State auditors, who have been digging into the district’s books, found there are no available reserve funds to apply toward the looming deficit.
- FILE PHOTO
- Superintendent Terry Dade and school board President Van White listen to speakers during a board meeting.
“Further, absent additional severe budget cuts, short-term borrowings or outside intervention, the district will not have sufficient resources to meet its financial obligations by the end of the fiscal year ending June 30, 2020,” Deputy Comptroller Elliott Auerbach wrote the district in a six-page letter.
The letter blamed “several inaccurate estimates” for the shortfall, and pointed out that many of the amendments the district already made to the current year’s spending plan amounted to one-time savings and did not address structural deficits that may exist in future budgets.
“Consequently, without additional recurring revenues, the superintendent and board will need to implement additional budget and/or staffing cuts” next academic year, the letter read.
Auditors issued their warning as stakeholders press the state for more funding for the district and a day after Governor Andrew Cuomo proposed legislation to assign a state monitor to oversee the district.
The monitor would be appointed by Mayor Lovely Warren and the state education commissioner, and would be tasked with providing “oversight, guidance and technical assistance related to the educational and fiscal policies, practices, programs and decisions of the school district, the board of education and the superintendent.”
Warren said Wednesday that she supported the governor’s proposal.
Board of Education President Van White said a financial monitor was reasonable, but pushed back on part of the governor’s proposal that would require the district to develop an academic improvement plan.
The district already has a state Education Department-approved plan to improve academic performance, White said. He also noted that graduation rates have been rising and student scores on standardized tests have been improving incrementally.
State auditors began scouring the district’s books last fall in response to requests from what Auerbach called in his letter “numerous interested stakeholders” who wanted an “independent review” of the district’s finances after word surfaced of a massive budget deficit.
District officials pegged the shortage at about $65 million, but state auditors estimated the gap to be even larger at about $71 million.
Like internal auditors in the district, state auditors dated the budget deficit to overspending in the previous academic year. State auditors found the predominate cause to be what they called “severe underbudgeting of several appropriations.”
They found expenditures outweighed revenues by $41.1 million in six areas, with health and dental insurance costs ($16 million), substitute teacher costs ($8 million), and charter school tuition costs ($6.5 million) accounting for the bulk of the overspending.
Jeremy Moule is CITY's news editor. He can be reached at email@example.com.