Announcing that New York State has run out of cash, Gov. David Paterson announced yesterday that he had issued an executive order directing the state budget officials to cut-off state aid to schools, local governments and nonprofit service providers such as hospitals until the State has some money. In effect, New York State is now going to "slow pay" its debts and obligations until tax receipts catch up some time next year.
Budget Director Robert Megna told the Associated Press "We've had a revenue collapse over the last 24 to 36 month period. The state's cash position is at its weakest point in recent history."
At the last school board meeting, Schools Superintendent Richard Organisciak revealed that New Rochelle schools may lose up to $3 million in state aid already budgeted for in the school budget approved by voters last May. In addition, the state is increasing required pension contributions which will cost the district another $2 million. Schools officials have yet to announce what will be cut. Salaries and benefits for current staff represent about 70% of the districts budget and much of the remaining budget is non-discretionary spending.
Many residents foresaw the current revenue shortfalls last spring and expressed their outrage during budget meetings prior to the May 19th vote on the school district's request to raise the budget by close to $7 million with a projected tax increase based on unsupportable estimates of the assessed value of property as home prices tumbled 35% in three years.
Meanwhile, the school board approved massive raises for administrators, approved across the board pay increases for union members and rolled out a new multi-million dollar full-day Kindergarten program. Assistant Superintendent John Quinn receive three raises in 13 months including a $25,000 non-contractual mid-year raise in October 2008 after less than 2 years on the job. The school board did not short-change itself either. The Journal news reported that the board expenditures were more than seven times larger than those for the Yonkers school board. When asked to produce records of reimbursements to then-board Cindy Babcock-Deutsch, the school district claimed there were none. Talk of the Sound subsequently obtained records of reimbursement payments to Babcock-Deutsch who is up for election in May 2010.
It was Quinn who famously quipped last March that the district might actually "make money" from expanding to full-day Kindergarten based on state aid and reimbursement formulas. Of course. the program has cost far more than Mr. Quinn disclosed, the state is holding up payments and no one is laughing now.
It is these chickens which are now coming home to roost.
As predicted on this site many times, tax certioris have skyrocketed, up over 300%. A sample of the 2,000 appeals filed in 2009 shows that 90% of the appeals came from District 5 and 6 (the North End).