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Area superintendents see insolvency on the horizon

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Nearly 50 percent of schools in Jefferson, Lewis and St. Lawrence counties fear they will be bankrupt in four years, according to a recent state superintendent survey.

And some districts, such as South Jefferson Central and Canton Central, could be financially and educationally insolvent in two years, their superintendents said.

The New York State Council of School Superintendents released a study in late November about the financial crisis superintendents predict they will face if state aid does not dramatically increase. Approximately 17 of 32 districts completed the survey, meaning the percentage of districts worried about their financial future could be higher. All but one of the districts that answered the survey foresaw insolvency in the near future.

Districts like Colton-Pierrepont Central and LaFargeville Central have not discussed insolvency. Others, like the Watertown City and Parishville-Hopkinton Central school districts, are waiting to see how much state aid they will receive before worrying about their tax base.

South Jefferson Central Superintendent Jamie A. Moesel said that the NYSCOSS study confirms the struggles of the past few years and that the district is on track to become financially and academically insolvent within two years.

State funding accounts for about 72 percent of the district’s budget.

“We’re going to have similar issues if things remain the same,” she said.

At the beginning of the school year, the district’s unrestricted fund balance rose from $1,027,398 to $1,048715. However, the district has been cutting programs and teaching positions to keep the doors open, Mrs. Moesel said. Since fall 2009, she said, the district has lost about 55 staff members, about 12 percent of its work force.

The school district in March 2011 was informed by the state comptroller’s office that it was one of 100 schools that did not have sufficient funds to sustain itself for two years. However, Mrs. Moesel said a timetable for insolvency could not be determined without knowing future state funding.

“It does sound bleak,” she said.

To make up for recent cuts in state funding, Mrs. Moesel said, the South Jeff district would need to raise its tax levy by more than 50 percent, which she said was unfeasible.

Mrs. Moesel’s worries mimic what most superintendents fear.

Canton Central School District may face bankruptcy as soon as next school year.

Superintendent William A. Gregory said the district’s unreserved fund balance has been depleted to roughly $730,000, and the district faces a projected budget gap of $2.72 million next year unless something changes.

“There is a strong possibility that we would have to commit the entire fund balance and still have to make crippling program and staff reductions, depending on the actual size of the budget gap that we will face,” Mr. Gregory said in an email. “We will have a better handle on the situation once the governor publishes his budget in January.”

Morristown Central is worried about educating students as soon as next school year. Superintendent David J. Glover has said the district will be educationally insolvent after this year. Mr. Glover said he believes basic bills could be paid for the next five years, but the district would not be able to provide even a basic education.

The school has roughly $1.7 million in its fund balance, and Mr. Glover said he thinks it will be exhausted in next year’s budget.

Morristown is looking to form a regional high school with Heuvelton and Hermon-DeKalb central schools, but that would require the state to pass legislation enabling the decision.

Hermon-DeKalb will barely be able to remain solvent through the 2014-15 school year unless the state makes further large cuts, according to district Superintendent Ann M. Adams.

The district has a fund balance of $378,000.

The rising costs of employee retirements and health insurance benefits are placing the greatest strain on the budget, Ms. Adams said.

“That is a big chunk of change,” she said.

St. Lawrence-area schools began talking about possible education and financial insolvency before the recession because total enrollment had decreased from 26,000 to 16,000, said Thomas R. Burns, St. Lawrence-Lewis Board of Cooperative Educational Services superintendent.

When you have a smaller number of students, “it becomes harder to achieve certain economies of scale,” Mr. Burns said.

Districts such as Canton Central and Potsdam Central receive the worst gap-elimination-adjustment cuts — the cuts to state aid used to offset the state’s deficit — because they are considered by the state to be in an average-wealth district, Mr. Burns said.

However, they are just above the “average” threshold.

“The district in Potsdam has lost $4 million in the past few years and as a result, we’ve had to cut many programs,” said Potsdam Superintendent Patrick H. Brady. “We’ve cut out the dean of students position at the high school and we’re also sharing our buildings and grounds supervisors with Norwood-Norfolk.”

Additionally, nearly 19 teaching positions and almost 30 support staff positions have been cut in the past several years.

If state aid continues to be lacking, Mr. Brady said, the district could run out of money in two to three years.

“It does reach a point that we can no longer cut” and meet the educational needs and mandates without additional funds, he said.

Thousand Islands Superintendent Frank C. House already has discussed fiscal insolvency with the district Board of Education. Nearby Lyme Central School in Chaumont also has been worried about a dwindling fund balance, but did not say how soon it would run out.

“Our greatest challenges are the gap-elimination adjustment and the tax cap,” said Lyme Central Superintendent Karen M. Donahue.

“The GEA assessment costs us over $390,000 of aid on average, and this, plus the cap, will continue to erode our reserves. Our budget has been kept in check and we have developed plans that have minimal increases for the last four years,” Mrs. Donahue said.

Sackets Harbor Central, another district wary of giving its doomsday year, is “keenly aware” of the possibility of educational and financial insolvency, according to Superintendent Frederick E. Hall Jr. After this year, the district will have a fund balance of $1 million to carry itself forward. Approximately $650,000 of the fund balance was allocated for this year.

Mr. Hall is waiting to see whether the looming fiscal cliff will change the amount of federal impact aid the district will receive. Last year, the district received $55,000 for military-related students. A dramatically reduced amount could mean more fund balance is used. However, another mild winter like last year’s might save on utility costs.

Jeffrey R. Swanson, Ogdensburg City School District business manager, and Scott N. Connell, Copenhagen Central School District superintendent, said they think funds at their districts are going to run out in two years.

In Brasher Falls, St. Lawrence Central Superintendent Stephen M. Putman said he feels he can stretch the budget for four to five years before his fund balance runs dry.

Mr. Connell and Mr. Putman said they blame the state’s trend of distributing the bulk of aid to wealthy downstate districts rather than to struggling upstate schools.

Copenhagen does not have a single Advanced Placement course and is cutting positions, and Brasher Falls has cut technical and agriculture electives.

“It’s a very scary downward spiral, and it’s very disheartening that if they took the state aid and redistributed it, that this would not be happening,” Mr. Putman said.

Aside from the problem of educational insolvency, superintendents are concerned that their students cannot compete for seats in the best colleges because so many enrichment courses have not survived budget cuts.

“Why does your ZIP code determine what you get in education?” Mr. Connell said.

Parishville-Hopkinton Central Superintendent Darin P. Saiff said that although he is waiting for the state budget before worrying about his district’s fate, he fears for the state’s future in education. He said he is anticipating the district will receive $407,000 less in aid than it received in 2008-09.

“Many superintendents began their careers as classroom teachers and we did not enter the profession to tear it down piece by piece, but that is the stark reality that we face,” Mr. Saiff said in an email. “Hard decisions will be on the horizon if we do not get support from our Governor and our legislators.”

“We will continue to tighten our belts, as this is necessary in a failing economy, but I implore our legislators to continue to bang the drum of a fair, sound basic education for our students,” Mr. Saiff said.

Times staff writers Jaegun Lee and Martha Ellen and Johnson Newspapers writers Benny Fairchild and Sean Ewart contributed to this report.

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