STATE BUDGET INFO

The Tale of Two Budget Bills 

By March 14, 2006 both the Assembly and the Senate had each unveiled one-house bills. 

Operating Funds

The Assembly one-house education proposal supports a foundation operating aid formula, much like the Regents Conceptual Proposal and CFE.  The Assembly proposes to consolidate Flex Aid, Comprehensive Operating Aid, Sound Basic Education Aid, Extraordinary Needs Aid, Reorganization Operating Aid, Educationally Related Support Services Aid (ERSSA), Tax Limitation Aid, Growth Aid and Summer Aid.  The Assembly's proposal would provide an increase of $6.8 billion in state funding over six years, with $331 million targeted funding increase for 2006-7.  Under the Assembly's proposal, New York City would receive $4.2 billion in additional funds over six years, but there is a catch -- New York City would be required to contribute an additional $1.4 billion in funding over the same six years. It should be noted that two years ago, plans for a CFE remedy were all based on a four-year phase in of funding.

The Senate one-house education proposal supports the structure of the Executive Budget, using Flex Aid and the three formula tiers and simply offers to layer on additional funding. (See EPP Monitor Su/Fa 2005 edition for explanation of Tiers) The Senate proposes a school year increase of $1.1 billion.  The Senate proposes this additional aid as part of a five-year funding plan to be negotiated the good old fashioned way-- yearly.  The Senate proposes to add $394.8 million for fiscal year 2007, which on a school-year basis would total $488 million.  The Senate adds nothing to Flex Aid, it concurs with the Executive recommendation of $8.5 billion but tinkers with the aid calculations in order to more specifically target aid above the 2005-2006 levels.  Most of the additional school aid is targeted to Tax Limitation aid, which will help suburban school districts with limited commercial property.

It is important to note that due to a court decision in 2004, the legislature has no possibility of changing the Executive proposal beyond decreasing spending or rejecting specific items. It is likely the negotiations between the legislature and the Governor will focus on tinkering with the Flex Aid and its tiers.  Thus restructuring the school finance system, as proposed by the Assembly, is a long shot.

But altering the altering amounts under the current structure is a realistic possibility.  What's the difference in amounts between the two one-house bills? The Assembly proposes to add $728.3 million over the Executive proposal. The Senate proposes to add $394.8 million over the Executive proposal. Both proposals would add over $1 billion in additional aid during the 2006-2007 school year.

Others

The Assembly proposes:

• Restoration of Limited English Proficiency as a unique category and proposes funding at $125.5 million, a $20 million increase.

• Restoration of Minor Maintenance and Repair as a distinct program and proposes funding at $50 million

• Restoration of Private Excess Cost Aid (Special Education funding for private schools) and proposes funding at $232.5 million, $112.5 million above the Executive proposal.

• A new $100 million Universal Pre-k expansion program in addition to the existing program.

• Sadly, a new $20 million Class Size Reduction program for "overcrowded schools" that skirts current requirements of 20 students with one teacher. The new language mirrors the phony language of the NYC Department of Education that seeks to dismantle class size reduction programs funded by the state. The Comptroller has released an audit report that found that NYC has flagrantly avoided complying with the requirements of state funding for class size reduction.

The Senate proposes:

• A CFE remedy plan called Leading Education Achievement for Results Now (LEARN), that would provide a total additional school aid increase of $5.2 billion over five years, including $2 billion in Sound Basic Education aid. The catch -- The Senate proposal would require a dollar for dollar match from New York City.

• To reject the Executive charter school proposal to authorize not-for-profit organizations to become chartering entities.

• To reject the Executive proposal to raise the charter school cap, including rejection of the proposal to allow the chancellor of the city of New York to open 50 new charter schools.

• To reject the Executive proposal, which would provide building aid to charter schools.

Facilities

The Assembly proposes a statewide $2.6 billion capital plan for Expanding our Children's Education and Learning (EXCEL). The EXCEL program would provide capital construction grants to districts.  New York City would receive $1.8 billion of these funds through borrowing by the Dormitory Authority of the State of New York. In Building Aid, the Assembly proposes deferment of payment for all building projects without signed contracts as of February 15, 2006.

The Senate capital plan consists of allowing New York City to borrow up to $2.8 billion in additional debt beyond its current debt limit through the Transitional Finance Authority (TFA) to finance school construction and setting reimbursement rates through tweaks in Building Aid calculations.  Unfortunately it is not a multi-year program targeted to end school overcrowding.

 How the final negotiated proposal is structured will be very important in terms of the 1) interest rates and 2) the potential to end overcrowding within the next five years.

Tax Relief

The Assembly proposes a "circuit breaker program" instead of expanding STAR (School TAx Relief program). The proposed circuit breaker would provide taxpayers with a personal income tax credit equal to the amount of property taxes that exceed 7.5 percent of their income. When fully phased in, it would be available to taxpayers earning up to $150,000. The credit would also benefit renters if the amount of property tax included in the rent exceeds 7.5 percent of their income.

The Senate proposes to accept the Executive plan to expand STAR with a STAR-plus program and boosts it with $530 million in additional funds (in order to provide all STAR eligible homeowners with a $400 rebate check).  The Senate proposal pushes the funding for STAR-plus to $1.06 billion. In basic STAR the Senate provides $75 million for a STAR COLA.

The Assembly proposes to provide $620 million in tax relief to families with children using a refundable tax credit for every child from one day to 17 years old. The proposal would, when fully phased in, allow for families earning less than $110K to receive up to $300 per child.  This would replace the Governor’s tax credit proposal for parochial school tuition.

The Senate proposes to allow taxpayers eligible to receive federal child tax credits to claim a state personal income tax credit equal to one-third of the federal tax credit. For low-income taxpayers who do not qualify for the credit at the federal level, the credit would be equal to $100 per child.  The tax credit would be limited only to those taxpayers whose children are enrolled in a pre-kindergarten program or attend an elementary or secondary school.

Both chambers of the legislature fail to preserve any significant amount of the projected budget surplus, despite predictions of budget deficits in the next three years.  Spend now pay later.

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