EPP STATE FUNDING EQUITY

Winter 2000 (v4#1)
Now You See It, Now You Don't:
Children Lose In Three-Card Monte Game Of State Aid

New EPP report, Checkerboard Schooling: How State Aid Affects High Minority School Districts in New York State, reveals how minority students are shortchanged.

More and more, public school children in the state of New York attend segregated schools. Even outside the big cities, in areas like the suburbs that surround New York City, we find public school districts that are defined by the State Education Department as "high minority" - that is, districts in which 80% or more of the enrolled students are minority pupils. All "high minority" school districts are located in the downstate metropolitan region, with the exception of one–Rochester.

In 1998-99, the State Education Department identified nine school districts in New York State that met its criterion for "high minority," two of the Big Five cities, Rochester and New York City, four school districts in Nassau County (Hempstead, Roosevelt, Uniondale, Westbury), two in Suffolk (Amityville, Wyandanch) and one city school district in Westchester (Mount Vernon). In the year 1996-97, according to data published by the State Education Department, 40% of all the students in New York State public schools attended school in one of the nine high minority districts in which minority pupils constituted 80% or more of total enrollment.

In the downstate area high and low minority school districts share the same regional costs and compete in the same market as their neighboring, more affluent school districts. The region therefore offers a useful laboratory in which to compare demographic and fiscal characteristics, staffing and outcomes and examine the impact of state aid policies.

Profiles of High Minority School Districts
In the downstate suburbs, most of the children enrolled in high minority school districts live in environments of poverty. The average percentage of pupils participating in a free and reduced-price lunch program was 70.9% in the high minority districts, compared to 10.9% in the low minority districts.

Because they are relatively low in wealth, the downstate suburban high minority school districts have benefited from state aid programs that are designed to vary with school district wealth–more aid is provided for poor districts, less to rich. The state’s "Revenue Share" reflects the percent of the district’s total school district budget that is represented by state aid. It will be higher for poor districts, lower for rich. Total expenditures consist of the state’s contribution plus locally raised funds. Federal funds are included in total expenditures, but play a relatively small role in most of the suburban districts. In districts with limited property and income resources, state aid constitutes a greater and very necessary proportion of total expenditures. But the aid available is typically not enough to permit poor downstate school districts to meet the higher costs of the region. As a result, they have to tax themselves at relatively high levels because they must compete in the same high-cost environment as their wealthy neighbors. They must make an extra tax effort to meet their expenditures.

The Big 5 city school districts serve a substantially higher portion of poor children than the rest of the state. The percentage of pupils participating in the free or reduced-price lunch program in the Big Five ranges from 70.7% to 90% compared to 30.5% in the rest of the state (which includes high minority school districts outside the big cities). By law, the Big Five cities fund public schools from their municipal budgets and do not levy separate school property taxes as non-city school districts do.

Editor’s Note: There has been considerable coverage in these pages and other media of the Campaign for Fiscal Equity’s lawsuit charging that New York State’s education funding system discriminates against New York City’s public school students. However, few know that the New York Civil Liberties Union (NYCLU) is also preparing to sue the state on behalf of students in other high needs districts. To assist in the NYCLU effort, EPP school finance consultant, Dr. Joan Scheuer, investigated the impact of state school aid on high minority school districts. Dr. Scheuer’s study of this issue, which no one had really looked at before, took on all of the complexities of solving a mystery. She conducted one analysis after another to discover differences in the way that state funding affects high minority districts in comparison to surrounding, usually more affluent, districts.

Dr. Scheuer found that state funding distribution to suburban high minority districts is very different from that of urban minority districts. For instance, urban districts receive substantial amounts of Extraordinary Needs Aid for students in poverty while suburban high minority districts do not. On the other hand, suburban high minority districts get Tax Effort and Equalization Aid because homeowners in these districts pay extraordinarily high property taxes and still don’t raise sufficient funds to adequately run their schools. So the next question was whether there were any commonalities in funding patterns to both urban and suburban high minority districts.

