panama when it was closing out its 2005 building project. However, in the eyes of the state Education Department, Panama neglected to file a final cost report for the building project within the established timeframe and fined the district.

Superintendent Bert Lictus said Gov. Kathy Hochul originally vetoed a legislative bill that would have addressed it, but the administration said the best way to handle it was through the budget process.

“We’d been told things before, but what we saw was the governor’s office was actually moving forward,” Lictus said. “When they presented their budget to the assembly and senate, they had included language in there that the department of education was able to forgive any outstanding final transportation aid situations. So, it was written into the budget.”

Lictus said the frustrating part of the situation was that in 2011, the state realized the process they were using was flawed.

“Now you’d be notified and they would withhold the aid until you complied,” he said. “When this was found out, they’d already amended the law, but because our violation occurred before 2011, they would not grandfather us in.”

Lictus said the change in administration was helpful in the process. He said the current administration took actions to help schools “get out from underneath this burden.”

“In the past, I believe it was almost like, ‘Sorry, it’s not our fault that you made an error,'” he said. “The current administration in Albany looked at the situation and said, ‘Boy, that’s not good — how are we going to fix it?’ And they fixed it. But, it took a lot of work by a lot of people; this has been going on for 10 years.”

Lictus said $1.1 million of the original $4.9 million fine has been forgiven. Of that penalty, $782,117 in aid was withheld from the school district.

The school was aided in the process by former state Sen. Cathy Young.

“Cathy Young was able to get us $3 million in special aid and grants, but still, with all the help we were given and the forgiveness of this remaining balance, a school the size of Panama had to suffer the loss of $782,000 in aid,” Lictus said. “That’s a lot of money that could have been used for programs here in Panama. That was an expense that we had that no other school had. … There’s only so much money to be had.

“If I’m spending $80,000 a year having my aid taken away, that’s a teaching position, or a counselor, or a social worker, or a resource officer or after school tutoring or a bus run. There are all sorts of ways you can look at it. But it certainly didn’t benefit the district at all — it was a burden.”

Lictus said the forgiveness of the penalty will allow the district to budget with more confidence going forward, and he is glad that the issue is being taken care of before his retirement. He added that he and the district would like to thank Young, state Sen. George Borrello, Assemblyman Andy Goodell, Dr. David O’Rourke of Erie-2-Chautauqua-Cattaraugus Boces, David Little of Rural Schools Association, Renee Garrett, superintendent of Forestville Central School District, Greg Berck of the New York State Council of Superintendents and Maureen Donahue, Southwestern Central School District superintendent.

“I want to thank the Panama community for being so supportive because when this happened it would have been easy for people to start pointing fingers and accusing people and things of that nature, and it never really happened,” Lictus said. “The people have been very supportive.”