January 22, 2014

State Report Lists Stressed Schools

Compared to districts upstate and in western and central New York, and despite property tax caps and diminished aid, East End schools are doing pretty well financially. Last week, State Comptroller Tom DiNapoli released findings derived through his fiscal stress monitoring system. Only the East Quogue and Southold school districts merited mention among the 87 districts deemed to be suffering fiscal stress.

The Office of the State Comptroller evaluated 674 school districts with fiscal years ending last June. Some 13 percent were designated fiscally stressed.

In a release discussing the findings, DiNapoli said, "School districts are a critical barometer to the fiscal health of our local communities. Unfortunately, reductions in state aid, a cap on local revenue and decreased rainy day funds are creating financial challenges that more and more school districts are having trouble overcoming. My office's fiscal stress scores highlight the need for school district officials to manage their finances carefully with an eye towards long-range planning and how they can operate more efficiently."

Indicators eyed during the study include year-end fund balance, cash position and patterns of operating deficits to calculate fiscal stress scores that range from "significant fiscal stress" to "susceptible to fiscal stress" to no designation at all. The data was gleaned through annual reports filed with the state education department.

The comptroller also analyzed such environmental factors as student enrollment, property value, budget vote results and poverty levels in order to provide insight into the health of any particular community.

East Quogue was listed as suffering "moderate fiscal stress," while Southold received a "susceptible to fiscal stress" designation.

DiNapoli explained that stressed school districts share environmental themes, such as declining property values, high poverty rates, and low school budget support. Those factors are often outside the control of district officials, he noted.

But there are other commonalities among the stressed districts. Most are operating with low fund balance, operating deficits and limited cash on hand. The districts were also found to have a much higher likelihood of using short-term borrowing to bridge cash flow gaps.

Using a similar system the OSC also monitors towns and counties statewide. None of the five East End towns were listed as suffering stress, based on information from 2012. However, Suffolk County as a whole was deemed to be under "significant fiscal stress." Though a $300 million deficit was almost halved during 2013, a hole to the tune of $180 mil remains. The deficit, sparse cash on hand and low fund balances led to the designation.


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