State education cuts are likely to have a more severe effect in local school districts

because these districts have smaller rainy day funds to cushion them, the New York State

School Boards Association says.

That means layoffs, program cuts and property tax increases are more likely here than

elsewhere in New York.

Seven of 28 school districts in Erie County would not be able to cover their state aid

losses even if they used up every dollar in their reserve funds &#8212 savings reserved for

emergencies, unforeseen expenditures or shortfalls in revenue.

Six of Niagara County&#8217s 10 school districts face the same predicament, said David

Albert, a spokesman for the school boards association.

In the two counties combined, 34 percent of the school districts do not have enough rainy

day funds to cover proposed cuts, compared with just 18 percent of the districts statewide,

making local schools particularly vulnerable to program cuts and property tax hikes.

The school districts that appear to be in the most trouble are Hamburg, Sweet Home,

Tonawanda, West Seneca, Maryvale, Holland, Depew, Niagara Wheatfield, Lockport, Niagara Falls,

Wilson, Royalton-Hartland and Newfane.

The association&#8217s analysis is based on financial reports from last June.

&#8220We&#8217re not talking about a little bit of a bleed,&#8221 said Sherrie Burns, a

member of the steering committee for the Alliance for Quality Education&#8217s local chapter.

&#8220We&#8217re talking a major artery slash here.&#8221

Faced with a $3.2 billion deficit, Gov. David A. Paterson last fall proposed a $700 million

&#8212 or 5 percent &#8212 cut in school aid. When building aid is excluded, the cut comes

to 6.7 percent, said Robert Lowry, deputy director of the New York State Council of School

Superintendents. That deficit is now pegged at over $7 billion.

The proposed cuts in education aid, though, follow several years of large increases. School

aid has increased $6.1 billion &#8212 or 42 percent &#8212 since 2003-04. That&#8217s twice

the rate of inflation.

Schools across the state have accumulated $1.1 billion in rainy day funds, Paterson said,

urging them to dip into those accounts to help counter aid cuts.

A spokesman for the State Division of the Budget said educators are misrepresenting

Paterson&#8217s message.

&#8220To say that we are asking school districts to rely exclusively on the reserves they

built up after years of rapid state aid increases that far outpaced inflation is a

mischaracterization of our position,&#8221 said Matt Anderson.

&#8220We believe that the first step school districts should take before tapping reserves

is to identify efficiencies and reduce costs, which is exactly what the state and other local

governments are doing during this historic fiscal crisis,&#8221 Anderson added.

&#8220We&#8217ve simply pointed out that these reserves represent a resource that is

available to school districts as they adjust their operations and reduce spending.&#8221

Even local districts that could afford to cover projected deficits entirely through the use

of reserve funds will hesitate to use too much rainy day money, since that would leave them

vulnerable to emergencies and the likelihood of more state aid cuts in future years, school

officials said.

&#8220There is simply no district that would absolutely zero out its rainy day fund,&#8221

Albert said.

Paterson&#8217s emphasis on the extensive use of reserve funds, he added, &#8220is not an

argument based in reality.&#8221

The City of Tonawanda Schools face a proposed state aid cut of $1.7 million, far more than

its rainy fund of $1.25 million.

Determined not to raise taxes, the district will probably use some &#8212 but not all

&#8212 of its reserves to help close a deficit of $1.3 million to $2.2 million. In addition,

it is seeking reductions in utilities, transportation, supplies, contracts and services, said

Joseph Giarrizo, the business administrator.

But those steps will not balance the books, and &#8220staffing cuts are imminent,&#8221 he

added.

&#8220The thing we don&#8217t want to do is use all of our reserves and find ourselves in a

far more dire situation next year,&#8221 Giarrizo said.

The crunch could be eased in the City of Tonawanda and elsewhere if &#8212 as is routinely

the case &#8212 the State Legislature boosts school aid above the level proposed by Paterson.

Even so, many school districts will combine the use of reserve funds with property tax

hikes and cuts in staffing and classroom programs, Lowry said.

Operating a school district with little or no money in a rainy day account is like running

a family with no money in the bank for furnace repairs or a new roof, he added.

&#8220The state and local school districts are all heading for the same cliff,&#8221 Lowry

said. &#8220If we use up our reserve funds, schools will go over the edge more quickly.&#8221

Districts have money in other reserve funds, but &#8212 unlike rainy day funds &#8212 they

are dedicated to specific purposes, such as workers&#8217 compensation, unemployment and

insurance payouts.