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Outcome of Prior Budget Negotitations

Fall 1999 (v3#3)
State restores crucial education funding

Once again, the Legislature and Governor were locked in a protracted budget battle that wasn’t resolved until the third of August, months after the April 1 start of the state’s fiscal year. One of the major sticking points, again, was school funding. Luckily for schoolchildren in New York City and across the state, the Governor "blinked" and finally agreed to restoration of critically-needed funds to reduce class sizes in the early grades, expand pre-kindergarten programs, and make minor repairs to long neglected school buildings. Statewide, the increase over last year’s education allotment totaled $913 million, far more than the Governor’s proposed increase of just $269 million, bringing total state school aid to $12.6 billion. Unfortunately, despite this increase, there was no improvement in the equity of distribution of state school aid.

As we reported in the EPP Monitor last spring, Governor Pataki’s Executive Budget threatened elimination of funding earmarked for LADDER programs, including class size reduction, Universal Pre-K, full-day kindergarten, Minor Maintenance, Instructional Computer Technology and other improvements, that had been agreed to in 1997. Instead, the Governor wanted to replaced funding for these and other programs with a block grant of a much reduced amount, so that New York City would only have received $77 million rather than the $216 million originally planned. Governor Pataki’s abandonment of these programs was surprising since they were part of a political deal, a type of promise which is rarely, if ever, broken. During the 1997 budget negotiations the Governor agreed to support the Assembly’s LADDER programs which provide needed education assistance, especially to the Big 5 cities, in return for the Assembly’s support for the Governor’s STAR property tax relief program which primarily benefits wealthy suburban districts. Since this was the time immediately preceding the gubernatorial election, Governor Pataki was extremely anxious to cement voter support with a large tax cut. Not only did the STAR property tax relief program escape unscathed in the Governor’s proposal and in the enacted budget, but he also saw to it that this year’s $1.8 billion budget surplus was set aside in a reserve fund to pay for tax cuts called for under STAR for the next two years.

Of the added $913 million, a 7.8% increase over the 1998-99 school year, the majority comes from previously-planned expansion of LADDER programs, restoration of Teacher Support Aid and regular growth in general school aid formulas, rather than any new initiatives. This year, LADDER programs statewide total nearly $270 million of which $161.36 million, or almost 60%, goes to New York City. Not surprisingly, $47.8 million, approximately 62.5% of the $76.4 million in state class size reduction funding, will flow to New York City which has by far the largest class sizes of any district in the state (see the article on p. 12 for further info). Similarly, the city is slated to receive two-thirds of this year’s Universal Pre-K allocation, $66.8 of the projected $100.1 million, as well as two-thirds ($33.3 out of $50 million) in Minor Maintenance funds to help deal with decades of deferred maintenance on the city’s aging school infrastructure. Thanks to the efforts of Assembly Speaker Sheldon Silver and Assembly Education Committee Chair Steve Sanders, who refused to agree to a budget unless these funds were restored, LADDER programs represent the only real equity for city schools which are traditionally shortchanged by deal-making on state aid formulas.

Besides LADDER, there were restorations of other programs, such as $67.5 million in Teacher Support Aid, essentially a salary supplement for teachers in the Big 5 cities, which the Governor vetoed last year. The Assembly also fought for, and won, $145 million in partial restoration of the RESCUE program for school repair and construction. In 1997, in the wake of the defeat of a $2.5 billion school construction bond act by voters, both houses of the Legislature approved $500 million for RESCUE, to be phased in over 4 years. However, the Governor vetoed RESCUE when it reached his desk. The $145 million just enacted will be funded by state bonds and is thus part of the capital, rather than the operating, budget.

Largest Increase Ever?
Although the Governor’s press release rightly touts this as the largest dollar increase in school aid, it does not represent the largest percentage increase at 7.8%, the same as last year’s raise. In fact, on three occasions during the 1980‚s there were larger percentage increases in school aid: 9.1% in 1980-81; 9.3% in 1987-88; and 10.6% in 1984-85. Perhaps more importantly, the state’s overall contribution towards school spending is down. At one time, the state’s share of total public school spending reached 50%. Now, the state contributes slightly more than 40% of total education funding with an additional 4-5% from federal coffers. Local communities make up the balance of nearly 55%! Since New York State is comprised of communities that differ tremendously in wealth, from poor urban and rural areas to wealthy suburbs in Westchester and Long Island, local ability to pay for education varies widely. The primary function of state school aid formulas is to help bridge the gap in terms of what localities can pay in order to ensure all the state’s students the opportunity for a sound basic education. Unfortunately, wide disparities in school funding persist, leaving some school districts without adequate resources to ensure that their students meet minimum standards.

The largest funding stream, Operating Aid, which covers basic school expenses, increased by $136.5 million overall after transition adjustments, of which New York City received almost $61 million. The city did not fare as well, however, in the area of Building Aid, another large funding stream. Statewide, Building Aid went up by $284.46 million, a 34% increase, whereas city Building Aid went up by just $45.8 million, only 18.8%. Worse, Extraordinary Needs Aid, which provides assistance to districts with high concentrations of poor and at-risk children, increased $12.34 million across the state, but not at all in NYC! (See box this page for other changes).

Budget Increase Fails to Address Inequities
Most disappointing of all, however, is the failure to make any progress at all in terms of funding equity. As State Comptroller Carl McCall put it in the letter accompanying his analysis of the state’s adopted budget:

Even with a record increase in school aid, the budget failed to materially advance either efficiency or equity in the aid distribution. As usual, the formulas were manipulated until the traditional regional shares were produced. Most needy school districts would have done better if the Legislature had simply rejected the Governor’s cuts and allowed the present law formulas to operate along with the planned expansion of the LADDER programs.

Comptroller McCall’s analysis gives a complete breakdown of the "regional shares" which shows: NYC’s "share" of combined state school aid has not changed from the 35.8% received last year; the share of the other Big 4 went from 6.1% in 1998-99 to 6.0% this year; Down state Suburbs remained the same at 15%; Upstate Suburbs increased slightly from 22.9% to 23%; while Small Cities, which are suffering economically, dropped slightly from 10.1% to 9.9%.

This flies in the face of Governor Pataki’s earlier promise to begin to close the funding gaps, particularly between New York City and the rest of the state. The lack of progress towards greater school funding equity in good economic times underscores the need for the courts to intercede to force the issue (see cover article on the CFE lawsuit).

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