April 2007 Vol. XXI, No. 4

STATE BUDGET
PASSED ON TIME

The Legislature passed the State Budget on the morning of Sunday, April 1^st, technically 12 hours late, but passage was close enough to be categorized by State Legislators and the Governor as ‘on time.’ The education budget bills were passed with limited debate and the Governor’s new Foundation Aid proposal was enacted substantially as written. Over 17 aid categories where collapsed into Foundation Aid with more than $1.1 billion or 8.8% in increases approved for this new, highly targeted aid category. Small city districts did well generally, receiving a 10.98% overall increase as opposed to 9.90% for the rest of the State (NYS minus NYC and SCSD). (Despite the good news for most, seven small city districts did not fare as well as expected. The Association is looking into each of these to determine the precise causes.) 

The difference between our districts’ and the rest of the State’s (NYS minus NYC and SCSD) increases in Foundation Aid was even greater at 10.49% vs. 8.21%. The only negative aspect is that the degree of targeting to low wealth/high need districts proposed in the Governor’s Budget was substantially lessened by some 44%. In other words, the State Budget Foundation Aid reduced targeting in the Executive Budget by nearly half. This derogation of targeting (i.e. driving more aid to wealthier districts) was continued outside Foundation Aid by the reinstitution of High Tax Aid which gave $99 million primarily to higher wealth districts on Long Island. High Tax Aid thereby reduced targeting in overall State education aid by another 50% The Senate Majority threatened a hold up of the State Budget to wrest the concession of High Tax Aid and proved once again that it takes three to make a budget, despite a strong and aggressive Executive. 

The education budget bills passed included A.4307C/S.2307C which set forth the statutory language necessary for Foundation Aid, the Contract for Excellence and other changes to the education law.    The following is a summary of key provisions of that bill. Some of the provisions are in need of further interpretation by the State Education Department. We are attempting to obtain such interpretation and will contact the membership later as those provisions are clarified. 

Part A

Bill section 1. Regents to review learning standards. ELA standards review to be completed by 6/30/08. 

                       Regents to establish an enhanced accountability system on an interim basis using the growth model by 7/1/08, including a value added assessment model, and on a permanent basis by 7/1/10. Performance targets to be established by 7/1/08.

                       The SURR list to be expanded by 07-08 to 5% of all schools.  

                       Regents to develop a plan for increased support of and intervention for school improvement on a two step basis using a school quality review team (advisory only) and a joint school intervention team (advisory only) to be established at the expense of the district. 

                       Districts requiring academic progress, etc. must submit a district improvement plan. Public hearing required. 

                       Commissioner to establish a plan for intervention for districts failing to make adequate progress. 

                       Superintendent contracts must require cooperation with teams.

                       Regents to establish distinguished educators (DEs) program who may be appointed where school/district fails to make AYP for four or more years or as part of joint intervention team. DEs are ex officio BOE members. District pays DE’s reasonable and necessary expenses. Not clear who pays salary, if any. 

Bill section 2. Student progress report required by 7/1/08. 

                       Com’r to establish methods to support use by educators of student performance data. 

                       Com’r to establish a school leadership report. 

Bill section 4. Com’r to evaluate teacher preparation programs. 

                       Regents to explore P-16 student tracking system. 

Bill section 9. Regents to establish rules for minimum standards and procedures for tenure for teaching staff effective 7/1/08, standards to include three year probationary period, use of student performance data, peer review and building principal review. 

Bill section 12. Districts with at least one school requiring academic progress, etc. and receiving lesser of $15 million or 10% increase in Foundation Aid or receiving a supplemental educational improvement plan grant must have a contract for excellence.           

                       Foundation aid minus 103% of FA base minus Charter School tuition increase must be used for new programs/activities or expansion of programs to improve student performance, except that 15% of additional FA may be used for experimental programs and 25% for maintenance of existing programs. It is not clear if the 25% is to be multiplied by FA- 103% of FA base or by FA-FA base.  

                       Districts may establish incentives for highly qualified teachers to work in low performing schools. Public hearing required for establishment of contract ion 2008 but only need solicit public comment in 2007. 

                       School audit must certify proper use of contract dollars and expenditure of contract money must be subject to public report.

PART B

Bill section 7-a. Instructional computer hardware and technology equipment apportionment is available for purchase or lease and for repair, training and staff development. 

