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REPORTS Checkerboard Schooling:
Educational Priorities Panel Table of Contents
Executive Summary 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, two in Suffolk and one city school district in Westchester. In the year 1996-97, according to data is published by the State Education Department, 40 percent 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 percent 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. The purpose of this report is:
Section I. Profiles of High Minority Suburban
School Districts Table 1 shows that in suburban high minority school districts:
In the downstate suburbs, most of the children enrolled in high minority school districts live in environments of poverty. (Table 2)
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 mainly 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 high proportion of total aid. But it 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:
High minority districts in the downstate suburbs must compete in the same high-cost environment as their wealthy neighbors. They must make an extra tax effort to meet their expenditures.
Profiles of the Big Five City School Districts
Table 4 shows that the large cities serve a substantially higher portion of poor children than the rest of the state:
. New York State’s Aid for Education Present day 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. It is important to understand that 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 percent of the total of state aid distributed statewide in a total package called General Support for Public Schools. (Figure 2) They included Operating Aid (52.3 percent) Transportation Aid (6.9 percent) Building Aids (7.8 percent) Tax Effort and Tax Equalization Aids (6.9 percent) and programs for pupils in special education, called Excess Cost Aid (15 percent). 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 percent of the total aid package. High minority school districts are especially dependent on a few state aids. Table 5 shows how much each district received in each major state aid category. Aid is reported here as aid per enrolled pupil, so that apportionments of aid can be compared among districts. 3 Analysis of the aid programs that supply the greatest part of the total state aid revenues in high minority school districts (Table 6) shows that:
Since high minority districts in the suburbs are relatively poor in terms of property and income wealth, they benefit from Operating Aid and other programs that adjust aid in inverse relation to the district’s CWR. We found that for the year 1998-99:
The Transition Adjustment
Why does the Transition Adjustment penalize high minority school districts? Why does this program discriminate on the basis of race? To answer these questions :
We found that the variables selected to explain the 1998-99 variation in dollars awarded or withheld in the Transition Adjustment accounted for almost half of the variation to be found among all school districts in New York state (Figure 5). The model estimates that, compared to other downstate suburban districts, the high minority suburban districts lost an average $343. Compared to the rest of the state,the Big Five cities lost an average of $459 in Transition Aid. The regression model confirmed our suspicions that the disparate impact of the Transition Adjustment could be largely explained by the districts’ high minority or Big Five status, by increased enrollments, changes in wealth and entitlements of tax aids. Why is the Transition Adjustment disequalizing? We found the Transition Adjustment disequalizing because:
Pupil Outcomes Table 8 reports data from the 1998 State Education Department’s report on staffing and course offerings in the downstate suburban districts:
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.
Comparing staffing and course offerings in the Big Five and the rest of the state, we find that staff characteristics in the Big Five schools were similar to those elsewhere in the state (Table 10) with important exceptions:
In the Big Five schools, between 58 and 83 percent of the pupils were college bound; in the rest of the state the median was 79 percent. Table 9 shows that many children in high minority schools in the downstate area were not offered or did not take Regents’ exams in 1996-97: 4
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. Results on the fourth grade English test administered statewide in January of 1999 indicate that throughout the state many children failed to pass the test and a disappointingly few demonstrated mastery of the material. Most schools responded with renewed effort, revising curriculum, supplementing tutoring, adding teacher training, summer programs and extended year schooling. Additional state aid to help defray the costs of these programs has been stinting and slow to arrive. Without it, it is safe to predict that children in the Big Five cities and in suburban high minority school districts will face continued failure and discouragement. The Politics of School Aid in New York State Conclusion State school aid sometimes has unintended consequences, as the results of our analysis of the Transition Adjustment shows. By including Tax Effort and Equalization aids in the Transition Adjustment, the high minority school districts in the downstate area were caught like dolphins in a safety net thrown out to maintain save harmless guarantees in affluent school districts. Our findings show that, when it comes to the bottom line, the imposition of cuts and save harmless guarantees have a discriminatory effect on high minority school districts, both in and beyond the big cities Wealthy districts continue to use local funds to enhance educational programs that support high levels of student achievement, while districts with limited property and income resources 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 minority 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 shares and demands a greater flow of resources to high need school districts. Introduction Close as they are to one another, there seems little physically to distinguish one school district from another. Similar as they appear, they differ in ways that are of prime importance to the children they educate and their parents. Although within the same geographic region and sometimes contiguous, suburban school districts frequently serve very different pupil populations, tax property at differential rates and, indeed, may offer the children within their invisible borders very different levels of schooling depending on the types of children enrolled. The attached maps of school districts in Westchester, Nassau and Suffolk counties identify school districts according to their minority representations. This report focuses on those districts on our map that serve a very high proportion of minority pupils. New York has become the most segregated of all the states in the nation, both for black and for Latino students. Using three measures of segregation, 1996-97 national data published by the National Center for Education Statistics reported that New York ranked lowest among all states in both the percentage of black students enrolled in majority-white schools and white students in majority-black schools. The same rankings held true for Latino students. 