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COVID-19 uncertainty surrounds state aid, budget discussions

Filed in Archive, District, District News by on May 5, 2020

Developing a school budget during the global COVID-19 pandemic grows increasingly challenging for school districts as New York state grapples with a multi-billion dollar deficit and the timeline for approval of a 2020-21 budget remains unclear.

The state’s revenues for the 2020-21 fiscal year are projected to be $13.3 billion less than what was forecast in January as a direct consequence of the COVID-19 pandemic, according to a report by the state Division of the Budget (DOB).

The statewide annual school budget vote, which had been scheduled for May 19, has been postponed by executive order, until June 9. There will be no in-person voting. The budget vote will be held by absentee ballot only. Read more about the June 9 budget vote and board of education election.

“With the extended stay-at-home order and business closures impacting state revenue, we expect to see a decline in the amount of state aid allocated to Bethlehem for the 2020-21 school year,” said Superintendent Jody Monroe. “How much that could be will be determined by several factors, including whether the state receives much-needed support from the federal government.”

State officials will be reviewing budget projections in four “look-back periods” during the 2020-21 state fiscal year which began April 1. Based on that analysis, the Governor estimated that school districts could see Foundation Aid reductions of anywhere between 20 percent and 50 percent.

Bethlehem, like most school districts, relies on a combination of state aid and local property taxes to fund education. Foundation Aid is the unrestricted aid school districts get from the state to support its programs. Other state aid categories are expense-based, providing funding for items such as special education, building aid, BOCES costs, and transportation. 

Governor Andrew Cuomo has said cuts in Foundation Aid up to 50 percent could be necessary if no federal stimulus bill providing assistance to state and local governments is approved by Congress.

According to the district’s Chief Budget & Financial Officer Judith Kehoe, Bethlehem had been expecting to receive approximately $12,836,000 in Foundation Aid in 2020-21. The total current year district budget is $100,829,000.

“Depending on what happens in Washington and how things look moving forward, the district could lose anywhere between $2.6 million and $6.4 million in state aid, if we apply the Governor’s estimates” said Kehoe. “During the financial crisis of a decade ago, we experienced aid reductions ranging between $2 to $4 million per year.”

Kehoe, however, remains positive when looking at the district’s position now compared to in 2008.

“Before the COVID crisis began, the district’s finances were solid and long-term planning will provide us with some extra stability as we navigate these waters,” said Kehoe. “We have several tools we can use to limit the impact of any cuts and we will use those as needed.”

Faculty and staff have already been instructed to order only essential supplies, vacancies will remain unfilled where possible, and unspent funds due to the districtwide shutdown (like fuel, utilities, substitute costs, etc.) could be used to fill a budget gap in the coming year, Kehoe said.

In her April 1 presentation to the Board of Education, Kehoe had outlined tools in four areas that the district can use during difficult fiscal challenges:

  • Fund Balance/Reserves: Provide funding sources through use of unrestricted fund balance or reserves. 
  • Salaries/Benefits: Limit expense growth by controlling staffing levels. Use TRS/ERS reserves to offset pension costs.
  • Expenditures: Eliminate all discretionary spending.
  • Debt Service: Limit the scope of potential capital projects. Draw on capital reserves to reduce new debt, benefit from maturing bonds.

Superintendent Monroe said the district expects to know more about the state aid outlook and a budget timeline in the coming weeks. A report of the state’s findings on the first revenue look-back period of April 1-April 30 is expected sometime in May.

“This experience is like no other,” said Superintendent Monroe. “However, I feel very strongly that by being supportive of one another and addressing each challenge with a focus on the collective well-being of our community we will make the best possible decisions in this difficult time.

“That is the way we are meeting the challenge of keeping the district going right now and it will be no different when it comes to creating a budget that will enable us to serve our students,” said Monroe.