State trimming aid payments to colleges, schools, others by 20%

Citing the pandemic and cash flow problems, the Cuomo administration has been trimming payments it normally sends to colleges, school districts and health care and transportation agencies by some 20% percent since June.

The reductions totaled $1.7 billion heading into August, including $430 million to colleges and universities and $324 million to school districts.

In some sense, the cuts have been in the works for months. The State Legislature in April gave Gov. Andrew M. Cuomo authority to withhold payments, as part of a state budget it enacted just after the coronavirus pandemic triggered lockdowns across the nation.

The Cuomo administration says the 20% withholding is a “temporary” solution to managing cash flow until Congress and President Trump come through with more aid for states.

But teachers’ unions and others say the short-term result might be layoffs and program cuts even as schools struggle to make plans to reopen for the fall semester. They say New York shouldn’t continue to wait on Washington and should instead tap reserve funds and raise taxes on the “ultrawealthy.”

The reductions are among the first tangible steps Cuomo administration has taken to deal with a massive revenue loss since the pandemic hit. All told, it has reduced spending $4 billion from April through June, compared to the same time period in 2019. Besides slowing payments to localities, the savings has come through freezing hiring, pay raises and new contracts.

Potentially more drastic ones — the governor has threatened not just a temporary withholding but a 20% permanent cut — are still on the table.

“As we first said in April, the lack of federal funding to offset the state’s revenue losses — amounting to $62 billion over four years — would force the state to temporarily hold back a 20% portion of payments as they are made over the course of the year, including for school districts which started in June,” Freeman Klopott, a spokesman for Cuomo’s Budget Division, said in an email. “The federal government has delayed funding for states for five months, and a lack of federal action will have a devastating impact on schools, hospitals, police and fire departments, and the services that support our most vulnerable neighbors.”

The Budget Division, in a quarterly update published earlier this month, disclosed it has withheld $1.7 billion in payments to localities since June 1.

By category, that includes $430 million in higher education, $325 million for transportation, $324 million to K-12 school districts, $279 million in health care, $180 million in housing, $79 million in mental hygiene and $78 million to local governments.

The amounts don’t correspond to a program’s share of the state budget — if they did, K-12 amounts would be much greater than higher education. Rather, they reflect that programs receive portions of their state aid at different times of the year, Klopott said. And as payments come due, 20% is withheld.

 "We've been aware of them for a couple of months," Fred Kowal, president of United University Professions, said about the cuts. The union represents State University of New York employees.

Kowal said campuses have been told to plan for up cuts of about 25%. So far, there haven't been big impacts besides the hiring of few adjunct faculty, he said. 

"Our concern is whether the campuses have the resources to open safely," Kowal said, adding "so much is riding on what happens in Washington."

The New York State United Teachers said schools might not be able to bridge the gap without layoffs. They note schools might also have additional expenses this year to provide personal protection equipment to employees and extra cleaning supplies.

“Reopening schools safely costs more money, not less. New York school districts have been banking on an infusion of federal aid to help them safely reopen their buildings in the fall, but we don’t know when or if those resources will come,” Andy Pallotta, NYSUT president, said. “If the federal government fails to provide those resources, New York lawmakers need to take action by taxing the ultrawealthy and using rainy day funds and borrowing authorities to provide our schools the resources they need to reopen safely.”

Further, the union noted two other huge payments are scheduled for September: $450 million for BOCES districts and $2.5 billion in aid from the state lottery. A 20% reduction of both would total nearly $600 million.