One Green Island, New York, resident's Lottery bonanza could be a financial nightmare for the village's tiny school system.
John Kutey's $28.7 million share of the $319 million Mega Millions prize in 2011 may lead to a mega cut in state aid for the Green Island Union Free School District.
At risk are the district's staffing and educational programs. Saving them may mean another double-digit jump in property taxes.
The village has the second largest tax levy rate hike in the state this year at 12.47 percent.
"It's the perfect storm: a small impoverished district with the big Lottery winner," Superintendent Michael Mugits said.
The Heatly School, the district's only school, has 331 students from kindergarten through grade 12. Fifty-nine percent of the students receive free or reduced cost meals.
Kutey was one of seven employees at the New York State Homes and Community Renewal in Albany who cashed in the winning Mega Millions ticket.
"We'd all like to be in his spot," Mugits said of Kutey. He could not be reached for comment.
Green Island finds itself in a different spot, facing a state aid squeeze because the state uses the aggregate income of a district's residents to calculate some forms of school aid. About 45 percent of the district's $6.8 million budget is funded by the state.
Kutey's $28.7 million jackpot is equivalent to 68 percent of the previous $42 million annual earnings of the 2,610 residents of the seven-tenths-of-a square-mile village. Add the numbers together and the Green Island's income jumps to $70.7 million.
The income boost makes Green Island appear on paper to have the same resources as the Capital Region's richer and larger suburban districts.
"The odds were against this happening. When I called the state about this, I thought I had lost the call," Mugits said about the long silence that greeted his request for help on how to handle the problem.
The state Lottery was created to fund education. In an unexpected twist the Lottery may cost Green Island a significant portion of its state aid.
Just what will happen is not known as it appears the situation was never anticipated at either the state or local level.
"It only just came to our attention, and we're studying it," Tom Dunn, a spokesman for the state Education Department, said last week.
How huge a reduction in state aid Green Island faces is unknown. A lost of 10 percent would be roughly equal to the $348,080 the district lost in payment in lieu of taxes from the Green Island Power Authority after its revenue from the sale of hyrdroelectric power plummeted.
To fill the whole in its budget, the district cut spending but was still forced to impose the 12.47 percent tax levy increase, which the voters overwhelmingly approved May 15.
It may take action by the state Legislature to rescue the district's finances, Mugits said.
Meanwhile, Green Island village government should escape major problems because the municipality's aid is based mostly on population, said Sean Ward, executive assistant to Mayor Ellen McNulty-Ryan.
There may be some small impact on housing programs that rely on income, he noted.
Thanks to mediabrat for the tip.