School aid delayed — again

Leaders at two local districts, like those across New York State, were shocked and appalled Tuesday to find out they weren’t getting their scheduled state aid payments although they also said they wouldn’t need to borrow to meet operating expenses — as long as the payments are made by June 1, which the law requires.

“When you only get 24 hours notice, you’re really surprised,” said Sarita Winchell, Voorheesville’s assistant superintendent for business.

Voorheesville, which has a $22 million budget this year, was slated to receive roughly $900,000 in aid on Tuesday.

“When the money didn’t come in, we called the state, and asked, ‘Where is it?’” said Neil Sanders, Guilderland’s assistant superintendent for business. “We were given no advanced notice.”

Guilderland was slated to get $3,135,112.04. It has an $85 million budget this year and is to receive a total of about $21 million in state aid.

“It’s pretty hard to run any organization with these kinds of surprises,” said Guilderland’s superintendent, John McGuire. “Because we’ve been well managed, we won’t need to borrow. Some districts in the state will have a terrible time. Districts with limited resources will have to borrow and pay interest.”

At Berne-Knox-Westerlo, which has a $20 million budget this year, Kevin Callagy, the district’s business official, said that BKW had received its March payment, which was about $928,000.

“I believe we’re still due a payment — which is scheduled for May 3, and another for June 1 — which is a little over 2.8 million total,” he said.

Governor’s view

The governor’s office sent out a release Tuesday with a statement from David Paterson. “The only way our State can put its long-term fiscal house in order is through significant, recurring spending reductions,” he said. “In the short-term, however, plummeting revenues and record deficits have once again forced me to take extraordinary cash-management actions in order to ensure the continued orderly operation of our government.”

Paterson said Tuesday that, because of severe cash-flow problems at the close of the fiscal year, which is March 31, $2.1 billion in school aid would not be paid to districts the next day as scheduled.

“The state intends to meet the June 1 statutory deadline for making this payment,” the governor said, adding, “assuming sufficient cash is available at that time.”

  In December, Paterson ordered $750 million in school and local government payments be withheld. The money was paid in January, but not before the New York State United Teachers, the New York State School Boards Association, the New York State Council of School Superintendents, and the School Administrators Association of New York State sued. They claimed that the governor, in withholding funds allocated by the State Legislature, acted unconstitutionally and illegally.

“As the governor says, you can’t spend what you don’t have,” Matt Anderson, spokesman for the state’s division of the Budget, told The Enterprise at the time.

Coping locally

Winchell, at Voorheesville, said that the district has “no real cash flow problems because of the spring advance money” — a reference to a recent $484,000 payment Voorheesville got from the state.  “I think we’re OK for our cash flow,” she said.

Similarly, Sanders, at Guilderland, said that his district had money from property taxes, state aid received so far, and other sources it could use to tide it over until the June 1 payment comes in.

“We put money in the bank and use it as we need it,” he said. “We have enough cash on hand to get to June.”

Where the district loses out, he said, is in not being able to invest the funds and collect interest, which it had figured on as part of its revenue stream.

Winchell explained that Voorheesville’s biggest expenses are in June. Voorheesville teachers can choose to have 22 or 26 payments for their salaries, so some of them get several pay cycles at once, which makes the June payroll the biggest, Winchell said. “If we get it by June 1, we’ll be OK.”

Like Voorheesville, Guilderland will have problems if the state doesn’t make its payments by June 1. “If we don’t have that $5 million by June 1,” said Sanders, referring to the $3.1 million missed March 31 payment and another nearly $2 million slated for June 1, “we’ll have some difficulty. We really need all of our revenue to cover the budget. That’s when we’d have to look at the fund balance or borrowing.”

Since the governor predicated his promise of making the June 1 statutory deadline on the assumption the state has sufficient cash at that time, Sanders was asked how the district would proceed if the state reneged on its legal obligation. He said that, when the school board sets the tax rates in August, “We’d look to see if we’re comfortable with the revenue estimates.”

Both Winchell and Sanders said the governor’s latest withholding will not affect deliberations on next year’s school budgets. It will not affect 2010-11, said Winchell, “unless we get to June and they do something really crazy.”

She said the move would likely cause more lawsuits. It’s “one time too many,” she said, referring to the state’s withholding December payments until January. This time, she said, there are two months between when the money was expected and when it is legally required to be paid.  Winchell also stressed the added difficulty for school districts because of the very short notice for the change in the pay schedule from the state.

Winchell said that Voorheesville would consider a suit only if other districts were signing on. Voorheesville would let other organizations “carry the banner,” she said.

— Saranac Hale Spencer contributed the information on Voorheesville, and Zach Simeone contributed the information on BKW.