SUNY Erie’s crisis

Regular readers of this blog are aware that there have been many posts devoted to issues concerning Erie Community College (ECC or SUNY Erie). I have regularly reported on the serious financial problems facing the school. A crisis that has been brewing for many years has arrived as a full blown storm.

The Board of Trustees has submitted a proposed budget to County Executive Mark Poloncarz and the County Legislature that cuts spending for the 2020-2021 year to $83.9 million, a reduction of $22 million compared with the current year. Layoffs are forecast and tuition will rise three percent. State aid will be slashed and the SUNY System has advised schools to use their fund balances before they receive additional funding.

The immediate cause of these draconian measures is, of course, the pandemic. The virus, which appears far from being contained, is forcing drastic cuts in businesses, governments and educational institutions throughout the country. While the pandemic has put a dramatic exclamation point on ECC’s finances, the fact is that the crisis has been in the works for years. Take note of the financial warning flags that were flying at the school before March 2020:

• The school’s auditors, Drescher & Malecki, reporting on the college’s 2018-2019 finances in early spring noted that operating revenues in 2018-2019 decreased $2.7 million from the previous year, while operating expenses only came down $1.6 million (the fiscal year ends August 31).

• Based on an analysis of enrollment figures from the current fiscal year it appears that the school was already running a new revenue deficit of about $2.7 million prior to the pandemic hit.

• Per the auditors, the school’s fund balance of August 31, 2019 was down $3.4 million from the previous year.

• Per County Comptroller Stefan Mychajliw, ECC’s student population, which drives revenues, has declined 33.5 percent over the past nine years, a pace that is greater than many other community colleges in the state.

The most recent President of the college, Dr. Dan Hocoy, has left for other work in Missouri after the Board of Trustees chose not to renew his contract. The college, with the concurrence of the State University of New York, has hired an interim president, William Reuter, who will, according to Board Chairman Len Lenihan, serve for six to twelve months while the college searches for a new president.

Reuter returns to the college after three years as CFO at another college, but his resume includes 19 years as ECC CFO and more than one year as the school’s interim president. He has a complete grasp of how the college operates, its finances, and its personnel.

Reuter’s first order of business will be to size up where enrollment may stand for the coming year and how deep a financial hole the school is in with revenues, which were declining up through March, now made worse by the pandemic. ECC is not alone in facing a myriad of operational and financial problems. Every other college in the nation is looking at similar problems.

As former Chicago Mayor and Barack Obama Chief of Staff Rahm Emanuel once noted, “never let a serious crisis go to waste. And what I mean by that is that it’s an opportunity to do things you think you could not do before.” That is good advice for the ECC Board and Interim President Reuter.

ECC’s three campus model is probably not sustainable. Resources are stretched too thin. Under the best of circumstances demographics in Western New York mean that ECC and all other colleges and universities will have fewer students for the foreseeable future.

While Reuter is working to right the ship he should look for time to explore all available avenues to make the school a successful institution for years to come. This means providing the College Board with information and a range of options that can help guide them to that future.  Options to consider include:

• Looking to close and dispose of the land and property of at least one of the three campuses that are presently operated. Each of the campuses could use a great deal of updating. Opportunities for course offering consolidations in one location should be explored. This will not be an easy decision because each of the campuses has its own constituencies and whether anyone wants to admit it or not, political considerations could easily creep into such discussions.

• The community colleges in Western New York (Niagara, Genesee and Jamestown) are all dealing with enrollment and financial problems. If the schools can find a way to consolidate some management activities and course offerings of all the colleges, their students and their county sponsors can benefit.

The pandemic has focused attention on all sorts of community resources that have for many years been struggling financially and therefore have suffered operationally. Higher education is not immune to such forces.

SUNY Erie provides good educational opportunities for both traditional and occasional part-time students looking to enhance their careers and educational opportunities. There are many talented, hardworking faculty and staff at ECC. The school, however, has struggled to maintain enrollment levels.

County governments sponsor community colleges. They have a vested financial interest in seeing the schools well managed. Legislators and executives must help promote the idea that the colleges need to figure out a better way to operate in the future. Likewise the State University of New York should actively encourage creative adjustments in the state’s community college system, perhaps offering financial incentives to do things differently.

The SUNY Erie Board has chosen well in bringing Bill Reuter back to deal with its financial challenges but after Reuter’s service is completed and a permanent new president is selected things will not be going back to whatever was considered “normal” just a few years ago. They need to take advantage of the crisis at hand to refocus ECC for the future.

We have a plan for that

Welcome to July. The weather finally feels like summer. There is a holiday coming up. They say there will be baseball games on television before the end of the month. The calendar moves on.

