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What would happen if Potsdam and Canton don’t merge?

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POTSDAM - Potsdam Central Superintendent Patrick H. Brady shared projections of what’s in store for taxpayers in both the Canton and Potsdam school districts should a merger not take place during a town hall meeting Tuesday on the ongoing discussions about combining the two districts .

This information prompted one concerned citizen, Angie Peploski to ask “What happens when we go bankrupt?”

Mr. Brady noted current possibilities include tuitioning students to a neighboring district, borrowing money to cover expenses or possibly the state coming in and taking a look at the district’s finances.

“The state has not put out a lot of options,” he said.

Board of education member Frederick C. Stone Jr. also offered another option.

“Or you could put out a budget with a 21 percent tax rate increase and let the community decide if it’s worth it,” he said.

Ms. Peploski said the answer to that question... “What happens if...” is something that the community really needs to hear.

“I think the community really needs to know what happens if this doesn’t happen,” she said. “Nobody likes changes she said, and for that reason people may tend to vote against this.”

According to budget projections presented by Mr. Brady, the Canton Central School District would run out of fund balance and reserves by the close of the 2015-2016 school year with Potsdam’s savings projected to evaporate by the end of the 2017-2018 fiscal year.

Projections through the 2019-2020 school year show that while a merged district would be using some fund balance by that time they would should have savings of more than $5.7 million, with their account peaking at just more than $6.5 million at the close of the 2017-2018 year.

The projection though of using fund balance that early into the merger though led some people to call the merger a temporary fix.

“What this merger money seems to offer is pushing back our execution date by three years,” Geoffrey Clark said, referring to the projections that show even a merged district would be on an unsustainable financial path, dipping into its fund balance after only three years of savings.

“There are some things that would have to change, yes,” Mr. Brady said, adding he would like to see insurance contributions for school employees determined at the state level, rather then be left up to each individual district to negotiate.

Mr. Clark said that in his mind salaries and benefits seem to be the biggest problem facing districts today.

Mr. Stone noted that nearly 50 percent of the district’s insurance costs are dedicated to retired employees who negotiated contracts that granted them free health insurance for life at a time when as Mr. Brady put it “insurance was cheap.”

Kimberly Busch, who has children enrolled in Potsdam but teaches in Canton, said while insurance and benefits costs may be high that isn’t the teachers’ fault.

“The biggest factor I see isn’t the employee’s benefits. It’s the source of funding,” she said.

According to Mr. Brady, if the two district’s merge the newly created joint district would receive an additional $35,275,563 in aid over a 14- year period, with additional aid allocations of $3,713,217 per year for the first five years, at which aid begins decreasing to the point where in year 15 of the new district,there would no longer be additional incentive aid.

Using projections that do not include the use of any fund balance and assume a 2 percent tax levy increase, Mr. Brady said the merger would benefit residents of both communities through a lower “full value tax rate.” Beginning with the 2015-2016 year without the use of fund balance and reserves, Canton taxpayers could expect to pay a rate of $23.85 per $1,000 of assessed property value, while Potsdam residents could plan on a rate of $24.90. Taxpayers in a merged district are projected to see a rate of $19.73 per $1,000 of assessed property value.

That rate would gradually increase to $21.25 per $1,000 of assessed property value in the year 2018-2019, at which point the chart ends.

“If we had another $35 million option, we would look at that too,” he said, noting the merger isn’t something either district wanted to be exploring.

If Potsdam and Canton were considered high-needs districts, as both superintendents have said they feel they should be, Mr. Brady said that would result in roughly an additional $1 million in aid for each district.

“A lot of the merger process has to do with providing opportunities for students, but it also has to do with dollars and cents,” he said.

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