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Attachment D: The Problem of Very High Wealth Districts
In recent testimony before the Assembly Education Committee concerning the implementation of the court’s order in CFE v New York, only the Small City Schools indicated that high wealth districts must be considered as a part of the potential solution to the state’s need to reform school finance. Other statewide education associations urged the legislature to reject “Robin Hood” approaches. The New York State Association of School Superintendents added “if the state eliminated every single penny of state aid for the top 10 percent wealthiest school districts, it would generate only enough savings to increase New York City’s total school spending by about 1 percent.” This statement is true, as far as it goes. The high wealth districts in New York are generally very small and receive a small amount of aid per pupil. There are 42 schools districts with property wealth that is at least three times the state average. They educate 43,486 students and receive $68,314,338 in school aid, or $1,571 per student. This is a tiny fraction of the amount that New York will need to raise to measurably improve the spending adequacy in high poverty districts. However, these school districts also possess a very substantial tax bases and, despite spending $18,391 per pupil, do not levy a property tax rate anywhere near that of the average taxpayer in New York. The total tax base of these districts in 1999 was $66,429,806,262, or $1,527,614 per student. This property was taxed at an average rate of $11.10 per $1,000 of value. Taxing these districts at the state average of about $18.00 per $1,000 would raise an additional $458,516,756 for education. Reducing the spending in those 42 districts to the state average would save another $297,646,889. In other words, if these high wealth districts were made average, over $750,000,000 would be available to bring other districts closer to the average. Applied to New York City, this would add $715 per student or 6.5% in additional spending to more than one million students. These are not only wealthy school districts, they also represent some of the state’s wealthiest taxpayers. It might be difficult for the court to comprehend why the state can afford to leave these tax shelters intact, yet can not afford to make substantial progress toward adequacy for New York City and similarly under-funded schools around the state. What would the state need to do in order to bring this untaxed wealth into play? One possibility would be to consolidate these small schools with larger and poorer schools nearby. A second method might be to levy a county-wide property tax on certain high-value properties to be re-distributed within the counties that have such districts. Consider the following comparison between the high wealth districts and small city schools:
Certainly there are serious political costs to shifting these funds, even over an extended period of time. Yet, considering the future of the state’s poorest children, it is premature to reject this option out of hand without even measuring the amount of funding that is lost or misdirected under the present system.
As long as the state is making substantial progress toward adequacy for all students, a degree of inefficiency in the present system does not become a constitutional issue. However, if the state fails to make progress due to a claimed shortage of funds, then the continuation of the present system of save-harmless coupled with the exclusive use of extraordinary tax bases could be seen as a causative factor in the denial of an adequate education to poorer systems. The small city schools do not advocate for a “Robin Hood” approach at this time. However, the state aid committee felt it important for the aid formula to calculate the full degree to which funds are potentially available to fund adequacy from within the system.
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•Albany
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