Schenectady passes its fiscal woes on to schools
Delinquent taxes totaling $3.7M delayed in return
SCHENECTADY The city of Schenectady’s ongoing financial troubles are forcing the city's school district to borrow nearly $3.7 million to cover operating expenses because it won’t get delinquent tax revenue from the city until next year.
Schenectady is required to make the school district whole for any uncollected school taxes. However, the city has two years to do so under state law. The city currently owes the district $3,664,997 in uncollected taxes for the 2010-2011 year.
Speaking At his last Board of Education meeting before leaving the post, interim Superintendent John Yagielski said the city had been paying the delinquent taxes on a one-year lag. However, city officials informed the district that it would not be able to make the payment until May 2013 because of its own cash flow issues.
The city has run deficits for 2010 and 2011. Last year, city officials tapped $4.8 million from its surplus. Schenectady will face its third consecutive year of deficit in 2012, auditor Jim Cusack told the City Council on Monday. Earlier this year, Schenectady made a $1.4 million payment to make the county whole for uncollected taxes — draining its funds.
Yagielski said school officials can issue tax anticipation notes to cover the shortfall and then pay it back over a 10-year period.
The other option would be to tap surplus, but Yagielski said that would pretty much wipe out the entire savings. “We’re too large of a district to get by without having some degree of fund balance,” he said.
The auditor will have to make a special notation that these funds will eventually be coming next year, Yagielski said, which is not generally acceptable accounting principals.
“Typically, the receipt of the cash has to come within a 60- to 90-day period of time to be included in that fiscal year,” he said.
School officials are having discussions with the state Education Department, the Comptroller’s Office and its independent auditing firm of Bonadio & Co. about this.
Board of Education member Gary Farkas asked what would happen if May 2013 came around and the city didn’t pay up?
“They’ll have to get it,” Yagielski responded. “They have an obligation.”
One bright spot is the school district may be able to use some of the $3.8 million it is due in transportation aid to plug the shortfall. The district was denied aid after a clerical error in a legal notice years ago. However, the State Education Department has been authorized to return most of the money. Yagielski said the district has already submitted the formal application to get the aid.
In other business, Yagielski was feted by city and school officials for leading the district for almost two years. Yagielski is returning to retirement at the end of the month and Cortland Superintendent Laurence Spring is taking over the district in June.
Mayor Gary McCarthy made a surprise appearance to present Yagielski with the Key to the City and declared it John Yagielski Day. “This district and this community went through a challenging period. Hopefully, that is behind us and we are focused on the right things.”
Yagielski took over from Eric Ely, who resigned to take a job in Massachusetts. That followed a tumultuous tenure that saw the defeat of two school budgets and former school facilities director Steven Raucci being sent to prison after being convicted of placing explosive devices on the homes and property of his enemies. School officials at the time were criticized for being aware of Raucci’s behavior and not doing anything.
The Schenectady School District PTO Council and Board of Education president also presented Yagielski with plaques.
Cathy Lewis, school board president, thanked Yagielski for his work on finance and budget matters, student achievement and the teacher evaluation as well as rebuilding community trust.
Yagielski said leaving is bittersweet and he is grateful for the chance to be of service to the district, which he praised.
“We have amazing strength. We have terrific students with lots of needs. We have outstanding, committed, hardworking faculty and staff. They’re here because the children need them,” he said.
Also on Wednesday, the board appointed Diane Wilkinson as the new high school principal effective July 1. Her contract is for three years and she will earn a salary of $135,000.
Yagielski said the incoming superintendent had made the recommendation of Wilkinson following a lengthy search process.
She replaces Gregory Fields, who was the interim principal for the last two years. Yagielski said Fields would likely return to his position as the house principal for the high school’s Career Center at Steinmetz.