Could economic troubles endanger aid to schools?
As Wall Street and the economy continue to struggle, major cuts in state funding soon could affect public schools, some education experts said.
Options range from decreasing funds mid-year to a drop in aid meant to make up for years of underfunding to poor, urban districts. Future funding also could be at stake.
Government figures estimate the financial industry represents 20 percent of state tax revenue. On top of that, economic figures show consumer spending is dropping dramatically, which means sales tax revenue also is down for the state.
Schools avoided being targeted in August with the first round of state budget cuts. The declining stock market and fiscal crisis, however, have led Gov. David Paterson to call for the Legislature to make additional cuts in November – an estimated $2 billion worth.
This time, school districts’ funds might not be so safe, said Larry Cummings, executive director of the Central New York School Boards Association and statewide school finance consortium.
“The scope of the economic crisis and the duration will determine if we’re looking at a major disruption or a minor inconvenience for schools,” Cummings said. “Right now, too much is happening too fast. Nobody knows the real scope of this.”
Mid-year budget cuts
The last time schools saw their budgets cut in the middle of the school year was in the 1990s.
Paterson and state legislatures have said they understand that mid-year cuts can be devastating. But education and Medicaid make up the largest portions of the state’s budget.
State Sen. David Valesky, D-Oneida, told a room full of educators last month in Utica, “it is becoming more and more difficult to continue to have areas of the budget that are off-limits.”
Utica Superintendent of Schools Marilyn Skermont said the district has not been told to expect mid-year cuts, but the district is “being frugal in any programs and any hiring considered above and beyond what we need. We try to keep the fiscal account for district in a solid state so we can anticipate whatever may be ahead.”
Cummings warned that the longer the state waits to make cuts, the deeper the cuts could be.
“If they delay the painful decision until next year, then the pain next year will be profound,” Cummings said.
But mid-year cuts are difficult when school districts have entered into contracts that lock them into much of their spending.
“There is a real challenge to meet the obligations they set out for themselves if school funding is cut,” Cummings said. “The task of educating kids doesn’t stop because of a financial crisis in the country. It’s going to be a very daunting task.”
A high level of skepticism exists in Albany and among local school districts that the state will fulfill its promise to boost school funding by $2 billion in 2009-10, the third year of the state’s four-year plan to improve Foundation Aid.
The Foundation Aid is meant to make up for years of underfunding to poor, urban districts. It was supposed to be phased in over four years – 22 percent last year, 42.5 percent for the 2008-09 school year and the rest in the next two years. But even this year’s percentage was cut to 37 percent.
“The Foundation Funding is back loaded, with most coming in the last two years,” Cummings said. “I don’t think anybody expects the state is going to be able to do that. We’re hoping they will sustain the current level of funding.”
But Holland Patent Superintendent Kathleen Davis said even a freeze in state funding would hurt.
“In schools like Holland Patent, aid helps fund many of our programs,” she said. “When the state cut the amount of Foundation Aid this year, it was a $200,000 loss to Holland Patent.”
In Utica, Foundation Aid makes up $71 million of a $125.8 million budget.
Skermont said she thinks if cuts happen next year, they will be in the Foundation Aid.
“We won’t know until probably November or December if that’s even being proposed to be cut,” she said
Next year’s funding
The state budget office is not yet projecting what the economic problems mean for next year’s aid.
State Comptroller Thomas DiNapoli recently released numbers suggesting the state could face a gap approaching $9 billion over the next 18 months.
The governor said he plans to submit his budget proposal in December to help state agencies plan better in their budgets.
Jane Briggs, a spokesperson with the New York State Education Department, said the department is hoping for the same budget as last year.
“The New York State Education Department has submitted an across the board ‘flat’ budget for 2009-10, meeting its obligation to implement the governor’s zero growth budget directive,” she said in a statement Friday.
She added that the department is hesitant to speculate on changes coming out of Albany.
Some think state mandates could be rescinded if the funding is cut, but Cummings said there won’t be much savings in that.
“The real cost savings are needed in areas that are highly charged politically like the pension system and health benefits for public employees,” he said. “Change is very difficult to do especially when virtually everybody in the school district is part of a bargaining unit.”