April 2006 Vol. XX, No. 4      

STATE BUDGET BREAK THROUGH

For the first time in nearly a decade the State Budget for 2006-07 has provided an above state average increase in education aid for small city school districts. Total computerized aid increased 7.63% or $114 million this year for the small cities, compared to 6.97% for the average district. In the nine year period from 1997-98 to 2005-06, small city districts received increases in excess of the average only once, in 1997-98 when the average increase was 6.71% as opposed to the small city district increase of 7.13%. Whether this good news is only an aberration, or represents a sharp break with past budget practices remains to be seen.

 However, despite the good news this year, our districts still remain significantly behind the average district over all. From 1996-97 the average increase was 7.43% annually or a total of 74.26%. For the small city schools the annual increase was 6.29% and a total increase of 62.94%. If our districts had received just an average increase over that period, they would have received an additional $108 million in aid this year alone, or nearly $2 million per district. That shortfall, as we all know, is instead being borne by the local tax payer.

2006-07 EDUCATION BUDGET
OVERVIEW

By Charles
Winters

Overall, the Legislature’s school aid package shows good positive movement.  The total amount of state aid increase is above inflation, which is good for the poorer districts that depend more heavily on state aid, including most small city school districts.  The distribution of aid also slightly favors high need districts, which is also good for most small city schools. 

As a result, the overall small city school district increases exceeded those of non-city schools, 7.9% to 6.8%.  Excluding expense-driven aids and special aid formulas (BOCES, Transportation, Building, Reorganization Incentive) the increases were much closer (7.2% to 7.1%).

By Need Category
The SED’s Need/Resource Category is a quick way to look at which aids are targeted on districts with high poverty and scarce local resources.  High need districts include all of the big five, 38 small city district and 163 central school districts.  Together these districts enroll 55.3% of the students in the state.  In 2005-06 they received 64.9% of the total school aid.  This run shows that high needs districts increased by 7.8% to 65.1% of the total for 06-07.  That is slow progress, but at least it is progress. 

What per cent of key aids are targeted to high needs districts?

            Flex Aid                       67.8% to high need districts

            Sound Basic Education             85.7%

            Limited English                         92.3%

            Transportation                                      56.4%

            Building                                                55.5%

            Textbook                                             58.4%

            BOCES and Special Services               46.8%

            Public Excess Cost                               65.0%

            Small City Aid                          78.9% - !!!!!

            Tax Limitation Aid                                23.7%

            High Tax Aid                                        18.4%

When it comes to targeting high need districts, small city aid is actually more efficient than Flex Aid, while the so-called tax driven aids work strongly against any kind of equity.

By Region
There was no substantial departure from the historic “shares”, even though this required some truly ugly gerrymandering. 

Long Island share of the whole state

Enrollment                                            16.7%

05-06 Aid                                            12.7%

06-07 Aid                                            12.8%

Flex Aid                                               12.4%

            Sound Basic Education               6.9%  (This includes a regional cost factor)

            Limited English                         12.6%

            Transportation                                      12.2%

            Building                                                11.5%

            Textbook                                             16.0%

            BOCES and Special Services               12.8%

            Public Excess Cost                               13.4%

            Small City Aid                          13.1% (Glen Cove and Long Beach)

            Tax Limitation Aid                                64.6%

            High Tax Aid                                        72.6%

Both Tax Limitation Aid and High Tax Aid work from a spurious combination of residential tax bills (including many who live out of town but own second homes) divided by the reported income (not including those who live out of town).  This ends up driving money to many districts that actually have low tax rates and measurably no need at all.

EXCEL
This is added funding from authority bonds that is supposed to supplement local capital programs.  A specific share is carved out for New York City ($1.8 billion, or about $1,750 per student).  This was responsive to the CFE case and highly sought after by the city.  There is no question that the city needed substantial capital construction immediately (for more charter schools) in order to be able to lower class sizes in the future.  The rest of the state got $778.22 per pupil for high need districts and $320.46 for average and low need districts.   Thus, the distribution was somewhat targeted to general need levels.  Properly used, this can greatly diminish the local share of future construction costs.

Responses to CFE case
While the Legislature did not enact systemic reform of any kind, it clearly recognized some needs on a one-year basis.  By increasing the amount of money allocated to SBE by more than 100%, aid was shifted slightly in a targeted direction that recognized regional costs (GCEI index) and poverty somewhat (.35 weight instead of the old .25).  By exceeding the inflation rate, this allocation moves slightly toward greater adequacy for the neediest districts.  The Legislature still hasn’t figured out how to buy off Long Island legislators without relying on truly bizarre “welfare for the rich” formulas. 

The scorecard on specific CFE issues is as follows:

            Formula simplification               Went backwards

            Regional cost recognition                      Slight progress

            Cost of adequacy                                 Slight progress

            Cost of poverty students                       Slight progress

            Long-term solution                                No progress -- one-year deal

            Capital needs                                        Very Substantial one-time progress

 It will be extremely difficult for high needs districts across the state to address additional educational needs with this funding because there is no way of knowing that it won’t be flat-lined next year.  Also, although this is an on-time state budget for the second year in a row, it is probably too late for many districts to bump up budgets in recognition of the extra SBE funding.  Thus, a substantial amount of money that might have helped students achieve will end up as tax relief or extra fund balance.   

Final Grade =  .35 Cheers / 1-(KUDOS/CWR)

SMALL CITY SCHOOL LITIGATION UPDATE

SCSD Suit
Written Up
in Legislative Gazette

Click here
to read
the article.

The Attorney General’s motion to dismiss the Small City School Districts’ complaint remains pending before the State Supreme Court, Albany County, Judge Thomas J. McNamara. Letter briefs were submitted as supplemental motion papers by both the Association and the AG on March 10^th and 17^th, respectively. The AG’s brief raised no unexpected or unusual points and we expect a decision on the motion to be made in one to two months. 

Late last month, the Appellate Division, 2^nd Department, issued its decision on the appeal of the CFE decision in the enforcement stage of that case. We are reviewing that decision and will report next month on the possible implications for the Small City case. The Legislature has taken the position that the decision confirms their argument that education finance reforms are squarely within the control and jurisdiction of the Legislature and the Governor and that an order dictating a specific amount and formula for distribution of state aid is outside the court’s powers. As of the writing of the newsletter it is not clear whether either side will appeal the decision.

CONFERENCE PLANNING UNDERWAY

 The theme for the conference this year involves a topic of great importance and interest to everyone. Hands on seminars on Interest Based Bargaining will be led by Sally Klingel and Ann Martin, both from Cornell University School of Industrial and Labor Relations. Klingel and Martin have worked with school districts around the state, including the Board of Education of the Binghamton City School District. Also presenting at the Conference will be Dr. Steven Uebbing, Superintendent from Canadaigua CSD and lecturer on IBB at University of Rochester. Lee Adler, Esq. and Dr. Alan Chartock are scheduled to speak to our members at dinner on Sunday. Mr. Adler will tell us about the history of IBB and Dr. Chartock will let us in on the State’s political climate.

This year the conference is scheduled for May 21^st and 22^nd and returns to the Gideon Putnam Hotel in Saratoga Springs.

Registration forms have been sent. Please look for our announcements and feel free to contact our office with any suggestions for the conference (518-475-9500, 518-475-7677 fax, beb@biggerstaff-firm.com). Conference information will also be posted on the Association website (http://scsd.neric.org).

UPCOMING
EVENTS

May 21 – 22, 2006
Annual Conference
Gideon Putnam, Saratoga Springs

May 21, 2006
Board meeting
Gideon Putnam, Saratoga Springs