Only 4 percent of schools are fiscally stressed, according to comptroller

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A recent report by New York State Comptroller Thomas DiNapoli shows that only 4 percent of schools in New York state are fiscally stressed.

Of the 674 schools monitored, only 26 schools fall under some classification of fiscal stress in 2017.

The Fiscal Stress Monitoring System reports that of the 26 schools, two are in “significant fiscal stress,” seven are in “moderate fiscal stress” and the remaining 17 are “susceptible to fiscal stress.”

The two school districts that are classified in “significant stress” are the East Aurora School District in Erie County and the Eldred School District in Sullivan County.

The seven districts considered in “moderate fiscal stress” are: Cortland (Cortland); Eastport-South Manor (Suffolk); Harpursville (Broome); Norwich (Chenango); Rhinebeck (Dutchess); Sandy Creek (Oswego); and Schenevus (Otsego).

The scoring system evaluates six financial and six environmental factors. These indicators assess budgetary stability and if the schools are able to remain fiscally strong in the face of unexpected monetary and environmental constraints that would affect revenue or drive costs.

The comptroller’s system analyzes the schools’ self-reported financial data and monitors fund balance levels, operating deficits, cash on hand and reliance on short-term cash-flow borrowing. Separately, state and published federal data incorporate environmental factors, some of which include poverty rates, tax base and budget support.

While distressed schools can be found across New York, this year saw upstate school districts more likely to be in fiscal stress, averaging 4.2 percent, compared to downstate school districts at 3.1 percent.

Upstate school districts face different challenges than downstate schools. Upstate districts had a higher percentage of economically disadvantaged students, and higher rates of teacher turnover. The Capital District and Western New York are regions with the greatest number of districts in environmental distress, with 13.5 percent and 10.1 percent in one of the three fiscally stressed categories, respectively.

Joanne George, the business administrator of the East Aurora School District in Erie County agrees with the comptroller’s report, noting it is a fair assessment of the school district’s finances. The Gap Elimination Adjustment (GEA) introduced by the state takes a portion of the state’s funding and divides it among all school districts. This depleted the reserve of the East Aurora School District and it is now in a rebuilding phase, according to George.

“It will take three years to rebuild, and we will have to control expenditures the best we can,” she said.

Although the number of schools in financial stress decreased from 59 to 26 schools in the past year, there is still call for action to lower that number.

DiNapoli is urging school districts to understand environmental factors and how fiscally susceptible local schools would be to them. School district officials can use the FSMS scoring internally and begin conversations with residents while monetary decisions are made.

“While it is welcome news that so few school districts across the state have been classified as in fiscal stress, school officials should remain vigilant and carefully consider how their budgeting decisions will affect their long-term fiscal condition and local taxpayers,” DiNapoli said.