Governor's suggestion lacks long-term financial planning: School district

The West Hempstead school district released a statement last week taking issue with Gov. Andrew Cuomo’s assertion that school districts have enough money in unrestricted reserves to offset his proposed state aid cuts.

District officials called Cuomo’s analysis of its finances incomplete as it failed to consider “the meager funding in the district’s other reserves that will need to be bolstered by the fund balance.”

In his budget address earlier this month, Cuomo said school districts across the state have about $1.2 billion in reserves and an additional $600 million in federal stimulus funding from the previous year. He suggested they use that funding to make up the $1.5 billion aid cut he proposed.

To West Hempstead administrators, the suggestion “demonstrates a clear lack of long-term financial planning that will further exacerbate the poor financial position of all levels of government.”

If the state Legislature implements the governor’s proposed 2 percent tax cap, using fund balance to offset state aid deficits this year would leave West Hempstead with no reserves for the 2012-13 fiscal year, according to Deputy Superintendent Richard Cunningham.

West Hempstead currently has about $1.5 million in unrestricted reserves, but it will need to transfer money from the undesignated fund balance to its Employee Retirement System reserve to pay off its obligation in December. Additionally, according to the statement, the district will transfer funds to the unemployment reserve, as it anticipates an increase in unemployment insurance costs — the result of the large number of layoffs that will accompany funding cuts.

The amount of money in the reserves is constantly fluctuating, Cunningham said, noting that as of June 2010, the district lost about $900,000 in total fund balance and reserves. As for federal stimulus funds — the district has about $480,000 in American Recovery and Reinvesting Act funds remaining, and it intends to use all of that money by June, according to Cunningham. In the last three years, he added, there has been a steady decline in federal funds.

“When we get through this, public education will look different,” Cunningham said, “but we do have to work with the community to make sure we provide the type of education that’s expected. … That will take compromise and sacrifice.”

In its statement, the West Hempstead school district administration said it expects its elected representatives to begin adopting multi-year financial planning techniques “that will enable all levels of government to gain long-term financial stability.”