Sources: Suit targeting state aid delays expected soon

December 14, 2009 by JAMES T. MADORE / james.madore@newsday.com

The teachers' union, school boards and other education groups are preparing a lawsuit, expected to be filed Wednesday, challenging Gov. David A. Paterson's delay of $582 million in school aid and STAR reimbursement payments, sources said Monday.

Lawyers for the groups have written legal briefs asking a state Supreme Court justice to find Paterson in violation of the constitutional prohibition against unilaterally withholding money approved by the legislature, said sources familiar with the preparations. They said there would be a demand for immediate payment of held-back funds.

Paterson on Sunday sparked what will likely be the third attack on his authority by postponing $750 million in state payments due this month. He said he did so to forestall New York from running out of money on Dec. 31. School districts are having the largest sum withheld, but cities, counties and health insurers are also affected.

Robert Lowry Jr. of the State Council of School Superintendents said, "We intend to be very much engaged in the lawsuit." The superintendents are collaborating with the State United Teachers union and State School Boards Association. Spokesmen for the union and association declined to say whether the suit was certain to be filed but admitted lawyers were working feverishly.

School aid payments are due Tuesday, while STAR property-tax reimbursements will be made in the week of Dec. 28.

"Our attorneys have been meeting with attorneys for other educational organizations, actively working to explore all legal options," said Carl Korn of the 600,000-member union. "We expect to move forward."

Paterson denounced school officials for threatening to cut programs for students, fire teachers or hike property taxes. Such draconian measures aren't necessary, he said, because 95 percent of school districts can tap reserve funds to compensate for the delayed payments.

The governor also agreed with the assessment of Assembly Speaker Sheldon Silver (D-Manhattan) that districts would be made whole once tax collections pick up next year. The two held a news conference together Monday morning at the New York Stock Exchange.

"I assume at some point that cash will come back to those school districts," Silver said.

Paterson added, "We certainly hope that they will." As recently as Sunday, he said he would advise lawmakers that the funds never be paid. That idea wasn't mentioned Monday.

Silver, along with the State Senate's Democratic majority, showed no interest in participating in the likely suit. Silver said he believed it was within the governor's power "to manage the state's cash."

Separately Monday, the staff of state Comptroller Thomas DiNapoli spent 10 hours changing the accounting system to reduce school aid payments by 10 percent. But many districts may not see the funds in their bank accounts until Wednesday.