State will Repay Schools the Funds Withheld to Keep State Afloat

December 24, 2009

Paterson said a suit filed by education groups to stop him was a waste of time because the state intends to pay the money back in January.

"The payments are not cut, they are not [an] impoundment, they’re not to balance the budget," Paterson said. "They are because we have no money. When the revenues return in January, we will restore the payments."

The governor has said he hoped to repay the districts, but his comments marked the first time he set a time frame.

Paterson cautioned it was only the state’s "best assessment" that money would be available in January to repay the schools.

Paterson noted revenues are already off by $240 million because of higher-than-projected tax refunds this month. Medicaid expenses are also $200 million above expectations for December.

Alan Lubin, executive vice president of New York State United Teachers, said Paterson needs to guarantee the money will be restored.

"He puts in the ‘but’ and that makes it impossible for us to walk away from this lawsuit," Lubin said.

Paterson announced Dec. 13 he was holding back $750 million from cities, towns and schools because lawmakers fell $50 0 million short in closing this year’s $3.2 billion budget gap.

The education portion amounted to $146 million, including $69 million for New York City. Education groups, led by the teachers union and the association representing school boards, sued, claiming the governor does not have the right to withhold the money.

The state attorney general’s office is defending Paterson in the suit.

"I would rather spend this time working for the people of New York rather than defending myself against special interests who have buried their heads in the sand and do not even admit the reality we face exists," Paterson said.