PORT BYRON, N.Y. — Good fortune smiled on Richard Loveless in 2015, when the retired electrician won a $42.5 million lottery prize, but those winnings are bringing headaches to the Port Byron School District.
Loveless' winnings pushed up the school district's total wealth, as calculated by the state's school aid formulas. It bumped Port Byron from being one of New York's poorest school districts to one that's almost middle class, said Neil O'Brien, Port Byron's superintendent.
"I'm thrilled he won. I play the lottery and dream of winning," O'Brien said. "I don't want to take the luster off his winning."
But, if the state doesn't take action, Port Byron will take a one-time loss of state aid that O'Brien estimates is about $452,831. That's about 3 percent of the $13.3 million in aid the district currently receives, according to district figures. Port Byron's budget for 2017-2018 is $21.2 million.
The loss of state aid won't occur until the 2018-2019 school year.
The state Division of Budget disagrees how big the hit will be for the district. The state believes Port Byron's calculations are "many times higher" than what the the impact will be, said Morris Peters, speaking for the division.
"This issue is of an order of magnitude that can be addressed as part of next year's budget process," he said. The district's aid for 2018-2019 hasn't been calculated yet, he said.
This isn't the first time such a lottery windfall has affected a small, poor school district.
In 2012, a resident of the Green Island Union Free School District in the Capital District hit the Mega Millions for $28.7 million, which threatened to lower the state aid to the little one-building school district.
In the past, the state has written special language into budget legislation to ease the aid hit for districts that are home to big lottery winners. Instead, O'Brien wants the state to craft a policy that exempts lottery winnings above $1 million from being used to calculate a school district's wealth.
New York calculates state school aid based on the total value of taxable property in a district, as well as the total gross income earned by the residents. So, when one resident in a poorer, small district wins big in the lottery, it can make a big difference in the wealth calculations. It looks like everyone in town has gotten a big raise.
"It's unfortunate that one person's gain, comes at the cost to all the school children in the district," said Michael J. Borges, executive director of the New York State Association of School Business Officials.
Loveless, a retired electrician from Port Byron, won the $42.5 million Lotto prize in November 2015. Loveless chose to take his winnings in a lump sum payment of $29,552,283, according to the state Gaming Commission. After required withholding, his net check was $19,557,701.
For one year, the district's total gross income skyrocketed due Loveless' win, O'Brien said.
"It made the district go from poor to middle class, almost," he said.
Port Byron is a rural school district. People live in modest homes and on family farms. There are no lake front homes, like those along Skaneateles Lake, housing developments or factories that would generate big property taxes.
The state aid formula has a three-year lag. That means the Loveless' lottery win will impact the district's state aid in 2018-2019, said the New York State Department of Education. Mitigating the impact of the change in wealth would require a legislative solution, the department said in an email.
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