NYSASCSDHome  Board of Directors   Committees   Membership Directory   Newsletters  Officers   Upcoming Meetings    Legal Opinions     Staff

 

December 2001 vol. XV, no.10  

LEGISLATURE ENACTS
SUPPLEMENTAL BUDGET
AND RESTORES HURD AID 

            As previously reported, the Legislature returned to Albany on October 27 and approved a supplemental budget bill which, among only a handful of education aid initiatives, restored the nearly $12,000,000 in cuts in Hurd Aid proposed by the executive budget for 2001-2001 and enacted in the base budget approved in August of this year.  The $12,000,000 cut in Hurd Aid represented a 16% reduction in that aid category.  The Association communicated with legislative leaders and the Governor about the extreme hardship this aid reduction would cause many small city districts.  It emphasized the inequity to small city school districts when all other districts, even the wealthiest districts, were protected through save harmless provisions.  While we are gratified that those reductions have been restored, the overall aid increase for education of $382,000,000 or 2.8% and the method by which that increases the distributed through “Flex Aid”, leaves poor school districts such as small city school districts further behind their more affluent suburban neighbors than ever.  Charles Winters, State Education Aid consultant to the Association has provided us an extensive analysis of State school aid for 2001-2002 which analysis is attached as an addendum to the newsletter.  The analysis shows how the increase in education aid was distributed by wealth/poverty and geographically.  The analysis also shows how the limited increases in education aid work in “the real world where costs are rising.”  If there are any questions regarding the analysis or the data supporting its conclusion, please contact us.

 

LEGISLATIVE UPDATE

 

            Despite strong indications to the contrary, the State Legislature appears reluctant to return to Albany before the end of the year to finish up unresolved budget issues absent a “three-way” agreement on the matters to be considered.  Previous plans to return to Albany on December 17th were predicated upon the Governor issuing his 2002-2003 executive budget on or before that date.  Governor Pataki has now backed off the commitment to deliver an early budget.  It has been reported that the executive wishes to review levels of state tax receipts after the holidays in order to have a more realistic basis for its revenue projections for the new state fiscal year.  Left hanging unresolved is the distribution of the stabilization grants ($50,000,000 of the total $100,000,000) earmarked for distribution prior to January 1, 2002.  The stabilization grants were authorized in the supplemental budget approved in late October.  However, the legislature could be reassembled on short notice before the end of the year if the leaders agree on an agenda.

  

 

CONSTITUTIONAL DEBT CEILING FOR SMALL CITY SCHOOL DISTRICTS

 

            The Association has been working this year to address the growing problem faced by many small city school districts which have hit their 5% constitutional debt ceilings.  The non-city school districts, of course, generally do not have this problem since their debt ceiling is set at a 10% and does not include amounts received for building aid in the computation of debt (Local Finance Law §121.20).  Elimination of the 5% debt ceiling requires approval in two separate legislatures and at a November statewide referendum.  The earliest this could be accomplished would be November 2003.  Senator Randy Kuhl and Assemblyman Ronald Canestrari have introduced bills that would accomplish this, S.4765/A.8681 and S.4766/A.8680.  In addition, the Association has been discussing amendment to the Local Finance Law to permit Small City School Districts to deduct State aid payments from the calculation of debt, just as the central school districts can under §121.20.  The Association has talked with Commissioner Mills, Senator Kuhl and Assemblyman Canestrari, as well as with leadership.  It appears that an amendment to the Local Finance Law §121.20, which would be a partial but significant short-term solution, may be doable in the coming legislative session.  The Commissioner has indicated that the department would support such an amendment.  The debt ceiling problem will become even more troublesome as new and existing debt is amortized or reamortized over longer terms, as required by amendments to the building aid under the recently enacted supplemental budget. 

