New York’s public school system is facing a fiscal crisis due in large part to the novel coronavirus pandemic.
About 40 percent of school districts across the state could declare insolvency if state legislators make cuts to their financial assistance as projected. This is the conclusion of a report the Association of School Business Officials of New York.
“New York state public school districts face serious fiscal challenges [that], if not addressed soon, threaten to undermine the educational attainment of a generation of students,” the report said. “Schools have been dealt a double-whammy of additional costs related to safely re-opening schools this fall due to the ongoing [coronavirus] pandemic while state revenue declines have raised the specter of mid-year school aid cuts for the first time since 1990-91.”
As it did with many other entities receiving funds, the state withheld 20 percent of the assistance that schools were scheduled to receive this summer.
“The state … projects a $14.5 billion general fund revenue decline over what had previously been forecast for the current fiscal year, according to the report,” an article published Thursday by the Watertown Daily Times said. “A 20 percent state aid cut this year would amount to more than $5 billion statewide.”
The report forecast that four out of 10 school districts could be forced to claim insolvency if additional cuts are made. It’s unimaginable how public education would fare in New York is this occurred.
“The Association of School Business Officials of New York and New York State School Boards Association conducted a survey to determine how further cuts would impact 680 school districts and Boards of Cooperative Educational Services across the state that are ASBO members. The picture painted by the 181 school districts that responded showed potential cuts to programs, staff and more,” according to the story. “The report said that if cuts lasted only one year, districts that responded to the survey said they would use a number of strategies to cope with a 20 percent aid decrease for 2020-21. About eight in 10 said they would allocate additional monies from their fund balance to fill the gap left by the loss in state aid. Other strategies identified by more than half of the districts included additional use of dedicated reserves (66 percent), non-instructional layoffs (64 percent), instructional layoffs (60 percent) and a reduction in extracurricular activities or sports (58 percent). If state aid is cut 20 percent and cuts continued for the next two to three years, 40 percent of the responding districts said there would be staffing cuts; 25 percent said there would be fiscal insolvency; 14 percent said there would be program cuts; 13 percent said there would be educational insolvency; and 9 percent said there would be a significant financial strain that could lead to large tax levy increases and an exhausted fund balance and/or reserves.”
The state’s tax cap hinders school districts more than it does municipal governments. School districts must receive at least 60 percent of voter support on their annual budgets to exceed the limits mandated by the cap. Other public bodies throughout the state merely need to get the support of a simple majority on their boards to do so.
No one wants unlimited tax hikes by school districts; that would be catastrophic for taxpayers. But school districts must have more flexibility in responding to financial emergencies. Legislators should reconsider the parameters of the tax cap to allow public schools to address the fiscal issues brought on by the pandemic.