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December 2001 vol. XV, no.10
LEGISLATURE ENACTS
|
|
|
Free
Lunch Percent |
Regionally
Adjusted Operating Expense
Per Enrolled Pupil |
Total
Enrollment |
|
New
York City |
80% |
$5,158 |
1,072,061 |
|
102
Other High Poverty Districts (50%+) |
69% |
$6,710 |
405,214 |
|
351
Medium Poverty Districts (20% to 50%) |
34% |
$6,766 |
686,119 |
|
223
Low Poverty Districts (Less than 20%) |
9% |
$7,023 |
705,045 |
|
All
Districts Outside NYC |
32% |
$6,854 |
1,796,378 |
|
Total
State |
50% |
$6,220 |
2,868,439 |
What is most striking is the contrast between the spending in New York City ($5,158) compared to the rest of the state ($6,854). With a poverty rate that is more than double the rest of the state (77% to 32%), New York City spends 25% less than the rest of the state. Leaving New York City out of the mix, we find that the other high poverty districts also spend less on average than the rest of the state, but only 2% less, while the lowest poverty districts spend 2% more than the rest of the state, and 36% more than New York City. Thus, there is significant inequity in the distribution of resources to deal with the effects of poverty, but it is particularly stark in New York City.
Spending and Wealth
Like many states, New York allows local schools to control their overall spending by levying local taxes, predominantly on property. While the state provides relatively more funds to poorer schools in an attempt to equalize the power of weak tax bases and poor communities, it provides some aid to all schools, and limits the amount of spending that is equalized. In addition, the amount of local tax effort is left to local discretion. The overall school spending, then, is produced through a combination of local effort decisions, local wealth and state aid. The end result of this combination, however, still allows districts with higher property values to spend significantly more on schools. Districts with concentrations of retail, manufacturing, utility or vacation property can export the cost of local education to surrounding communities, while residential communities cannot.
Thus, New York shows a system where school spending is largely a function of local wealth, not of student need. These factors underlie most of the elements in Judge DeGrasses finding in the CFE case that the state finance system is a causal link in depriving the children of New York City an adequate education:
1. The state fails to recognize regional differences in the cost of services.
2. The state fails to recognize the needs of disadvantaged students.
3. The state allows local control, including a lack of local tax effort, to determine levels of school spending.
4. The formulas are unduly complex and incomprehensible.
The Distribution of Aid Increases
It was in the above context that the Governor advanced a proposal for overall school aid reform, the results of which ultimately became final. The Governors proposal directly addressed three of the above points by including them in the proposal. 1. There is a weighting for poverty and for regional costs in the new formula. 2. Aid increases are equalized based on local property and income wealth. 3. The formula is simplified by consolidating fourteen separately calculated categories into one. While the problem of local effort was not addressed overtly by the formula, it was included in language for the five largest cities only.
There are two other elements in the Flex Aid formula as well. There is a guarantee that no district would receive less than a 1% increase. There is also a sparsity factor that increases aid for rural districts that bear extra cost burdens due to uneconomically small schools.
Finally, there is overall design of the proposal itself. The Flex Base is simply the total of the prior years aids. Thus, any increase in operating aid or aid for students with disabilities is frozen. This growth is replaced by a much smaller amount of increase driven by the Flex-Aid formulas, but producing only a 2.61% increase statewide. Thus, one major thrust of the proposal was to eliminate much of the aid increases being driven by current laws.
While the Legislature rejected Flex Aid as a formula, the ultimate resolution of the impasse was that the results of these calculations were accepted as final.
Analysis of Equity Changes
We can examine these increases two ways. First, by simply looking at how the increase was distributed, by wealth, by poverty, upstate and downstate. Second, by looking at how the increase works in the real world where costs are rising.