Bill section 7-b. Loan of instructional  computer hardware to non-public school students is authorized. 

Bill section 11. Some definitions in education law section 3602 are amended:

                       Selected actual valuation  is lesser of current year or two year average.

                       Weighted foundation pupils with disabilities shall be 1.41. Also says to be set by analysis of successful schools’ costs. If so, why set at 1.41?

                       Average daily membership equals possible aggregate attendance. What is ‘possible’ mean?

                       Poverty count is .65 times census plus .65 times lunch count.

                       Extraordinary needs count equals the LEP count times 50% plus the poverty count plus the sparsity count.

                       Additional aidable pupil units are the sum of summer pupils times 12% plus weighted pupils with special educational needs.

                       Total aidable foundation pupil units may be units in the current year or a two year average.

                       Additional building aid ratio for low income wealth districts is available at the state sharing ratio times 1.263. 

                       State sharing ratio has four tiers and one proviso, the last geared to driving money to wealthy districts, and overall shall be not less than 0% or more than 90%. 

                       Foundation Aid is a minimum of $500 times pupil units or the formula amount, not less that 103% of 2006-07 Foundation Aid Base nor more than 125%. 

                        Foundation Formula Aid is the Foundation Amount less the local contribution times the regional factor times the pupil needs index. 

                       Foundation Amount is $5,258 in 2007-08 and adjusted annually by the CPI. 

                       Regional cost index is set between 1 and 1.425 in 2007-08 and thereafter and by labor market analysis (inconsistent language). 

                       Pupil need index is between 1 and 2 and equals 1 plus the extraordinary needs index. 

                       Minimum local contribution equals the selected actual valuation divided by the TWF pupil units times the lesser of the local tax factor times the income wealth index or 1 minus state sharing ratio. 

                       Phase-in foundation aid increase is set at 20% of the formula amount for first of four years or 103% of the base. 

                       Foundation aid increase is to be deemed a grant in aid for purposes of education law section 2023 and section 1718. This means that under a contingency budget, Foundation Aid increases may be appropriated outside the contingency cap. We will get SED confirmation of this. 

Bill section 16. Full day kindergarten conversion aid for districts choosing such programs (optional, not mandated as under Governor’s Budget) is available. 

Bill section 16-a. High tax aid is available for certain districts in counties with high taxes, i.e. county  levy divided by adjusted income is greater than 4.2% (tier I) or county regional cost is greater than 1.3 and district levy ratio higher than 4.2% (tier II). This is the Senate’s method of driving aid to wealthy districts on Long Island. 

Bill section 17-a. Incentive operating aid for reorganized districts is available. 

Bill section 18. Transitional aid for charter school payments in three year phase-out amounts is available to districts with more than 2% of students in Charter Schools in amounts similar to Governor’s Budget. 

Bill section 19. Universal pre-k aid remains available on an optional basis and equals .5 times the selected foundation aid or the 2006-07 per student aid figure. Additional pre-k aid is available for unserved pupils. Regents and com’r to prescribe standards for program quality, instructional staff, curriculum and student performance. 

Bill section 22. State grants in aid included in foundation aid may be included in contingency budget under education law section 2023 (4). Presumably this includes magnet school aid and class size reduction aid which will not be subject to the budget cap under a defeated budget. We will get confirmation of this from SED. 

Bill section 38. Full day kindergarten planning grants are available 

Bill section 39. Excelsior scholars program for seventh grade math and science and for summer institutes under education law section 3641-a and 3641-b. 

Bill section 59.Creates a temporary task force on pre-school special education to report by 11/15/07. 

PART D-2

Bill section 1. Excludes from contingency budget computation under education law section 2023 expenditures for charter schools.  

Bill section 2. For districts where charter school enrollment exceeds 5%, approving body must find that the charter school would have a significant educational benefit to the students attending or that the school district consents to the application.

CHARLES WINTERS GIVES A ‘HEADS UP’ TO SMALL CITY DISTRICTS ON THE STATE BUDGET

To:       Mr. Robert E. Biggerstaff
From:  Charles A. Winters
Re:      Foundation Aid Increase and 07-08 Budget HEADS UP
Date:   April 4, 2007

In reading the budget bill language and asking around, I realized that there are some important issues schools should be aware of in preparing their 06-07 and 07-08 school budget data for voting.

