JOHNSTOWN — A 20 percent state aid reduction for the Greater Johnstown School District could result in a nearly $5 million gap in the district’s budget by the end of the 2020-21 school year.
That scenario, which officials say might result in layoffs, was presented by district administrators to the Board of Education Thursday night.
But district officials say the city school system might be able to sustained half as much of a reduction in state aid, without layoffs.
District Interim Superintendent Karen Geelan and Assistant Superintendent Ruthie Cook reported to the board that the Johnstown school district still doesn’t have a true grasp of how much aid may be cut. Due to the COVID-19 pandemic, the state previously said publicly that a 20 percent reduction in state aid to school districts might be in the offing.
Geelan said the district has heard of immediate state aid cuts, which results in an $89,000 shortfall. She said that would have been able to pay for 255 Chromebooks for remote learning for district students.
But Geelan said a further analysis shows that if a 20 percent state aid reduction comes to fruition over the next six months, the Johnstown district budget will have a $4.8 million hole by year’s end.
The district has just come through two full years of budget uncertainty and is now dealing with COVID.
On July 28, district voters approved a $38.9 million 2020-21 district budget in a revote, which had a 5 tax levy increase. The district is in a three-year financial plan and has hoped to keep taxes down again for the next school year’s budget.
The tax levy increase of 5 percent exceeded the statutory levy increase of negative 2.02 percent for the 2020-21 school fiscal year and therefore exceeded the state tax cap. If the revote had failed, the district would have had to a contingency budget. The previous school year, district voters eventually approved a budget with a 14 percent tax levy hike, but athletics was eliminated. Athletics was restored for this school year.
Cook noted media outlets are now saying the state may not impose a 20 percent state aid cut on school districts. But she said if the computation was lower — or about 10 percent — the district would be able to sustain the financial blow without layoffs.
“We should be able to avoid these things,” Cook said.
In that scenario, Geelan said the district has “got it covered.”
Cook said the district estimated it can use fund balance and some reserves — under certain guidelines— to offset a lesser state aid reduction nearly half as much as 20 percent.
She said the state comptroller is telling school districts that during the pandemic they can borrow from their own reserves and pay themselves back. She said the district has applied for CARES Act money, for which it may be eligible for up to $420,000. In addition, she said the district may be able to use unassigned fund balance to bridge gaps.
Cook said that like other school districts, Johnstown faces uncertainty moving ahead. To meet the issue of a huge reduction in state aid, she said the district may have to do three main things: “underspending” the budget, make reductions, and utilizing reserves.
“The financial effects of this pandemic cook be three to five years,” Cook said.
Geelan said that whatever happens on the state aid front, the district should not abandon its prudent financial plan.
“It really is important to stick with that critical mission,” she said.
She sad the district is going to realize some savings through athletics not played initially, but some sports weren’t canceled but rather postponed.
Michael Anich covers Johnstown and Fulton County news. He can be reached at [email protected]