Niagara Gazette

February 25, 2013

Casino funds, pensions cause massive planning uncertainty for Falls schools

by Timothy Chipp
Niagara Gazette

Niagara Gazette — The lack of casino revenues could again cause devastating pain in the Niagara Falls City School District.

For the third year in a row, the district faces going without $750,000 in revenues it needs to help close a projected $5.3 million gap heading into 2013-14.

Getting a settlement between the Seneca Nation of Indians and New York state on the matter would definitely help future planning in the district, according to Administrator for School Business Services Timothy Hyland.

“Should the casino fiasco not be resolved by the end of this school year, we’ll be looking at losing another $750,000 and we’ll be looking at a massive gap,” Hyland said.

Casino funds aren’t the only thing Hyland can’t bank on, though, concerning the future of the district’s finances. Pension contributions are also contributing to the massive difference.

So the problem lies both in revenues, projected to be at most $123.2 million with casino funds included, and expenses, which he said could be as high as $127.7 million.

Hyland selected those two specific items to highlight Thursday because they’re the only aspects of the budget he can’t control which would allow more income or less spending to go on in the district.

Gov. Andrew Cuomo’s executive budget, released in January, came with controversial pension reform which, if adopted, would cut the district’s contribution to the retirement system by more than $1 million next year.

The figure seems like a lot, but it’s currently projecting paying more than $2 million more than this year to the system if the reform is not passed by the legislature.

Cuomo’s reform would cap all contributions to the fund by government entities like school districts, which Hyland said would allow him to plan for the long-term. Opponents of the reform, however, say the cap would break New York state’s constitution, which requires the more-than $5 billion fund to be fully funded.

In the coming weeks, Hyland said, his budget team will create three scenarios of varying degrees of pain, each designed to take into account one or both of the possible changes coming to fruition.

A fourth, worst-case, would also be developed in case neither happen and the district must cut $5.3 million to balance its budget.

Though banking on casino revenues and pension reform are nice, it begs the question why the district doesn’t learn from previous years and just plan for the worst. After not seeing casino money for two years, the district might be hurting itself in the long run continually recognizing the potential for it to be there in the future.

But Hyland said, for the sake of teachers and programs in the schools, the district needs to holdout hope the money will be there every year.

“If we assume we don’t get (the casino money), we’d have to cut an additional $750,000,” he said.

Hyland and Budget Manager Rebecca Holody also revealed what the district’s upcoming tax levy cap would be.

Niagara Falls has not raised its tax levy, or total dollars collected in taxes, in 19 years. Next year, the district could choose to raise its levy by nearly 5.5 percent without needing a supermajority of 60 percent of district voters approving the spending plan in May. The figure includes this year’s 4 percent tax cap, along with a 1.5 percent carryover from not raising it last year.

Big red number $5.3M The Falls School District's projected budget gap for the 2013/14 school year