EdVANTAGE Blog

Yesterday (March 30) Governor Paterson announced the state will delay $2.1 billion in School Aid payments planned to be made today.

The Governor’s news release says, “The State intends to meet the June 1 statutory deadline for making this payment, assuming sufficient cash is available at that time.”

Here is a district-by-district list of the delayed payments.

We are gathering information on how this will affect individual districts.  But coming with essentially no notice, districts are scrambling to determine what they need to do.  That is perhaps the most troubling aspect of the Governor’s action.

Imagine the reaction if Washington had delayed a comparably-sized payment to the state with so little warning.  Or if, with a single day’s notice, an employer advised all employees that their next paychecks would be reduced by 10 percent of their annual pay.

Like the Governor, superintendents must manage budgets.  We can respect the hard choices state leaders must make.  But the state’s cash flow concerns have been widely advertised for some time.  Why couldn’t the Governor give schools more than a single day’s notice before announcing that an average of 10 percent of their annual aid payments would be delayed for two months — or more?

If the delay is part of a strategy to leverage legislative action toward a timely budget, it makes less sense.  The Legislature is not in town to take action.  To have that effect, again the announcement should have been made last week, or before.

Beyond the impact on the current year’s budget, the delay also disrupts work on proposed budgets for the coming year, which must be adopted by April 24 for submission to the voters in May.

Some districts would choose to draw from their undesignated fund balance to accommodate the aid delay.  But the overwhelming majority of districts also plan to draw from those funds in assembling their proposed budgets for next year — to reduce layoffs or local tax increases that would otherwise be needed.  For example, without the sums they withdrew from undesignated reserves this year, districts would have had to raise local taxes by an average of 4 percent more, or to make cuts of corresponding magnitude.

Without absolute assurance that the aid will be paid by the end of the school year in June, some district leaders will be reluctant to count on those reserves to help balance the budgets they propose for the next school year.

The lawsuit that the Council, New York State United Teachers, New York State School Boards Association, and the School Administrators Association of New York State challenging the Governor’s December aid withholding is still underway.  Oral arguments are planned for June.

A primary motivation for the lawsuit was to prevent the precedent of a Governor disregarding state laws which establish aid formulas and payment schedules and prescribe that the state pay certain amounts by certain dates.  However, yesterday’s action by the Governor affects a payment which the state may not be not required to make until June 1st.  Since the current state aid payment schedule was first enacted in the early 1990s, the state has made this payment early in every year but one.