Niagara Gazette

March 19, 2014

Niagara-Wheatfield looks five years in the future

By Timothy Chipp
Niagara Gazette

Niagara Gazette — They’re words no one in Niagara-Weatfield is hearing for the first time. There’s no money, long-term, to save the school district from itself.

Hearing the words from a consultant Monday was still uncomfortable for veteran school board members, even if they’ve sat through two of the most difficult years anyone in New York state has dealt with at an education level, with promises of a third set to ramp up over the next few weeks.

Rick Timbs, executive director of the Statewide School Finance Consortium, used graphs and spreadsheets to drive home the fact the financially embattled school district is without money and struggling every day. It’s so bad he even predicted a quick and painful death in two years if voters don’t approve a tax levy increase this May.

“You’re between a rock and a hard place,” he said, using a model he created predicting the state of district revenues and expenses over the next five years. “I can’t get the budget, as extrapolated, into 2017. I might be able to get it into 2016. But unless you get another form of revenue, you won’t make it (through) 2016.”

Most surprising in his presentation, though, was his findings even if the district were to successfully ask taxpayers for a 4.8 percent increase to its tax levy next year. He said even then, long-term success might not be possible without taking money from a special Employee Benefit Accrues Liability Reserve — EBALR — ontrolled by the state Comptroller’s Office.

There’s only one problem with doing so: It’s illegal. Making a withdrawal from the reserve without granted exception, typically due to a district saving too much money, Timbs said, is a misdemeanor. Right now, he said Niagara-Wheatfield doesn’t appear to qualify for an exception.

Proof the district is in rough shape came when he mentioned ignoring the law and doing it anyway, though only in a hypothetical situation as part of his predicted model, which is based on a low, consistent levy increase for four consecutive years starting in 2015-16.

“I don’t think I can get you to 2018 unless you take it anyway,” he said.

Timbs is an advocate for abolishing the Gap Elimination Adjustment, started in 2010 to help the state recuperate a multibillion-dollar deficit following the 2008 stock and housing markets crashes. He wants it gone immediately, since it’s crushing school finances across the board, not just in Western New York.

But the GEA, which is scheduled to have Niagara-Wheatfield return $2.1 million to New York next year, isn’t even the worst of the district’s financial problems. Instead it’s likely the frozen foundation aid that’s hurting Niagara-Wheatfield the most.

Foundation aid, a conglomerate of state money that forms the largest segment distributed to districts like Niagara-Wheatfield outside of property taxes, was developed by lawmakers following a 16-year lawsuit was ruled in favor of educators in New York City. The ruling said the state was constitutionally mandated to provide fully-funded education from grades one through 12, no matter what it cost, in the city.

After it was determined the state would do the best it could for the rest of the state, though, money quickly dried up and payouts were frozen. It’s resulted in Niagara-Wheatfield not receiving $44 million in the past four years, Timbs said, with districts state-wide coming up short $5.4 billion over the same time period.

All of it has left Niagara-Wheatfield desperate to increase taxes as high as possible since 2011-12, when the bubble burst on its own financial landscape. It was the only way the district could afford to keep its program running. It’s led to the state Comptroller’s Office slapping it with the “significant fiscal stress” label this past January.

The district joined 86 others statewide in the broad stroke of facing some form of fiscal challenge. But Timbs said the state’s in for a rude wake-up this coming fall. He’s run the numbers using the exact same formulas and more than half of the state’s 674 school districts will make the list in 2015.

As for Wheatfield, the finances are leaving everyone drained, upset and without much hope, especially after being told a lack of yet another increase in taxes is almost an immediate death sentence. But Superintendent Lynn Fusco said the district has to be positive and has to survive. And the only way to do it is with the support of everyone involved.

“This is our harsh reality,” she said. “You could feel it in the room at our last board meeting. It was palpable. But if we can all work together, and bring the community along, we can do this. If we don’t present a united front and don’t help the community come together, we’re done. It’s as simple as that. We will not exist if we don’t succeed.”

“It’s obvious we can’t continue to operate year-by-year,” school board President Steve Sabo added, following the special meeting Monday. “It’s not surprising what was said. It just confirmed everything we’ve been saying all along. He spelled it all out in a clear picture. We need to have a three- to five-year plan.”

Contact reporter Timothy Chipp at 282-2311, ext. 2251 or follow on Twitter @timchipp.