Dear Friends, I have just completed an analysis of the outstanding debt of the school districts in the State of New York. Drastic changes in debt level as shown by the case below inspired me to write this piece. This is very concerning because it is taking place in environment with declining enrollment. I hope you enjoy it. % Change 2004/2011 MUNICIPAL NAME: Kiryas Joel Village Union Free School District COUNTY: Orange ENROLLMENT:-40.00% DEBT:43061.85% Sincerely, Luis Taveras CEO& Founder Optimization with an impact

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“THE ROLE OF DEBT IN THE SCHOOL DISTRICTS’
INSOLVENCY PUZZLE”
THE SCHOOL DISTRISTS’ DEBT TRAP
After conducting a thorough assessment of the financial and fiscalcondition of the school districts within the state of New York,I
have to conclude that we appear to have been misguided by the media. Although the cost of healthcare and pension has been
rising exponentially, the school districtsappear to be confronting another problem in the financial frontwhich could have the
same, or much bigger, impact on exacerbating the insolvency of the education system. Our analysis sheds light on a problem
that might have been overlooked by many in the past, but that is worth to explore head-on. This problem is the debt that some
school districts have accumulated over the last 7 years. The State Comptroller’s Office barely scratched the surface when they
published a report back in 2011 about the issue.Once you go deeper and analyze the outstanding debt figures closely, you start
to understand the magnitude of the fiscal challenge that the school districts are facing. The debt by some of the school districts
is a reason for concern and is clearly not sustainable in the long-term. This is an issue that should be discussed by the parents,
the school district boards, and relevant education authorities in order to come to a strategic and viable solution as to the best
way to address this challenge.
Our analysis involves a comparison of the level of outstanding debt in 2004 and that of 2011 (the last financial report submitted
by the school districts to the State Comptroller’s Office). The difference is substantial and unsustainable particularly in an
environmentwith declining enrollmentand where the burden of financing our schools has fallen on the shoulder of local
municipalities as a consequence of the substantial state aid reduction over the last eleven years. One puzzlingfact that we
discovered while performing this research was that the smaller the size of the school district, the greateris its amount of debt.
Making the problem even more difficult for these school districts is the fact that the municipalities themselves are confronting a
fiscal challenge of their own. For instance, in Salamanca, one of the smallest citiesin the state of New York, the school district’s
outstanding debt has grown 2,036% (from $1,353,133 in 2007 to $28,905,000 in 2011) In addition to this grave scenario, the
city is faced with a revenue shortfall of $2.5 million in 2012-2013 (about 35 percent of 2011-12 General Fund revenue).The city
could run out of cash before the fiscal year ends on March 31, 2013.The same school district has seen its enrollment
declineover the same period of time by 9%. Another example worth mentioning is Gloversville, another small cityin which the
school district’s debt has increased 590%. The municipality is facing a challenging fiscal problem largely attributed to its inability
to raise property taxes, as it has nearly exhausted its constitutional taxing limit. There are many school districtsexperiencing the
same predicament. Below is a sample of our analysis for your review.
MUNICIPAL NAME ENROLLMENT DEBT
Green Island School District -1.90% 4312.03%
Salamanca City School District -9.09% 2036.15%
East Hampton School District -7.16% 1139.65%
Geneseo School District -3.23% 1052.29%
Gloversville School District -1.47% 590.85%
If you want to see how your school district fares, please visit our website at
www.optimimizationwithanimpact.com where you can see all the school districts within the State of New
York.Please feel free to leave us your comments.
This is clearly an unsustainable path and one that the electedofficials should be looking at more closely. If we continue on this
path of turning a blind eye to a monstrous, growing problem, we will be practically mortgaging the education of our children
and dealing with an insolvent education system for years to come.
See you next time,
Optimization with an Impact (OpIm)
P 646.770.3449|E-mail:schools052@gmail.com|www.optimizationwithanimpact.com|www.fiscalintelligence.org
“OpIm is a School Advisory Service Firm that strives to improve instruction, the school environment, and the community-at-
large through the optimization of public schools financial resources.”