Schools squeezed toward insolvency

By Matt Porter

March 7, 2013 Updated Mar 7, 2013 at 10:13 PM EDT

Binghamton, NY (WBNG Binghamton) As they comb through their budgets for the coming year, the possibility of becoming insolvent inches closer to reality for some local districts.

Binghamton City School District Assistant Superintendent Karry Mullins said although the state has narrowed its budget, the process has squeezed schools to the brink.

"Over time, if we don't see a change in the way our schools are funded, we are going to have to reduce staff to make a balanced budget," Mullins said.

Binghamton has already reduced staff by 100 people in the past three years.

It's one of nearly all districts in Broome and Tioga counties dealing with million-dollar budget shortfalls while trying to stay within the 2 percent property tax levy cap.

The effect: A squeeze in school budgets.

"In all areas," Mullins said, "Instructional, support, we're looking at everything."

Two-thirds of Binghamton's budget is staff related, meaning it's unlikely they will be spared from cuts, Mullins said, adding the state doesn't realize how detrimental their budget restrictions have been.

"At the state, I think they believe we can find a way to do without," she said. "And that is not the case."

Unlike a private business, schools can't file for bankruptcy.

Instead, they reach a state of "insolvency," where the state takes over running the finances of the district.

It becomes responsible for managing debts, and can impose wage and hiring freezes.

Mullins said if nothing changes, Binghamton could reach a point of insolvency in the next five years.

"If everything else stays the same including minimal increases from foundation aid and so forth," she said, "We will be in a situation where we can't continue to do business."

In Albany, assemblywoman Donna Lupardo (D-123rd) said the problem lies in how money is allocated. She said the poorest districts end up paying the highest price.

"The way school aid is distributed is not fair," Lupardo said, "and it discriminates against poorer schools in low-wealth areas like mine."

Looking forward, school districts like Binghamton say the cuts can only go so deep.

"If we want to continue to meet the challenges the state has given us with the new standards and expectations for students to achieve," Mullins said, "we need teachers to do that."

What or who will be cut in Binghamton City Schools has not been determined.

Administrators will present their plan for meeting the district's $5 million budget gap on March 19.