Gov. David Paterson’s decision on Tuesday to withhold $2.1 billion in state aid to school districts until June 1 caught Capital Region school officials by surprise.
“We could be compelled to borrow money,” said Superintendent L. Oliver Robinson of the Shenendehowa Central School District in Clifton Park.
Shenendehowa was expecting $6.3 million in a March 31 aid payment. No final decision on borrowing for cash flow reasons had been made, he said.
“I think it’s irresponsible,” Robinson said about the governor’s announcement, adding it shows “the lack of a real fiscal plan at the state level.”
Paterson said the state’s cash-flow problems forced him to delay the payment, which is not due by statute until June 1.
“The only way our state can put its long-term fiscal house in order is through significant, recurring spending reductions,” Paterson said in a written statement. “In the short term, however, plummeting revenues and record deficits have once again forced me to take extraordinary cash-management actions in order to ensure the continued orderly operation of our government.”
Paterson said the state intends to meet the June 1 deadline, “assuming sufficient cash is available at that time.”
Matt Anderson, a spokesman for the state Division of Budget, said school districts across the state were warned that the state — facing a $9.2 billion budget deficit — may have to defer aid.
Leaders of other school districts in the region had similar complaints about the governor’s announcement.
“It’s interesting that school districts are being used for political purposes,” said Superintendent Janice White of the Saratoga Springs City School District, which will have $5.1 million of its state aid withheld.
“Some districts will have to go out and borrow,” White said. She said she did not think the Saratoga Springs district would have to borrow money for cash-flow purposes, but district officials were still studying the withholding language and numbers.
The Schenectady City School District will have $6.8 million in state aid withheld.
Superintendent Eric Ely said he was still trying to assess the potential impact but said it could create a cash-flow problem in which the district would have to borrow money through another revenue anticipation note.
“Our taxpayers will have to pay extra interest. It’s not a good thing,” he said.
Greater Amsterdam School District Superintendent Thomas Perillo said the district won’t be greatly affected by the delay.
“We will just have to use money we have from other sources and when we get the money [from the state] we will replace it,” he said. Perillo said the district won’t be borrowing any money to make up for the $2.2 million being withheld.
This is the second time in just a few months districts have faced this scenario. In December, Paterson ordered the withholding of $750 million in payments to school districts, local governments and other entities in order to prevent the state from running out of cash. These withheld funds were ultimately paid in January when the state’s operating margins temporarily improved.
Ely said Schenectady was not affected in December as it would be during this withholding.
“Our state aid is backloaded in the second half of the year,” he said.
When December’s state aid withholdings were announced, several education-related organizations, including those representing teachers, school boards and school superintendents, filed a lawsuit against the state saying the withholding violated the state constitution.
Robinson, who is president of the New York State Council of School Superintendents, said “our lawsuit is still on the table, it’s still being deliberated.”
However, in the case of Tuesday’s withholding announcement, Robinson said it appears that the governor is within his statutory rights to withhold the state aid until June.
“It’s a major cash-flow problem,” Robinson said. “We make plans a year in advance, including when our state aid comes in.”
Paterson said on Tuesday that “unfortunately, the spending plans that the Senate and Assembly have put forward [for the 2010-11 state budget] did not include enough cuts to move us toward the goal of a fiscally responsible and sustainable state budget.
“In fact, in light of the state’s worsening revenue situation, additional reductions beyond even those included in my original [2010-11 state] budget proposal may ultimately be necessary,” Paterson said in a statement.
Categories: Schenectady County