 

REFINANCING OF EXISTING DEBT AND ACCESS TO THE
NEW YORK STATE DORMITORY AUTHORITY

 

            The supplemental budget passed in October makes extensive changes to the way building aid will be paid both for existing debt and new debt incurred after the effective date of the changes.  In short, the law now requires that building aid be paid based on an assumed amortization and assumed interest rate, each to be determined by the Commissioner.  The assumed amortization will be based upon probable useful life for each project depending on whether it is new construction, renovation or other projects such as energy performance contracts.  The department is currently working to develop policies and guidelines to implement these new provisions which we understand will be forthcoming in the next several weeks.  The details that must be worked out for both the refinancing (which is also being referred to as advanced refunding) and new financing are highly technical.  Moreover, financing and refinancing through the Dormitory Authority adds further significant complications, some of which are only now being uncovered. 

 

            The Association will be attempting to provide districts with assistance and understanding in implementing the new law in three ways:  1.  the regional meeting to be scheduled at the end of January in Newburgh will be devoted in part to discussing some of these issues; 2. The Association has been in discussions with First Albany Corporation, which has extensive experience in underwriting Dormitory Authority bond issues; and 3.  The Association counsel has extensive experience with Dormitory Authority financings and will be an available resource to districts.

 

CONVERSATIONS WITH COMMISSIONER MILLS

 

            The Board of Directors met with State Education Department Commissioner Richard P. Mills and Deputy Commissioner James Kadamus on November 30th.  Representing the Association were Norma Barton, of Canadaigua CSD, Ronald Friedman of Long Beach CSD, Richard Jorgensen of Norwood CSD, Michael Egan of Fulton CSD, Ronald Ross of Mount Vernon CSD, Judith Johnson of Peekskill CSD, Sandra Lockwood of Rome CSD, Thomas McGowan of Glens Falls CSD and Association Counsel, Bob Biggerstaff.

 

            Bob started the discussions by outlining the issues that the Board wanted to cover.  Those issues included middle school testing, teacher shortages, Hurd Aid, the constitutional debt ceiling, charter school funding, the BOCES aid freeze and the transition from 55 to 65.

 

            With respect to the concern over middle school testing, Bob conveyed the concerns of James Lee of Binghamton that the test results were down, that there were too many tests being given, that there may be a failure of curriculum alignment, and that there is a loss of instruction time and additional cost incurred in test administration.  The Commissioner responded that Jim Kadamus is currently working on these and related issues with a view to spacing the exams so that the English exam is held at mid-year, Math will be given as late in the year as possible and that other exams would be split between mid-year and late in the year, including Science and Social Studies.  He also said that he was concerned that some did not want Science and Social Studies results reported to the Commissioner or to the newspapers for two more years.  This bothers him because the public will not see the improvements that he knows will occur.

 

            Michael Egan said that Social Studies results are much better than the results for English and Math; that 90% are in categories II, III and IV and well more than half are in III and IV in his district.  The Commissioner observed that some districts have been doing very well and wanted to know what were they doing to achieve those results.

 

            Ron Friedman observed that the system is overwhelmed with requirements and that is beginning to affect morale in the schools.  Sandy Lockwood stated that fourth graders generally aim to please and that the same cannot always be said for eighth graders.  The goal in their district is to make children life long learners.  James Kadamus responded that he agreed and that motivation is essential to overall performance.

 

            Tom McGowan said that receiving results immediately was important for the teacher’s morale and for the students, and must be connected to promotion.  Judith Johnson, who has been at Peekskill city school district for three months, said that the test results there are not good and that the kids don’t know what is required of them.  Further, she said teachers don’t have the training to teach the standards and haven’t taken the tests themselves.  Therefore immediate results are essential to teacher assessment of their professional needs.  Ronald Ross said that he didn’t think scores could go down but they did and that the quality of teaching in Math is greatly inferior to that in Social Studies.

 

            The Commissioner said that Mount Vernon had devoted substantial resources to the early grades and got great results.  He asked what was happening in the middle school.  Ron Ross responded that he needed more funding to make similar progress in the middle grades.  Judith Johnson stated that there needs to be a major shift in teaching methods.  James Kadamus observed that the problems in middle school really start in the fifth and sixth grades where advancement is not sufficient.  Tom McGowan said that the maturation of students is a major factor in eighth and ninth grades.  Failures are high in the ninth grade but not necessarily thereafter.  There should be a fifth year track for some.  Jim Kadamus asked what was being done to help the transition from eighth to ninth grades.  Tom McGowan observed that his district had a program to address this for 40 identified kids working with 4 teachers who are putting in much additional time .

