ALBANY — More than $2 billion in state aid payments to public school districts across

the state are being delayed, possibly until June, because of the state's worsening financial

crisis, Gov. David A. Paterson said Tuesday.

The governor's order, coming the day before the aid was to go out, left school districts

scrambling, with talk of program cuts, delayed payments to vendors and possible layoffs if the

expected state aid — approved a year ago in the 2009 budget — does not come soon.

Several school officials lashed out at the Paterson administration for giving just 24

hours' notice and shifting the state's cash-flow problems onto local districts. A top labor

leader predicted some schools — especially lower-income districts that rely heavily on

state aid — will have to cancel school days if they can't pay the bills.

The delay will cost the Buffalo school district $26 million it was expecting Tuesday.

The Paterson administration also sent word Tuesday to construction companies doing business

with the state that road and other capital work will be delayed in the weeks ahead until a new

state budget deal is reached at the Capitol.

Document:See a district-by-district list of payments due from the state on Mar. 31

Department of Transportation officials said among the projects being held up will be the

$50 million reconstruction of Fuhrmann Boulevard into a new Outer Harbor Parkway, the final

phase of which just began in October.

A full list of DOT delays will be released today, officials said; the delays will hit any

state agency doing construction work that is not funded with federal stimulus money or is not

of an emergency, health-related nature.

The governor said the school payments might not be made until June 1, if the state has the

available money. He said his hands were tied because the state's 2009 fiscal year —

which ends today — needed to be in balance. Paterson also is trying to cut payments to

schools in the coming year to help Albany close a mounting deficit.

"The fact that extraordinary cash-management actions such as these are necessary

underscores the dire nature of our state's fiscal circumstances," Paterson said. He blamed a

"severe" cash-flow problem facing the state.

The $2.1 billion in delayed payments, which could result in school districts cutting

programs or staff, come after Paterson in December delayed $582 million in scheduled state

payments to the state's nearly 700 school districts. That was part of a total payment delay of

$750 million that also included funding for local governments and not-for-profit service

providers.

The latest school payment delay is more than three times larger than the December level and

is coming much later in the school districts' fiscal year, which ends June 30. It also will be

longer than the one-month delay that Paterson promised in December. State law permits the

governor to delay the payment due today until June 1.

The March 31 payment has been made on time every year except 2003 since the state moved the

payments to that date in the early 1990s, according to Robert Lowry, deputy director of the

New York State Council of School Superintendents.

Lockport school officials learned about the delay in their $3.4 million state aid payment

from a reporter, not the state. Lockport Superintendent Terry Ann Carbone said the district

might have to look at a whole range of solutions — from delaying vendor payments to

undertaking short-term borrowing that comes with expensive interest costs — to cover the

lapsed state aid.

"To get such short notice could be devastating to a district," Carbone said. "Surely, this

is a very serious time for public education, and I just hope that we don't lose sight of the

fact that educating our children is probably the most important thing we could be doing in the

state."

Buffalo school officials did not respond to requests for comment.

Other payment delays include $4.4 million for Niagara Falls, $4.6 million for West Seneca,

$3.6 million for Lancaster, $2.5 million for Hamburg and $2.7 million for North Tonawanda.

Funding for public schools has become a major sticking point in negotiations for a new 2010

budget. The deadline for on-time adoption is today, but Paterson and lawmakers will again miss

the target. Lawmakers are on a break for the religious holidays, and talks have broken down

over spending, tax hikes and borrowing plans.

In his budget plan for 2010, Paterson proposed slashing school aid by $1.4 billion, a level

backed by Senate Democrats. Assembly Democrats offered $800 million in education cuts. The

state spends more than $20 billion a year on public schools.

Schools are already preparing for cuts from Albany for the coming school year. Many have

drafted budgets based on Paterson's $1.4 billion cut. Buffalo school officials have said they

might have to lay off 680 workers if the governor's cut is adopted in the final budget deal.

Richard Iannuzzi, president of the New York State United Teachers union, called Paterson's

last-minute payment delay "immoral" and said it could force schools to cut bus services and

"shut doors early if they can't meet payroll."

"It's unconscionable to pull the rug out from under school districts," he said.

The payment delays came as a conservative think tank released a report showing a surge in

teacher and other school district hiring over the past decade even as student enrollment

dropped.

Between 2000 and 2009, districts across New York added 14,746 teachers and 8,655

nonteaching professionals, such as administrators, guidance counselors, social workers and

nurses. During the same period, statewide enrollment dropped by 121,280 students, according to

a report by the Empire Center for New York State Policy.

The group said upstate schools saw the sharpest enrollment drop — 72,000 students

— yet added 939 teachers and 2,408 other professionals. It said upstate enrollment

dropped by 7.4 percent while teacher hiring was up 1.1 percent and other professional hiring

leaped 19 percent. The group said about half the additional teachers were for special

education programs.

School groups in recent weeks have said proposed state aid cuts could lead to more than

10,000 layoffs at districts. One lawmaker, Assemblyman Sam Hoyt, D-Buffalo, called on NYSUT,

the teachers union, push local affiliates to accept pay freezes for teachers this year; NYSUT

rejected the idea.

On the delay in construction projects around the state, officials said it was necessary

because there is no appropriation for capital projects in the emergency spending bill approved

by the Legislature this week to cover up to April 14.

Paterson had vowed to propose only a bare-ones emergency bill — needed for things like

paying for Medicaid services and state worker paychecks — covering up to April 14.

The emergency bill is necessary because of the failure to agree on a full year's budget.

The governor used the school payment delay to again lecture the Legislature on the need for

fiscal discipline. He has said plans by the two Democratic-run legislative houses do not cut

enough to help erase the state's $9.2 billion deficit; Paterson and lawmakers are more than $1

billion apart in spending cuts, and he is resisting Assembly calls for $2 billion in borrowing

to close the gap.

Paterson warned revenues to the state are dropping at levels that even deeper cuts than he

proposed in January for the 2010 budget may be necessary. "In order to reach a consensus

budget agreement, all sides must come together as soon as possible and make the tough choices

necessary to reduce spending to more affordable levels," Paterson said.