As school districts begin to craft spending plans for next year, some are getting a warning: Cash is getting dangerously low.
Three local school districts – Lewiston-Porter, Niagara Wheatfield and West Seneca – have been told by State Comptroller Thomas P. DiNapoli that they face “significant fiscal stress.”
Eight other districts in Western New York have been cautioned that their financial situations will need work in order to ensure they have enough cash on hand to pay the bills and enough money set aside for unexpected expenses.
“Regardless of which scenario applies,” DiNapoli’s report warned, “these communities will have to take measures now to prevent a more dire fiscal situation from developing in the future.”
Western New York school districts that are labeled as facing “moderate fiscal stress” include Frontier, Evans-Brant, Lackawanna and Holland. The Comptroller’s Office also placed four districts – Niagara Falls, Bemus Point, Ellicottville and Scio – in a third category, “susceptible” to fiscal stress.
It’s a long way from six years ago when the Comptroller’s Office issued a round of audits critical of districts that were holding too much taxpayer money.
Since then, school districts across the state have dipped into rainy day funds to help alleviate cuts in state aid and lessen the impact of a new tax cap. That has left some districts teetering on the edge of financial health.
“Not just for Lewiston-Porter, but for every school district, we’ve been reeling,” said R. Christopher Roser, superintendent of Lewiston-Porter Central School District, which received the second-worst fiscal score of any district in the state.
The comptroller’s report comes at a time when school districts have begun to work on creating budgets for next school year. While school administrators are hoping for more state aid, they also face the potential for an even lower tax cap than previous years because of the way inflation factors into the calculation.
DiNapoli’s staff analyzed the fiscal health of all but the state’s largest school districts to come up with a “fiscal score” intended as a red flag for districts as they approach long-range planning.
“Unfortunately, reductions in state aid, a cap on local revenue and decreased rainy day funds are creating financial challenges that more and more school districts are having trouble overcoming,” DiNapoli said in a statement accompanying his office’s report on the fiscal stress of school districts.
Some districts see their poor fiscal stress scores as a reflection that they’ve hit bottom and will begin to stabilize.
Five years ago, West Seneca had a fund balance of about $20 million. With deep state aid cuts and rising expenses, the district began spending that money to help offset tax increases. Then, last year, the district closed an elementary school and offered employees an incentive to leave; 132 employees took the offer.
“We’ve significantly downsized,” West Seneca Superintendent Mark Crawford said.
With payouts for the employee separation incentive paid, Crawford believes the district is on its way to building up a fund balance that has nearly been depleted.
Lewiston-Porter, which had a slim but healthy fund balance set aside for unexpected expenses before the recession, used some of those funds to help keep taxes flat. But after a combination of state aid reductions, pension increases, the tax cap and rising expenses hit the district, the fund balance is now down to about $600,000.
“We have a plan in place,” Roser said. “We believe we are at the new rock bottom for Lewiston-Porter, and if things go as we hope they will, we’ll be on the right path to be more fiscally stable than we are right now.”
Lewiston-Porter and Niagara Wheatfield, both in Niagara County, received the second- and third-worst fiscal scores from DiNapoli’s office.
DiNapoli’s rankings sought to measure the financial health of all but the state’s largest school districts. The new “fiscal stress scores” measure a variety of factors, including whether school districts have enough money set aside for unexpected expenses, whether they have chronic operating deficits and whether they often rely on short-term borrowing to pay bills.
School districts facing fiscal stress were more likely to use short-term borrowing to bridge cash-flow gaps and to operate with low fund balances, deficits and limited cash on hand, DiNapoli’s report said.
Eighty-seven school districts across the state were classified as facing some level of fiscal stress.
The fiscal stress scores were calculated based on financial information submitted to the state Education Department as of December. They did not include the state’s largest school districts, including Buffalo.
“The way DiNapoli has created this fiscal stress report, I see as pretty accurate,” Roser said. “But it doesn’t really tell the tale of what all these schools were confronted with and how they acted or didn’t act when this all started. You wouldn’t have needed this report six years ago.”