Niagara Gazette

February 14, 2013

Falls School District spending projections soar

by Timothy Chipp
Niagara Gazette

Niagara Gazette — At an absolute worst-case scenario, administrators at the Niagara Falls City School District have a road of tough decisions in front of them concerning the 2013-14 school year operating budget.

Superintendent Cynthia Bianco said district spending could rise to $127.7 million without any cuts to current year staffing, a massive $6.4 million increase.

"This is the absolute worst-case scenario," she said following the district's school board meeting Thursday. "This doesn't have what the governor proposed in it. Over the next few weeks, we'll develop some strategies and we'll try to even things out. We're hopeful things will turn out well."

What exactly did Gov. Andrew Cuomo's executive budget, released last month, propose affecting district spending? The largest change comes in the form of pension reform, which would drastically reduce the financial burden districts with high numbers of employees face next year.

Without reform, the TRS contribution is expected to increase from 11.84 percent this year to 16.25 percent next year, an increase which represents a $2 million (38 percent) increase in spending in Niagara Falls. 

Administrator for School Business Services Timothy Hyland said Cuomo's plan would cap a district's pension payment at 12.5 percent for at least the next five years, which would save the district more than $1 million in increased spending next year.

He said a good analogy would be to consider the district attempting to get a fixed-rate mortgage as opposed to a variable rate.

The state pension system, which pays more than $5.7 billion each year, requires a fully-funded system according to the state's constitution. Opponents of the reform believe capping contributions from districts would result in possible underfunded situations, should investments — the system's No. 1 source of funding — flounder.

But Hyland believes the cap would go a long way to providing some short-term relief to districts feeling the penny pinch heading into next school year, giving districts a chance to build up their numbers of Tier VI employees, a category created by Cuomo's administration last year which requires much more contribution from the employee to the system.

"It would give relief in the near term to school districts, towns and cities, while it allows us to plan for the future," Hyland said. "There are some questions as to whether it's constitutional, but I look at it like I need to be able to plan."

Hyland and Bianco both said they'd met with Assemblyman John Ceretto to ask him to consider the pension reform. They said they also requested the TRS option be allowed to have amortization, which would permit the district to, in situations similar to this year, borrow money to spread out the effect of a massive increase.

Amortization already exists for the Employee Retirement System, which pays the non-teaching staff like custodians and secretaries, and Hyland said should help the district accomplish its goal of being able to plan.

"A school district, facing such a huge increase, says 'OK, we're going to close a school,' " Hyland said. "What happens if rates drop next year? Are they going to come back and reopen the school because they can afford it? We need to be able to plan for the future."

Meanwhile, the district's ERS contribution, not covered in Cuomo's plan, is expected to change from 18.9 percent to 20.9 percent, though it only represents an 11 percent increase in cost at an additional $215,000 because of amortization. Other increases projected thursday include a $1.6 million increase in teacher salaries and a $1.5 million increase to health insurance benefits, a projected 9 percent increase.

Assuming no reforms are passed by the legislature, Hyland said the district would require cuts to match its projected $122.5 million in revenues for next year.