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Jan 28, 2014 2:27 PMPublication: The Southampton Press

Tuckahoe School Financials Not Yet Considered Dire By State

Jan 28, 2014 6:32 PM

Though Tuckahoe School District officials maintain that a merger is necessary to avoid bankruptcy, the district has not been classified as being in immediate financial trouble by the state comptroller’s office, which earlier this month released a list of districts considered to be in “fiscal stress.”

This week, Tuckahoe Superintendent Chris Dyer said that the information in the state report—which is designed as a financial guide for taxpayers and to provide early warning signs of problems—is accurate. However, he noted that it is based on past and current school year information, and does not anticipate future spending.

The Tuckahoe district, he said, is financially stable for the time being, but it is clear that contractual, tuition and pension payments will force the district to spend all of its reserve funds by 2015.

Rather than waiting until the state issues red flags for the school, Mr. Dyer said, district officials instead are continuing to work toward a merger with the neighboring Southampton School District.

“My understanding of that model is that it is built on how you are using your reserves and how you are borrowing,” the superintendent said of the state warnings. “We haven’t been borrowing from our operational funds yet, but when you look at revenues and expenses, that will come into play in the 2015-16 timeline.”

The New York State report, which evaluates 674 school districts, is part of the Fiscal Stress Monitoring System utilized by State Comptroller Thomas DiNapoli’s office. It identifies early warning signs of economic distress in school districts using factors such as fund balances, operating deficits, cash on hand, cash flow borrowing and fixed costs, as well as demographic factors like changes in population, fluctuations in property values and child poverty rates.

Each school was rated based on a scale of 21. The more points a district accumulated, the worse the state considers the financial situation at the district. The points were then converted into a weighted percentage, putting emphasis on some factors over others. Districts with 25 to 44.9 percentage points were deemed susceptible to fiscal stress; 45 to 64.9 percent to have moderate fiscal stress; and 65 to 100 percent to be experiencing significant fiscal stress, according to the comptroller’s website.

Locally, East Quogue was labeled as having moderate fiscal stress, while Eastport South Manor was labeled as being susceptible to fiscal stress. They were the only two districts on the list.

Tuckahoe received a total of seven points, or 16.7 percent financial deficiency, which is 8.3 percentage points less than the districts deemed susceptible to financial stress. Of Tuckahoe’s points, most were attributed to short-term debt issuance, and one point was for gross expenditures.

“You have school districts that are facing any number of challenges, whether they be with reductions to state aid or the tax cap, or making cuts to their budgets,” said Brian Butry, a representative from the comptroller’s office. “This is part of the reason we put this into place, to identify some of the budgetary issues our districts and municipalities are facing, and to see those problems earlier so they don’t go down the wrong path and have to consider drastic measures.”

This week, Mr. Dyer said Tuckahoe hopes to be able to merge with Southampton before the financial issues reach a tipping point. Currently, the district plans to present a budget to the public for the 2014-15 school year that will maintain all staffing and programs while staying under the tax cap. If forced to keep paying tuition and benefits costs, that is not something that will remain an option come the 2015-16 budget season, the Tuckahoe superintendent said.

“We are trying to make sure that people understand that on the road to fiscal insolvency, you go educationally insolvent first,” Mr. Dyer said. “You are forced to cut programs and services. The opportunities to improve our programs are going to go away, because we will become educationally insolvent, and then we will go fiscally insolvent.”

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Chris Dyer is absolutely correct. The Comptroller's Dept looked at the immediate out liquidity situation. Tuckahoe still has significant reserves from over a decade of overtaxing. But the school has very high fixed costs that these reserves could not withstand for long rougly two years worth unless structura operating reforms are undertaken.

One doesn't wait until he has two nickels left in his pocket before sounding the alarm. The Comptroller's objectives addressed very short term financial ...more
By Obbservant (449), southampton on Feb 1, 14 5:32 PM