Cyber-heist complicates tough budget year

PHOTOGRAPHER: Justin Mason

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Uncertainty is clouding the Duanesburg Central School District’s budget this year.

Gov. David Paterson’s proposed budget would shave more than $787,000 in state aid from the school and the continuing federal investigation into the online theft of roughly $497,000 is forcing the district to dip heavily into its reserves. As a result, the only thing certain about the budget planning is that it’s going to be difficult for the small district.

Superintendent Christine Crowley said the governor’s proposed gap elimination adjustment — a large funding cut on top of the flat aid — combined with continued rising costs will result in a $1.19 million shortfall for the district. The addition of federal stimulus fund will help reduce this by roughly $400,000, which is not enough to prevent draconian cuts.

“We’re going to have to work at this point under the assumption that we’re going to have to cut another $800,000 out of our budget,” Crowley said Friday.

And that’s before even considering the nearly half-million dollar deficit caused by December’s cyber-heist. Over the course of five days, hackers attempted to transfer an estimated $3.8 million from the district’s account with NBT Bank to destinations overseas. The bank was able to reverse the bulk of the transfers. Yet federal investigators haven’t given the district any indication as to whether the lost amount will ever be recovered.

Crowley said the district’s insurance carrier doesn’t intend to cover the loss. And she’s uncertain when the FBI investigation will end.

As a result, Duanesburg had to transfer from its fund reserve to patch the hole, which amounts to about 3.3 percent of the 950-student district’s $14.8 million operating budget. These reserves are often used to offset disparities between the proposed tax rate in the adopted budget and the actual figure that is determined once the town’s tax rolls are ratified.

The district has scheduled community forums on the budget for Feb 24. and March 1. The Board of Education is expected to review a first draft of the 2010-2011 spending plan on March 2.

shaky ground

Crowley said the unknowns are making it even more difficult to establish a framework. She said the board will have to craft the budget under the assumption that the funding isn’t there, meaning deep cuts could be in the making.

Unfortunately, Crowley said, very little of the district’s budget is discretionary. She said consecutively tough budget years has left few areas to trim.

Last year, the budget gap was closed by a tax rate increase of 1.6 percent, $258,000 in cuts and the restoration of some state aid through the federal stimulus package. Crowley said the last year of federal stimulus funding won’t put nearly as much of a dent in the proposed reductions in state aid.

Unfortunately, the end result could be a greater burden on local taxpayers. Crowley said the district will aim to reduce the impact, but is having trouble identifying areas to cut that wouldn’t hurt school programs.

graduation planning

However, district officials plan to help the class of 2010 raise funds to host their graduation ceremony at Proctors for the first time. Crowley said $1,455 is already budgeted for graduation, which will cost $3,000.

Moving the graduation from Duanesburg to Schenectady drew strong criticism from some parents who argued it would cost more and be breaking with a long-standing tradition in the district. The majority of students polled by the district, however, indicated they preferred the event at Proctors.

The school board ultimately agreed to not put the extra cost in the budget, rather seek donations.

“This is not a fee or requirement,” Crowley said. “We are simply making this opportunity public for those who may have an interest.”