1. Districts with Magnet Grants and Class Size Reduction Aid FORMERLY carried in the Special Aid Fund (F) but now folded into Foundation Aid need to include these costs in their upcoming 2007-08 General Fund Budgets.  The amount of the current budgets should also be added to the 2006-2007 base budget for capping. 
2. Districts that received a foundation aid increase greater than 10% and appear on a school accountability list (including 18 small cities, all of the big five and some 31-odd others) must stop and think before using this added general revenue to offset existing costs—you will be required to use a major portion of the new money for NEW programs (see example). 
3. For calculating the contingency budget, the law text says: “for the 2007-08 through the 2010-2011 school years, the additional amount payable to each school district pursuant to this subdivision in the current year as total foundation aid, after deducting the total foundation aid base, shall be deemed a state grant in aid identified by the commissioner for general use for purposes of sections seventeen hundred eighteen and two thousand twenty-three of this chapter.”  I take this to mean that this increase can be appropriated by the board of education as added funding over and above the contingent budget cap. 

EXAMPLE

Assume a district appears on an accountability list.  It has a foundation base of $20,000,000, including a 2006-2007 Magnet Grant of $500,000.  For 2007-2008 it expects $24,000,000 in foundation aid, for a 20% increase of $4,000,000.  It had a total 2006-07 approved general fund budget of $40,000,000, net of exclusions.

First, the base for capping for 2006-07 is increased by $500,000, and all desired magnet school activities are included in the 2007-2008 general fund budget.  Thus the 2007-08 contingency budget level rises to 1.0384 times $40,500,000, or $42,055,200. 

Next, the Foundation Aid increase of $4,000,000 must be looked at as four potential pieces, as follows:

A.      Up to three percent of the 2006-07 Foundation Aid Base (.03 * 20,000,000 = $600,000) is allowed for general inflation on costs and therefore may be budgeted as general aid. 

B.     For 2007-08 up to 25% of the increase (.25 * 4,000,000 = $1,000,000) may be used to maintain investments in the five priority categories.  Assuming the budget contains at least this amount in existing programs for 1, class size reduction; 2, improving teacher and principal quality; 3, increasing student time on task; 4, middle school and high school restructuring; and 5, full-day kindergarten and pre-kindergarten.   I think it might be wise to identify where these costs exist, including benefits, down to the school building level in the 2007-08 general fund budget.  This amount of foundation aid also can be budgeted as a general aid.

C.     The balance of the increase ($4,000,000 minus $600,000 for general inflation and minus $1,000,000 for existing programs = $2,400,000) must be budgeted for NEW costs.  Up to 15% of the increase (.15 * 4,000,000 = $600,000) may be used for innovative programs beyond those mentioned on the list.

D.     At least the balance (2,400,000 – 600,000 - $1,800,000) must be used on NEW costs within the five priority categories.  If the new, supplemental costs are already included as part of the increase in the proposed general fund budget, then the added Foundation Aid can fund these costs.  It could be a big mistake, however, for a district on an accountability list to budget all of this new aid as revenue, but be unable to identify approvable supplemental costs that are being funded from the increase.  

Districts that are not on any accountability list and districts with less than a 10% increase in foundation aid may budget the whole as general aid.  They have no Contract for Excellence obligations. 

Districts on an accountability list should assume they will need to write a clear plan for the use of this money and get it approved, and document, including audit, that they conform to the new laws or risk losing some of the money.   Districts that haven’t even begun this planning, and thus can’t include the costs in their proposed 2007-08 budgets for voting, should not include that portion of the new revenue in their General Fund budgets at this time.  They can appropriate this additional funding when if their plans are set and approved, even if they are on a contingency budget. 

Most of this is simply my interpretation of the text of the law, always subject to being corrected by higher powers.  I do expect that the SED will clarify these issues as they come up, but districts with accountability issues need to be thinking of how they will address them. 
 

Small City Districts with accountability issues & 10% increases: 

STATE AID ANALYSIS
2007-08

The Association has completed an analysis of State Aid to Education for 2007-08. Below are the total aid and foundation aid analyses. A full report is posted on the Association website, http://scsd.neric.org. Please feel free to contact the office with any questions.