June 30 was the last day of the City of Buffalo’s 2019-2020 fiscal year. It was rocky. July 1 is the first day of the City of Buffalo’s new fiscal year. It is going to be rocky.
Mayor Byron Brown on May 1 proposed a budget for the next fiscal year. With some reluctance the Common Council by a six to three vote last month approved the budget. Council members expressed concerns about some of what that document contained.

While all government budgets have problems with the expense side of the ledger, Buffalo’s financial difficulties have been rooted more on the revenue side of the picture. The problems are big and they have been ongoing for several years.

Recent city budgets have contained tens of millions of dollars in estimated revenue that can best be described as creative. There have been millions in fees that have never been enacted such as an entertainment surcharge/tax; proceeds from city property sales far in excess of what could reasonably be expected to materialize; income from fines that is unattainable; exaggerated casino payments; and other assorted overestimations of revenues.

Over the past several years, ending in 2018, the city exhausted all of its reserves except for its “rainy day fund” that amounts to approximately $39 million. It’s pouring now. Nay, there’s a monsoon now. The “break glass” use of the rainy day fund is coming soon.

In the fiscal year just ended Buffalo found it necessary to borrow 18 million dollars to fill a budget gap that included the recurring problem of overestimated revenues as well as the fiscal shocks of the pandemic. The city incurred additional pandemic-related expenses while the city’s share of the county sales tax diminished, parking collections dropped, and traffic fines went down.

City Comptroller Barbara Miller-Williams announced in late April that the city had a $35 million cash deficit and was in danger of not having enough money to make payroll. Not to worry, the Brown administration announced, we have a plan for that. They simply used a joint city-school district bank account that is managed by the City Comptroller’s Office to make up the shortfall. Then, the Brown plan went on, when the city government received its regular payment from the State of New York in June the money would be returned.

At about the same time Governor Andrew Cuomo was warning local governments that shortfalls in state revenues would partly be made up by reductions in money provided to the localities. That possibility does not seem to have been factored into the city’s plan for repaying the joint city-school system account.

To bring the 2019-2020 budget gap filling story up-to-date, the Cuomo administration announced last week that they would not be sending certain money to municipalities because of the state’s own budget hole. There was no indication about when or in what amounts those funds might be forthcoming. For Buffalo the delayed or lost revenue could be up to $20 million. That would be the same money that the city intended to use to repay the joint city-school district bank account for the money the city used in May. A plan to repay that money remains to be seen.

To fill a projected budget gap for 2019-2020 the Common Council approved the borrowing of $18 million, but that does not account for the temporary or permanent loss of up to $20 million in state aid that the city expected to receive last month.

On to the 2020-2021 fiscal year. The approved 2020-2021 city budget revenues includes $65.1 million in “federal disaster relief,” something that at the moment has no basis in law, and $11 million in revenues from the Buffalo Creek Casino, which has just re-opened in a limited operational mode. $76.1 million is more than 14 percent of the city’s total budget, so if any substantial portion of those millions is not forthcoming the city will be left with a big new hole to fill in a new fiscal year that is now underway. In budget-speak, the city now has a structurally unbalanced budget where operating revenues do not match operating expenses.

But the city administration, according to spokesman Mike DeGeorge, has a plan for that too. He texted the Buffalo News to say: “When the federal government provides adequate, direct and flexible aid to state and local governments, the state will disburse the withheld AIM funding to Buffalo and the other cities. In the interim, the City of Buffalo has a plan in place to cover any deficit or gap that may arise as a result of this action.”

Whatever exactly is included in the administration’s plan to “cover any deficit or gap” appears to be as closely guarded as Colonel Sanders’ secret blend of 11 herbs and spices for the chicken he serves. When the city budget was adopted in late June Council members reported they had no information on what is included in the budget gap closing plan. Meanwhile other governments, including the County of Erie, have already approved plans for budget cutting if federal government relief is not forthcoming.

Elizabeth Warren had all sorts of publicly detailed plans for moving the country forward. On the other hand, Richard Nixon, during the 1968 presidential campaign, had a secret plan to end the Vietnam War. For the moment anyway, the Brown administration’s plan for paying off borrowed money and for filling a hole in their new budget seems more Nixon-like than Warren-like.

The city’s secret plan, whatever it is, will get harder to implement with each day that passes in the new fiscal year.  Did I mention that there is a Buffalo Fiscal Stability Authority that could legally step in to bring some order to the impending chaos?

So what happens now?

The expression “it’s all over but the shouting” never had more meaning than Wednesday morning following the congressional doubleheader in NY27.

Nine days of early voting and the in-person turnout on Election Day produced relatively low totals. Literally tens of thousands of absentee votes, an unprecedented number, remain to be counted. Even while awaiting official totals which are about two weeks away, however, it is pretty clear that Jacobs’ in-person vote margins of victory in both the special election and the primary cannot be overcome with the available absentee votes that will be split among the candidates. Chris Jacobs has won both the special congressional election in NY27 and the Republican primary for nomination to the same seat in November.

