Niagara Gazette — The Niagara Falls City School District recently received a clean bill of financial health. But does it mean the struggle over money is coming to an end?

Administrator for School Business Services Timothy Hyland says the future is still uncertain if not bleak.

“Because of the reductions in state aid, that we are 70 percent dependent on for our budget funding, along with the dramatic increase in (state) pension contribution rates for next year, the district may likely be facing its toughest budget challenges ever for 2013-2014 year,” he said.

In fact, if estimates continue as projected, next year’s pension contributions alone are expected to cost the district an extra $1.8 million more than it is currently. Chief among the reasons is the potential 10.6 percent increase in teacher retirement payments, which is in addition to the actual 16 percent increase paid this year.

According to the district, reversing the two major increases of these two years would save the district $3.5 million each year and allow officials to not only balance its budget without increasing taxes but invest in new programs and services for students.

The district hasn’t increased its tax levy, or total amount of money raised in property taxes, in 19 years, despite cuts to state aid and increases in other expenses, including benefit payments to current and retired employees.

Wayne Drescher, a partner at Cheektowaga-based auditing firm Drescher & Malecki, agreed with Hyland in his audit report and pointed out another direct cause for concern while presenting to the school board earlier in November, Hyland said.

Drescher’s report said the district’s agreement to receive some of the money from the state’s agreement with the Seneca Nation for casino revenues, which is tied up in arbitration at the moment, has left a new sense of uncertainty surrounding the district’s finances.

The district is supposed to receive $750,000 each year through the compact, according to the audit report.

But Superintendent Cynthia Bianco said despite the tough times ahead, the district is committed to making sure it remains in good fiscal health going forward.

“While coming times threaten tough challenges with cuts in state aid and increasing costs in pension and medical insurance, we are in good fiscal shape,” she said. “I want the residents of Niagara Falls to know that we take seriously the responsibility to be trustworthy stewards of the community’s children and tax dollars and we continue to do our best to provide (education) in the most cost-effective, common sense way.”

Bianco said she is particularly impressed with the results of this year’s external audit, which the district received an unqualified opinion, the best result an auditing firm can give a municipality such as the school district. The district is also removed from the state’s fiscal watch list, which is used to monitor the decisions in districts which have large debt and little resources to overcome them.

She said it took three auditors three and a half weeks to complete the audit process this year, a large step forward for a district which used to require seven auditors three months. She attributed the resulting efficiencies to better practices by the financial staff and transparency in all purchasing and accounting procedures.

Bianco also said building consolidations, a move to single-source health insurance and a decision to change its purchasing policy also assisted in the district recovering its good fiscal standing.