As they prepare budgets, Canton-Potsdam area school officials still in the dark about state aid
Sunday, February 10, 2013 - 8:41 am

By JIMMY LAWTON

A lack of clarity regarding cost-saving measures in Gov. Andrew Cuomo¹s proposed budget leaves Canton-Potsdam area schools in the dark as they prepare their own fiscal plans.

Superintendents at Potsdam and Canton schools said the modest increases in aid that can actually be applied to operating costs for 2013-14 will not close existing budget gaps, but there may be hope elsewhere in the executive budget.

Three of Cuomo¹s proposals could have major financial impacts on the local school districts, including his plans to:

• offer an option for school districts to pay a fixed pension contribution rate of about 12 percent of payroll for the next 25 years, instead of the current 16 to 20 percent.

• divide $203 million among state school districts as a one-time "fix" to offset rising employee benefit costs

• set aside $100 million statewide for "competitive" school grants instead of allotting the money to financially struggling districts.

Stabilizing Pensions

At both the Potsdam and Canton school districts, employee benefit cost increases approach the $1 million mark this year. The problem is similar across the state as much of the increase stems from mandated retirement contributions.

Each year, the state orders districts to contribute a percentage of employee salaries into the state retirement system. The contributions are based largely on the stock market and tend to fluctuate year to year.

In this year¹s executive budget, Cuomo suggests including a fixed rate option for schools and municipalities.

Schools that opt into the fixed rate would see immediate savings to the teachers retirement system, which would reduce contributions from 16.5 to 12.5 percent, and the employee retirement system, which would drop from 20.5 to 12 percent.

The catch is that schools would have to lock into the rate for a quarter-century, which makes the option less appealing.

"It would definitely be a savings up front, but there is certainly risk involved in the long run and we don¹t know any of the details about it," Canton Superintendent William Gregory said.

Potsdam Superintendent Patrick Brady said his district would save about $400,000 this year by locking into the fixed rate, but it could lead to problems down the road.

"If we lock in for 25 years, what happens if the economy gets better and we are paying more? My understanding is that you can opt out, but you would pay a penalty," he said.

Details on the size of the penalty and other requirements of opting in have not been finalized; leaving the schools to consider an option they know little about.

"There are lots of questions about the option that need to be answered," he said.

Stabilization Funds

To address rising employee benefit costs, Cuomo has proposed $203 million be appropriated as a one time shot of cash aimed at offsetting rising employee benefits and other fixed costs.

Both Brady and Gregory said the funding could save jobs and help reduce budget gaps faced by their respective districts. While any additional funding is welcome, districts will not likely know how much aid they will receive for some time.

"What we have been told so far is that a formula will be negotiated between the governor and the legislature. Since it¹s being presented as a fiscal stabilization option, our hope is that it would go to schools that have real fiscal problems, otherwise it¹s defeating the purpose and not being used as stabilization funding," Brady said.

Gregory was also concerned about how the funds would be funneled to districts.

"It¹s not clear how that money is going to be redistributed yet," he said.

Brady said it will be important for the state to allocate the money in a timely fashion to allow schools to include the revenue in their spending plans.

"We can¹t include it in our budgets until we know for sure what we are getting," he said.

Competitive Grants?

Although there has been no formal discussion, Brady and other superintendents are hopeful that a portion of the $100 million Gov. Cuomo has appropriated for competitive grants will be reallocated to school districts in need. He said similar changes have been made in past budgets.

"During the first year of his term, Gov. Cuomo put aside $250 million for competitive grants. But the legislature moved $200 million back into school aid," he said. "In his proposal he puts that back up to $100 million."

Brady said competitive grants may have their place in a strong economy, but in current times there are schools in need of the funding, that can¹t access it. He said many St. Lawrence County schools can¹t even enter the race for a variety of reasons.

He said one such grant is offered to schools that show dramatic academic improvement, but schools like Potsdam, that already have high levels of success can¹t possibly improve by the margins required to access funding.

"We also haven¹t been given information about what schools have applied to these or how well the efficiencies they have implemented are working," he said. "Our concern is that at a time when many schools are facing insolvency, is this the best use for the money? We would rather seem them applied to keep our struggling districts solvent."

Brady said he and other superintendents have expressed this concern to North Country representatives in the past, and he expects they will work to move some of the competitive grant funding back into aid lines.

"The budget is in their hands now. We will be looking to our legislators and waiting to see how this turns out," he said.