EPP Summer 2000

Good News and Not so Good News...
The outcome of New York State's budget negotiations

In formula aids alone, New York City's elementary and secondary school children will receive approximately $4.7 billion in state education aid in 2000-01. This increased amount of state aid, from $4.3 billion last year, is a result of New York State's budget negotiations which were concluded in early May. This is approximately a 9 percent increase in education spending from the 1999-00 state budget. That is, relative to last year, good news ...

New York City educates 1.1 million of the 2.8 million children enrolled in the state's public schools. With an allocation of $4.68 billion for 2000-01, each child, on average, will be allocated roughly $4,250 in state-level funding.

When the inevitable "shares" were divided by the senior state legislators and the governor's staff, there was an attempt to "move the needle" toward equitable distribution to a small degree. This is only sensible in light of the Campaign for Fiscal Equity lawsuit (see p. 3) and a strong economy.

Unfortunately, the New York State Senate went into education budget negotiations with the objective of increasing every school district's allocation of state aid by 2 percent, even the most affluent, least-needy districts ... and they succeeded! The resulting $12.9 billion education budget (a record-breaking $1.2 billion increase) had something for everyone and did not "move the needle" towards more equitable distribution of educational resources.

Our concerns regarding equity remain. High-needs school districts, including New York City, will still spend less than the per pupil state average.

Even without precise per-pupil numbers, prior to this aid increase, there was a $1,400 differential between the average state and New York City total expenditure per pupil (using a state average of $10,800 and a city average of $9,400 per pupil). We will not know the actual total expenditure for 1999-00 until audited numbers become available. There still is a deficiency if you believe that the largest city in the state should at least spend at the state average, as it used to do before 1984. Regardless of what the state spends on average, there is still the issue of adequacy of expenditures, given the student population and needs of New York City students.

Many state aids do not directly assist in teaching the student in the general educational environment. The state’s legal requirements for transportation aid ($881 million state; $241 million to NYC), building aid ($1.2 billion; $295 million to NYC), and specialized aids for children with special needs, ("excess cost" aid of $2.0 billion; $718 million to NYC), total approximately $4 billion.

What is left? The remaining $9 billion is spread across 2.8 million children statewide in an attempt to equalize expenditures, which are, by definition, unequal due to their reliance on the wealth of the community in which the children are located. Will this $3,200 per child, on average, do the job of ensuring that all students receive a "sound, basic education" or, heaven forbid, something even better? And are the resources being put where they are needed most critically? We must continue to ask these questions of our legislators.

OPERATING AID was $2.33 billion, up from $2.24 billion. New York City was not capped, because the transition cap was moved to 4.27 percent. This was partially a result of EPP's education efforts with its Checkerboard Schooling report and legislator briefings which focused on "the sleight of hand" involved in providing additional funding that is then taken away by a transition adjustment (more about that later).

LADDER AIDS were funded as follows: Class Size Reduction: $88.84 million; Universal Pre-kindergarten: $146.53 million; Minor Maintenance at $33.33 million; Shared Services at $11.58 million; Instructional Technology at $6.07 million, for a subtotal of $286.35 million, plus non-GSPS assistance for Extended Day/School Violence programs estimated at $15 million and Professional Development Grant funds estimated at $5 million. This comes to a grand total of $306 million. The GSPS data comes from the May 15, 2000, Local Assistance Tables. The non-GSPS figures are estimates based on the total state allocations of $30 million and $10 million respectively. These LADDER aids represent a victory in that the governor and State Senate had recommended lower amounts.

For New York City all requested LADDER funds from the 1997 budget agreement were included. Since both the Reduced Class Size and the Universal Pre-kindergarten programs were scheduled to increase statewide, ($75 million to $140, and $100 to $225 million), this was a considerable achievement but it came at the price of a concession to other districts - "flexibility" to use Universal Pre-kindergarten funds in future years if they cannot be used in the current year. There are also concerns about available space to implement class size reduction.

Assembly Speaker Sheldon Silver asked for $500 million for facilities funding (called RESCUE) but had to settle for one-tenth of this amount, $50 million, as the total school aid package grew. Of this amount, New York City will get $19 million, not enough to provide sufficient classroom space for smaller classes or pre-kindergarten programs.

With one more year to go to fully phase in these programs, the victory is only temporarily sweet. In 2001, a non-election year, when the CSR program is scheduled to go up to $225 million and Universal Pre-k increases to $500 million, there may be renewed efforts to curtail or eliminate these programs.

EXCESS COST AID FOR PUBLIC AND PRIVATE PUPILS (Special Education Funding) Combined aid for these pupils was increased from $684 million to $718 million. The public aid portion increased from $623 million to $656 million. With respect to reform of special education funding to eliminate incentives for segregating students with disabilities, the State Education Department survey of the cost associated with children who spend 60 percent or more or their time in general education settings still showed an estimated $56 million in increased costs. This led the Education Conference Committee to recommend a delay of reimbursement to school districts until 2001-02 to allow for the submission and collection of more accurate program data. Is this a one-year delay or the beginning of the end of federally-mandated special education funding reform?

