Governor Cuomo continues to stress that the vast majority of school districts have enough in fund balance and reserves to survive a major reduction in state aid.
As I have addressed in a previous column, our fund balance reserve of $4,787,784, or 3.53 percent of our budget, as of June 30, 2011, is well within the four percent the law allows school districts to hold in fund balance. Regarding school district reserves, our total reserves amount to $4,931,337, all designated for expenses that are likely to occur or have been incurred.
With this in mind, I was pleased to see a report from State Comptroller Tom DiNapoli a few weeks ago that stressed the following:
Although the budget proposes cuts of similar sizes for low- and average-need districts, average-need districts are much less likely to be able to make up for aid cuts with reserves-less likely, even, than high-need districts, since the higher need districts had lower aid cuts. Almost all low need school districts would be able to cover the difference.
Regionally, districts in Central New York and the Finger Lakes appear to have the least ability to tap reserves to mitigate the proposed school aid cuts, and would have the greatest dependence on accessing excess EBALR funds (Employee Benefit Accrued Liability Reserve) in order to do so.
To clarify the above, DiNapoli stated in his report that the governor had proposed allowing districts to use excess funds in the Employee Benefit Accrued Liability Reserve fund. By law, these accounts may only be used for set-aside funds to compensate departing employees for unused leave time. In some cases, acting on bad advice from their accountants, some districts have put money in such accounts to pay for future retiree health insurance. North Syracuse Central School District has done neither, and consequently, is unable to access such funds.
Not only does DiNapoli's report reinforce my argument that Central New York school districts have the "least ability to tap reserves to mitigate the proposed aid cuts," but average need districts "are much less likely to be able to make up for aid cuts with reserves-less likely, even, than high need districts, since the higher need districts had lower aid cuts."