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May 2002

Initial Information from EPP on the State Education Budget

The budget agreement on state School Aid that was passed on Thursday May 16, by the NYS Assembly and Senate is more complex than usual and is still incomplete. Each major New York City newspaper reported different figures as to how much money will be coming to the New York City school district. It takes EPP two to three weeks to fully understand the adopted budget. At this point, we are getting two completely different versions of the budget agreement, one of which is very complex. Here is the summary of the less complex version:

$163 million formula aids
$435 million authority to borrow against payments of prior-year claims
$50 million advance by the state for future Title I payments
Still to be finalized, $30 to $35 million authority to borrow from the NYS Dormitory Authority for small capital projects

The projected increase in state funding for all school districts is $440 million, which includes grants and formula aids. The increase in formula aids is $420 million, 3.09 % higher than last school year. Of this amount, New York City will be getting its usual 38.86% share, $163.2 million. See below for a breakdown of these figures. Class size reduction is frozen at last year's amount, $88.8 million for New York City.

New York City and the other large city school districts (Yonkers, Syracuse, Buffalo, and Rochester) are owed for claims that they submitted to the New York State Education Department as far back as ten years ago. The state has come up with a complicated scheme to repay these claims. New York City has been given the authority to borrow up to $435 million. The city will borrow this money from a Municipal Bond Bank and pay the principal and interest on these bonds over a ten-year period, and the state will reimburse the city for these expenses. We suppose that this is a way of getting around the fact that the NYC Comptroller has accounted for these prior-year claims. It also allows the state to stretch out its expenditures for prior-year claims in a way that, technically, does not count against the state's outstanding debt.

An additional $50 million coming to the New York City school district will be an advance payment from the state for expected Title I federal funding .

One way of looking at the increase of funds to the NYC Board of Education is that roughly $163 million will be coming from reoccurring state school aid and $485 million will be borrowed, but available immediately. It is assumed that a portion of the borrowed money will go to fund the contract with the UFT.

Not all of this money will be available to the NYC Board of Education for K to 12 education. Out of the increases in formula aids, $10 million has been set aside for adult education programs. The proposed city budget for the 2002-03 school year has factored in $30 million for the pre-payment of Title I, so the "increase" for the Board of Education is $20 million. Similarly, $235 million of the payment for prior-year claims has already factored into the city budget, so only the remaining $200 million from these borrowed funds will be available to the school district. The unknown factor is how the NYC Comptroller will treat this borrowing from the Municipal Bond Bank, since, technically, these prior-year claims have been categorized as expected revenues for the purposes of balancing the city's budget.

Increases in state funding for schools can be reported on a fiscal-year basis (April 1 to March 31) or on a school-year basis (September to August). School-year increases are larger than fiscal-year increases. The figures above are for the school-year.

BREAKDOWN OF SCHOOL FUNDING FORMULAS

There are different large categories of state funding for schools, the most important one being formula aids. These is often called the "computer runs," and are broken down into (1) payments made to school districts largely based on student enrollment and the wealth of the district (with some amounts for student need) and (2) reimbursements for school bus transportation and building construction and repairs, also adjusted for wealth, which are called "expense-based aids" or "reimbursables."

The increase in formula aids to New York City comes to $163.2 million. The breakdown in estimated appropriations for the 2002-03 school year (in millions) are: Operating Aid $2,458.7; Gifted & Talented $5.4; ERSSA* (sp. ed. money that can be used for gen. ed. to prevent referrals) $36.1; Extraordinary Needs Aid* (student poverty) $435.7; Operating Standards Aid* (student poverty) $83.0; Limited English Proficiency* $47.6; Summer School* $34.9; Special Services* (sp. ed.) $95.8; Excess Cost* (sp. ed.) $850.9; Building Aid $412.3; Transportation $285.8; Hardware & Technology $11.3; Software, Library, Textbook $104.3; Academic Services* (poverty) $12.8; Universal Pre-K $146.5; Early Grade Class Size Reduction $88.8; Minor Maintenance & Repair $33.3; Teacher Support Aid (teacher salary supplement) $62.7.

(*Some or all of these state funds are folded into the Board of Education's "Special Needs/Academic Intervention Services" formula for schools and districts.)

The more complex version of the May 16 agreement includes additional funding from legislators (called Member Items), a yet-to-be-drafted agreement for $20 million in additional funding for Minor Maintenance, and a division of the funds coming from the Municipal Bond Bank, some of which support Teacher Support Aid (in formula aids) and Teacher Centers (a grant).

Note. The Senate's version of the budget agreement is slightly different.

Educational Priorities Panel 5/23/02

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