STATE BUDGET INFO

EPP Summary and Comments on
State School Aid for SY 2007-08

Dr. Joan Scheuer
April 19, 2007                                      

Having passed through a rigorous political wringer, legislation creating a new state aid plan has emerged in the form of the state’s budget for the next fiscal year. Only gradually, as the mangled fabric of the plan shakes out, have critics ventured to assess it.

SUMMARY

The 2007-8 state budget includes these basic changes:

1. Foundation Aid Formula  The new budget creates a new foundation aid formula, based on the sum of $5,258 per pupil adjusted by a regional cost factor and an index designed to reflect the needs of the pupils within each district. Aid is apportioned to the district according to its weighted pupil count and its access to local taxes. An expected local contribution is computed for each district based on its local property values and the income wealth of its taxpayers; the lower the expected contribution, the greater the available state aid.

2. A Multi-Year Plan  The plan is a multi-year plan to be phased in gradually, so the foundation level of $5,258 per pupil will not be reached until 2010. This year’s budget provides $1.59 billion in new aid statewide, with the addition of $1.9 billion in non-formula aids for Building aids, debt service (EXCEL) and a new aid for pupils with disabilities, the total statewide educational spending for the year is $19.3 billion. For New York City, formula aids total $6.8 billion, but with the addition of Building Aid and Excel funds, the City will receive a total of $7.5 billion in aid. (State of New York Education Department, 2007-08 State Aid Projections, Run No. SA070-8, 03/31/07)

3. Pupils Counted on the Basis of ADM – close to a count of enrollment Pupils are counted on the basis of Average Daily Membership, which is close to a count of pupils actually enrolled, rather than the former method of counting pupils, which was based on average daily attendance.

4. More Aid for High Need Districts  The plan claims to have achieved a major goal of the Campaign For Fiscal Equity (CFE), the court case in which the New York Court of Appeals ruled that every child was entitled under the state constitution to a sound basic education. The plan was designed to redirect state aid towards those districts with the greatest need and reduce support for districts with greater ability to support their own programs. For the current year this goal has been overshadowed by political compromise and measures to phase in the changes gradually.

5. At Least a 3 Percent Increase for All, But Some Back-Tracking on “Shares”  Although the new budget offers no save-harmless guarantees, it assures every district, even those in affluent areas at least an increase of 3 percent over aid received last year. A political storm was raised when preliminary projections showed that, under the new law, Long Island school districts would receive 8 percent of the total aid increase, rather than the 11 percent share of the increase they felt entitled to, based on previous political agreements. The Governor was forced to add $400 million in aid for Long Island districts to restore their presumed “share.” The extra $400 for Long Island was added to the budget in the form of High Tax Aid – an aid that was essentially eliminated in the Governor’s Executive Budget proposal. This “compromise” was an unwelcome indication that the “shares system” continues to haunt budget determinations in the state of New York. In this "shares" system, New York City received 39% of all new education funds, Long Island received 11%, and the rest of the state 50%.

6. New Definitions of Pupils: New Weights  The new plan includes changes in the way that pupil needs are weighted and counted. A district’s total of pupils, called “TAPU” (Total Aidable Pupil Units) has become “TAFPU” (Total Aidable Foundation Pupil Units). It includes weightings for “pupils with disabilities” at 1.41; for summer school students, at .12 and for Declassification pupils at .50. In addition, the formula adjusts aid by a Pupil Needs Index which takes into account pupils in poverty, those with Limited English Proficiency and Sparsity (for “Sparsity,” read pupils in rural areas).

7. Aid for Pupils with Disabilities  Treatment of aid for pupils with disabilities appears to have been another contentious issue. Although extra weighting of 1.41 for these pupils is included in the foundation formula pupil count, TAFPU, a Supplemental Public Excess Cost paragraph was added outside of the foundation aid totals for some districts in the last paragraph of the law. It adds additional aid for pupils with disabilities based on the district’s 2006-07 funding, with provisions for pupils receiving services for 60 percent or more of the day, for declassified students and those served in integrated settings. The total amount for the state for Supplemental Public Excess Cost is $20.8 million. New York City receives none of these additional special education funds.