This blogger thought that while Republicans would gravitate to Jacobs in the special election to keep the seat Republican, there was at least the possibility of an upset in the Republican primary with Beth Parlato’s hard charging challenge to Jacobs. It turned out that her over-the-top television advertising campaign may have brought her campaign down — or maybe it was simply a badly run campaign.

The first ads that Parlato ran, with actors sarcastically going after Jacobs on taxes and his previously moderate Republican positions, may have had some impact. But after the brouhaha about Jacobs voting residence played out last week and it became known that she had instigated the matter, she persisted in running an ad that suggested that Jacobs might be a future felon, headed to jail. The ad ran right through Election Day. Bad judgment.

While there were an unprecedented number of absentee ballots returned in the elections, the voting statistics show that Republicans were less inclined than Democrats to vote absentee; the Reps turned out in larger numbers on Tuesday. People going to vote in person had the opportunity to absorb and assess that Parlato had the story about Jacobs’ voting residence either wrong or twisted.

In the special election Democrat Nate McMurray seemed to be waiting for Parlato to help take down Jacobs. There were dozens of McMurray Tweets, but hardly an ad until near the end of the campaign. Political people are fond of saying “signs don’t vote” while assessing the number of signs on lawns. This campaign might add a new truism, “Tweets don’t vote.” Tweets are an inside baseball sort of thing.

We will now wait until July 14 or later to get the official results in NY27, but it’s all over but the shouting.

Jacobs and McMurray will re-litigate things over the next four plus months but McMurray has an awfully high hill to climb to November. NY27 is overwhelming Republican by affiliation; Trump is still popular there; and McMurray’s liberal politics will be difficult to sell. He ran a close race in 2018 against the indicted Chris Collins, but Jacobs is not Collins.

There are also some things that will need to be tidied up with the other two contestants in the Republican primary, Parlato and Stefan Mychajliw.

Parlato at the moment remains the Conservative Party candidate for Congress in the November election. She previously indicated that she would abandon that nomination to allow the party to substitute Jacobs on the ballot. As a lawyer Parlato can decline the nomination in order to run for a judgeship, albeit this will be for a race that she will not compete in actively and will have no chance of winning. The State Supreme Court Judicial Nominating Conventions will be held between August 6th and 12th. Parlato will carry the Conservative banner in the non-conservative hinterlands of Manhattan or the Bronx.

Mychajliw remains Erie County Comptroller for a term that ends in a year and a half. His problem is all the burning bridges that he left behind with Erie County Republicans when he first declined to run for County Executive against Mark Poloncarz last year and then pursued an underfunded and anemic effort in the Republican congressional primary.

In the course of pursuing the congressional seat Mychajliw aggressively attacked the Republican establishment. Will they abandon him when it comes time for re-election or might he just walk away from the office? And while I’m asking questions, close observers in the Southtowns report that during the recent primary there was no Stefan Mychajliw for Congress sign on Lynne Dixon’ property in Hamburg. Why didn’t Mychajliw appointee Dixon have a sign on her lawn?

On to November.

Watching the millionaires fight the billionaires

As the country works its way through the COVID-19 pandemic and the re-opening of the economy we are all looking for a return to some degree of normalcy. We look for the distractions we enjoy for some relief. We might want to take a chance by going to a restaurant. Many would love to watch a baseball game or the championship finals of the NBA and the NHL.

The restaurants have in fact become an option. Watching sports? Not yet. Continue reading

Mail-in voting is making it easier to participate; increased interest could affect the outcomes in NY27

New Yorkers have had a major new opportunity presented to them in 2020 to honor their civic duty. Voting has gotten much easier, and voters in large numbers are taking advantage of their new options.

The first test of the new arrangement has been in the recently completed school district elections outside of the City of Buffalo. All eligible voters in the 2020 district elections were mailed ballots allowing them to vote yea or nay on their districts’ budgets and borrowings. Candidates for school boards were also elected by mail-in balloting. Continue reading

The rumble in NY27

The doubleheader in NY27 will be over in a few days. It cannot happen soon enough.

The indictment, re-election, conviction and resignation of Chris Collins, former member of the House of Representatives from the 27th District in New York, spanned 14 months. The process for getting new representation for the district has gone on for eight months.

It will end on June 23rd when voters will choose between Democrat Nate McMurray and Republican Chris Jacobs for the right to occupy the seat through the end of 2020. Simultaneously Republican voters will select a candidate for the November general election for the seat from among Jacobs, Stefan Mychajliw and Beth Parlato. McMurray has no primary and will be on the November ballot. Continue reading