A review of the Rochester School District’s proposed 2020-21 budget shows not enough money earmarked for charter school tuition, and recommends close monitoring of salary and substitute costs.
The findings were part of a review by the Office of the State Comptroller of the upcoming spending plan.
The district’s budget is scheduled to go before City Council on June 16.
The comptroller’s office had done independent reviews of the 2018-19 and 2019-20 adopted budgets and was responding to a request from what it called “several interested stakeholders” to take a look at the upcoming spending plan.
Future reviews will be completed by an independent State Monitor2 installed in the District by the New York State Education Department pursuant to language included in the State’s 2020-21 budget bill.
The objective of the review was to determine whether the revenue and expenditure projections in the proposed $927.5 million budget were reasonable. The amount is $6.6 million less than the amended 2019-20 budget. The upcoming budget includes funding for more than 24,000 students, a workforce of over 5,600 employees and the operation of over 60 schools and programs.
In a letter to Superintendent Lesli Myers-Small about the 2020-21 budget, Deputy Comptroller Elliott Auerbach wrote that revenue projections were substantially accurate. However, charter school tuition appears to be underbudgeted by approximately $1.5 million.
Also, the budget is structurally imbalanced because RCSD officials are relying on City Council to allow the use of $10 million for operational expenses rather than capital purposes. If that happens, and “absent recurring additional revenue, appropriation reductions will be necessary for future budgets to be structurally balanced,” Auerbach wrote. City Council will have to grant a waiver so the money can be used for operations, but it’s a Band-Aid approach. It meets short-term needs at the expense of long-term capital needs – and delaying projects may increase their price.
Myers-Small inherits this budget, which was developed by former Superintendent Terry Dade.
Dade resigned on April 23 after most of his 10 months in the district had been consumed by budget issues.
Auerbach commended Dade and the board for improving the accuracy of projections, particularly in light of revenue reductions because of COVID-19. Dade had proposed midyear cuts, including layoffs that helped close a budget gap that grew wider seemingly by the month.
Even though Dade closed the gap, the ramifications will extend for several years. The district received a $35 million advance in state aid for the current budget. That “spin-up” money will result in reduction of future state aid payments of approximately $1.17 million per year for the next 30 years, according to the comptroller’s report.
Additionally, the evolving circumstances surrounding COVID-19 allow the state to reduce aid as necessary throughout the year if the state budget gets out of balance.
The comptroller’s report recommends that the school board and district officials closely monitor expenditures especially for salary and substitute costs and charter school tuition and make budget modifications as necessary to ensure a balanced budget, and make a plan to balance the budget and reduce expenditures in the event state aid is reduced according to provisions of the state budget.
The report also recommends that RCSD work with the state monitor to develop comprehensive multiyear financial plans with structurally balanced budgets that:
- includes realistic estimates of revenues and appropriations based on historical trends or other known factors;
- complies with the board’s fund balance policy and restores necessary reserves;
- funds long-term operating needs, goals and objectives; and
- discontinues the practice of delaying cash capital expenditures in order to finance recurring expenditures.