8. Subtotals: What Aids Belong in the Total?  In recent years the budget has grouped aids as “computerized aids” programs that were funded by annual budgeted allocations. In most years there were two totals for computing the dollar and percentage funding increase that each school district was to receive in the next school year. One total was an addition of all aids listed in the computer run, while the other total eliminated spend-to-get programs, such as Transportation or Building aids. When the “shares” practice prevailed, shares of the aid increase going to each region referred to the total of all computerized aids. For the 2007-8 budget, there are two totals, as usual, but with a big difference. Both the total of all formula aids and the total of formula aids without spend-to-get aids do not contain Building Aid. In New York City’s case, $615.7 million in Building Aid and $94 million in Excel Aid was added below the line for Total Aid. (See comments below.)

9. Accountability – New Contracts for Excellence and Class Size  The new budget requires all districts receiving increases of 10 percent or $15 million in state aid to sign a “Contract for Excellence” and develop a comprehensive plan to use the funds effectively. It turns out that close to half of all the school districts in the state will receive aid increases that meet at least one of these criteria. For school districts in the rest of the state, they have an option to select reduced class size as a strategy for improved learning, but for the New York City school district it is a required part of the Contract for Excellence plan. According to The New York Times (page B4, April 2, 2007) there was a standoff on the budget agreement over this issue because of rigorous objections on the part of New York City officials and the Chancellor to the Assembly Education Committee Chair's proposal that a quarter of CFE funds be dedicated to class size reduction. A settlement was only reached after it was agreed that the city “develop a plan for reducing class sizes over five years” with few specifics. The Regents are to adopt more specific guidelines and objectives.

10. Charter Schools and Universal Pre-Kindergarten   The budget agreement lifts the restriction on charter schools permitting an increase to 200 statewide. Fifty of these are planned for New York City. Universal Kindergarten is continued, increased from $188.7 million to $249.1 million. The increased funds cannot be used for full-day pre-kindergarten programs, but the city can use Contract for Excellence funding for this purpose.

COMMENTS

Did the enacted education budget fulfill the CFE objectives? Does it implement the comprehensive reform envisioned by Governor Spitzer?

The new budget has been warmly received by the current Director of the Campaign for Fiscal Equity, Geri Palast, by its former director, Michael Rebell, by Molly A. Hunter of Access and representatives of the Alliance for Quality Education.  They have hailed its new funding formula as a major reform that was prompted by and indeed is based on CFE proposals. They see the new “Contracts for Excellence” as providing new accountability standards and commend the fact that so large a portion of the new increase is to go to New York City. According to Molly Hunter’s April 14, 2007 report for Access this figure will rise to $3.3 billion over the next four years and, with city funds added, “will far exceed the $2 billion constitutional ‘floor’ ordered by the New York Court of Appeals . . . and will be very close to the $5.6 billion increase that the CFE trial court ordered based on extensive costing-out analysis.”

            Mission Accomplished statements like these tend to put a sense of closure on the drive to rationalize and de-politicize New York State school funding. The budget did indeed achieve significant gains but more needs to be done:

• The new foundation formula raises the level of funding guaranteed for each child. It sweeps away previous save-harmless provisions; it is based on an enrollment, rather than an attendance, measure of pupils; it includes a regional cost factor, and a measure of pupil need. But it is not simple. The new pupil count (TAFP or Total Aidable Foundation Pupils) is defined and it includes new weightings. It is used in addition to the old (TAPU, or Total Aidable Pupil Units). There are still options to average last year’s and this year’s  pupil counts, and additional phase-in measures must be applied along with the Regional Cost Index and an index of pupil need (PNI). The computations for the formula are still arcane. In addition there are various “Tiers,” or levels of aid that are not shown on the computerized runs of state school aids. In effect, the system has not been simplified.