 

            Richard Jorgensen stated that a new approach to character education is needed and attention given to why we learn.  Norma Barton expressed her concern that there needs to be a greater focus on teacher education.  Jim Kadamus stated that there needs to be developmentally appropriate education and that this must be thought about.  He believes that this may be a problem in the middle schools.  The Commissioner stated that we needed to talk with college presidents who often resist department suggestions because they cost more money.  (For example, requiring that a teacher has to major in the course that they will ultimately teach.)  Judith Johnson stated that her district will not take teachers from certain colleges without a minimum GPA because of some of these problems.  The Commissioner stated that some teachers can’t teach.  A paper on teacher shortages shows a net total of 23,000 which is larger in some areas e.g. Math than in others.  The solution necessarily involves expansion of capacity through an alternative certification program.  Cliff Janney, Superintendent of Rochester City School District, has had great success in this area.  He also suggested that there be recruiting exit interviews asking prospective teachers why they were leaving or why they were not taking a job that was offered.  Ron Friedman said that his district has much feedback on how prospective teachers were treated during the process of being a candidate.  Generally candidates were not told what they will face during the process and his district gives its candidates that information before they go through the process.  Tom McGowan said that his district was losing candidates for being too tough.  They ask for a video on their teaching, three unpaid orientation days and four additional teacher professional development days.  The Commissioner stated that the district may be losing people that they really want to lose.  Ronald Ross stated that his district is getting teachers that are leaving other districts.  James Kadamus asked what are the competitive problems in attracting teachers.  Tom McGowan answered - low salaries as compared to surrounding suburban districts.  Judith Johnson answered low test scores were a factor.  The Commissioner stated that the first ten years of a salary schedule needs to be competitive not necessarily the whole schedule.  This is the result of work done by Cliff Janney in Rochester.  James Kadamus observed that the some teachers tell the district in the summer that they are leaving, making it difficult to replace them with good teachers.  Perhaps a bonus for early notice should be considered. The Commissioner asked where is all of this information shared that we have been discussing here today.  Ron Friedman stated that at the various association conferences there is considerable networking at which this kind of information is available.  Tom McGowan continued by observing that teacher mentors are needed and a fifth year needs to be added.  The Commissioner said that the system, however, is going in the opposite direction.  James Kadamus asked how well are the teachers prepared to teach the higher standards.  Tom McGowan replied, not well.  Norma Barton stated that districts have to prepare teachers to teach now.  The Commissioner asked whether the Superintendents talk about college reputations among themselves.  Ronald Ross stated that many teacher applications do not use correct English grammar.

 

            The discussion then turned to the issue of the transition between the passing grades of 55 to 65.  Ronald Friedman stated that he thought that the timing of the transition is too fast; districts can accomplish the transition but need more time to do it.  The Commissioner stated that if more time were given he would need to see what would be done with that additional time.  Ronald Ross asked whether a phase-in would be possible.  Jim Kadamus stated that that might be possible.

 

            Other topics were discussed including debt reamortization and refinancing.  Sandy Lockwood stated that the new requirements will force her district to exceed their constitutional debt limit.  Commissioner stated that the department was developing rules which should be out in December and that further the Governor next year will be proposing additional reforms to slow building construction down.

 

            Tom McGowan asked what about the kids the 70-75 I.Q. who are not classified as special education students but probably wouldn’t pass regents exams.  Jim Kadamus replied that the department is looking at that and maybe recommending that, if a student is declassified in ninth grade, he or she may take the Regents Competency Test in order to receive a diploma.

