Tuesday, March 30, 2010

Paterson Delaying Aid Payment To Schools

Gov. Paterson announced he will withhold NY's $2.1 billion payment to schools until June 1, which was the original deadline for the payment. ~~ STORY

NYSSBA Alert Sent In Response ~~


                               Early April Fool’s Joke or Just Foolishness?

Finding himself at odds with Assembly Speaker Sheldon Silver and less relevant to the state budget negotiations than his own lieutenant governor, Governor Paterson today announced that he will withhold $2.1 billion in school aid payments due to be sent tomorrow. It is glaringly coincidental that the governor and legislature have been at odds over whether the state should decrease school aid cuts by borrowing a virtually identical amount to balance the state budget. Mired in scandal and precluded from speaking with his own staff as investigations continue, the governor timed his announcement after the legislature had left Albany for the Passover and Easter recess; a time when his nemesis, Speaker Silver, is precluded by his faith from attending to non-religious matters.

Whether attempting to reassert his participation in the budget negotiations, make a point about the need to permanently trim costs or a sincere effort to avoid fiscal consequences for the state, the governor gave school districts no prior warning whatever that the usual March 31st state aid payment would not come until June and then only if he deemed the state sufficiently flush to send it out. In the accompanying statement, Paterson made no mention of the impact on school districts and particularly low wealth districts that are largely reliant on state aid to function. These districts will be forced to engage in a form of short term borrowing, seeking Revenue Anticipation Notes or RANS, to tide them over. To do so, they will pay interest on funds they would otherwise receive free and clear. Simply put, like his plan to remove School Resource Officers, tax school district payrolls to pay for the MTA, force schools to pay for cost increases to pre-school special education and others, the governor once again intends to shift state costs to local property taxpayers.

Unlike when he attempted to withhold over $700 million in aid payments in December, Paterson did not claim that the state did not have the funds on hand to make the current school aid payments. In fact he said that “Deferring payments does nothing more than delay an inevitable day of financial reckoning.” He also failed to indicate a withholding of any other areas of state funding, adding to speculation that the move was more politically motivated than financially necessary. The governor has sparred with legislative leaders in opposition to his own appointed lieutenant governor’s plan to borrow funds, as well as over the size of education aid cuts needed to balance the budget.

As a result of today’s action, the Big 5 cities would lose the following amounts respectively:
Buffalo is $26M
Rochester is $24 M
Syracuse is $14 M
Yonkers is $23 M
New York City is $924M

NYSSBA, joined by other education advocacy organizations, continues its lawsuit challenging the governor’s authority to unilaterally withhold statutorily required aid payments. This suit was successful in the state relinquishing the December aid payments, allowing districts to recover $750 million in revenue. At nearly three times the amount of that December withholding, the stakes are much higher for schools this time. The state’s poorest districts will be hurt the worst, because unlike the last attempt to hold onto school revenue, Governor Paterson is attempting to withhold the entire aid payment this time and not a percentage measured according to wealth.

Whether or not the move is legitimate from a legal standpoint, there is little question about its practical impact on schools. Schools must operate on an assured and consistent revenue stream. Educational programs and services cannot fluctuate according to political whim. Children require certainty and the process of education is cumulative, not intermittent. Withholding the entirety of a state aid payment that is higher than most states spend in their entire school year is a devastating and myopic approach to a systemic problem. As always, NYSSBA will be at the forefront of an effort to release these funds and remove our students from the middle of a dangerous game of politics, where fiscal mismanagement of precious resources becomes a weapon.

SCATS ~~ As pointed out to me in an email, NY's "leaders simply refuse to act in a sensible manner. They will continue to court the public employee unions so they can reap the campaign cash cow yet are quite willing to stick it to the local taxpayer. Indeed, the local taxpayer will cough up the dough for interest, etc on whatever we borrow to get the district schools though the end of the year."


Anonymous said...

Oh Jesus, the sky is falling!

Anonymous said...

I can't see what the big deal is. School districts have been saving money in reserve funds like squirrels expecting a harsh winter. All any of them need do is "borrow" from themselves for a few weeks until the state finally gets the cash to pay them. Then they can pay their reserves back what was borrowed.
What am I missing?

SCATS said...

To 7:55AM ~~ You didn't miss a thing. In fact, you weren't supposed to notice or remember about those "rainy day funds!"