A report issued by State Comptroller Thomas P. DiNapoli shows 13 percent of school districts statewide have been designated as fiscally stressed under his Fiscal Stress Monitoring System. Of the 87 school districts noted in the report, 12 school districts were classified as in “significant fiscal stress”, 23 in “moderate fiscal stress”, and 52 as “susceptible to fiscal stress.” Manhasset was classified “susceptible to fiscal stress.”
The report states, “New York State’s school districts are facing severe fiscal challenges. District officials must continue to improve student performance, ensure student safety and provide extracurricular activities that taxpayers value for their children – all against the back-drop of a slow economic recovery in which resources are limited.” The report also noted, “Unfortunately, reductions in state aid, a cap on local revenue and decreased rainy day funds are creating financial challenges that more and more school districts are having trouble overcoming.”
Comptroller DiNapoli also released a study this week on school revenues, which states: “Bottom Line: Schools are facing fiscal challenges that are not likely to dissipate in the short-term. Between a tax levy limit that restricts local funding, State and federal aid cuts followed by capped growth administered in a complex and opaque manner, and a lack of other sources of funding, schools are in a period of low revenue growth.”
Both reports can be found on the District’s website.
Manhasset’s fiscal stress score was determined by examining seven financial indicators and assigning points to each. More points indicate more fiscal stress in each category:
1. Unassigned fund balance greater than 3 percent. Manhasset received 0 points, as its unassigned fund balance is approximately 4 percent.
2. Total fund balance greater than 10 percent. Manhasset received 1 point because its total fund balance is 6.19 percent of its 2012-13 expenditures.
3. Operating deficit. Manhasset received 3 points. The District has questioned the Comptroller’s Office on this negative designation because, under the Comptroller’s formula, the “Operating Deficit” was the result of the use of reserves, including funds segregated in the non-operating capital reserve that were used to complete voter-approved capital projects. It is unclear why the planned, budgeted use of reserves, especially the capital reserve, would factor in to a calculation of an operating deficit. The District did not operate at a deficit.
4. Cash ratio greater than or equal to 100 percent of prior year ratio. Manhasset received 0 points, as its cash ratio was 121 percent.
5. Cash percentage of monthly expenditures greater than an equal to 100 percent of prior year percentage. Manhasset received 0 points, as its cash ratio was 114 percent.
6. Short-term debt issuance amount greater than last fiscal year. Manhasset received 2 points because it issued tax anticipation notes (“TANs”) of $10 million in 2011-12 and $12 million in 2012-13. Tax anticipation note financing is specifically structured for municipalities and school districts to help smooth out the ups and downs in revenue cycles, when the timing of receipts does not match the timing of expenditures. The TANs are short-term, due within the year, and are repaid from the imminent collection of taxes. (See further comments below in #7.)
7. Short-term debt issuance trend. Manhasset received 3 points because the District has issued TANs in each of the last three years. The District has questioned the Comptroller’s Office because most districts routinely issue TANs to stabilize cash flows by bridging these timing differences. It seems at cross purposes to ‘reward’ the District with 0 points on categories 4 and 5 for maintaining strong cash levels, while penalizing the District with 3 points for using the acceptable and appropriate financial and legal means available to school districts to maintain proper cash ratios.
The Comptroller noted in his report: “Environmental indicators represent the local challenges that school districts officials must navigate on an ongoing basis. While these factors are largely outside of a district’s control, they can drive additional costs or negatively impact the district’s ability to raise revenues to fund programs.”
The report’s conclusion noted, “Schools districts provide the foundation for success of future generations, and do so in the midst of close scrutiny by taxpayers and mounting fiscal pressures.”
The District will keep the community informed as the Comptroller’s Office responds to the District’s inquiries. —Submitted by the Manhasset School District