By JIMMY LAWTON
If Canton and Potsdam schools do not merge both will be operating in the red by 2017, according to a consultant’s joint merger study.
According to graph created by Western New York Educational Council, Buffalo, Canton will be operating with a negative fund balance during the next school year, while Potsdam would reach negative numbers by 2017.
The graph is based on a scenario without further cuts and assumes rising mandated costs. It also provides a merger scenario, which shows the combined district growing a nearly $10 million fund balance by the 2019-2020 school year.
This would be due to savings of about $1 million per year and the state’s front-loaded $35 million incentive, which would give the merged district $3.7 million for five years and gradually reduce the aid amount over the following 10 years.
Consultants also showed a reduction in the tax rate under a merger. In Canton, the full-value tax rate would drop from $23.99 per $1,000 of assessed property value in the current year to an estimated $19.73 per in the first year of the merger.
In Potsdam the rate would drop from $25.69 to $19.73 over the same period of time.
Potsdam Superintendent Patrick Brady said this scenario assumes the districts would not use any fund balance to reduce the tax rate. He said it excludes use of incentive aid to reduce the rate, meaning the savings would actually be more significant under an actual merger.
The reduction in tax rates would result from increased assessments on properties and savings from reductions in staff and other expenses of roughly $1 million per year.
The information provided by the consultants does not show an estimate of whether or not the tax levies for Canton in Potsdam would rise or fall.
Brady said massive cuts in staff and programs at both districts since 2008 make it hard to achieve huge savings under a merger.
He said both districts have reduced staff by nearly 25 percent over the past five years.
“The point there is we have already cut $6 million over previous years and it’s hard to make more cuts,” he said.
He said the fiscal report shows savings from the merger, but more importantly it shows a more sustainable scenario in years to come. While the savings to taxpayers appears modest, a merger would provide a wider range of educational opportunities for students and curriculum that could be expanded down the road.
If the schools do not merge and state aid formulas do not change significantly in the coming years, both schools will be forced to reduce class offerings to mandated levels.