EPP's letter to the Governor about his inadequate CFE remedy plan

July 21, 2004

Governor George Pataki
Executive Chamber
New York State Capitol
Albany, NY 12224

Dear Governor Pataki:
Thank you for directing the Deputy Director of the Division of the Budget, Alden Kaplan, to respond to EPP’s letter on the need to restructure the state’s school funding system to comply with the Court of Appeals’ ruling in the Campaign for Fiscal Equity lawsuit. The Educational Priorities Panel is already familiar with the Zarb Commission’s recommendations as well as the Standard and Poor’s study undertaken for the Commission.

Now that you are calling for a special session of the legislature to negotiate a CFE remedy plan to meet the court’s deadline, which is only nine days away, we urge you to develop a good faith plan that reflects the principles you outlined in your 2004 State of the State address and on many other occasions:

Accountability The Standard and Poor’s analysis found that the funding gap between New York City public school students and students in higher-performing school districts ranged between 74 percent and 87 percent. Yet the plan you outlined in June distributed only 48 percent of $4.5 billion in state funds to New York City, far less than is needed to close this gap. We urge you to develop a new plan that addresses the findings of the Zarb Commission study.

Transparency You have long championed honest school property tax bills and an “understandable” school finance system. Yet the plan you outlined in June relied on projections of federal education funding over five years. The federal Elementary and Secondary Education Act is not under the control of the state and future Congressional funding decisions are difficult to predict. EPP requests that in your next plan you focus on state funding and eliminate extraneous, and potentially confusing, federal funding sources.

Rejection of “Robinhood” Funding Strategies The Center for Government Research recently found that New York City taxpayers provided the state with a net surplus of $7 billion in fiscal year ’01, an amount larger than previous estimates. While EPP understands that state tax proceeds are redistributed by the state from high-wealth areas to low-wealth areas, this net surplus is now approaching the “Robinhood” level. The court found that the city’s share of school aid has always been capped no matter how big the annual increase in education funding has been. So, as the courts observed, city kids can never catch-up. It is time to end this cruel game. Your June plan increases the share of state school aid going to New York City by a mere 10 percent, but requires New York City taxpayers to contribute an additional $1.5 billion, about forty percent of the increased funding for city schools. If, indeed, you reject a “Robinhood” strategy, a far larger share of the state’s funds should go to the benefit of New York City’s schools, its taxpayers and its economy.

Fiscal Sustainability EPP calculates that since the inception of the STAR program in 1997, $20 billion in state funds have been spent to reduce homeowners’ school property taxes, even for high-income homeowners who deduct their property taxes from their federal tax payments and therefore are receiving limited tax relief benefits. Over the course of the next five years, an additional $15 billion will be spent on STAR. This is three times the amount you proposed to spend in your June plan for additional state school aid during the same five-year period. The revenue sources for STAR as well as the cost benefit of this program need to be evaluated for fiscal sustainability, not just a lower-cost CFE remedy. As a 2001 EPP study noted, the STAR program is a “reverse Robinhood” strategy that results in the state’s taxpayers subsidizing the tax bills on the highest-cost homes. It is also a perverse strategy, in that this expensive state program results in marginally higher federal taxes for these wealthy homeowners. Why not cap the income-eligibility for STAR benefits similar to the STAR program for senior citizens?

New York City students who are now one year away from high school graduation were entering kindergarten when the CFE lawsuit was first initiated. A whole generation of city students were denied the resources they need to meet ever higher standards for receiving a high school diploma. An expensive and ultimately unsuccessful legal defense that proceeded through three levels of the court system against this lawsuit resulted in a ten-year delay in upgrading the quality of public education in New York City. The governance system you championed has now been adopted, but your June plan did not even meet the Mayor’s request to end school overcrowding. EPP urges you to present a good faith plan that meets the courts’ requirements and that will provide the next generation of New York City students with the same opportunities to learn as their peers in the rest of the state.

Sincerely,

Marilyn Braveman
Chairperson

Noreen Connell
Executive Director

CC
Assembly Majority Speaker Sheldon Silver
Senate Majority Leader Joseph J. Bruno
Mayor Michael Bloomberg
New York City Council Speaker Gifford Miller
Assembly Education Committee Chair Steven Sanders
Senate Education Committee Chair Stephen Saland
Chancellor Joel Klein
Deputy Director of the Division of the Budget Alden Kaplan
United Federation of Teachers President Randi Weingarten
Council of Supervisors and Administrators President Jill Levy