EXTRAORDINARY NEEDS AID for NYC was $405 million, frozen at the 1998-99 level. The statewide allocation is $677.7 million, up from $665 million. New York City is being "held harmless" in this aid category. According to the State Education Department, our student count used for this aid category went from 1,068,796 to 1,072,061, of which 988,148 (almost the same as last year's 989,616) students were counted as either reduced/free lunch or English Language Learners. New York City's "ENA percentage" thus went from .925 to .9217. The "big picture" question for this aid category is whether student needs should have the small overall weight that they have, compared to the big drivers of operating aid, namely property wealth and income wealth (which do not measure student need).

NYC is not the lowest-wealth school district in the state, actually it is about average wealth. However, our schools educate most of New York State's high-poverty and immigrant students. EPP believes that measurement of student needs should be a key element in the reform of New York State's school funding.

SCHOOL FACILITIES Building Aid went to $295 million from $247 million. This remains a "drop in the bucket" compared to our needs. This is separate from the RESCUE (Rebuilding Schools to Uphold Education) funding. The city was at risk of not being able to fully utilize this funding (which is based on the reimbursement of payment of principal and interest on city bonds) because it had reached the state constitution’s debt limit for municipal borrowing (10 percent of the value of taxable property). In 1997, the State Legislature allowed NYC to create the Transitional Finance Authority (TFA) to borrow an additional $7.5 billion. Now the city has received legislative approval to borrow an additional $4 billion, because, otherwise, the city would not have been able to fund its own capital plan.

STAR This governor's initiative is not treated as school aid - though it should be. Statewide, homeowners receive a reduction in property taxes and NYC residents also receive a slight reduction in personal income taxes. To compensate for this lost revenue to school districts, the state replaces these local tax revenues with state funds. Although this program was not designed to be of great aid to NYC residents, this report would not be complete without a reference to its impact on funds available for state education aid. Estimates from the governor's budget are that $2 billion in property tax relief will be granted throughout the state this year, including NYC's personal income tax relief of an estimated $380 million. This four-year phase-in program entered its third year on April 1.

Next state fiscal year, STAR estimates increase to $2.8 billion statewide and $470 million for NYC. In preparing for any discussions on equity reform, it is important to bear in mind the price being paid for school property tax relief. It continues to make non-NYC property owners happy, at a significant price tag, but it actually drives more state funds to the most affluent districts in the state - the reverse of any effort to drive more state funds into needy districts.

TRANSITION CAP Since the Governor Cuomo administration, year-to-year increases made to school districts have been capped, with different ceilings every year. EPP's Checkerboard Schooling found that high-minority school districts are hurt the most from this "sleight of hand." Although NYC was spared the cap this year, many high-needs school districts were still "capped" in their operating aid. Our attempts to build a coalition across the Big 5 cities and Long Island to secure the $400 million held back by the cap were met with resistance because the State Assembly suggested funding the elimination by abolishing the tax equalization formula. The cost to the Long Island districts of doing this was greater than the estimated gain for eliminating the cap. In the end, the tax equalization line item stayed in, and so did the cap. This was a step backward for equity, but a step forward in building an alliance among school districts and legislators to end budget gimmicks.

TEACHERS While this year's negotiations followed the annual ritual of restoring the governor's proposed cuts to salary supplements for city teachers (now at $67 million) and Teacher Centers (now at $11.25 million), this year signaled a new level of investment in trying to solve the qualified teacher shortages, especially in hard-to-staff schools. A total of $15 million will go to New York City to provide incentives for certified teachers who agree to be assigned to low-performing schools; grants to help teachers with taking college courses ($3,400 for certified and $2,000 for uncertified); summer training courses; and up to $10,000 salary bonuses for teachers with National Board Certification who agree to teach in Schools Under Registration Review (SURR) schools. Will this $15 million even begin to solve the problem of the "performance" and "credential" gap between high-needs and low-needs districts?

STATE DEBT LIMITS, STAR REFUNDS, and the MTA BOND ISSUE Issues surrounding an amendment to the state constitution imposing a limit on the state's debt and the notion of giving individual taxpayers STAR refund checks prevented a pre-Easter/Passover budget passage. In the end, a constitutional amendment was not sought for the debt limit but rather a statutory provision, and individuals will not be receiving STAR refund checks. The New York State Comptroller points out that the state ranks fourth among all 50 states in debt per capita. When the legislature resumed negotiation, refund checks were dropped and the debt problem was to be solved through legislation, not an amendment to the constitution.

The Metropolitan Transportation Authority (MTA)/Transportation Bond Act will go to the voters in November. At that time, the public's desire to spend $3.7 billion for a new subway and equal improvements to transportation infrastructure elsewhere in the state will be tested.

What YOU can do to prepare for next year�s state budget negotiations:

Educate a fellow traveler. Sit down over coffee with another parent or friend and go over this article. Learn the numbers so you can use them when you meet those who doubt your position on adequacy and equity.
Meet skeptics with facts in hand. Use pictures depicting the condition of your neighborhood�s schools and statistics from the articles you read. Emphasize specific facts about high-needs children, such as the high percentage of students living in poverty and English Language Learners.
Call your legislators and ask what they plan to do about equity in next year�s legislative session. Ask them if they have supported action towards equity and thank them if have already. Tell them that you expect their strong support. With all the noise about pension benefits and the MTA, they need to hear from education activists and parents.