For the first time, EPP did a per pupil analysis of the funds lost under "Transition" caps and were shocked to see the high dollar amounts involved. Some districts lose over $1,000 per pupil to this artificial cut-off point on year-to-year increases. We decided to share our findings with legislators from the affected high minority districts and held legislative briefing sessions in New York City on November 19 and in Albany on February 15. EPP also briefed school board members from affected Long Island districts at an event sponsored by REFIT (Reform Education Finance Inequities Today).

We are very gratified to learn that, in part as a result of our efforts, the one-house budget bill recently drafted by the New York State Assembly substantially minimizes the impact of Transition caps. We hope that this is a precursor to elimination of the caps altogether.

What follows is a brief summary of Dr. Scheuer’s report, Checkerboard Schooling, (so named because of the checkerboard pattern of suburban high minority districts interspersed among districts with low minority enrollment) which details how current state aid formulas discriminate against high minority suburban and urban school districts.

New York State’s Aid for Education
State aid must be viewed as a package of some 50 aid programs, many with separate formulas. Over the years many different aid formulas have been created in response to local or specialized needs, and each contributes revenues for school districts in varying amounts. The state does not attempt to monitor the budget policies of localities in a way that would assure that the funds generated in each aid program are actually spent for the purposes described by the formula. In effect, formula aids are pooled, and in their lobbying efforts, school districts have learned to focus on the bottom line–the total aid allocation.

In 1998-99, six of the largest categories of aid accounted for 95% of the total of state aid distributed statewide in a total package called General Support for Public Schools. They included Operating Aid (52.3%) Transportation Aid (6.9%) Building Aid (7.8%) Tax Effort and Tax Equalization Aids (6.9%) and programs for pupils in special education, called Excess Cost Aid (15%). Six percent of total aid was allotted as Extraordinary Needs Aid designed for urban districts with large concentrations of disadvantaged students and for rural districts with widely dispersed residents. All other aids together constituted only 5% of the total aid package.

The Transition Adjustment
After the formulas are computed, a "Transition Adjustment" is applied to the total entitlement. The Transition Adjustment is sometimes referred to as Transition "Aid." It is not an aid, but a computational procedure that applies both save harmless guarantees (assurances to school districts of no total dollar loss in aid) to some districts and cut backs or limits on receivable aid in others. Because save harmless guarantees are framed in terms of total dollars, rather than dollars per pupil, it protects districts even if their property appreciates and their enrollments decline. The Transition Adjustment applies caps on aids earned that prevent other districts from fully realizing some of the benefits intended for them. Its impact depends on the group of aid programs specified by law each year as subject to the Transition Adjustment. The group of aids subject to the Transition Adjustment has recently diminished and now includes only three aids, Operating Aid, Tax Effort Aid and Tax Equalization Aid. Unfortunately for the high minority school districts in the suburban downstate area, these are precisely the aid programs on which they most depend.

Pupil Outcomes
The State Education Department’s report to the legislature in April 1998 illustrates serious gaps between high and low minority school districts in staffing, teacher quality and course offerings especially in the large cities. The report emphasizes the difference between the two groups in test scores at the elementary and high school level. Even before January 1999, when the Regents’ testing program was initiated, it was clear that the high minority school districts needed much more support than has been available if goals for improving learning throughout the system were to be met.

With larger classes and less qualified teachers, high minority suburban districts offered fewer academic courses leading to a 1997 Regents diploma compared to low minority districts in the downstate suburbs. The percent of pupils graduating with a Regents diploma reflects a marked difference in course offerings between the two groups of school districts. In three of the suburban high minority districts, less than 10% of students graduated with Regents diplomas in 1996-97; in one, Roosevelt, none did. In the other four high minority suburban school districts, the percentage of pupils graduating with a Regents diploma in 1996-97 was between 18% and 22% compared to 54%, the median for low minority school districts. In the Big Five school districts, less than 20% of the pupils typically graduated with Regents diplomas in 1996-97; in the rest of the state 49% did. Many children in high minority schools in the downstate area were not offered or did not take Regents exams in 1996-97.

