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State delays $2.1 billion in school aid Payments Put Off Until June Cash-flow problem blamed; districts eye cuts, layoffs

More than $2 billion in state aid payments to public school districts across the state are being delayed, possibly until June, because of the state's worsening financial crisis, Gov. David A. Paterson said Tuesday.

The governor's order, coming the day before the aid was to go out, left school districts scrambling, with talk of program cuts, delayed payments to vendors and possible layoffs if the expected state aid -- approved a year ago in the 2009 budget -- does not come soon.

Several school officials lashed out at the Paterson administration for giving just 24 hours' notice and shifting the state's cash-flow problems onto local districts. A top labor leader predicted some schools -- especially lower-income districts that rely heavily on state aid -- will have to cancel school days if they can't pay the bills.

The delay will cost the Buffalo school district $26 million it was expecting today.

The Paterson administration also sent word Tuesday to construction companies doing business with the state that road and other capital work will be delayed in the weeks ahead until a new state budget deal is reached at the Capitol.

Department of Transportation officials said among the projects being held up will be the $50 million reconstruction of Fuhrmann Boulevard into a new Outer Harbor Parkway, the final phase of which just began in October.

A full list of DOT delays will be released today, officials said; the delays will hit any state agency doing construction work that is not funded with federal stimulus money or is not of an emergency, health-related nature.

The governor said the school payments might not be made until June 1, if the state has the available money. He said his hands were tied because the state's 2009 fiscal year -- which ends today -- needed to be in balance. Paterson also is trying to cut payments to schools in the coming year to help Albany close a mounting deficit.

"The fact that extraordinary cash-management actions such as these are necessary underscores the dire nature of our state's fiscal circumstances," Paterson said. He blamed a "severe" cash-flow problem facing the state.

The $2.1 billion in delayed payments, which could result in school districts cutting programs or staff, come after Paterson in December delayed $582 million in scheduled state payments to the state's nearly 700 school districts. That was part of a total payment delay of $750 million that also included funding for local governments and not-for-profit service providers.

The latest school payment delay is more than three times larger than the December level and is coming much later in the school districts' fiscal year, which ends June 30. It also will be longer than the one-month delay that Paterson promised in December. State law permits the governor to delay the payment due today until June 1.

The March 31 payment has been made on time every year except 2003 since the state moved the payments to that date in the early 1990s, according to Robert Lowry, deputy director of the New York State Council of School Superintendents.

Lockport school officials learned about the delay in their $3.4 million state aid payment from a reporter, not the state. Lockport Superintendent Terry Ann Carbone said the district might have to look at a whole range of solutions -- from delaying vendor payments to undertaking short-term borrowing that comes with expensive interest costs -- to cover the lapsed state aid.

"To get such short notice could be devastating to a district," Carbone said. "Surely, this is a very serious time for public education, and I just hope that we don't lose sight of the fact that educating our children is probably the most important thing we could be doing in the state."

Buffalo school officials did not respond to requests for comment.

Other payment delays include $4.4 million for Niagara Falls, $4.6 million for West Seneca, $3.6 million for Lancaster, $2.5 million for Hamburg and $2.7 million for North Tonawanda.

Funding for public schools has become a major sticking point in negotiations for a new 2010 budget. The deadline for on-time adoption is today, but Paterson and lawmakers will again miss the target. Lawmakers are on a break for the religious holidays, and talks have broken down over spending, tax hikes and borrowing plans.

In his budget plan for 2010, Paterson proposed slashing school aid by $1.4 billion, a level backed by Senate Democrats. Assembly Democrats offered $800 million in education cuts. The state spends more than $20 billion a year on public schools.

Schools are already preparing for cuts from Albany for the coming school year. Many have drafted budgets based on Paterson's $1.4 billion cut. Buffalo school officials have said they might have to lay off 680 workers if the governor's cut is adopted in the final budget deal.

Richard Iannuzzi, president of the New York State United Teachers union, called Paterson's last-minute payment delay "immoral" and said it could force schools to cut bus services and "shut doors early if they can't meet payroll."

"It's unconscionable to pull the rug out from under school districts," he said.

The payment delays came as a conservative think tank released a report showing a surge in teacher and other school district hiring over the past decade even as student enrollment dropped.

Between 2000 and 2009, districts across New York added 14,746 teachers and 8,655 nonteaching professionals, such as administrators, guidance counselors, social workers and nurses. During the same period, statewide enrollment dropped by 121,280 students, according to a report by the Empire Center for New York State Policy.

The group said upstate schools saw the sharpest enrollment drop -- 72,000 students -- yet added 939 teachers and 2,408 other professionals. It said upstate enrollment dropped by 7.4 percent while teacher hiring was up 1.1 percent and other professional hiring leaped 19 percent. The group said about half the additional teachers were for special education programs.

On the delay in construction projects around the state, officials said it was necessary because there is no appropriation for capital projects in the emergency spending bill approved by the Legislature this week to cover up to April 14.

e-mail: tprecious@buffnews.com1

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