Schools fear ‘devastating’ impact of 20% aid reduction
An update from New York state’s budget office indicates that the worst case financial scenario for school districts upstate and down may soon become a reality without some form of federal relief.
The New York State Division of the Budget released an update to the Fiscal Year 2021 First Quarterly State Budget Financial Plan on Aug. 13, which projected a $14.5 billion decline in the state’s general fund and a 15.3% decline in All Funds tax receipts, creating a total loss of $62 billion through Fiscal Year 2024 as a direct result of the COVID-19 pandemic. To offset the revenue loss, the state has reduced spending through June by nearly $4 billion through holding back 20% of payments to localities, which include school districts.
The state’s decision to hold back aid does not come as a surprise: throughout the last several months Gov. Andrew Cuomo has mentioned its possibility should the state not receive enough assistance from Congress, which is currently in a stalemate over a second coronavirus relief package and not due to return to Washington until September.
“The longer that Congress and the (U.S.) Senate do not act with a state relief bill, the more likely it seems that these hold backs could become indeed cuts,” said Dr. David O’Rourke, Erie-2 Chautauqua Cattaraugus BOCES Superintendent and Chief Executive Officer.
Still, O’Rourke and his colleagues throughout the region were surprised by how the reduction was made — districts saw an aid reduction in August Excess Cost Aid payments, which are used for certain special education students, and July Deferred Building Aid payments, according to Jamestown Public Schools Chief Operations Officer Lisa Almasi.
“(The payments) have been approved to be released to school districts, but the Division of Budget has reduced these payments by 20%,” Almasi said. “We will be receiving 80% of the aid amounts that we should be receiving. We are not sure if or when we will receive the 20% that is being withheld.”
“We were given the heads up that the 20% number was thrown out back in the budget was going on,” Dunkirk City School District Superintendent Michael Mansfield said. “You do your best to plan for that, but it’s still hard when it comes.”
The uncertainty, O’Rourke said, now lies in how districts should plan from here.
“The Division of Budget is characterizing these 20% hold backs as hold backs and not cuts at this time,” he said. “That leaves districts, the leaders and boards of school districts in a difficult position as they try to ascertain how to interpret these payments and whether they may ultimately lead to cuts.”
“If they don’t give us that 20%, it will be devastating to nearly every school district in New York State,” Southwestern Central School District Superintendent Maureen Donahue added. “We did not know that’s how they were going to do the 20% reduction. When we were planning for a possible cut in aid, we were given information that it would be off the foundation aid only.”
Instead, Donahue said, the state made the cut to “categorial aid,” which provides funding for buildings, special education and the Board of Cooperative Educational Services.
“Categorical aid is significant for us,” she said. “In a perfect world, this is just temporary because this is hard on districts.”
The formula used, Donahue said, would also be especially “devastating” to districts in Chautauqua County.
“Districts with high poverty rates will be the most affected,” she said. “We may get it or we may not. We have to plan for if we don’t get it and hope for the best.”
Jamestown Public Schools, for instance, received more than $347,000 in excess cost aid and another approximately $340,000 in deferred building aid last fiscal year. The state, then, is withholding roughly $69,500 and $68,000, respectively, according to Almasi.
Sherman Central School, meanwhile, according to Kim Oehlbeck, school business administrator, received “$15,900 less than what we were supposed to get in excess aid. We’re supposed to get around $86,700 and instead, we got about $70,800.”
“This money goes to some of our most vulnerable and at-risk students,” the district’s superintendent, Michael Ginestre, said. “With the political climate being as toxicas it is, we really have to plan on reductions and what we were told we would get. We were hoping to see something done by now and now that it’s at a stalemate, we’re looking at every line item again and looking at all of our expense to see where we could hold the line or trim because we really have to plan that the money we were promised is not coming in full.”
The state’s decision also comes at the most inopportune time — districts are planning to incur significant costs in order to welcome students back safely in a few weeks, O’Rourke and Mansfield said.
“It costs more to operate during a pandemic than it does during normal times and schools already have had cuts to their revenues from the state based on the budget situation,” O’Rourke said. “The school leaders are hopeful and are planning for the worst and hoping for the best.”
“We’re starting to turn over every rock now that this looks like a more likely scenario, “Mansfield said. “Now you’re losing funds on top of that. We’re looking really hard at everything. … We still have some open positions. We may not fill those and may do some other movement around to save money there. We’re looking at every option, working closely with the community and child care council with providing school-age child care for our working families which puts an additional burden on them. Normally they would expect that their children would be going to school for five days a week, but we’re looking at all those avenues in terms of sources for funding in terms of grants and stuff for that. It would not just help the school district but the community.”
Still, the most frustrating aspect to administrators is that some form of relief package has not been agreed to by federal representatives.
“The fact the federal government has not figured this out is frustrating,” Donahue said. “They need to figure out this next stimulus package that will help municipalities and schools.”
Ginestre is encouraged that some sort of deal can be arranged, but said he and his colleagues will continue to lobby.
“(U.S. Rep.)Tom Reed has been hosting monthly calls with superintendents,” said Ginestre, who also serves on a regional legislative committee. “We are lobbying our state and federal legislators to please push to get this stimulus package moving. Schools like ours that rely heavily on state aid are going to be the ones impacted severely for these lack of funds.”
“Ultimately, the pandemic and its fiscal impact is a nationwide issue and it requires a federal solution even at the local level,” O’Rourke added. “School leaders are doing everything they can within their power and control to provide support for students and families with the resources that we have available.”
Added Ginestre, “Knowing school is starting for us in three weeks and they’re at home. …We’re not at home. We’re planing constantly for these changes in order to be ready to go and offer the best we can. But, there’s no doubt that this certainly hurts.”