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City Council asks for state help for school district finance crisis

Sep 30, 2019

City Council chambers
Credit James Brown / WXXI

In a special session Monday, Rochester City Council voted 8-0-1 to ask the state to manage the finances of the City School District. Councilmember LaShay Harris abstained because of her employment at the district. 

This decision is in response to what Superintendent Terry Dade calls a “crisis” in overspending that left the district, about $30 million in the red, just months after its finance department said the budget was balanced.

Councilmember Michael Patterson said the district and city’s futures are connected. He said that he was open to talking to school district leaders but thinks this move is necessary after a long history of mismanagement.

“The responsibility to act in a fiscally appropriate manner is the responsibility of the Rochester City School District as it pertains to their budget. They have failed to do so,” said Patterson.

Former Board of Education president and current council finance chair Malik Evans said the city and district’s financial futures are intertwined.

“One of my favorite saying is love and marriage you can’t have one without the other,” said Evans. “The city and the school district are married whether we like it or not. And what happens there affects our bond rating and what happens here affects our district.” 

Bond ratings affect the percentage of interest that the city spends on its debt. The city borrows money to pay for everything from big projects to trash collection. 

Ratings agency Moody’s last week said it would review the city’s debt rating in light of the overspending problems with the school district.

Yet Willa Powell, the longest serving member on the school board, said the district’s finances do not have much of an effect on the city’s bond rating.

“I am concerned about this notion of the narrative that assigns the city’s bond rating problem to the district. I don’t believe those two should be intersecting at all,” said Powell who pointed toward the city’s own spending choices. 

“Over the last dozen years, the city has borrowed between $65 million and $75 million every year,” said Powell. “While the district has borrowed between $12 million and $20 million in those same years. So because of various limitations to district's borrowing, the district has had a smaller and smaller impact on the city’s budget and the city’s borrowing, at the same time that the city’s budget exceeded its own charter.” 

Council President Loretta Scott said she’s surprised by Powell’s assessment.

“We borrow for the district. So the amount that we pay in interest is impacted by that bond rating. So there’s an absolute and intrinsic connection. I’m just amazed that she made that statement,” said Scott.

Powell said the district has overspent once before in late 90s and this occurrence was an exercise of poor judgement in the district’s finance department.

“I think it was a case of putting too rosy a picture on it to try to get a balanced budget in the first instance,” said Powell.

Emily DeSantis, a spokesperson for the NYS Department of Education said that Chancellor Betty Rosa and several members of the NYS Board of Regents met with Superintendent Terry Dade Monday and that Dade has “a clear grasp of the realities of this situation.” 

“The Board must now work with Superintendent Dade to make decisions to correct the course and put the district on secure financial footing. Department staff will continue to monitor the District and its actions closely as it works to address this situation,” said DeSantis.

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