Comptroller identifies stressed school districts

On Board Online • February 15, 2016

By Paul Heiser
Senior Research Analyst

For the third straight year since the state comptroller began handing out fiscal health ratings of school districts in 2013, 32 districts once again find themselves on the list of those with the most fiscal stress. Sixteen districts are better off since 2012-13, eight are worse off and eight are the same, according to the comptroller.

The third annual fiscal stress report from Comptroller Thomas DiNapoli's office examines financial data submitted to the state education department by 672 state public school districts.

The comptroller's report used financial indicators to create an overall fiscal stress score for each school district. The four main indicators used to evaluate fiscal stress were fund balance, operating deficits, liquidity and short-term debt. Districts were then classified into one of four categories: "significant stress," "moderate stress," "susceptible to fiscal stress," or "no designation."

Over the three-year period from 2012-13 to 2014-15, a number of school systems have come and gone from the list. For example, a school district may see its fund balance dip below a certain amount one year but quickly rebound the following year.

"Most are operating with low fund balances, a pattern of operating deficits and limited cash on hand," said the comptroller's office in a press release. "In addition, fiscally stressed school districts are more likely to have a shrinking property tax base, low budget support and a low graduation rate."

The comptroller's analysis says that certain groups of school districts are more likely than others to be fiscally stressed. For example, districts that have less ability to meet the needs of its students with local resources (known as high-need districts) are more than twice as likely as districts overall to be in a fiscal stress category. Of the 32 districts that have been under some level of fiscal stress since 2013, nearly half (14) are considered high-need districts.

City schools also tend to be disproportionately likely to be in fiscal stress. Nearly one-fifth of the 32 districts that have been under fiscal stress since 2013 are city school districts.