|
|
|
01-02
Flex Aid |
Flex
Base |
Change |
Other
Aids |
Other
Aid Base |
Change |
Total
01-02 |
Total
00-01 |
Change |
|
NYC |
|
3,790,008,799
|
3,687,583,560 |
2.78% |
756,186,314 |
741,672,313 |
1.96% |
4,546,195,113 |
4,429,255,873
|
2.64% |
|
Buffalo |
|
257,170,474 |
250,415,216 |
2.70% |
51,901,087 |
50,659,612 |
2.45% |
309,071,561 |
301,074,828
|
2.66% |
|
Rochester |
|
195,955,670 |
189,673,823 |
3.31% |
46,423,783 |
46,592,880 |
-0.36% |
242,379,453 |
236,266,703
|
2.59% |
|
Syracuse |
|
112,572,928 |
108,921,575 |
3.35% |
23,440,104 |
23,745,177 |
-1.28% |
136,013,032 |
132,666,752
|
2.52% |
|
Yonkers |
|
60,162,156 |
58,405,595 |
3.01% |
25,199,533 |
25,154,216 |
0.18% |
85,361,689 |
83,559,811 |
2.16% |
|
Total Big 5 |
|
4,415,870,027
|
4,294,999,769 |
2.81% |
903,150,821 |
887,824,198 |
1.73% |
5,319,020,848 |
5,182,823,967
|
2.63% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Small Cities |
|
972,324,300 |
945,648,026 |
2.82% |
277,539,114 |
274,617,881 |
1.06% |
1,249,863,414 |
1,220,265,907
|
2.43% |
|
|
|
|
|
|
|
|
|
|
|
|
|
All City Schools |
|
5,388,194,327
|
5,240,647,795 |
2.82% |
1,180,689,935
|
1,162,442,079
|
1.57% |
6,568,884,262 |
6,403,089,874
|
2.59% |
|
Non-City Schools |
|
4,424,502,274
|
4,322,515,287 |
2.36% |
1,126,232,004
|
1,096,268,207
|
2.73% |
5,550,734,278 |
5,418,783,494
|
2.44% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
9,812,696,601 |
9,563,163,082 |
2.61% |
2,306,921,939
|
2,258,710,286
|
2.13% |
12,119,618,540 |
11,821,873,368 |
2.52% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of Total |
|
Flex
Aid |
Flex
Base |
Change |
Other
Aids |
Other
Aid Base |
Change |
Total
01-02 |
Total
00-01 |
Change |
|
NYC |
|
38.62% |
38.56% |
0.16% |
32.78% |
32.84% |
-0.17% |
37.51% |
37.47% |
0.12% |
|
Buffalo |
|
2.62% |
2.62% |
0.09% |
2.25% |
2.24% |
0.31% |
2.55% |
2.55% |
0.13% |
|
Rochester |
|
2.00% |
1.98% |
0.68% |
2.01% |
2.06% |
-2.45% |
2.00% |
2.00% |
0.07% |
|
Syracuse |
|
1.15% |
1.14% |
0.72% |
1.02% |
1.05% |
-3.35% |
1.12% |
1.12% |
0.00% |
|
Yonkers |
|
0.61% |
0.61% |
0.39% |
1.09% |
1.11% |
-1.91% |
0.70% |
0.71% |
-0.35% |
|
Total Big 5 |
|
45.00% |
44.91% |
0.20% |
39.15% |
39.31% |
-0.40% |
43.89% |
43.84% |
0.11% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Small Cities |
|
9.91% |
9.89% |
0.21% |
12.03% |
12.16% |
-1.05% |
10.31% |
10.32% |
-0.09% |
|
|
|
|
|
|
|
|
|
|
|
|
|
All City Schools |
|
54.91% |
54.80% |
0.20% |
51.18% |
51.46% |
-0.55% |
54.20% |
54.16% |
0.07% |
|
Non-City Schools |
|
45.09% |
45.20% |
-0.24% |
48.82% |
48.54% |
0.59% |
45.80% |
45.84% |
-0.08% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
100.00% |
100.00% |
|
100.00% |
100.00% |
|
100.00% |
100.00% |
|
The Flex Aid portion of the package gives city districts, including New York City, a slightly larger increase than the non-city districts. Compared to a statewide increase of 2.61%, city districts receive 2.82%, while non-city districts received 2.36%. The increase for small city schools was consistent with that of other cities. However, this difference is extremely slight, amounting to 2/10ths of one percent. Moreover, the rest of the package tends to have an offsetting effect, with non-city schools seeing larger increases. The total increase, excluding Building Aid, amounts to a shift of 1/10th of one percent toward cities. This amounts to a redistribution of $5,000,000 out of a $12,000,000,000 aid package supporting $29,000,000,000 of expendituresthat is to say, no redistribution at all.
This outcome has been the norm in school aid for decades. The concepts of reform are used to create formulas that purport to address existing inequities, but they are used in such a way as to minimize their actual impact. Guaranteed minimum increases and other categorical aids that have disequalizing provisions also tend to perpetuate the existing distribution.
