9 LI School Districts 'Susceptible To Fiscal Stress': Report

LONG ISLAND, NY — Nine Long Island school districts have been identified by state Comptroller Tom DiNapoli's office as having susceptibility to fiscal stress, a report says.

The districts include Three Village, Middle Country, New Suffolk, Greenport, Bay Shore, South Huntington, North Merrick, Roosevelt, and Hempstead.

A total of 23 school districts across the state were cited in the report. Twenty-one of the school districts were identified as susceptible to fiscal stress. Two of the school districts, including East Ramapo Central and Newfield Central upstate, were identified as susceptible to significant fiscal stress.

DiNapoli's office also released a report examining the challenges that school districts faced in the 2020-21 school year, which is the first full year of operations under COVID-19 pandemic guidelines.

His office noted there were state aid delays, including a delay of 20% in school aid early in the school year "and indicated more reductions could occur."

"Some school districts issued short-term debt, which is often used to bridge revenue delays but is also considered when fiscal stress scores are calculated. This had a notable impact on the number of school districts on Long Island that ranked in fiscal stress because they issued an increased amount of short-term debt," DiNapoli's office said.

There were also federal delays, including the federal government’s Coronavirus Aid, Relief, and Economic Security Act had, which had many requirements that caused funding delays for many school districts, as well as about 44% of school districts, which received their aid by the end of the school year.

Some school districts also received less aid for the 2020-21 school year because the state used the deferred CARES funding to replace general school aid and the federal aid had to be shared with eligible non-public schools throughout a district.

"Although this had little impact on many districts, for a few, this meant they received substantially less aid," DiNapoli's office said. "For example, East Ramapo, one of the two districts in significant fiscal stress in [School Year] 2020-21, was allocated $22.3 million in CARES Act funding, but had to set aside $15.8 million (71%) of this for non-public schools."

Other challenges included staffing cuts and common issues like weak cash position and low fund balances.

DiNapoli's auditors also reported environmental risk factors, which can often increase the chance of fiscal stress, like having a high percentage of economically-disadvantaged students, a high teacher turnover rate, a decrease in local property values, a low budget vote approval rate, a high percentage of English language learners and a high student-to-teacher ratio, according to his office.

DiNapoli noted that "while federal and state aid for the 2021-22 school year alleviated some of the financial stress caused by the onset of the pandemic, the state’s property tax cap will limit levy growth for school districts at two percent next year."

"The tax cap, which first applied to local governments and school districts in 2012, limits annual tax levy increases to the lesser of the rate of inflation or percent with certain exceptions," DiNapoli said. "School districts may override the cap with 60 percent voter approval of their budget."

The report was based on 670 of the 672 school districts in 57 counties that filed required financial information for the 2020-21 school year.