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Sometime in January, State Comptroller Thomas P. DiNapoli’s office is expected to release a report that designates the West Seneca School District as suffering from “significant fiscal stress.”

“We are not quarreling with DiNapoli’s office about this designation,” Superintendent Mark Crawford told reporters this month. “We are just trying to respond to it and explain.”

You could call it a pre-emptive response.

Earlier this year, DiNapoli implemented a fiscal stress monitoring system to identify early warning signs of financial trouble and offer cost-saving ideas to avoid a crisis. After evaluating counties, cities, towns and villages, the Comptroller’s Office turned its attention to school districts.

In November, Crawford received a letter from the state identifying the district’s preliminary score as 73.3, on a rating system designating high scores as a bad thing.

The designation was based on a review of data from 2011, 2012 and 2013; the fiscal year ends June 30. What hurt West Seneca the most was its year-end fund balance, which accounts for 50 percent of the score.

Although the district has $5.8 million in restricted reserves to meet specific financial obligations, its unassigned fund balance – widely referred to as a “rainy day” fund – has run dry.

District officials point to the conflicting advice from state officials on that matter.

Gov. Andrew M. Cuomo repeatedly has suggested that districts tap into unassigned fund balances to make up for state aid reductions, while DiNapoli recommends maintaining unassigned fund balances equal to 4 percent of a district’s total budget. Yet the Comptroller’s Office criticizes districts that exceed 4 percent.

In West Seneca, that should be about $4 million.

Approximately $4.6 million of unassigned fund balance was used in the 2012-13 budget as part of a strategy to reduce the payroll. Separation payments of $35,000 each went to 132 employees – deeply impacting the custodial, buildings-and-grounds and support services staffs.

Only 10 replacements have been hired, officials noted.

With student enrollment below 7,000, “the downsizing, we felt, was appropriate for our current enrollment,” Crawford said.

“Next year, we’re free of that liability,” the superintendent added. No more salary increases, no more health insurance costs and, in some cases, no pensions.

The comptroller’s letter didn’t acknowledge the increasing cost of state pensions, which are managed by DiNapoli’s office, district officials pointed out.

“We’re not blaming it on that,” said treasurer Brian Schulz. “We have taken steps, including following the directive of the governor” regarding fund balances.

Nor did the letter address state aid cuts.

West Seneca’s state aid was cut in 2010-11 and again in 2011-12, for a total reduction of approximately $9 million. Even after some money was restored, the district is getting about $6 million a year less than it did in 2009-10.

“We have not recovered the cut,” Schulz said.

Before it became apparent that state aid levels were not going to be fully restored, unassigned fund balances, in recent years, had been used to maintain student programs. “It’s just amazing that we have been able to maintain the level of programming,” Crawford said.

And contrary to what the comptroller’s upcoming report may imply, district officials want residents to know that they’ve been hard at work all along.

“We want to make sure our community, particularly our senior citizens, know we are doing everything we can to save money,” Schulz said.

Between attrition and the separation incentive, staffing has been reduced from 1,250 to 1,033 since 2008, officials said. In 2010, all employment agreements were renegotiated, resulting in salary freezes, postponed raises and increased employee contributions to health care costs.

This year, East Elementary School was closed and now houses an expanded middle school.

“When all this bad economic news came, we decided to fight back,” Crawford said. “I think, as the economy is improving ... we are turning a corner and the result is we’re doing very well.”

Schulz said: “We’re past the worst of it.”

email: jhabuda@buffnews.com