The Flex-aid calculation uses many of the concepts from the CFE case, and they do show up in the calculated results. There is a definite relationship between the Flex-aid increase and district wealth. However, the aid increase drops off greatly as a district moves from only 50% of the state average in wealth to slightly above the state average. Then, when minimums kick in, the increase begins to rise again. It is not a coincidental that New York Citys wealth (unadjusted for regional costs) is a respectable .94 of the state average. Using this figure, the steep equalization of the formula minimizes New York Citys increase from the modest poverty and regional cost adjustments. Because of the size of New York City, aid formulas are often designed around its unique characteristics.
The Impact of the Aid Increases
While most analysis focuses on the distribution of state aid or of aid increases, these resources actually operate within the context of the overall spending decisions of schools. School districts also react to changes in their costs and their local taxes. This is especially true when local budgets are set well before the aid increases are knownwhich is most of the time in New York. Thus, costs, enrollment and local resources are moving somewhat independently of state aid. This year in particular, local schools were reassured by Legislative leaders that significant funds would be added to the governors total. Thus, they had little reason to anticipate what actually occurred. Multi-year contracts with staff represent over 70% of the total budget and drive a local cost of doing business that does not respond quickly to outside events. These costs will probably move forward in 2001-02 at about 4%. This means that the state aid increase will fall below local cost increases. How does this impact on different schools? Consider this example.
|
|
Poor
District |
Wealthy
District |
|
Base
Year Budget |
|
|
|
Base
Budget |
10,000,000 |
10,000,000 |
|
Base
State Aid |
7,000,000 |
3,000,000 |
|
Base
Taxes |
3,000,000 |
7,000,000 |
|
|
|
|
|
Aid
Year Budget |
|
|
|
Inflation |
4% |
4% |
|
Comparable
Budget |
10,400,000 |
10,400,000 |
|
|
|
|
|
|
Higher Aid Increase |
Lower aid Increase |
|
Aid
Increase |
3.0% |
2.4% |
|
New
aid |
7,210,000 |
3,072,000 |
|
|
|
|
|
Tax
Increase |
4% |
4% |
|
New
Taxes |
3,120,000 |
7,280,000 |
|
|
|
|
|
Total
Funding |
10,330,000 |
10,352,000 |
|
|
|
|
|
Budget
Shortfall |
(70,000) |
(48,000) |
|
As a
Percent of Spending |
-0.7% |
-0.5% |
|
As a
Percent of Taxes |
-2.2% |
-0.7% |
In this example, the poorer district receives a larger aid increase than its wealthier neighbor. Yet, because this increase is less than the rate of inflation, and because state support makes up a much larger percentage of its budget, the poorer district ends up with a larger gap in its finances, which requires a much larger tax increase to close.
This concept can be applied to the 2001-02 results by increasing the base expenditures and tax levy of each school district by 4%, and comparing the total resources from the tax increase and the aid increase together to the expenditures needed to maintain the same programs.
When 4% inflation is factored into the picture, districts with high poverty actually fare slightly worse than low poverty districtsand high wealth districts fare slightly better than poor districts. The greater the gap between inflation on local costs and the state aid increase, the greater the additional burden that is placed on poorer districts.
Conclusion
In the final analysis, the outcome of the 2001 session was consistent with prior years. The aid formulas gave the appearance of reform without the substance. Meanwhile, the dependable engine of school financethe property taxcontinued to sustain wealthy schools better than poor ones. The states historical commitment to a variety of formula aids was repudiated, leaving districts that depended heavily upon state support with sizable budget gaps and diminished confidence. Any pretense of a working formula was abandoned in favor of the outdated results of an early computer run.
Moreover, the entire legislative process that lasted more than ten months was conducted without any possibility of public participation or debate. Even the three leaders themselves stopped talking for weeks at a time. The end product appears to be supported by none of them. While the disasters of September 11, 2001 provided an ostensible pretext for abandoning further attempts at negotiation, the reality was apparent weeks beforethe political interests of all three parties are completely at odds with any meaningful long-term reform in school finance.
Albany
Amsterdam
Auburn
Batavia
Beacon
Binghamton
Canandaigua
Cohoes
Corning
Cortland
Dunkirk
Elmira
Fulton
Geneva
Glen Cove
Glens Falls
Gloversville
Hornell
Hudson
Ithaca
Jamestown
Johnstown
Kingston
Lackawanna
Little
Falls
Lockport
Long
Beach
Mechanicville
Middletown
Mount
Vernon
New
Rochelle
Newburgh
Niagara
Falls
N.
Tonawanda
Norwich
Ogdensburg
Olean
Oneida
Oneonta
Oswego
Peekskill
Plattsburgh
Port
Jervis
Poughkeepsie
Rensselaer
Rome
Rye
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Saratoga
Schenectady
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Verona Sherrill
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Plains