Buffalo Schools: We Are Not on the Brink of Bankruptcy

November 4, 2010 Updated Nov 4, 2010 at 6:11 PM EDT

By Laura Gray

November 4, 2010 Updated Nov 4, 2010 at 6:11 PM EDT

Buffalo, NY (WKBW) -- The Buffalo Fiscal Stability Authority says the school district's situation is much more dire than predicted. The Buffalo Fiscal Authority or the control board , as it's known, claims that the district faces a 42 million dollar shortfall next summer. Now the Authority is reconsidering moving towards an advisory status. District officials says Buffalo Schools are not on the brink of bankruptcy and nothing could be further from the truth. Lou Petrucci, Chair of Finance committee was surprised the control board's allegations. He says they try to paint a worst case scenario as a precaution."I'll just say it was a little premature."
Elected leaders will be called back to Albany November 15th for an emergency session. Petrucci tells us the district is hoping to secure the entire 23 million dollars in Article VII money to cover it's shortfall.
The Fiscal Stability Authority does not believe the district is having problems managing their finances. Healthcare and charter school costs are the biggest concerns.
Controversial elective plastic surgery costs shot up 800 percent in 5 years. That accounts for about 8.5 million dollars in total health care costs. Petrucci says the teacher's union is willing to give up the perk if they can agree on a contract.
Also, the district budgeted for a sales tax reduction but officials were surprised to learn they could receive even less. Still, Petrucci warns this is not a "doom and gloom" scenario.
School Board President Ralph Hernandez says there are too many unpredictable issues and the district is not in crisis. The district has 30 millions in a reserve fund to close the gap if necessary. The district would have to layoff about 450 people to cover their shortfall in a worst case scenario.