State comptroller calls East Ramapo the most 'fiscally stressed' school district in NY

East Ramapo was designated the most fiscally stressed school district in the state by state Comptroller Tom DiNapoli. This comes as the district gained millions in federal CARES Act dollars that officials have said would impact this year's finances.

Overall, school districts seemed to be in better shape in 2020-2021, according to the comptroller's report, which credited federal, state and local pandemic aid with easing financial burdens, along with belt-tightening by districts during remote learning.

But East Ramapo's risks grew in the same period.

"We look for a reasonable amount of funds on hand in order to meet what might be gaps in the budget in the middle of the year, in case they have a blip," said Tracey Hitchen Boyd, an assistant comptroller in the New York State Comptroller's Office.

East Ramapo, Hitchen Boyd said, showed a deficit. "Not only did they not have money in their accounts, they were overextended."

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That heightened fiscal alarms the comptroller's office had already set off in May 2021, when a review of the district budget showed significant fiscal problems. At that time, DiNapoli took the unusual step of calling for the state to increase the powers of fiscal monitors assigned to the district years ago.

State legislation was signed in June to strengthen the state monitors' roles, including providing them veto power over the board in certain situations.

The district, Hitchen Boyd said, had a plan to use the anticipated federal CARES funding to "apply to that mismatch" in the 2021-2022 budget. But, she added, "There's a risk factor there planning on the receipt of those federal monies."

Superintendent Clarence Ellis said Thursday that the district "will continue to carefully and strategically manage our financial resources while being mindful of our taxpayers."

Ellis, who joined the district this past summer, said the district has long demonstrated a commitment to expanding programs and support services and improving facilities.

"ERCSD will continue to monitor expenditures from year to year, but will also look for cost savings opportunities using shared services, utilize competitive bidding, seek opportunities in the form of energy performance contracts and pursue ways to increase revenues through grants," he said.

Hitchen Boyd said the comptroller's office performs budget audits and fiscal stress tests that are a "snapshot in time," so she could not provide any update on the district's current fiscal health.

However, the fiscal stress test results, as well as last May's and previous years' budget reviews by the comptroller, show a pattern of strained budgets that often rely on speculative future funding.

The stress index, Hitchen Boyd said, can help the school community understand how the district manages its finances.

"Plans are only as good as the assumptions that go into them," Hitchen Boyd said. "Ongoing problems were significant and structural, and that is fully confirmed in the fiscal stress scores that came out today."

A message to school board President Yehuda Weissmandl was not immediately returned.

Fiscal decisions and restrictions

East Ramapo has a long history of fiscal struggles. The district's public schools educate some 9,500 children, while about 30,000 children who live in the district and attend private schools, mostly yeshivas that serve a growing Orthodox and Hasidic Jewish community. The school board has for more than a decade been dominated by trustees seen as favoring the needs of the yeshiva community.

The board in 2020 lost a federal voting rights challenge that asserted election methods favored the private-school community and froze out representation of the public school families, many of whom are Black and Latino. The challenge, which was brought by the Spring Valley NAACP, changed the district's school trustee voting method to a "ward" system that elects specific seats to represent neighborhoods.

The district was ordered to pay millions in plaintiffs' legal fees, and spent more on defending the case.

Last spring, a $30 million budget hole came to light after earlier warnings by state-appointed fiscal monitor Bruce Springer were apparently eschewed by the board. The acting superintendent at the time, Raymond Giamartino, had warned that more than 30 layoffs could occur to fix the financial hole.

The district also often operates under restricted spending plans because school budget plans are frequently voted down, often with overwhelming turnout from the so-called yeshiva community. The district in recent years has had more budgets fail at the polls than any other in the state. And when mail-in voting in spring 2020 proved a plus for school budgets passing around the state, East Ramapo's spending plan still failed, and the district again was stuck operating under a bare-bones contingency plan.

Both the public- and private-school communities are considered high-need, with many children coming from economically disadvantaged households.

Assemblyman Mike Lawler said Thursday that the comptroller's report demonstrated his "worst fears" about the strains East Ramapo faces from funding both private- and public-school needs. He has introduced a bill that would have funding for mandated services in the private schools, like busing, come directly from the state.

"The simple truth is, in order to solve the underlying issues in the ERCSD, we need to think bigger and bolder," the Pearl River Republican said. "The Educational Choice and Equity Act is that big, bold solution."

CARES Act cash

The fiscal ranking comes after the district received three big buckets of federal aid tied to the pandemic.

The first round of CARES Act dollars in 2020, some $22.3 million, ended up a wash for many districts after then-Gov. Andrew Cuomo held back an equivalent amount of state funding by applying a "pandemic adjustment" to school aid.

But Cuomo's 2020-2021 claw back hit East Ramapo especially hard.

That's because the first federal CARES Act distribution based aid on levels of need among all students, not just public school kids, and the aid had to follow the child. So while that feds gave the district a hefty $22.3 million, Cuomo dunned the district by an equivalent amount in foundation aid. Because 71%, or $15.8 million, went to aid private schools, the district actually lost money for public-school use.

However, such restrictions weren't used in future rounds of CARES Act funding.

The district was then promised about $66 million in December 2020 and then around $142 million in March 2021, more than any other district in the region, including Yonkers, the fourth-largest district in the state.

Information on the aid was not available Thursday.

"Our office doesn't have the answer to what's happening in the middle of the current fiscal year," Hitchen Boyd said. "A lot of people are wondering that in our office and locally."

This year, East Ramapo and other school districts saw a hike in foundation aid. That impact will show up in 2021-2022 school budgets.

East Ramapo, for example, received an additional $7.3 million this school year over last; in 2020-2021, East Ramapo's total state aid equaled $29.65 million; the 2021-2022 state aid total was $37.01 million.

How the score works

School districts are given a fiscal stress ranking by the comptroller based on several factors: year-end fund balance, operating deficits and surpluses, cash position, and reliance on short-term debt for cash-flow. The factors, Hitchen Boyd said, are "what may foretell fiscal stress."

The report also reviewed "environmental risk factors," which can often increase the chance of fiscal stress, such as having a high percentage of economically disadvantaged students, a high teacher turnover rate, a decrease in local property values, a low budget vote approval rate, a high percentage of English language learners and a high student-to-teacher ratio.

East Ramapo manages many of those factors.

The comptroller's monitoring system excludes the “Big Four” city school districts of Buffalo, Rochester, Syracuse and Yonkers, as well as New York City.

The only other district in the state to be ranked in "significant fiscal stress" was Newfield in Tompkins County.

East Ramapo Central School District's ranking was 76.7 points, while Newfield had a ranking of 66.7 points.

While Newfield was considered at moderate fiscal stress in 2019-20, East Ramapo scored in the lowest category of fiscal stress that year.

No districts were considered at moderate risk for the 2020-21 school year.

Mount Vernon, Kiryas Joel, and Wappingers were the Hudson Valley districts ranked among 23 in the state that were considered susceptible to fiscal stress for the 2020-2021 academic year.

Nancy Cutler writes about People & Policy. Click here for her latest stories. Follow her on Twitter at @nancyrockland.

This article originally appeared on Rockland/Westchester Journal News: New York Comptroller ranks East Ramapo as most fiscally stressed