State Aid Delay Carries Real Implications
Governor David Paterson’s recent decision to once again delay state aid payments to public school districts carries with it definite implications that will be felt in one way or another by everyone.
The governor’s latest action means the state aid payment due on June 1 will not be arriving as expected. Huntington School District officials are lamenting the situation and focusing on the bottom-line cost to taxpayers.
“In March the state withheld a payment of $441,956.33,” Assistant Superintendent David H. Grackin said. “For Huntington, the June payment amounts to $1,276,424.29.” The district’s financial plan relies on state aid coming on the expected dates. When it doesn’t, there is a ripple effect that is sometimes obscured, but nevertheless real.
“While we can function with a diminished cash flow through June 30 without approximately $1.7 million of state aid, there are three issues that concern us,” Mr. Grackin said. Those issues center on the district’s borrowing costs and its lost revenues.
Mr. Grackin said the district might have to move up by “at least two weeks” its sale of tax anticipation notes (TANs), leading to higher than planned borrowing costs. The district is also losing its ability to invest the state aid payments, as it does with all idle monies, and thus missing the usual opportunity to reap interest on the funds. Such interest revenues offset the need to raise taxes by that commensurate amount.
Finally, the district’s fund balance could be significantly affected by the state aid delay. A healthy fund balance allows the district to pay lower interest rates for its borrowing needs, such as the sale of TANs, which also helps hold down the tax rate.
“These state aid delays carries with them a hidden cost to the Huntington School District and our property taxpayers in this community,” Superintendent John J. Finello said.
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