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Once you use that money to pay for your fuel oil and your electric bill – what do you do the next year?

North Country schools say cash reserves can't cover Cuomo cuts

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A report released last week by the state Education Department estimates that 74 percent of school districts outside of New York City have a big enough fund balance to pay for Gov. Andrew Cuomo's proposed state aid cuts.

The numbers show that districts have about $1.16 billion in their reserve accounts, along with a little more than $355 million in federal stimulus funds leftover from last year.

But opponents of Cuomo's budget cuts say that's just not true.

They claim the aid cuts will force thousands of teacher layoffs and result in increased taxes, especially in poor North Country districts.

Chris Morris has our story.

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Chris Morris
Tri-Lakes Correspondent

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The Cuomo administration is using the Education Department report as ammunition, stating that districts won’t need to cut back on programming or layoff teachers because they’re holding onto large cash reserves in so-called rainy day funds.

School advocacy groups, however, dispute that claim. According to a second report released last week by the Statewide School Finance Consortium, hundreds of school districts will run out of money next year if Cuomo’s school aid cuts are approved by the Legislature.

Education lobbyists say districts would exhaust their general funds sometime during the 2011-12 school year. In years past, those schools would simply raise taxes to make up for the budget shortfall.

But that option comes off the table if Gov. Cuomo’s property tax cap is enacted. That plan aims to cap local property tax growth at two percent – and the proposal is gaining ground in Albany.

Here in the North Country, lawmakers and school administrators say an across-the-board approach to slashing school aid just doesn’t work.

Janet Duprey from Peru represents New York’s 114th Assembly District.

“I think some of the cuts are going to be incredibly difficult – because they are going to be large” she said.

Duprey adds that the formula for school aid often makes districts like Tupper Lake look wealthier than they really are.

“Because of some of their assessments – the second homes – it appears to be a wealthy school,” she said. “Those who are there, attending the district, don’t reflect what some of the assessments reflect. It certainly should not be considered a high means school.”

Seth McGowan is superintendent of the Tupper Lake Central School District. He says Cuomo is making assumptions based on districts he’s familiar with –places like Westchester County, where school fund balances are plentiful.

“In larger school districts, perhaps the case is that state aid is not a major factor in their spending plan, and therefore they put it into reserves,” he said. “Not in schools that I know of, of our size. He also makes the assumption that there are large reserves to begin with – that’s certainly not the case.”

The same holds true for neighboring Saranac Lake Central School District. Assistant Superintendent for Business Dan Bower says state law only allows districts to maintain a fund balance of four percent of total expenditures.

Under Cuomo’s proposal, Saranac Lake would lose about 12 percent in state aid – or $980,000. Bower says in theory, the district could use its $1 million fund balance to withstand that loss.

“If we spend that – it’s gone,” he said. “Then we would have no emergency funds whatsoever.”

Boyer says running a district with a depleted reserve account goes against the recommendation of the state Comptroller’s Office.

Up to this point, state Senator Betty Little has been a vocal supporter of Cuomo’s executive budget.

But she, like Assemblywoman Duprey, says cuts to school aid need to be handled in an “equitable” manner.

“Any decrease in school aid has to be fair,” Little said. “And if some areas of the state are only losing two, three, four, or five percent and we’re getting 10 or 12 percent – that’s not fair.”

Little adds that a Cuomo proposal to consolidate administrative staff at school districts is one way to cut budgets and fend off decreased state appropriations.

“I do think that the governor also mentioned the idea of consolidating administrative services,” she said. “We’ve talked a long time about the possibility of one superintendent being able to run two smaller schools. State law currently doesn’t allow for that. But those are the things we need to start looking at.”

Jerry Goldman is superintendent of the Saranac Lake Central School District. He says the school is ahead of the curve when it comes to consolidation, having already shut down two of its educational facilities – the Lake Clear and Lake Colby elementary schools.

But the school is still facing double-digit school aid cuts. And Goldman says asking the district to use fund balance to make up for that loss is like asking a homeowner to use their savings to pay for heating and energy costs.

“The problem with that, is that once you use that money to pay for your fuel oil and your electric bill – what do you do the next year?” he said. “We see our fund balance as being available for unanticipated large expenses that we have not budgeted for.”

Goldman adds that his district has already downsized as much as it can, noting that enrollment – after declining for several years – is now starting to level out. That means savings from program cuts and school closures are starting to factor out of the equation

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