The Buffalo Public Schools’ proposed 2014-15 budget reflects another financial near-disaster dodged, thanks to the ever-greater largess of the state and the spending down of reserves. The district needs a better strategy.
The process is not complete, but it appears that because of an infusion of state money, academic and extracurricular programs will remain essentially intact.
District administrators have proposed an $806.6 million general fund budget that would increase spending by $12.6 million, or 1.6 percent. That figure excludes $115 million in program costs that would be covered by state and federal grants.
The budget plan is balanced thanks to $30.9 million in additional state aid, which was a lot more than district officials anticipated. They must be breathing a sigh of relief because the money, coupled with cost savings and $10 million in reserves, helped wipe out what had been projected to be a $50 million deficit. However, reserves and state aid increases that vary from year to year cannot be counted on to plug recurring holes.
District officials are in a tough situation as a ward to both the state, which provides about $700 million of its budget, and the city, which sends it about $70 million.
It is good that the state bailed the district out. Again. But the Buffalo Fiscal Stability Authority has warned against the district’s consistent use of reserves. As a stepchild of the state and second or third cousin to the city, unable to levy its own taxes, the Buffalo School District has little room to maneuver.
In particular, it remains to be seen how effective a retirement incentive will be in saving money. The proposal would give teachers a one-time $5,000 bonus for retiring and withdrawing from the district’s health insurance coverage. In return, those who take the incentive also would receive annual payouts until age 65 to cover health insurance purchased through health care exchanges under the Affordable Care Act.
The district faces two big budget problems faced by other municipalities in the state: the costs of pensions and health insurance. Those skyrocketing costs have become a huge liability for the school district and make balancing the budget difficult. The effects are especially damaging for the school district, where the lack of a new contract with teachers and administrators means those costs just keep piling up, thanks to state labor law that keeps contract provisions in place until a new contract is signed. That means unions have little incentive to negotiate a new contract.
Depending upon the twin crutches of draining reserves and state bailouts year after year only delays acting on the structural financial problems.