STATE BUDGET INFO

EPP Comments on November 2006 Court of Appeals CFE Decision

After fourteen years of waiting for a Campaign for Fiscal Equity decision, the four-to-two majority opinion is profoundly disappointing. EPP can add little to Chief Justice Judith Kaye's well-reasoned minority opinion. (Click here for a pdf version of both opinions.) Below is more background information on Chief Justice Judith Kaye’s criticism of the "cost filter" used by the Governor's Zarb Commission study to arrive at the lowest possible estimate for achieving adequate funding for New York City public schools, $1.9 billion. While, indeed, this dollar number is just a "floor" or "starting point" for negotiations between the Governor and the two houses of the legislature, there is a deep irony in the majority's adoption of this costing-out estimate. This low budget number can only be fashioned if New York City's student needs and higher downstate costs are ignored, which are the key flaws of the current state school aid formulas. While the legal theory of "adequacy" has survived, the majority opinion has turned "remedy" into a hollow promise. Even if $1.9 billion is adjusted upwards for inflation, a four-to-five-year phase-in period would represent little more than the current growth in state school aid for New York City. This $1.9 billion cost estimate represents only the Governor's lowest possible budget number, one he abandoned within a year, not the cost estimates of other representatives of the state, such as the NYS Assembly.
 
EPP is also profoundly disappointed that the Court of Appeals vacated the lower court’s order for more state facilities funding. The city's current capital plan does not reduce class sizes above third grade and does not restore any libraries. Fifty percent state funding for the city's current capital plan, achieved this spring by Mayor Bloomberg, was a step forward, but by no means does this state budget agreement represent a sufficient investment in school facilities to eliminate most barriers to adequate education in New York City.

This last-minute shift in the Court of Appeals CFE ruling in 2006 is reminiscent of the surprising last-minute shift in the Court of Appeals Levittown ruling in 1982 (a previous state school funding lawsuit). Both represent last-minute changes in the composition of the court through new appointments by governors. Twenty-four years ago, when the court found that the state constitution did not require a fair school funding system, resource disparities grew worse. Within six years, the New York City school system, which had always spent more per-pupil than the state average, fell into the bottom third of lowest-spending school districts, all of them districts in rural areas of the state. Justice delayed is justice denied. Governor Pataki's efforts to block reforms in school funding to adjust for student needs and regional cost differences have not only hurt urban students, but suburban property taxpayers. Governor Pataki's state tax reductions and tax relief initiatives, such as STAR, came with a hidden price tag. Essentially, they were funded by shifting more of the costs of education to local school districts and local taxpayers.

It is now up to incoming Governor Spitzer to live up to his campaign promises to create a better and fairer public education system.
 
More Information on Cost Filter  
Standard & Poor's study for the Governor’s Zarb Commission was essentially a financial analysis of four different student achievement scenarios using a “successful schools” method of selecting samples of school districts whose students perform well on standardized tests. The authors of the study stated that they made adjustments for 1) geographic cost differences; 2) additional spending for students with special needs; and 3) cost effectiveness.  The “cost effectiveness” adjustment merits closer examination because it effectively eliminated from a sample of high-achieving districts those that were more similar to the New York City school district in that they have these characteristics: 1) located in the southern, high-cost part of the state; 2) are of average local wealth; 3) have more students who are not English proficient or who are from low-income families.
 
Depending on the achievement target and the regional cost index that was employed, Standard & Poor's estimated that the gap between New York City's education spending and those of successful school districts ranged from a low of $1.93 billion to $4.69 billion. When school districts that had a few of the characteristics similar to New York City were included in the samples, however, the spending gap increased and ranged from $3.99 billion to $7.28 billion.
 
Without the “cost effectiveness” adjustment and when the New York Regional Cost Index was used to adjust for differences in geographic labor markets, all of the Standard & Poor's estimates of the required increase in funding for New York City were higher than the Plaintiffs. When an index was used that adjusted for teacher labor markets (the same geographic adjustment used by the Plaintiffs), only one estimate falls below the NYS Regents' estimate of the costs of providing a sound, basic education to New York City students.
 
 
There are two key issues in arriving at an estimate for costing out the level of educational resources for city school children: measuring student needs and measuring geographic differences in costs.
 
Student Needs  The NYS Regents also used a sampling of “successful schools” with a “cost effectiveness adjustment” that largely excluded Downstate school districts with more of New York City's student characteristics. Even when the “successful schools” samples do not exclude Downstate, average-wealth, and more ethnically-diverse districts, this methodology fails to capture the true costs of a large, urban school district with five times the student-poverty rate of any district included in any and all samples of school districts. William Duncombe and John Yinger of the Maxwell School, Syracuse University have developed a successful schools model that does control for “efficiency,” that is, excludes school districts that spend more, but they also account for the extra effort that is required to educate students where there are high concentrations of poverty. Using a “full cost index,” they estimate that City spending for education would have to double.
 
Geographic Differences in Costs  The Educational Priorities Panel issued a report in 2001, Getting It Right: An Assessment of Several Methods for Calculating Regional School Costs across New York State.  We concluded that there were several strong arguments that favored the NYS Regents measurement of labor market costs that excluded teachers. A widely held explanation for the high turnover rate of teachers in the New York City school system is that they transfer to high-paying suburban school districts. But a 2000 study by Hamilton Lankford, James Wyckoff, and Frank Papa found that the transfer rate of City teachers is lower than that of other school districts. Instead, city teachers tend to quit the profession of teaching in higher numbers. At the five-year point in the careers of new teachers in New York City, 30 percent have left teaching entirely, while in the comparison districts the quit rate hovers around 20 percent. Bringing teacher salary levels closer to that of other professionals in New York City may result in an improved retention rate of teachers.
 

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