Who would have thought that Buffalo’s economic recovery has progressed to the point where the city is lending money to a suburban school district?
The city, which still has a “soft” state-appointed financial control board, is about to lend $15.5 million to the cash-strapped West Seneca Central School District until district taxes are collected in October.
It’s a good deal for the city and for the West Seneca school district, representatives from both municipalities said. Buffalo will get a higher interest rate than usual for the funds. West Seneca will pay a lower interest rate than it would have paid going to the open market, said Janice Lewandowski, assistant manager of finance and computer services.
And this isn’t the first time that the Buffalo has lent money to West Seneca.
“We’ve borrowed the last three years because we have spent down our fund balance,” Lewandowski said.
West Seneca finds itself at the end of its budget year, which is June 30, with payroll and other obligations over the summer and opening months of school. There is not much money in the bank, and $58.39 million in school taxes is not due until October. State Comptroller Thomas P. DiNapoli determined in 2014 that the school district faces “significant fiscal stress” because of its low fund balance.
It’s not unheard of for districts to issue tax-anticipation notes to tide them over until the tax checks are deposited. It’s more unusual to get the money from the city next door.
Patrick J. Curry, executive assistant to City Comptroller Mark J.F. Schroeder, said the city and West Seneca have the same financial adviser, who suggested that the school district borrow from Buffalo.
The terms are still being worked out. West Seneca probably will be paying an interest rate of about 0.45 percent or 0.46 percent, Curry said. In comparison, the city is only getting 0.05 on its money now, given low interest rates.
Curry said it’s not a problem for the city, which has about $146 million in reserves. He said the city expects to make about $50,000 in interest by loaning the money.
Council President Darius G. Pridgen called the loan an example of cooperating governments, and said it’s good to see Buffalo is financially in a place where it can lend money.
“It’s been a long time since the city was able to be a leader in banking issues,” said Common Council Member Richard A. Fontana of the Lovejoy District.
The Buffalo Fiscal Stability Authority was created to oversee the city’s finances in 2003. It went into advisory status in 2012, and no longer has the authority to impose a wage freeze or approve labor contracts.
But the board still must be able to analyze the finances of the city, the School Board, the Buffalo Municipal Housing Authority, the Buffalo Urban Renewal Agency and the Joint Schools Construction Board.
The deal between West Seneca and Buffalo is to be finalized by June 23. The money is to be paid back by Oct. 30.
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