Paterson pitches another delay in school aid

May 14, 2010 by JAMES T. MADORE / james.madore@newsday.com

ALBANY - Having withheld billions of dollars in education aid for weeks, Gov. David A. Paterson on Friday proposed another delay, but promised school districts would be made whole by the time their fiscal year ends on June 30.

Paterson wants to send districts on June 1 the $2.1 billion in aid that he has withheld since March 31 because of the fiscal crisis. He then would send an additional $1.3 billion to $1.5 billion after the state receives income tax receipts on June 15.

All the money, totaling about $3.5 billion, is due June 1. But Robert Megna, Paterson's budget director, said Friday the aid payments must be staggered because of the ongoing cash crunch.

He added the administration hopes lawmakers will approve the proposal Monday when they vote on emergency spending bills required to keep state government operating for another week. "We think this is a reasonable approach to solving our cash-flow problem," he said.

However, the legislature's Democratic majorities expressed skepticism.

Travis Proulx, a spokesman for State Senate Democrats, said there was little urgency for acting on the school aid proposal. It will not be voted on next week, he said, adding the 2010-11 budget could be in place before the June 1 aid deadline. The budget is 45 days late.

Megna countered that even if a budget deal is reached, there will not be enough money in the state treasury to make all the payments early next month. "We would have to deal with this even if we had a budget," Megna said.

Dan Weiller, a spokesman for Assembly Speaker Sheldon Silver (D-Manhattan), said the proposal would be reviewed.

Reaction from the state School Boards Association was mixed. Spokesman David Albert said school districts believe they are owed all the funds on June 1. However, Paterson's commitment to send some money will relieve pressure caused by the earlier payment delay.

"It's absolutely essential that school districts get state aid in June," Albert said, noting some districts may have to take out loans to pay bills.

Separately, Paterson on Friday sent lawmakers the spending bills needed to keep government open next week. They don't include the furlough proposal that a federal judge blocked earlier this week.

However, the bills include $7.4 million in wage increases for state workers back to April 29. Paterson had withheld the raises, which equal 4 percent, since April 1 to save cash. The federal judge said they must be paid going forward until he decides lawsuits from four state-employee unions.