 

DATES TO REMEMBER

 

Date and Time                                     Location                                Event

December 17, 2001             Board meets with
Legislative Office Building     Assemblyman
  Albany 11:00 am                Tokasz, and
                                            Senator Kuhl

January 13,2002                 Board Meeting
Desmond Hotel, Albany  
1:30pm-4:00pm 

January__, 2002 (tentative)                 Mid-Hudson Location           Regional
                                            Meeting-Mid
                                            Hudson Valley

March 26, 2002                     egislative
Fort Orange Club, Albany     breakfast
8:00am-1:30pm                    and
                                            seminar                                                                          

August 18 and 19, 2002               Summer
Statler Hotel, Cornell University    Conference
                                                    and Annual
                                                    Meeting

 


Charles Winters
Consultant of NYSASCSD

11/01

 2001-2002 School Aid

The 2001 legislative session began in December of 2000 according to the historical script.  Citing the need to improve educational opportunities and outcomes for high poverty districts, the Regents Proposal called for an aid increase of $1.45 billion (11%) with the bulk of the new money going toward high-need, low-resource districts.  The Executive Budget, however, called for many cuts in existing aid programs, but left an overall aid increase of $382 million (2.8%).  By consolidating many categorical aids into “Flex-Aid” the Governor represented his package as offering greater efficiency and flexibility to local schools.  The new “Flex Aid” proposal included both a poverty factor and a regional cost adjustment—two of the elements cited as lacking by the trial court in the CFE decision.  Thus, the Governor claimed that his proposal had begun the process of reforming school finance in New York.  Both houses declared the Governor’s budget to be woefully inadequate and vowed to restore the aid cuts and dramatically increase the overall funding. 

 

Later in the spring, however, the tensions among the parties began to boil over.  Both of the houses complained that the Governor was refusing to negotiate, and neither house was willing to chance the Governor’s authority to make selective vetoes over the final package.  In frustration, both houses passed “one-house bills” containing the outlines of their positions.  The Assembly package called for a $1.7 billion increase, while the Senate package called for $925 million, and both houses agreed to restore the Governor’s cuts.  All of these estimates were based upon projected data obtained from local school districts the previous fall. 

 

This was the state of information about school aid as districts finalized their budgets for the ensuing year.  By August, the state was nearing an all-time record for late budgets without any compromise in sight.  Most school district tax levy resolutions were due by September 1, and the Legislature did not want to be blamed for large increases in local property taxes based upon its inability to carry out its function.  Without cooperation from the Governor, the Legislature put together the following package under the heading of a “baseline budget”, meanwhile vowing to return in September with a supplemental package to restore funds left out by the Governor.

 

§        The package deleted many of the new initiatives requested by the governor.  This was an attempt to force the Governor to negotiate in good faith on the additional increases that the legislature wanted.

§        None of the changes in statute that the Governor needed to reduce the aid increases carried by existing law was enacted.

§        Instead, in order to balance the budget, the Legislature apportioned to each school district the same amount of funds that was carried in the aid run accompanying the Governor’s budget.  In other words, each district would receive a specific sum of money included in the computer run as a lump sum, but without any formula calculations.

§        In one major area, aid for local debt service on school construction (Building Aid), the law and the budget did not match by several hundred million dollars.

 

The leadership of the legislature made it clear that this was only an initial step that would be followed up in September by a genuine budget package.  Some districts levied taxes based upon the baseline budget while others assumed that more restorations would be forthcoming.  Yet, before the legislature re-convened to develop this final package, the terrorist attacks of September 11th occurred, changing everything. 

 

For about three weeks, all other state business was put on hold in order to deal with the unprecedented emergencies the accompanied the aftermath of September 11.  By October 2, however, legislative aides began to indicate that nothing major could be done with school aid.  The worsening economy, along the economic impact of the disaster itself, was blamed for turning the state’s estimated $2.5 surplus into a projected deficit.  However, something had to be done to reconcile some of the inconsistencies in the budget.  On October 24, 2001, the day before the state’s appeal of the CFE case was to be heard, the legislature convened to approve bills to authorize new forms of gambling to help raise revenue and to make some of these corrections, but left the vast majority of the “computer run” basis for school aid just as it was in the base-line budget. 

 

While the formulas that created the Governor’s Flex-Aid were never enacted, the results of those calculations, made in January on projected data and never updated, became the official distribution of school aid for the 2001-2002 school year on October 25, 2001. 

