State: L.B. school district ‘susceptible’ to fiscal stress

For the fourth straight year, State Comptroller Tom DiNapoli’s office put the Long Beach School District on its list of fiscally stressed districts, though school officials say that the designation did not take into account borrowing related to Hurricane Sandy.

According to a report released last week, the district is one of 26 in the state to fall into the stressed category. It was identified as susceptible to fiscal stress, receiving a fiscal score of 26.7 percent, improving about 15 percentage points over last year.

Though fiscal stress scores throughout New York have decreased, this is the fourth consecutive year that the Long Beach district has been designated fiscally stressed.  

The state’s fiscal stress monitoring system serves as an early warning to local governments and school districts that they could be in trouble financially.

In assessing school districts, the state examines year-end fund balances, surpluses or deficits, the amount of cash on hand and the use of short-term debt, as well as property values, enrollment, the budget vote, graduation rate and participation in free or reduced-price lunch programs.

Michael DeVito, the district’s chief operating officer, explained that the lower the score is, the better financial health the district is experiencing.

“If you look at 2017, it’s the lowest score that we’ve had over the past few years,” DeVito said.

DeVito also cautioned that the state’s determination does not account for “the unique financial circumstances that the Long Beach Public School District faced due to Superstorm Sandy,” which struck in October 2012.

The district borrowed money after the storm to fund restoration projects, DeVito said, which led to DiNapoli’s office issuing the district fiscally stressed scores in previous years because short-term borrowing is considered a financial stressor. The district sustained more than $35 million in damages from Sandy.

While the district’s storm-related costs have been paid off, it’s still waiting to receive a portion of reimbursements from the Federal Emergency Management Agency. But because the money has not yet been restored to the district’s bank accounts, the cash position is affected, which worsened the score from the Comptroller, DeVito explained.

In October, the district received a reimbursement from FEMA of about $1.1 million, and in November, about $2.4 million, he said.

“If the district had received the two FEMA reimbursements payments prior to June 30 instead of in October and November, it would have had ‘no designation,’” DeVito said.

The district is expecting to receive about $3.2 million more from FEMA, he added, and is hoping that the state reimburses the district between $3 million and $4 million “to make us whole.”