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School aid flat in wake of COVID-19 pandemic; Numbers mean budget cuts likely

School aid flat in wake of COVID-19 pandemic; Numbers mean budget cuts likely

State budget plan freezes foundation aid; districts will get same aid as this year
School aid flat in wake of COVID-19 pandemic; Numbers mean budget cuts likely
Schenectady High School student Grace Sellie picks up a chromebook from 11th grade principal Jocelyn Hoffman Wednesday.
Photographer: Marc Schultz

CAPITAL REGION -- School districts will have roughly the same level of state funding for next school year as they had this school year, under a state budget deal that was being finalized Wednesday night in Albany.

That is unless Gov. Andrew Cuomo further reduces state aid to districts in the coming months.

The state budget plan freezes the state’s foundation aid funding levels, the core source of state funding for school districts, and includes a “pandemic adjustment” for each district, a reduction in state funding that will match how much districts can expect to receive from the massive federal stimulus package passed last week.

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The math means districts will essentially have the same amount of money for next year’s budget even as they face rising costs primarily driven by contractually-promised salary raises and increases in healthcare costs. That is likely to mean budget cuts for districts across the Capital Region and the state.

That math could change, though, as the budget also gives the governor the ability to make further reductions in school aid throughout the year if state revenues come in lower than expected. Cuomo has said in recent days that the state is anticipating a massive budget hit due to the current COVID-19-related shutdown of most businesses in the state.

Education policy analysts with various statewide associations suggested Wednesday that the flat funding was close to the best districts could expect as state lawmakers and the governor grappled with a budget deficit of around $10 billion or more.

“Flat foundation aid may have been the best we could have hoped for under the circumstances,” said David Albert, director of communications at the New York State School Boards Association, noting that districts are still in a tough situation. “In the absence of a [state aid] increase, there obviously is going to be a revenue shortfall [for districts].”

State aid figures for district-level funding released Wednesday include a line item labeled “pandemic adjustment,” and additional cuts to state funding that equal new funding districts will receive in federal support. Statewide, the pandemic-related reductions equal about $1.1 billion, which is how much the state expects in federal support for education.

The budget does include so-called expense-based aids, reimbursements for money districts already spent on transportation, BOCES and other items. The governor had proposed consolidating some of those funding categories. The statewide new expense-based aid of around $100 million represents the only new funding in the budget compared to the current year’s budget, said Brian Fessler, a legislative analyst with the school boards association.

A group of education organizations across the state, including the school boards association, New York State United Teachers and state Council of School Superintendents, earlier this year called for increasing state education aid by over $2 billion. The group calculated that just to maintain current services and programs, while covering rising costs, would cost districts a statewide total of around $1.6 billion.

To cover their budget gaps, districts can raise local taxes, cut programs and staff or, as many districts did during lean budget years in the Great Recession, work with unions to open collective bargaining agreements to freeze pay or find other benefits savings.

The budget language sets up multiple opportunities throughout the coming year for Cuomo to further reduce state aid to school districts and other local governments if state revenues fall short of what is expected. The governor could impose additional cuts, if lawmakers don’t come up with cuts of their own, at the end of April, at the end of June and at the end of December. School districts begin their fiscal year July 1, so they may know about some additional cuts prior to the start of their budget year, but other cuts may still be looming for the middle of the school year.

“School districts are going to have to be adaptable going forward,” said Michael Borges, executive director of the state Association of School Business Officials.

It’s unclear what precise impact the funding levels will have on local school districts. Many districts faced budget shortfalls and potential budget cuts even under the governor’s January executive budget proposal, which included about $600 million in new state aid to schools.

At Schenectady’s Wednesday night school board meeting, Kimberly Lewis, the district’s business official, outlined the district’s still-changing fiscal picture. She presented a projected budget shortfall of around $4.6 million, while outlining the district’s relatively healthy reserves, which include about $6.3 million in fund balance the district hasn’t earmarked for any particular use.

Acting Superintendent Aaron Bochniak alluded to those reserves when he told board members the district’s top priority was working to preserve staff positions and student programs, while also "belt tightening" expenses that aren't essential to the district's mission. 

“First and foremost, we want all positions and programs to stay in place,” Bochniak said. “We have a healthy fund balance in place. We saved that fund balance for a rainy day and boy this is a rainy day if we ever imagined one.”

He and Lewis said the district would have to be strategic about using its reserves to cover the budget gap, because the consequences of the pandemic and its fiscal impact will play out over multiple years. They cautioned that the budget picture would continue to change over the coming weeks.

"We definitely want to be cautious, because I don't think this is going to be a one-year event," Lewis said.

Niskayuna Central School District officials, for instance, presented a budget outlook to the school board last week that contemplated cutting between 20 and 40 staff positions to cover a $2.7 million budget hole. But those figures were based on projected revenue that included a foundation aid increase of over $360,000 included in the governor’s January proposal. Under the actual budget, that funding increase is wiped away, potentially putting the district in an even tighter spot. The budget also removes a proposal by the governor to fold expense-based aid categories – funding categories based on how much districts spent in previous years – into foundation aid, which could work in the favor of some districts.

The math for districts will play out over the coming weeks as they work to finalize budgets for voter approval. But the timing and logistics of getting voter approval for those budgets – or whether they will even need voter approval – remain uncertain.

Cuomo delayed the annual votes, which also include elections for open school board seats, until June 1 at the earliest. The school boards association and others have suggested the state offer a special allowance for districts not looking to raise local taxes above their tax caps to adopt a budget with just school board approval. They have also suggested using absentee voting or other ways to avoid in-person voting this spring.

“There are a lot of different options on the table and our sense is at this point there is no date certain,” Albert said of budget votes. “As of now, we don’t have a date for the budget vote or board elections.”

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