Silver cloud, dark lining: The fund balance for the Buffalo Public Schools has risen to $73.5 million and is the largest in history, but that's no windfall. The money has been saved through actions that are being legally and politically challenged, and the total is just beginning to reach levels that school experts consider prudent.
The district generated a surplus for the second consecutive year, about $12 million in 2005-06 and slightly more than $31 million last year, even more than officials expected. The savings resulted from administrative efforts to tighten down on expenditures wherever possible, particularly in employee health insurance. District officials tried to come up with the best assumptions possible for budgeting purposes, and took a conservative approach to spending. More things went right than wrong, and the district ended up with a surplus.
But financial officials for the district and independent auditors alike have advised Board of Education members that just because there has been a surplus recently, there's no guarantee that will be repeated. A case or two quite literally in point: Currently, there are two court cases lodged against the district by unions.
One is over district-imposed single-carrier health insurance, and the other has to do with pay increases based on longevity. Courtroom wins for the unions in both cases could mean that the district would fall perilously into the red -- reversing about $8 million in health insurance savings and about $8 million in employee compensation savings and leaving the district with a $15 million end-of-school year deficit that would grow to $26.2 million by 2010-11.
The major case involves the way the district shifted from multiple offerings to single-carrier insurance -- imposed by the district, not agreed to during bargaining as the Buffalo Teachers Federation says it must be.
It is in the best interest of everyone, especially the district's students, to reach agreement on single-carrier health insurance and other issues. It's not so unusual these days for private-sector unions to work with management to keep everyone afloat. In the public sector the goal is providing the best possible service within tax-funded budgets, but the need for cooperation is the same. Agreements are better than imposed solutions and court tests.
So at this time, the surplus is no windfall. It's a hopeful sign. But Buffalo still is at the mercy of the state -- the state share of school funding in the city is now 83 percent, an all-time high, and the state faces its own growing deficit and budget shortfalls. And although the current fund balance is the largest in the district's history, it's just beginning to enter the range of "reasonableness" for a district of this size.
The Government Finance Officer's Association is developing guidelines on what boards should adopt as a policy for fund balance, but already has said that a district's fund balance should be 5 percent to 15 percent of its general fund. Buffalo's is still only 7.9 percent of the general fund, near the low end of the association's recommended range.
Cooperation, not confrontation, is the best path to a stronger financial future for the district. In today's fiscal climate, politicians can no longer meet union expectations of more money -- nor can unions expect to get something costly in exchange for each cost-reducing survival effort.
It's hard to believe that two individuals as intelligent as Superintendent James A. Williams and BTF President Philip Rumore cannot agree on a document that assures teachers the same health care coverage under one insurer that they now enjoy with multiple carriers. It's vitally important that someone gets that done.