• The formula measures district ability to pay using the same Combined Wealth Ratios methodology that was used in the previous formula. It retains the complex tiers and options that formerly helped identify districts with the highest and lowest needs for state aid. The Tiers are designed to increase the equity of the formula by more precisely identifying ability to pay and tax effort. They determine the eligibility of school districts for specific aids. While improving the equity of the formula, the tiers sharply reduce the transparency of the formula.                                                     

• The new formula effectively adds money to districts with the highest need and lowest wealth. But, by applying objective criteria and reducing the effect of save-harmless provisions, the early projections of aid for school districts produced an immediate political reaction. As a result, the negotiated budget provides additional funding in the form of a revised High Tax Aid program to supplement the total aid available, chiefly benefitting Long Island districts. The protected share of the total state aid increase that is targeted for Long Island is continued. Subsequent negotiations evidently restrained aid for New York City to a ten percent increase over last year's total aid funding level for the city. In contrast, almost half of the school districts in the rest the state aid have school aid increases that exceed 10 percent. For reasons that EPP does not yet understand, many rural school districts received school aid increases of between 15% and 25%. About 40 percent of this year’s statewide increase in aid was directed to New York City, just a slightly bigger "share of the pie" than New York's traditional 38.7 percent.

• The extended four year budget process is a significant gain. Now written into law, it allows districts to plan ahead and sets clear budget targets for government and legislators. The arrangement should help officials phase out save-harmless measures and limit promises of increases for everyone. If politics-as-usual can be tamed, with each year there should be progress toward a formula that is based on objective criteria and that is less and less obstructed by adjustments designed to meet political demands.

There remain important reservations and questions:

• The agreement on class size does not go far enough. According to the NY Times, it “does not set specific targets, either in terms of the number of children in each class or the amount of money the city will have to spend.”(page.B4, April2, 2007.)  Randi Weingarten, the President of the UFT  (NYC Teachers’ Union) is quoted as saying “The language is clear, it’s not ambiguous, class size has to be part of the foundational plan for reform.”  However, the result seems to make it even easier for the administration to evade a serious commitment to class size reduction.                                                   

• How special education pupils are accounted for is still open to question. It remains to be seen if the weights added in pupil counts and in the Supplementary Public Excess Cost provision will assure adequate services for these pupils. The debate seems to continue as to whether specific program funds for pupils with various levels of disability create an incentive that encourages districts to assign too many pupils to special education, or whether adding support for special education in the form of added weights might provide a disincentive for districts to provide needed services.  Supplementary Public Excess Cost Aid looks like a negotiated add-on. It is unclear to EPP why New York City was not eligible for these Supplementary funds.  

• Why is building aid ($617.7 million in 2007-08) and EXCEL aid, ($94 million) not included in the formula total for New York City?  When the Governor’s budget proposal was presented in January, the Mayor’s representatives and EPP strongly objected to listing as part of computerized aids the Excel grant, which is basically providing debt service for an Excel grant made to New York City during the 2006-7 school year. The compromise appears to have been the placing Building Aid and Excel Aid outside both totals and thus “below the line.” To replace funding taken out when EXCEL Aid was moved, a new $88 million Education Grant was created for New York City.   This could be good news, in that Building Aid will no longer appear on the computerized aid, or it could be just a holding pattern for this year. (See note below.)                                                          

• The question of whether the new four-year spending plan fully satisfies the Court’s ruling in the CFE case, requiring at least $1.9 billion of total funding for New York City depends on how the ruling is interpreted. Does the prescribed increase in aid mean increase over and above the usual annual increase in aid, typically driven by rising costs, new aid programs and enrollment growth, or should those elements be counted in the increase?  What should the City’s contribution be? What, then, is the appropriate base to use when applying the court’s final ruling that the state should increase New York City aid by $1.9 billion?    

• The New York Times quotes the Governor’s staff as saying that New York City will receive 41 percent of the total increase in the current year. Our computation puts the share at 39.99 or 40 percent, a sum that strongly suggests that the shares system continues to lurk within the New York State budget process.

NOTE: EPP saw this "below the line" holding pattern once before. A year after LADDER was enacted, funding for Pre-K and Class Size Reduction appeared on the state’s print-outs of Computerized Aids, but was not included in the total for the state or for New York City’s aid that year. The next year, these aids became part of the total used to compute New York City’s “share” of the total new state aid. Vigilance will be needed to ensure that next year, New York City’s increasing reimbursement for capital projects is not included in aid increases to the City. If Building Aid is included, most new funding intended to meet CFE goals will be dedicated to facilities, rather than instruction.

[ Budget Info | FAQ NYC Students/Schools | State Funding Equity | Smaller Class Sizes | Facilities | Standards | Emergency Campaign Against Vouchers | Historical Facts | Lingo Translations | Best Schools/School Performance ]