These findings indicate that school districts with high concentrations of minority pupils in both the downstate suburbs and the Big Five cities serve pupils with greater academic needs than those in low minority districts. The downstate suburban districts, despite limited resources, make a major tax effort to bring expenditures into line with their neighbors. Nevertheless, expenditures are not sufficient to raise pupil outcomes to the expectations held out by the Regents. In the Big Five cities, insufficient state aid, low per pupil expenditures, high special education costs combined with high pupil needs, mean that student needs remain unmet and outcomes typically fall far below those achieved in the rest of the state. Despite the challenge that data in the 1998 report presented to the legislature, state policy makers failed to provide meaningful help for students in high minority school districts. Present policies that restrict aid for the largest cities run exactly counter to the goal of raising the academic achievement of all students.

The Politics of School Aid in New York State
Contradictory effects persist within the system because the distribution of state aid is a political process, subject each year to the annual budget process. Legislators have long since reduced this process to a debate on shares of aid, apportioning a given percentage of available aid first to New York City, another percentage share to Long Island and the rest to the remaining upstate districts. Tinkering with the numerous and very complex formulas to produce the required shares is left to a few technical experts. "Regional shares" has become state policy, making a mockery of the state’s original goals of distributing school funds on the basis of objective criteria that would distribute funds equitably in accordance with each district’s fiscal ability and pupil needs.

Conclusion
State funds do not provide enough support for children in urban or downstate suburban high minority school districts. State aid falls far short of filling the gap in educational offerings. Instead, it reflects regional political pressures. Despite the fact that aid programs are frequently targeted to support specific pupil groups, state aid does not relate directly to special programs in the schools.

State school aid sometimes has counterproductive consequences, as the results of our analysis of the Transition Adjustment shows. Our findings show that, when it comes to the bottom line, the imposition of Transition Adjustments have a discriminatory effect on high minority school districts, both in and beyond the big cities. Wealthy districts continue to use local funds to reduce class size, reward good teaching and enhance educational programs that support high levels of student achievement, while districts with limited property and income resources must tax their citizens more and still can provide only reduced services to children with pressing educational requirements. State funds are insufficient to provide most high minority school districts with the funds needed to help their students meet the new and more demanding state standards. School districts serving high concentrations of minority students need more money to improve old buildings, reduce class size, add specialized instructional services and increase support for those with limited English proficiency. To meet the new standards and bring their schools into line with other public schools, they need additional funds to provide for summer school and additional tutoring as well as after-school sports and the enrichment in the arts that should be a part of every child’s education.

The problem will not be solved by making minor adjustments to one or more of the many aid formulas that combine to make up the state’s contribution. What is needed is a resolve to shift much more sustained state support to those pupils most in need. We recommend a fresh political alliance that rejects negotiated regional shares and demands a greater flow of resources to high need school districts.

Dollars Lost in Transition Adjustments by High Minority School Districts 1999-2000
District	Total Aid 1999 $	$ Lost via Trans. Adjust.	Dec.99 enrollment	$ Lost per pupil	% Pupils Level 1**
Rochester	224,197,687	(37,718,546)	38,388	(983)	18.6
Hempstead	41,022,908	(12,709,983.00)	7,323	(1,736)	15.2
Roosevelt	22,046,506	(4,167,149.00)	3,197	(1,303)	9.4
Uniondale	14,981,243	(3,479,091)	5,888	(591)	8.9
Westbury	9,427,199	(2,851,048)	3,625.00	(786)	9.9
New York City	4,260,380,775	(39,569,771)	1,066,061	(37)	21.3
Amityville	12,000,363	(2,393,517)	3,309	(723)	18.4
Wyandanch	21,383,456	(3,392,215)	2,306	(1,471)	21.9
Mt. Vernon	40,881,489	(12,282,099)	10,247	(1,199)	14.1
Total	4,646,321,626	(118,563,419)	1,140,344
Notes:	Enrollment based on December, 1999 SED data Data in columns 1-2 from NY Executive Budget run dated 1/11/00 **Data from NY Board of Regents, Grade 4 English Language Assessment, January, 1999 Level 1 defined as "in need of remedial help"
If you’d like to obtain a copy of the full Checkerboard Schooling report, please complete the order form on page 23 and send it with your check or money order to EPP, 225 Broadway, Suite 3101, New York, NY 10007.