ALBANY, N.Y. (NEXSTAR) — Governor Kathy Hochul signed a law on November 21 changing how the state’s 57 small city school districts calculate their financial borrowing limits. It’s supposed to give districts in cities with under 125,000 residents more wiggle room to pay for building repairs and safety projects.
S3367/A2318 removes State Building Aid from the math that determines debt caps for those small districts. State Building Aid is money the government gives to help schools pay for construction. Small city districts used to have to count the full cost of a project against their debt limit–the maximum they can borrow from investors via bonds–even if they’d be reimbursed by the state.
As a financial regulator, the state government enforces debt limits to make sure districts are stable. The old rules made districts count the full value of those private loans against their debt limit.
New York State budget tweaks Foundation Aid formula
This prevented borrowing for other capital projects and long-term investments like infrastructure repairs or upgrades, because their debt seemed higher than it really was. In a way, small districts were penalized by the state for getting state funding…