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Great while it lasts

The American Recovery and Reinvestment Act was designed to be a shot in the arm, not a permanent lifeline. It is not too early for the many beneficiaries of stimulus funding-in particular, those in the public sector-to start looking that reality straight in the eye.

That message was delivered to New York’s school districts this week by state Comptroller Thomas DiNapoli, who warned that unless federal aid is renewed or replaced by state assistance, a gap of at least $2 billion will emerge when ARRA funding runs out in 2011-12.

"That’s a big hole to fill," Mr. DiNapoli said. "The time to start thinking about how to fill that hole is now, not when the money is already gone. It won’t be easy; schools are already facing financial problems. But this won’t just go away."

According to the comptroller’s analysis, ARRA funds on average accounted for 5.3 percent of total school budgets in 2009-10. In the Finger Lakes region, the average was slightly lower-5.1 percent.

Several area districts, however, exceeded the state average, the comptroller’s analysis found. In the Rush-Henrietta Central School District, ARRA funds represented 6.7 percent of the 2009-10 school budget. The figure for the Canandaigua City School District was 6 percent. By contrast, Pittsford’s school district tapped stimulus money for only 3 percent of its budget.

Without ARRA funds, Mr. DiNapoli said, property taxpayers statewide would face an average 7.7 percent tax increase in 2011-12, assuming school budgets and state aid remain constant.

School districts, of course, are only one major recipient of stimulus money. Albany is another, and the comptroller separately warned in his November cash report that the state last month ended in the black thanks only to ARRA funds.

"The future is still very shaky," he noted. "And that stimulus money won’t last forever."

Local governments also have used ARRA funds to avoid tax increases or sharp cuts in programs and services. By 2011, that option is likely to be gone.

These facts are not an indictment of ARRA or recipients of stimulus funds. The whole point was to provide a boost when the economy sorely needed one.

But the time to plan for after ARRA is now.

12/25/09 (c) 2009 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.

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