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Delayed state aid cited as leading cause of Niagara Wheatfield fiscal crunch

SANBORN – A state audit released Friday acknowledged that the state Education Department’s failure to pay state aid in a timely fashion was the leading cause of the Niagara Wheatfield Central School District’s recent fiscal crisis.

But the Board of Education and past district administrations bear some blame because of their own financial decisions, according to the audit by the state Comptroller’s Office.

The audit, covering the period from July 2011 through last September, concluded that the district’s hopes of maintaining enough cash flow to operate normally were damaged by the state’s failure to pay $6.6 million owed the district in reimbursement for operating the Tuscarora Indian School, which it does under a state contract.

That figure included $3.4 million for the 2012-13 school year and $3.2 million for 2013-14, the audit said. A $3.3 million payment for 2012-13 was released by the Education Department on Oct. 3.

A response dated March 25 and signed by Superintendent Lynn M. Fusco, business administrator Allison S. Brady and School Board President Steven L. Sabo said state aid not related to the Tuscarora school has been cut an average of 23 percent a year for the last eight years.

“Assuring that the district has adequate cash flow is an impossible task considering that the aid has been reduced so significantly and that the amount due for services provided is 12 to 18 months delayed,” the district’s letter said.

The comptroller’s report said the Education Department tried to blame the school district, attributing the two-year payment delay to time needed to process the district’s contract renewal for the Tuscarora school, and significant staff turnover in the district’s business office, which allegedly hindered the process.

The district response said Fusco, Brady and the principal of the Tuscarora school are scheduled to meet with state officials in Syracuse on Wednesday to continue to push for reimbursements.

During the three years surveyed in the audit, the district borrowed several million dollars to pay its bills, not knowing when the state aid was going to be released. The audit acknowledged that, but also questioned why the Board of Education transferred nearly $1.85 million from its fund balance to designated reserve funds in 2013-14. That move placed the money legally out of reach for bill-paying purposes.

The district’s response said the money was placed in reserves for bus and retirement costs to cushion the impact of those expenses in future budgets.

The district raised the property tax levy by 4.8 percent last year and is assuming that there will be a 2 percent increase annually through 2019, the report noted.

The auditors noted that Niagara Wheatfield has a debt service fund that contained $5.6 million as of the end of the 2013-14 school year, “which is not being used for taxpayer benefit.”

Instead of using that money to pay debts, the board used $7.7 million from the general fund for that purpose last year.

In 2013, the board voted to float a $10.6 million bond issue to pay off a Safe Schools capital project for which $2.2 million in Niagara River Greenway money had been approved, but none of the Greenway money was used toward the project. It was stashed in the debt service fund but not spent, the auditors reported.

email: tprohaska@buffnews.com