STATE BUDGET INFO

EPP Summary and Comments on Governor
Spitzer's Executive Budget Recommendations

       After twelve years of reviewing Governor Pataki’s Executive Budgets, filled with provocative and ideological gamesmanship when it came to education funding, it is a relief to have a Governor make an attempt at crafting a fairer system for funding school districts. Nevertheless, the new Governor’s budget proposals are a “mixed bag.” Here are the highlights:
  
ACROSS-THE-BOARD INCREASES IN SCHOOL AID FOR THE NEXT FOUR YEARS  FOR ALL SCHOOL DISTRICTS
 
* In the next fiscal year, Governor Spitzer proposes to increase funding for all school districts by at least 3 percent. Over four years, these increases will grow to at least a 12.5  percent increase over 2006-07 levels.
 
* The state’s cost for these increases in the 2007-8 year will total $1.4 billion and over four years will total $7 billion. In this first year, no district may receive more than a 25 % increase over 2006-07 operating aid levels.
 
TARGETED CFE-RELATED INCREASE FOR NEW YORK CITY
 
* As part of the $1.4 billion in across-the-board increases recommended by Governor Spitzer, $637 million are targeted to the New York City school district. Over four years, the increase will total $3.2 billion.

 * Combined with New York City’s expected  one-year increase of $532 million, education spending will increase by $1.17 billion in the 2007-08 school year. Over a four-year period, combined with the city’s four-year projections for spending of $2.2 billion, increased spending will total $5.4 billion.

* This four-year total appears to exceed the Court of Appeals “floor” for a $1.9 billion increase, which always assumed a city contribution. This four-year $5.4 billion increase, however, is not on top of the usual yearly rate of funding increases for the NYC school district. From the 2003-04 school year to the 2006-07 school year, spending for New York City schools increased by $3 billion. So at this rate of increase in spending, unadjusted for inflation, Governor Spitzer is recommending a $2.5 billion increase for New York City above its most recent growth rate.

* The 2006 EXCEL facilities funding agreement was structured to exclude debt payments from the formula aids, as EPP understood the agreement at the time. Yet EXCEL debt payment of $94 million for facilities grants for New York City is included by the Governor as part of the $637 million proposed increase in formula aids to New York City. This EXCEL debt is not operating aid and should be excluded from formula aids. Without EXCEL debt, New York City’s share of total state-wide increases in school aid is 39 percent, almost the same as its traditional “share” limit, which has perpetuated inequitable funding for the city over the last two decades. Since EXCEL funding will grow much larger over the next few years, these increases could consitute the lion's share of increases to the New York City school district, thereby preventing any investments in instructional improvements.


NEW YORK STATE’S EQUALIZING SYSTEM FOR SCHOOL DISTRICT FUNDING HAS BEEN RESTRUCTURED INTO FOUNDATION LEVEL FUNDING SYSTEM
 
* Flex Aid and 29 other formulas are now folded into a Foundation Level which would provide a minimum of $5,662 per pupil with an expected minimum local contribution per pupil based on a statewide average tax rate and wealth (income and property).
 
* This Foundation Level is adjusted for regional costs and for students needs: poverty, which can range from .65 to 1.30; English Language Learner 0.5, and disability 1.41.

* Early Grade Class Size Reduction is eliminated and folded into the Foundation Level formula.

* Services for students with more severe disabilities are not folded into the Foundation Level formula but will continue to be funded by Public Excess High Cost and Private Excess High Cost formulas that will receive modest increases.

TAX RELIEF
 
* The largest one-year proposed increase is not for a CFE remedy, but for the STAR property tax relief program, $1.5 billion, which will grow to a total of $6 billion in additional state funding within three years. Most of these increases are linked to the income of the homeowner, so the initiative is called “Middle Class STAR.”

* New York City individual taxpayers will see their STAR tax credit on their income taxes raised from $115 to $150. City homeowners will also benefit from an adjustment that takes into account the higher average home values in the downstate area.

* These changes will not significantly address the fact that New York City receives a disproportionately small share of STAR benefits. Many New York City residents are renters who will continue to pay their landlord’s property taxes through their monthly rents with no possibility of tax relief from STAR.

TUITION TAX DEDUCTION

* Governor Spitzer is proposing $25 million to provide tax deductions to parents who pay tuition to private schools or public schools. This type of tax deduction benefits better-off families. A primary function of state government is to provide a sound, basic public education that is free for all children. This initiative invites the assumption that a state subsidy is being provided because of inadequate public education in some parts of the state, primarily urban areas. This problem should be addressed.

ACCOUNTABILITY
 
* School districts receiving increases in excess of $15 million will enter into a “Contract for Excellence,” requiring them to specify how they will spend new state funding “on measures that have been demonstrated to improve student performance.” The Executive Budget lists these measures as having “demonstrated” effectiveness: class size reduction; increased time-on-task; teacher quality; middle school and high school restructuring; and full-day pre-K.

* The Regents are required to establish minimum standards for teacher tenure determinations.

 * The NYS Education Department will establish improvement targets for individual schools and school districts by July 2008 based on state tests and high school graduation rates. By 2010 “value-added” assessments will become available.

* By July 2007, the SUR list will be expanded and more schools will be required to restructure or reorganize

 
CHARTER SCHOOLS
 
* The Governor proposes to increase the current cap of 100 charter schools by 150 charter schools, with each of the three chartering agencies (SUNY, Regents, and NYC Chancellor) allowed to charter an additional 50 schools.

* Charter School Transition Aid is proposed, totaling $15.24 million, for five qualifying school districts impacted by a concentration of charter schools. New York City will not be a beneficiary of this aid, though it has the most charter schools in the state.

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