 

Analyzing the Results

           

It cannot be denied that the prospect of the upcoming campaign and the desire to have enough funds left at the end of the year to reward both supporters and taxpayers, yet still show a budget surplus, played a definite role in the intractability and escalating bitterness of the 2001 session.  At the same time, the process had initially raised the expectations of local school districts for several months, only to leave them appalled and disappointed by the outcome.  A further complication was presented by the fact that laws passed years earlier would have driven a massive increase in school aid had the legislature done nothing at all, yet these aid increases would have gone disproportionately to upstate districts. 

 

Organizational Impact

 

Several aid formulas act as incentives based upon districts’ expenditures in prior years.  When districts commit money in areas such as BOCES, special education, capital projects and transportation, they do so with the expectation of partial reimbursement from the state the following year.  Since these expenditure-driven formulas are also equalizing, poorer districts depend much more heavily upon them.  BOCES Aid and Excess Costs Aids for children with disabilities have been frequent targets of the Governor’s attempts to reduce inflationary aid increases, but have always been restored by the legislature.  Despite their initial signals that these cuts would be restored, the Legislature finally left them frozen at the Governor’s levels. 

 

In many cases, the aid contained in the Governor’s run was based on estimates of 2000-01 costs supplied by the districts themselves in September of 2000.  Normally the aid would be recalculated using actual data from financial reports and aid claims, but not this year.  Thus, districts generate additional cuts or even random windfalls based upon bad guesses.  For high wealth districts, these variances are not material since their aid is only a small fraction of the amount spent.  However, for the poorest districts, these reimbursement rates can run well over 70%.  

 

There are many examples of property-poor school districts that also have low tax rates and very low spending.  When the actual yield of added taxation is very small due to a weak tax base, there is a marked tendency for districts to restrain spending rather than raise taxes.  Thus, a weak local tax effort often compounds the problems of the aid system.  Uncertainty surrounding future aid increases has a pronounced chilling effect on spending decisions of these poorer districts, since state aid represents well over half of the budget and local tax increases would be disproportionately greater to make up for any shortage in aid.   The abandonment of historic commitments to these expenditure driven aids erodes the confidence of poorer districts in the state’s willingness to consistently support a significant share of new costs. 

 

High levels of student poverty and lower test scores are also common in many of these schools.  For years, the State Education Department has urged these schools to raise achievement through supplemental programs during school, after school and over the summer.  As supplements, however, it is far easier for districts to curtail these programs than to lay off salaried staff in core courses.  To what extent programs targeted at low achieving students will suffer a disproportionate level of cuts remains to be seen.  However, local confidence in state guarantees has been badly shaken.

   

Analysis of Equity in the Existing Distribution of Resources

           

In order to judge the impact of the aid increases, it is first necessary to understand the underlying problems in the existing distribution of resources.  This is made far more difficult in New York due to the wide divergence of costs between upstate and downstate.  According to a study done by the State Education Department of 77 professional, non-teaching occupations in nine separate regions throughout the state, there is a 51.5% higher cost for the same professions in the Long Island/NYC area as compared to the northernmost counties, with lesser variances in other parts of the state.  It is not possible to make resource comparisons between regions without taking these cost differentials into account.  We can, by dividing the actual school spending by these cost indices (the same ones used in the Flex-Aid proposal) produce an adjusted spending value that demonstrates equivalent buying power throughout the state.  By comparing this cost-adjusted spending to other variables it is possible to discern how spending varies among districts. 

 

Spending and Poverty

           

Both nationally and in New York there has been a consistent showing that family background has a profound influence on performance of children in schools.  Schools are expected to compensate for these disadvantages through supplemental programs that give extra time and attention to students who are struggling.  These supplements add to the cost of education.  Therefore it would be reasonable to assume that school districts with high concentrations of poverty would need more money than districts with low concentrations of poverty.  However, when we look at districts in this way, we see the opposite.

 

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 DeGrasse’s 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 Governor’s 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 year’s 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.


Distribution

 

 

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 expenditures—that 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 City’s 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 City’s 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 known—which 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 governor’s 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 districts—and 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 finance—the property tax—continued to sustain wealthy schools better than poor ones.  The state’s 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 before—the 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
•Salamanca
•Saratoga
•Schenectady
•Tonawanda
•Troy
•Utica
•Vernon Verona Sherrill
•Watertown
•Watervliet
•White Plains