STATE BUDGET INFO

State Budget Hearing on

Executive Budget Proposal for Fiscal Year 2006-2007

Albany, February 6, 2006

            Thank you for the opportunity to address issues of concern to the Educational Priorities Panel. Our coalition of civic organizations has worked together for thirty years to improve public education for New York City’s one million school children. My name is Martine Guerrier, EPP’s Director of Communications.

            EPP recognizes that the Governor's Executive Budget often reflects a negotiating posture that contains provocative proposals. This year’s proposals are indeed shocking:

• Flex Aid, the major funding stream for instruction, is to be frozen at last year’s level, $8.5 billion, thereby proving that this new formula is neither flexible nor intended to help school districts raise student achievement.

• The Governor not only refuses to comply with the court order in the Campaign for Fiscal Equity lawsuit, but he also shifts more of the burden of school funding to local taxpayers by limiting the increase in formula aids to $258 million. What will be the result? High-need school districts will continue to offer inadequate instruction and low-need school districts will continue to increase their property tax rates.

            The illogical message of the Executive Budget is that state government will not perform its primary, constitutional function of helping school districts to provide a sound basic education to children of New York. Instead, state government will offer marginal tax relief measures because it is failing to carry out its responsibilities.

            EPP’s overall recommendation to the legislature is to increase Flex Aid and to focus on solving the problem of inadequate education in New York City and other high-needs school districts: We suggest that the $400 million proposed by the Governor for tax tax credits for inadequate schools could be better used by the state for a NYS School Building Reserve Fund to pay principal and interest costs for building new schools or building additions for:

• any district with severe student overcrowding problems;
• any district with a lack of building capacity to reduce class sizes to the average for the state;
• any district that wants to expand pre-kindergarten programs.

This would allow the state to borrow $2.8 billion for the construction of new schools. If an additional $400 million were provided to this School Building Reserve Fund in Fiscal Year 2007-08 and increased by the same amount for the next three years, the problems of student overcrowding and large class sizes will be that will be completely solved in five years.

            Building Aid reimbursement would continue to be used by school districts for major capital repairs. Districts without any overcrowding could still access Building Aid for new construction and modernization. The NYS School Building Reserve Fund, on the other hand, would tackle the infrastructure problems that Building Aid never was able to solve for municipalities and small cities with limits on their ability to borrow capital funds. For New York City, always capped at a share of between 33 percent to 39 percent of any school aid increase, more Building Aid reimbursements never resulted in more School Aid.

            EPP could envision this NYS School Building Reserve Fund as a resource for charter schools to help them with their major hurdle of finding suitable space, with one important proviso. In New York City, the closure of a charter school resulted in a private landlord being the direct beneficiary of several years of investments in upgrading the school’s leased space. This is what we find troubling about the Governor’s Executive Budget proposal to provide Building Aid reimbursements to charter schools. It is one thing to provide school aid to members of a private board of directors who want to run a school, which is not much different from contracting for other types of services. But when a taxpayer investment is made in a school building, who ultimately owns the building? What if the charter school closes? The proviso EPP would suggest, both for our NYS School Building Reserve Fund or for the Governor’s Building Aid for charter schools proposal, is that the state become the owner of the building or the lessee so that the property can revert to another public purpose should the charter school close. Absent this proviso, EPP recommends that charter schools be allowed to borrow capital funds through the assistance of the Dormitory Authority, similar to the assistance DASNY currently provides to private schools throughout the state.

            EPP urges legislators to reject five of the Executive Budget’s proposals:

Tax Credits for Government Failure Since January 2001, the Governor, through a constant series of legal maneuvers, has delayed implementing the court’s order in the Campaign for Fiscal Equity lawsuit. He now proposes to provide $500 in a refundable tax credit to families with incomes below $90,000 in school districts with under-performing schools. The cost estimate is $400 million annually. EPP cannot think of any other tax credit that is premised on the failure of government to perform its function. If part of the state’s road system was in disrepair, should a Governor simply provide a refundable tax credit to low-income and moderate-income motorists for their troubles? Wouldn’t it be the first order of business for the state to fix its roads? Shouldn’t it be the first order of business for the state to fix its schools?

            When over a third of New York City’s entering ninth graders never graduate, isn’t the real cost to each family closer to $20,000 to $30,000 a year in lost income from a job earner? And where are the tax credits for employers who have difficulty finding skilled workers? Is this a $500 problem for them? The failure of the state to provide a sound, basic education for all of its children has had vast social and economic costs. This tax credit proposal trivializes this problem. On another level, it also trivializes government as outlined by our state’s constitution. It’s a statement that “Here’s a discount—we haven’t done our job.”

            EPP urges the legislature to consider alternate tax credits for families in high-need school districts, some of which have been outlined by the United Federation of Teachers. Even eliminating a state sales tax on children’s clothing would prove more workable, because it would eliminate the necessity of providing documentation of expenditures, always a barrier to lowest-income parents.

STAR-Plus It needs to be remembered that “tax relief” is really a “tax shift.” When homeowners receive STAR discounts on their school property taxes  this “discount” is funded by all the state’s taxpayers. What was a small share of a local tax paid by homeowners becomes an additional tax burden for all taxpayers in the state. Across the state, many homeowners are complaining about escalating school property taxes. The Governor proposes to provide an additional $530 million in STAR tax relief as a bonus to low-spending districts – the school districts where homeowners do not face this problem. A better use of this half a billion dollars would be to increase school aid formulas, so that property taxes in  higher spending school districts do not have to be raised to maintain current school programs. This would ultimately benefit more of the state’s taxpayers.

Flex Aid Incentives The Governor now proposes to provide Flex Aid incentives to school districts that do not increase their budgets by 2 percent. Low-spending districts, however, are not the locus of escalating school property taxes. Worse, the Governor is proposing to link student test score increases to increases in Flex Aid. This is a type of performance incentive that in the long run will put pressure on the state to reduce the quality of state tests—so that like Lake Wobegon, all our students are “above average” and most districts will get an increase in Flex aid. England’s decades long experiment with merit pay triggered the same watering down of its tests.

Reductions to Private Excess Aid The proposed cut to state funding for special education instruction provided by private schools is ill considered. There needs to be a well-thought out plan to reduce the need for these placements.

Lifting the Cap on the Number of Charter Schools As a coalition, the Educational Priorities Panel neither supports nor opposes charter schools. Nevertheless, most organizational members oppose the Governor’s proposals to 1) lift the cap on the number of charter schools in the state; 2) eliminate any limit on the number of charter schools that can be created by the NYC Department of Education; and 3) allow new entities to review and create new charter schools. There are two reasons for our opposition to these proposals. The first is that the creation of the charter school program was premised on its being an experiment to see whether private citizens, provided with state school aid, could offer better instruction. Where is an objective research that shows this? There is a careful study, recently released by Columbia Teachers College, that shows that charter schools do not provide the same quality of math instruction as the public school system. Before the state’s taxpayers make another investment in charter schools, there should be some meaningful data that this type of contracting works.

            Our second reason for opposition to these proposals is that charter schools in New York City are not providing an education to all student populations. There are over 7,000 charter school students, yet fewer than 8 percent have disabilities and only 128 students are English Language Learners. Another troubling pattern is that most charter schools that have opened are for elementary students, even though there is a desperate need for good, safe middle schools in New York City. EPP would support the expansion in the number of charter schools when there is an objective study of their performance and when current charter schools now in operation begin to serve more children with disabilities, more children who are English Language Learners, and more students in the middle grades.

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