EdVANTAGE Blog

Yesterday, State Comptroller Thomas DiNapoli issued a short report warning about the funding cliff confronting schools when federal stimulus aid runs out, in 2011-12.

This is something we have been warning about for months (see our testimony on mid-year aid cuts, p.6), and which most school leaders seem to recognize.  But it appears to have come as news to the media.

The Comptroller’s analysis notes that this year stimulus funding enabled school districts outside the Big 5 cities to hold tax increases to 2.1 percent.  It goes on to observe that had state aid reductions been enacted without the stimulus relief, districts would have had to raise local taxes by as much as 7.7 percent, cut spending by 3.2 percent, or some combination of the two.

The analysis takes into account both the State Fiscal Stabilization Funds, used to offset aid reductions proposed by Governor Paterson, and increases in Title I and special education aid. Title I funds extra help for disadvantaged students.

The stabilization funding was intended by Washington to fund ongoing operations by preserving jobs and averting tax increases.  On the other hand, the Title I and special education aid were intended to expand services but were issued with ample warnings from Washington to districts to minimize making multi-year commitments, given the scheduled ending of the aid.

Newsday reported that “yesterday’s advisory from Albany drew amused snorts of derision from local educators, who note the state has been discouraging school districts from building up the sort of cash reserves that could protect against future aid losses.”

We’ve cautioned that the state and the schools are heading for the same cliff, and using up reserves now would send more school systems over the edge sooner.

Comptroller Di Napoli says that the stimulus funding has, “helped ease some of the budget pain for school districts and taxpayers.” He adds,

“But that money stops in 2011-12, and when it does, New York’s schools face a $2 billion funding gap. That’s a big hole to fill. The time to start thinking about how to fill that hole is now, not when the money is already gone. It won’t be easy; schools are already facing financial problems. But this won’t just go away.”

The Comptroller’s report does not offer any thinking on how to fill that hole.