Public School Insolvency?

    Representatives from the NYS Departments of State and Education were in Canton on August 22nd to discuss education issues and to get input from attendees. Chuck Szuberla (Assistant Commissioner of School Operations for NYSED), Dede Scozzafava (Deputy Secretary of State for Local Governments), and Sean McGuire (Certified Planner and Land Use Training Specialist) were prepared to discuss school consolidations, mergers, transportation problems in rural areas, and other cost reduction ideas. Among the attendees were Board of Education members, PTA members, teachers, community members, and the BOCES Superintendent.

    Mr. Szuberla noted that from 2007-09 there were increases in NYS aid to schools, followed by a few years where aid was frozen. Then, he said, the Great Recession occurred. As a result, there were significant cuts in aid to schools, a property tax cap, and the loss of many teacher jobs and educational programs for students. He went on to mention the skyrocketing costs of health insurance and the ever-increasing contributions that must be made by school districts (i.e. taxpayers) to teacher and employees pension systems. Szuberla said that retiree health care costs are a serious concern because nobody is putting money aside for these future costs. Right now, schools handle these costs on a pay-as-you-go basis. This, Szuberla stated, will not continue to work.  He added that the retirements of the Baby Boomers will further stress the system.

     School consolidations generally result in significant savings and a net reduction of staff. Szuberla stated that NYS once had 7,000 school districts and it now has 685. Consolidation, he said, has been successful in NYS but it has become clear that extremely large schools have not, for the most part, benefited students. Rural schools, like those in Northern New York, usually find that consolidations are not feasible because of the vast geographic areas that are covered in sparsely populated regions. Students cannot be expected to be transported on buses for hours.

    Mr. Szuberla said that we (ostensibly NYSED, the Governor and state politicians) expect the economy to show signs of recovery over the next five years. “If the economy does not recover, we’ll have big problems,” stated Szuberla. When he was asked to explain what might occur if the economy does not recover in that time period, Szuberla sidestepped the question. However, participants later asked him what schools in this region were going to do when their fund balances were depleted.  “Could public schools go bankrupt?” asked several attendees including Mrs. Scozzafava. Schools can be taken over by NYS and all contracts would become null and void and would have to be renegotiated.Though this, according to Mr. Szuberla is something officials hope to avoid. The group was told that public schools cannot go bankrupt but they can become insolvent. Szuberla stated that once insolvency occurred, the Governor and the State legislature would have to step in and do something. Many present at the meeting felt officials should not wait for insolvency before making a plan to deal with the dire financial straits facing schools.

Further information about this meeting will be provided in future blog entries.