EdVANTAGE Blog

Legislation accompanying Governor Paterson’s revised Deficit Reduction Plan would require school districts to use any unappropriated, unreserved fund balance to mitigate the impact of his proposed mid-year School Aid cuts.

Given the late point in the school year in which the cuts would be inflicted, it can be expected that many districts would choose to use reserves to offset state aid cuts.

But some districts might be able to accommodate cuts without exhausting reserves and literally forcing them to do so now would ensure tougher budget choices — more layoffs, bigger tax increases — in the budgets they assemble for next year, closer to when State Legislators are running for re-election.

Last year, for example, some districts said unanticipated retirements would have helped them manage proposed mid-year cuts.

The Governor’s proposal also directs that,

In addition, any programmatic reductions undertaken by school districts after any unappropriated unreserved fund balance is fully allocated, as a result of the enactment of the gap elimination adjustment shall, to the extent possible, not impact educational services to children.

School districts would be required to report to the Education Commissioner all budgetary actions they take to accommodate the Governor’s cuts.

In a positive move, the Governor proposes to allow schools to withdraw excess funds from Employee Benefits Accrued Liability Reserve Accounts to help offset proposed mid-year cuts.

He would also expand a tool approved with the 1990 mid-year cuts which allows districts to count an amount of future Lottery Aid equivalent to his proposed cut as revenue received in the current year.