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The state control board criticized spending in the Buffalo schools Tuesday, prodding educators to find ways to channel more money into improving student achievement.

It also warned that an expected increase in state aid won't solve the Board of Education's long-term fiscal woes.

One board member even suggested that escalating costs in an era of steep declines in student enrollment might be a sign that the "system is broken."

"We're spending more and more money for less and less students," said Robert G. Wilmers, chief executive officer of M&T Bank.

The control board expressed concern over student test scores and noted that nearly half of all city public schools have been designated as "schools in need of improvement."

But the school district's chief financial officer cited the Board of Education's payments to charter schools, higher pension costs and rising health insurance costs as the culprits.

"It's not fair to condemn the district for this lack of academic achievement in light of the additional spending without having a full discussion of the dynamics that are at work," said Gary M. Crosby.

Control board Chairman Brian J. Lipke said even with an anticipated $25 million increase in state aid for schools, the district is "not out of the woods." The district still faces a $17 million gap in the coming year, a shortfall that could trigger significant layoffs. "It's a short-term help but not a long-term fix," said Lipke.

The district anticipates closing more schools in the coming years. Since the budget crisis occurred four years ago, officials said 15 schools have either been closed or temporarily put out of service.

The oversight panel also put more pressure on school unions to accept a plan that would place all employees under one health insurer. Advocates insist the move would save $10 million a year without reducing benefits. Control board member Richard A. Stenhouse, an inner-city minister, encouraged teachers and administrators to do what is "morally right" and embrace a plan that would help channel more money into classrooms.

"For many of the children in the Buffalo school system, quality education is their only lifeline to a decent life," he said.

Control board Secretary Richard M. Tobe also called for cost-saving changes in school custodial contracts and early retirement incentives.

While the school district faced criticism, the control board praised city government for ongoing efforts to shrink its work force and reduce budget gaps. For the second time in as many months, the Buffalo Fiscal Stability Authority credited city officials for making significant strides. New figures released Tuesday indicate the city's work force has shrunk from more than 2,800 two years ago to just over 2,500 today. By comparison, the city employed nearly 5,200 workers in the late 1970s, and nearly 3,300 when Mayor Anthony M. Masiello took office in 1994.

Control board Executive Director Dorothy A. Johnson noted that the city does not expect to have to borrow money to close a deficit in the coming year. Some of the fiscal pressures are expected to be eased by $13 million in additional state aid. But Lipke reiterated that the extra money should not be viewed as a solution.

"Continued diligence in doing things better and more efficiently is the only way to ensure long-term fiscal stability," he said. "The City of Buffalo cannot use this money to simply continue the status quo."

In other action, the control board:

Called on the Buffalo Municipal Housing Authority to look into perks that commissioners receive for serving on the board, including stipends, travel money and cell phones.

Approved a five-year contract that makes Rural Metro the city's sole ambulance provider. Officials from MedCorp, an Ohio company that offered to pay Buffalo a higher franchise fee for the privilege, attended Tuesday's meeting. They claimed city officials didn't give their proposal a full airing, but control board officials said they're convinced the contract with Rural Metro was "validly awarded."

Approved a new capital budget and authorized selling $29.7 million in bonds for numerous projects.

Approved a $55,000 city expenditure that will help the Board of Education pay for 11 roving nurses who will provide services to high-need students in schools that recently lost county nurses.


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