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Watertown City Schools forecasts dire financial future

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Watertown City School District’s $66.7 million budget next year will have no staff or program cuts.

But $1 million in staff and programs cuts may happen at this time next year because of the district’s dwindling fund balance.

At Tuesday’s Board of Education meeting, Superintendent Terry N. Fralick outlined the 2013-14 budget as well as a dreary budget prediction for the 2014-15 school year.

“Many districts are in the same situation we’re in,” said Mr. Fralick. “We have a limited fund balance.”

He recalled the district having to cut 55 positions just a few years ago in order to close the budget gap and said the $1 million in staff and program cuts is just one option the district is considering for the 2014-15 school year.

He said financial insolvency — bankruptcy — for the district is possible within the next few years.

“We are facing another financial challenge in the next two years and beyond,” he said.

For the 2013-14 school year, the budget will be 3.29 percent, or $2,125,849, higher than the current year’s $64,594,377 that was budgeted.

Additionally, the levy is proposed to be raised nearly 5 percent. Business Manager Dale M. Morrow said the levy is still under the state tax cap due to various allowable exceptions. Through the calculations she presented at the meeting, the district could increase the levy nearly 9 percent without a super majority vote from residents.

The largest area of expenditures is for personnel. Approximately 70.67 percent of expenditures, $47,152,599, will go towards salaries and benefits.

Based on Gov. Andrew M. Cuomo’s executive budget proposal, the district is expecting to have 55.8 percent of its revenue — $37,255,057 — come from state aid.

“Without knowing what our actual state aid will be, some of these numbers may change,” said Mr. Fralick.

Mrs. Morrow said she was informed the school will lose some of its impact aid and federal grants due to sequestration, or across-the-board federal budget cuts.

“We still don’t have the dollar amount for that,” she said.

This year’s nearly $1.4 million budget gap will be closed with a $400,000 interfund transfer from the reserve account and $984,801 additional money from the fund balance, according to the presentation.

This July, Mrs. Morrow estimated there would be $3,308,932 as undesignated fund balance. By July 2014, she estimated that the district would be in debt $4.7 million because of its depleted fund balance.

Mr. Fralick said millions of dollars have been taken from the district’s state aid in the past three years due to the Gap Elimination Adjustment, the cuts to state aid used to offset the state’s deficit.

Cutting teachers would mean larger class sizes and fewer electives being offered, he said. He already predicts larger class sizes next year due to new students from the Creek Wood Apartments off Mill Street.

“If we financially have to cut staff, everything changes,” he said. “It’s daunting what we’re facing.”

Board member Peter E. Monaco said it was unfair for the state to take money out of the school aid every time it faced a budget gap. Additionally, he said keeping the tax levy increases down in the past may have hurt the district.

“You can only do so much on so little,” he said. “You can only do so much before the jar runs empty.”

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