The fluctuation of a City's bond rating impacts quality of life whether approval rises or falls. City governments issue tax exempt and taxable bonds to encourage investors to pump money into projects such as infrastructure i.e. road repair, construction, machinery and equipment. New apartment complexes are also financed with bonds. These projects create jobs and revenue for the town.
When a bond rating is downgraded, it means fewer investors and those who do invest will do so with a demand of lower interest rates. It does not mean that the City is bordering on financial collapse. However, it does mean that fewer projects are implemented. This translates to fewer jobs. The combination eventually causes a ripple effect on the quality of life.
Moody's recent downgrade of Yonkers' bonds cites the lack of cash reserve. A multitude of reasons have caused the deficit. The perpetual problem of school funding is a major factor. The antiquated NYS forumula based on property tax and overall wealth is skewed.
Yonkers is wealthier than upstate cities. Census estimates show 16 percent of Yonkers residents lived below the poverty line in 2013, compared to 35 percent in Syracuse, 33 percent in Rochester and 31 percent in Buffalo. Yonkers’ median household income of $59,195 was nearly double that of the other cities. That is one of the reasons why upstate schools get the big bucks and Yonkers does not. The poverty rates for Yonkers students are as follows:
- Enrolled in Elementary School(Grades 1-4) in Yonkers, New York have a Poverty Rate of 27.1%.
- Enrolled in Middle School(Grade 5-8) in Yonkers, New York have a Poverty Rate of 27.8%.
- Enrolled in High School (Grades 9-12) in Yonkers, New York have a Poverty Rate of 23.3%.
Former Yonkers's Mayor, John Spencer was adamant that it was the state's responsibility to fully fund the school district. Spencer stated.“I used to purposely put a hole in the budget and say, 'F### you, fill the hole.'”
Governor Cuomo has responded to the problem. "Why isn’t that district giving more money to the poorer schools?” “I advocate that they should, because the poorer schools have more need.” Cuomo said.
Cuomo proposes an eduction equity plan that has received mixed reviews from law makers. In his state of the union address in 2019, he asked for a one billion dollar boost in school funding.
It's not only a fight over how much to spend. It is also a debate over how the money should be spent.
Education groups want the money better distributed to high-need, poor districts. Cuomo says the money is already going to districts who need it the most; they just aren't sending it to the poorest schools within their districts.
Back to the bond problem. “When you get down to the end, it’s really a 50 percent reimbursement,” Spano said. “For this city to repair all its schools, I would have to go out and bond in the hundreds of millions of dollars.”
And since the bond rating has dropped. it would cost more money. Either way, Yonkers will remain bound by bonds.