Foil: Your right to Know.
“On the heels of revelations that East Ramapo had a $30 million surplus after years of dire deficit predictions, Moody’s Investor Service has removed its “negative” outlook from the district’s poor bond rating. But Moody’s latest opinion was far from rosy for the school district, as the ratings agency preserved a near-junk bond rating status and portended a possible drop.
Meanwhile, the New York State Comptroller’s Office alerted the district on Jan. 2 that it would audit the district’s 2024-25 budget amid questions about the roots of the budget surplus after years of fiscal woes.
For Moody’s analysts, it seems, East Ramapo’s past is likely prologue. “While the improved reserves and liquidity provide the district with greater resources today, the school board’s historical management indicates the financial position will be gradually depleted over time,” the Dec. 5 opinion states.
Moody’s gives East Ramapo ‘lowest investment grade rating we assign’
Moody’s simultaneously reaffirmed the district’s Baa3 credit rating, which is one step above junk status.
As a result, New York State Education Commissioner Betty Rosa asked the New York State Comptroller’s Office for an audit of East Ramapo. On Jan. 2, the comptroller’s Division of Local Government and School Accountability sent a letter to East Ramapo Interim Superintendent Anthony DiCarlo announcing it would audit the 2024-2025 budget, “including historic budget estimates and prior operating results.”
What’s working for, against East Ramapo?
Moody’s report cited the district’s high dropout rate, “very low graduation rate,” large number of English language learners and poverty as social challenges that have fed a credit low rating.
But the Dec. 5 report pointed to some positives, including “short-term remediation” to lead levels in the water supply by installing water fountains filters.
But, Moody’s also flagged looming infrastructure issues the district faces; a 2023 Building Conditions Survey showed hundreds of millions of dollars worth of repairs were still needed to all district schools, even after myriad fixes using a huge investment of COVID-era federal funding.
The ratings agency continued to knock governance issues in its latest communication, citing the school board’s “history of unwillingness” to increase local taxes.
The board’s members are seen by many public-school families as favoring the private school community that send their kids to yeshivas. Only about 20% of the children who live within the district’s boundaries attend the public school system.
The ratings report referred to the district’s “challenging social and demographic profile.”
“The financial challenge this district has to deal with is more than others,” Lehman said. “In East Ramapo, there is this secondary challenge.”
Lehman pointed to the outsized cost of transportation. The district operates the most complex school transportation in the state outside NYC, providing “universal busing” to all kids to scores of private schools as well as more than a dozen public schools. Efforts to curb the extra busing service — which goes beyond what the state will reimburse — have failed. “Some of those financial decisions … don’t seem to be in the best interest of the district given its challenges,” Lehman said. “
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