Schools deal with Paterson's budget cuts, funding issues

The Southampton School District, and others in the surrounding area, could be strapped for cash in 2010 if New York State education aid payments do not come through in the coming months.

Governor David Paterson is delaying payments to school districts, explained Southampton Superintendent of Schools Dr. J. Richard Boyes. Mr. Paterson is withholding 10 percent of the December payment of regular state aid, or about $16,000, Assistant Superintendent for Business Maria Smith said recently.

The governor is also withholding 19 percent of the January payment of the School Tax Relief (STAR) property tax exemption, Ms. Smith said. The withheld STAR payment for Southampton totals $76,000, she added.

Dr. Boyes said the district can weather the delayed payments with ease—if they are only temporary delays. But Mr. Paterson has not said whether the cuts will become permanent.

“The question right now is whether or not this is temporary or permanent,” Dr. Boyes said. “While we don’t like a delay, the worst would be for this to be permanent.”

In total, the district receives $2.4 million in regular state aid each year, and $410,000 in STAR reimbursements, Ms. Smith said.

Dr. Boyes said the district will be hard put to formulate a 2010-11 school year budget if the cuts become permanent.

“It’s the future we’re concerned about, especially next year,” Dr. Boyes said.

In the meantime, New York State Assemblyman Fred W. Thiele Jr. of Sag Harbor warned of more financial troubles for schools across the East End in a press release distributed on Monday. He wrote that money provided by the federal stimulus, formally called the American Recovery and Reinvestment Act, will no longer be available in 2011.

Mr. Thiele said that financially beleaguered New York State will most likely be unable to compensate school districts for the losses they will suffer due to the end of the stimulus. The release states that New York State, which is projected to have a deficit of $27.5 billion until 2012, would have to increase funding to schools by 31 percent of its current levels to make up from the loss of federal stimulus funds. Increasing funding by 31 percent will be unlikely with such a tremendous state budget deficit, according to the release.

According to the release, New York State Comptroller Thomas P. DiNapoli said that the end of federal funding could equate to an average local property tax increase of 7.7 percent, if state aid stays constant and school district expenditures do not increase.

Federal funding makes up less than 2 percent of the budget of most schools east of the Shinnecock Canal, according to the release.

In order to compensate for the current withheld payments—or any future cuts—the Southampton School District will most likely have to dip into its unreserved fund balance, a savings account set aside for emergencies. “But we don’t want to take from that, because then we have less for a rainy day,” Ms. Smith said, adding that the district currently has about $2.1 million in the account. “We’ll have to make up for this later on.”

The district’s entire budget is $53 million. Federal stimulus funding makes up 1.3 percent of Southampton School District’s budget.

Mr. Thiele also spoke out against what he sees as Mr. Paterson’s illegal decision to withhold the school aid and STAR payments. “I don’t think he can unilaterally stop payments to school districts, towns, and county governments,” he said. “These are ill-considered mid-year school cuts.”

Mr. Thiele explained that school districts do not have the ability to make spending reductions now, and can only borrow money to pay for what they are losing from the state.

“He’s shifting problems to localities including school districts, which is not the way to go,” he said.

Bridgehampton School District Interim Business Official Dr. George Chesterton expressed concern about the state withholding and possibly permanently cutting payments at a Board of Education meeting held recently.

Dr. Chesterton said during the meeting that while Bridgehampton is not heavily dependent on state aid, it could stand to lose $5,000 in regular state aid and about $8,000 in STAR reimbursements. The district’s budget totals about $10 million. Federal stimulus money makes up 1.6 percent of its budget.

In Sag Harbor, Business Administrator Len Bernard said the school receives about $1.7 million in state aid each year. The delayed payments total about $170,000, but will not leave the school cash-strapped—as long as they are only delays.

“Our cash flow doesn’t really depend on the state aid,” he said. “It’s mostly getting our tax money on time that is the most important thing for our checkbooks.”

The outright loss of a portion of the STAR payments would sting a bit more, Mr. Bernard said. The district stands to lose about $128,000 if the cuts survive battles in the State Legislature. With a budget that is already very tight, the outgoing business administrator said, the school would have to find savings in the current budget or make some cuts to the budget.

Superintendent of Schools Dr. John Gratto has already identified a number of cuts and hoped-for savings in the current budget that he says the district can use to rebuild its depleted unreserved fund balance, which sank to just $65,000 at the end of the 2008-09 school year, according to an audit released last week.

Mr. Bernard said the School Board recently enacted a $100,000 spending freeze, in part as a response to the anticipated loss of state funds.

“If we lost that portion of the STAR payment, we might have to take some more out of the budget,” Mr. Bernard said.