MCS to use Reserves to Weather Huge State Aid Cut

Middleburgh Central School should be able to withstand a state aid cut of 20 percent, but that could cause problems for the 2021-22 school year, it was announced Wednesday.

To help solve the state revenue crisis because of the fallout from the Corona virus pandemic, Governor Andrew Cuomo has announced a 20 percent reduction in state aid to schools. To Middleburgh, which receives over 60 percent of its revenue form state aid, the cut is especially costly.

Business manager Terry Gillooley told school board members Wednesday night that the aid cut involves all state aid streams, not just foundation aid. The state is reassessing the cuts quarter by quarter but MCS will lose about $117,000 in state for the spring quarter for BOCES and excess cost aid. District officials thought the state aid cuts would only "hit" foundation aid and not all sources of aid.

The cut for the 2020-21 school year could be much more.

Mr. Gillooley said that a 20 percent reduction could cost Middleburgh between $1.5 and $2.4 million. A 20 percent cut would reduce the 2020-21 state aid to Middleburgh to $9.6 million instead of over $11 million.

The only saving grace is that Middleburgh has enough in its fund balance to cover the cut , Mr. Gillooley added.

The district has a total over about $4.5 million in its fund balance, more than the four percent of the total budget that the state recommends, he said. Of the $4.5 million, $2.3 million is "unassigned" and can be used. The state has been more lenient with the schools and said that reserves can be used to cover the budget gap.

"We have unassigned funds in the fund balance to cover a 20 percent cut in state aid, but it would deplete our fund balance," Mr. Gillooley told board members. "What does that mean for 2021-22?" Though the costs for the next school year are in the formative stages, there will probably an increase in health insurance costs.

He added, "$2.4 million is a big hit to our district, but we're in better shape than some other districts. I don't see any immediate (personnel) cuts needed." 

MCS can "survive this wave but" it will be much harder to survive the "2021-22 wave," Superintendent Brian Dunn said.

The district could avoid making any other changes until the state announces its second quarter cut for the 2020-21 school year, Mr. Gillooley said.

There was very little comment from school board members.

"We usually budget for a worse-case scenario," Mr. Gillooley concluded.