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Schools brace for budget by Cuomo; $10 billion shortfall has districts worried

And now, the other shoe drops.

After scraping by the past two years thanks to billions of dollars in federal stimulus money, New York State is on its own this year.

Without the federal money, it won't be pretty. That's because the level of spending projected in the coming year runs far greater than the expected revenues.

That translates into widespread cuts, if Gov. Andrew M. Cuomo has his way, to close the $10 billion deficit without raising taxes or borrowing.

On Tuesday, Cuomo unveils his state budget for 2011, and groups that rely on state money are bracing not just for reductions in the growth of state aid but on actual cuts.

Schools across the state, for instance, are already beginning to plan for what they call the worst-case scenario: big cuts in state coupled with a Cuomo plan to place a cap on the annual growth in property taxes that fund much of the spending in most districts.

School districts already are talking about ending full-day kindergarten classes, shutting down programs like music education and scrubbing all extracurricular offerings, said Timothy Kremer, executive director of the New York State School Boards Association.

"As much as we hate the thought of having the cuts made, we also know that we're looking at a significant deficit, and there's only so many options that [Cuomo] has," Kremer said.

But Kremer worries that Cuomo will try to limit -- beginning this year -- how much districts can raise through property taxes while Albany cuts its share to schools.

"I'm seeing a sense of inevitability of a very dramatic cut in public education and a tax cap," Kremer said.

The chief supporters of a plan to cap property taxes -- Republicans who lead the State Senate -- introduced Friday its version of cap legislation. It gives schools a breather: the property tax controls would not begin until the 2012-13 school year.

Schools might be able to better live with a tax cap if the state were to reduce the number of unfunded state mandates that drive up the cost of local governments. But Cuomo has sent signals that a mandate relief package might not have to be immediately tied to a property tax cap bill.

The governor has said his budget will offer "no surprises." He intends to cut school aid, Medicaid and areas of the budget like the state work force, which is anticipating thousands of layoffs and cuts through attrition. The state university system is expecting hundreds of millions of dollars in reductions, prisons are slated to close and an array of state agencies will be merged.

The state budget office has estimated that the loss of federal stimulus money for public schools and Medicaid will result in the state having to pick up $5.4 billion in projected costs -- assuming no changes are made to state law. The 2011 gap grows another $1 billion, according to a Division of Budget report, with the expiration of a temporary income tax surcharge at the end of the year. That surcharge applied to individual taxpayers making over $200,000 a year.

If no action is taken to change laws on the books, the state has estimated that general fund spending will grow at an annual rate of 12.8 percent each year between now through the 2013 fiscal year. The budget office, though, projects only "modest" growth in revenues of 4.8 percent annually.

Closing a $10 billion deficit only through cuts would translate into a bit more than a 15 percent across-the-board reduction in the state's projected spending for this year.

The state's funding for public schools in the coming year is projected to rise by $3.2 billion -- which includes covering the loss of the federal stimulus money and state aid hikes already on the books, said Robert Lowry, deputy director of the New York State Council of School Superintendents.

New York would have to increase aid to schools by 19 percent this year to cover projected cost increases of 9.8 percent and make up for the loss of the federal stimulus money, he recently noted.

That won't be happening, of course.

Albany had a chance the past couple of years to use the federal stimulus money to correct its fiscal ways by better controlling spending for schools and health care providers, said Elizabeth Lynam, deputy research director for the Citizens Budget Commission, a fiscal watchdog group.

"We blew that opportunity. Now, it's important to look at the structural aspects of the budget and to deal with unsustainable spending," she said.

New York spends in excess of $17,000 per elementary and secondary pupil, the most of any state in the nation, the U.S. Census Bureau reported last year.

"Nobody wants to decimate services. But we're a long way from that. The sky is not falling. We spend a great deal on schools and we're going to continue to spend a great deal," Lynam said.

One issue that observers are watching as a clue to how things might go during this budget season involves "shares," which ensure that any cuts or increases in school aid are based on long-established regional breakdowns

Cuomo has been trying to stay cozy with Republicans who control the Senate. Nearly one-third of the GOP conference comes from Long Island, where the "shares" concept is sacrosanct. The Senate's top Republican, Dean Skelos, is from Nassau County.

Will Cuomo offer a bone to Skelos by proposing a school aid package that protects the usual 12 percent to 13 percent share for Long Island schools?

That would keep Skelos from having to proactively fight with other lawmakers from places like Western New York to protect the Long Island share.

School officials expect Cuomo will not only wipe out the projected increase for 2011, but then dig deeper. That will give schools a simple route: cut spending deeply or sharply raise local property taxes. The state cuts in school aid, they say, come just after many districts dug deep into their reserve funds during the recent recession.