RCSD’s budget gap is big – but how big?

Justin Murphy, Rochester Democrat and Chronicle

The Rochester City School District has a budget shortfall of either $117 million or $199 million — or far less, depending on one’s definition of “deficit,” or far more, depending on state aid projections.

The bottom line is that the district’s rising expenditures continue to outpace its precarious revenues, with no remaining savings to serve as a cushion. The details, though, are riddled with uncertainty and disagreement over priorities.

For the purposes of immediate action — whether a certain child will see her teacher laid off, or her school closed altogether — nothing at all is clear.

Chief Financial Officer Carleen Pierce gave an overview presentation to the school board Tuesday night, outlining several large areas of concern.

The greatest, at $86 million, is an outstanding revenue anticipation loan from the city of Rochester. It is like a payday loan for the district, covering expenses until expected state and city revenue arrives later in the year.

ike an actual payday loan, it is not sound fiscal practice, and the district has been increasing its reliance on such loans in recent years.

“We’re using this debt to sustain our business operations, and that’s not where we should be,” Pierce said. “The fact of the matter is, if we lived within our means, we wouldn’t need (it).”

Deficits or liabilities?

But School Board President Van White objected to calling the loan a “deficit,” since the anticipated funding — the eagerly awaited Friday paycheck — can be counted upon eventually.

He also objected to the second point on Pierce’s list, a $69.9 million figure that the district ought to restore to its depleted fund balance. That sum would put RCSD in line with the board’s policy on fund balance levels — but, as White noted, the board is free to set the speed with which it meets its goals.

“The aggressiveness by which we pay back these identified deficits is a reflection of the board’s priorities,” he said. “If we decided it’s a priority to keep our staff close to our children and not discharge them … we could prioritize how quickly we could pay that back.”

The third largest item on the list, $20.6 million to restore various other fund balances, has some discretion built into it as well. The fourth is $12.5 million owed to the state for an accidental overpayment several years ago, but the state has not yet called that bill due.

Those four items equal $189 million, or about a third of the entire amount budgeted for employee salaries and benefits in 2020-21.

“None of those are really true deficits,” said Eamonn Scanlon, education policy director at The Children’s Agenda, said. “They’re definitely liabilities, but the question is, what’s the timeline?”

As for restoring the general fund balance, Scanlon said, putting back more than $10 million would be “prohibitive and crazy even in a normal year, let alone in a year like this.”

State Monitor Shelley Jallow, though, said that from the perspective of her higher-ups at the state Education Department: “They don’t believe reserves are an option; they believe that’s a mandatory expectation.”

The rest of Pierce’s list — more mundane items such as lost aid in transportation and food service and miscalculations in charter school and special education expenses — added up to about $10.3 million.

State funding reduction looms

That deficit calculation did not include the looming impact of a possible state funding reduction later in the school year. If it were to happen, it likely would cost tens of millions of dollars.

Or not.

Jallow followed with a preview of her official report due at the end of the month, saying the board needed to reckon with some “pain points,” namely laying off staff and closing buildings.

“You just do not have the students to support the staff you currently have,” Jallow said. “Your buildings are not fully occupied.”

She highlighted several areas of wasteful expenditures inefficient practices. But other problems are beyond the district’s control: the fact that it has far more children in poverty and with disabilities than any other district in the region, for instance, while not receiving proportionate state funding.

Superintendent Lesli Myers-Small said last month that a major proposal for cuts would be presented in October. Pierce said Tuesday night it would come in November.

“We’ve been kicking the can down the road, and at this point there is no more road,” board member Beatriz LeBron said. “This has landed on this board of commissioners. … This is us; the time is now.”