Last week the New York State Comptroller’s Office released a report reviewing the fiscal situation of school districts throughout the State. The City School District of New Rochelle was classified as being under “Moderate Fiscal Stress”.
THIS PUTS NEW ROCHELLE IN THE BOTTOM 5% OF ALL 674 SCHOOL DISTRICTS REVIEWED.
There were only 23 school districts given this designation. If it makes you feel better, there were 12 school districts that were considered worse off than us with a designation of “Significant Fiscal Stress”.
How did we get this score?
70% of the grade was tied to the way the District manages its budget. Any district that spends more money than it takes in and has to dip into its reserve fund gets a bad grade. The reserve fund is a rainy day fund set aside to meet unanticipated expenses. Over the past 3 years, the School District has burned through its reserve fund at an alarming rate while, at the same time, laying off teachers, shutting programs, and raising our taxes by more than 12%.
Our grade in managing our reserve fund was equivalent to a 50%, which is an F.
Our grade in managing our operating budget was equivalent to a 33%, which is a low F.
Incidentally, we came within a hair of getting a 0% on this last part, which is the worst score you can get.
The other 30% of the grade was related to the District’s balance sheet. The State looked at our cash balances and our cash flow.
We received a very high grade for cash balances. That’s the good news. The bad news is that we had all of that cash because we borrowed money every year.
Added together, our grade in managing our balance sheet was equivalent to a 50%, another F.
What is the Board of Education’s explanation?
The BOE issued
1. rising mandated pension contributions and health care costs;
2. negative adjustments in state aid; and
3. the tax cap
However, all of the school districts in the State faced these same issues and yet 95% of them were given a passing grade while we were given a failing grade.
Should We Be Worried?
Absolutely yes. The remedies here are not rocket science. In fact, two advisory committees to the Board of Education have made recommendations that could have saved the School District tens of millions of dollars in recent years. But the Board has been unwilling to make the tough choices, and the community has been unwilling to elect reformers to the Board to change their behavior.
So, we appear to be stuck. Hopefully, the Comptroller’s report will spark the community to elect people to the Board of Education who are able to manage a large budget. If we don’t, we risk cutting the heart out of our school system.
Adam D. Egelberg, CFA
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