State comptroller warns South Country schools could face $10 million debt

The South Country Central School District could end the year $10.5 million in the red, a state comptroller’s review warned, after auditors said the district repeatedly underestimated major expenses and leaned on temporary money to keep up with routine bills.

The report, issued April 10, said South Country was already on track for an about $8.7 million deficit in 2025-26 even after spending freezes and personnel layoffs. It also said the district reported an unassigned general fund balance deficit of $1.8 million as of June 30, 2025, and would need to borrow $6 million to balance the 2026-27 budget if current trends continue. Auditors said recurring costs such as workers’ compensation, transportation and BOCES had been consistently misprojected, while one-time revenue sources, including temporary federal COVID-era aid, were used to cover ongoing expenses.

Those mistakes are now showing up in the household-level services families rely on every day. South Country’s own recovery plan says the district overspent its voter-approved 2024-25 budget by about $3.49 million and depleted reserves by $16.2 million. The plan identifies transportation and special education as areas of concern, and March budget discussions included 55 proposed staff cuts, among them 43 teachers and five administrators. Another proposal would save $900,000 by changing transportation, but it would also leave 121 students without transportation.

The crisis has been building since the district disclosed an unplanned deficit on Oct. 22, 2025. In December, the board adopted a three-year fiscal recovery plan that said the district faced significant fiscal challenges from the 2024-25 school year. The district also said the 2024-25 budget did not fully account for the end of temporary federal COVID-relief funds that had helped pay for recurring costs such as salaries and special education.

South Country leaders have since taken several steps to steady the books. The district said its board ordered external auditors to finalize the 2024-25 financial statements, hired the forensic firm IMG to investigate what went wrong and brought in school business official John Belmonte to strengthen daily oversight. The board also said it was working with state officials on a recovery plan, and warned that if that plan is not approved, the district will face decisions that permanently reduce what its schools can offer.