The financial picture looks bleak for school districts amid the Covid-19 pandemic. Just how bleak is starting to become clearer.
Gov. Andrew M. Cuomo warned that the state, grappling with the financial fallout from the shutdown of the economy, could cut 20% of aid budgeted next year for education. And that could be just a start.
Will schools be forced to lay off staff? That’s likely, but how many?
“Given that staffing consumes 76% of a typical school district budget, it is difficult to mitigate a substantial cut in state funding without layoffs, unfortunately,” said Michael Borges, executive director of the Association of School Business Officials.
Cuts to instruction? Highly probable, but how deep?
“That’s going to vary by district,” said Robert Lowry, deputy director for the New York State Council of School Superintendents. “But if you’re looking at such large reductions in state aid, it’s impossible to avoid cuts to personnel and instruction.”
Big city school districts across the state are doing what they can to reduce their staffing through attrition to avoid layoffs, but they are “very, very concerned,” said Jennifer Pyle, executive director for the Conference of the Big 5 School Districts, which represents Buffalo.
“They’re trying to weed through all that now,” Pyle said.
Absent another bailout from the federal government, “we have to tell school districts you should expect a significant cut,” the governor said.
Many school districts now await more details so they can finalize their budgets.
Here are some storylines to watch:
Poor districts, both urban and rural, particularly feel the financial pain because they rely so heavily on the state aid, Lowry said.
Look no further than Buffalo Public Schools, with more than 80% of its revenue coming from New York State. The largest school district in the region, Buffalo projects an $89.6 million budget shortfall next year.
Superintendent Kriner Cash acknowledged to the Board of Education a couple weeks ago that while he anticipated a deficit, he didn’t expect it would be “quite this bad.”
“The $89.6 million is just what we know now,” Cash told the board. “And it could continue to fluctuate – likely higher.”
While the district has received roughly 3% increases in state aid for the past several years, revenue, as a whole, is projected to drop 3% for the school district. Meanwhile, expenditures would go up 6.6%, fueled by higher costs for transportation, payments to charter schools and employee salaries and benefits.
The district will chip away at the deficit in the coming weeks. If schools remain closed the rest of the school year, the district could save “$30 to $40 million” to be rolled over for next year, Cash said. Cash also mentioned using “$20 million or so” in fund balance to help close the gap.
Cash also hinted at layoffs.
“That’s where the money is going to be at the end of the day – it’s in your people,” Cash told the School Board. “So we’re going to have to be thoughtful about this.”
State lawmakers agreed to hold the line on school aid for next year with one big caveat: The Cuomo administration could make further cuts in the coming months should revenue projections fall short due to the toll that Covid-19 has taken on the economy.
If it is a 20% cut for education, as indicated by Cuomo, it’s unclear whether it would be across the board for each district or based on wealth or some other formula.
Depending on the state’s financial situation, the governor has the power to make more cuts at different points during the fiscal year through March.
“What you would hope is that the state would somehow have an on-target estimate of the actual problem and deal with it once,” Lowry said.
“But this is unprecedented,” he said. “So yes, it is possible further reductions might be needed.”
Borges, from the business officers association, expects school districts will handle this financial crisis much the same way they did during the Great Recession more than a decade ago – through cuts in staffing and money they saved for a rainy day.
But have they saved enough this time around?
“No one has huge reserves, in most cases,” Pyle said of the Big 5.
“This is not going to be a one-year problem,” Lowry said. “It will take time for the state to recover, so it would be nice for districts to have something left in reserves after this year to continue to manage through this.”
Pressure on Washington
The threat of a 20% cut to education has ramped up the pressure being put on federal representatives for additional funding for schools, Pyle said. New York received $1.2 billion for education in the initial round of federal emergency relief funding for the Covid-19 pandemic.
“We don’t see any other way out of this at this point in time,” Pyle said. “I don’t see how schools can withstand additional losses in aid without doing damage to their programs.”
“We have been very emphatic with superintendents that this is not a problem Andrew Cuomo and assembly members and state senators can solve,” Lowry said. “We need help from Washington.”