5 In 1976, minority students constituted 29.3 percent of all public school pupils in New York State, compared to 43.5 percent in 1996, indicating that minority groups represent an increasing share of the public school enrollment. 6 More and more, students in New York State attend either schools with very low or very concentrated minority representation. 7 In 1996-97, 76 percent of all the state’s white students attended schools in which 80 percent or more of the pupils were white, while 64.4 percent of all the minority students in the state attended schools in which 80 percent or more pupils were non-white, facts that confirm the growing tendency towards segregation in New York state. Although over 79 percent of minority students in the state is enrolled in the Big Five City school districts, a significant number now attend school in suburban areas surrounding large cities. With their sharply contrasting pupil populations, differing levels of income, varied racial enrollments and disparate access to local revenues, the downstate metropolitan counties offer a microcosm of New York State. They provide a ready laboratory for studying the impact of state aid on diverse communities that share a common market and are minimally affected by the upstate-downstate cost differentials that so strongly color statewide school data. The downstate metropolitan area includes a number of school districts with the highest concentrations of minority pupils in the state, reflecting patterns of residential segregation that characterize the region. High minority school districts in the downstate region must confront the same high regional costs and the same tight labor markets as their affluent neighbors. With limited access to local wealth and less to spend on their public schools, these districts face a fiscal squeeze. A study of how state school aid programs affect high-minority school districts located in downstate suburban counties should help us evaluate the equity and adequacy of the entire state aid distribution. The report addresses some of the questions now before the legislature:
To answer these questions we compared the demographic and fiscal characteristics of high minority school districts within the downstate metropolitan area (those school districts in which minority pupils constitute more than 80 percent of enrollment) 8 with low minority school districts within the same area (those in which fewer than 20 percent of enrolled pupils are minority). We then examined the impact of selected state aid provisions on the two groups of school districts to determine whether state policies are fairly meeting the needs of both.
State school aid is distributed to school districts, not individual school sites. Because we are interested in the impact of state policy on those districts in which minority pupils are educated, our analysis is concerned with school districts rather than individual school sites. The report will:
Conclude with a discussion of the political and economic pressures on state aid distribution and their effect on the equity and adequacy of state support for public schools. Section I. Profile of High Minority School Districts in the Downstate Suburbs When the school districts in New York State are ranked on the basis of minority enrollment, we see that the nine districts with the highest concentrations of minority pupils (those with minority enrollments of 80 percent or greater) are either among the Big Five cities (Rochester and New York) or are located in the downstate metropolitan area. In New York City, 83.9 percent of the public school enrollment is non-white. Among all the districts ranked in the highest minority category, only Rochester, where 80.4 percent of enrollment is non-white, is outside the downstate area. It must be noted that in the year 1996-97, according to school district data published by the State Education Department in 1998, the nine districts in which minority pupils constituted 80 percent or more of total enrollment together enrolled more than half of all the students enrolled in New York State public schools. As popular understanding goes, the suburban counties ringing New York City are ethnically white, generally well-to-do bedroom communities. A closer look shows that Nassau, Suffolk and Westchester, the three downstate counties in which suburban high-minority school districts are located, are far from universally white and indeed they are growing more ethnically diverse. All are populous areas; Westchester had a population of 893,412 in 1996, Nassau 1,303,389 and Suffolk 1,356,896. The northern section of Westchester and eastern Suffolk still have an agricultural flavor, with lower population density and lower costs. The lower expenditures and lower teacher costs in the rural/suburban sections of northern Westchester and eastern Suffolk are reflected in the county averages for Suffolk and Westchester. Together the three counties enrolled about 20 percent of the state’s pupils in public schools. The average county minority population ranged from 20 percent in Westchester, about 15 percent in Nassau to 10 percent in Suffolk. For the most part, minority populations in the downstate suburbs are confined to isolated sections, often adjacent to largely white centers. As the map shows, high-minority Mt. Vernon abuts affluent Bronxville (95 percent white) and Wyandanch, also high-minority, is bordered by Half Hollow Hills and Deer Park, both over 75 percent white. The attached tables identify those suburban school districts in which total enrollment is 80 percent or more non-white. They compare data on the high minority school districts to county averages and to the group of districts defined by the State Education Department as low-minority districts. 9 As Table 1 shows, the seven downstate school districts outside the Big Five cities with the highest minority enrollment together enrolled 32,672 pupils while the 98 downstate school districts that meet the State Education Department’s criterion for low-minority districts together enrolled close to 298,500 pupils. For these two groups, we compare data on demographic and fiscal characteristics and on pupil performance on state tests. Table 1 lists the high minority school districts within the downstate metropolitan area and the percentage of total enrollment in the district that is minority. Enrollments in five suburban high minority school districts, Roosevelt, Wyandanch, Hempstead, Westbury and Uniondale are between 95 and 99 percent minority. Four of the high minority school districts are in Nassau county; Wyandanch and Amityville are in Suffolk county. The only city among the high minority suburban school districts is Mt. Vernon, in Westchester county. Two of the Big Five cities, New York City and Rochester are high minority school districts, the percentage of minority school enrollment in these cities dwarfs the percentage of minorities in the population of the cities as a whole. Table 1 displays the demographic characteristics of the independent 10 school districts which have the highest minority enrollments in the downstate counties compared to the low minority school districts in the same area. As stated in the Glossary of the State Education Department report, state data on pupil counts refers to pupil information for the 1996-97 school year. Enrollment data include students in grades K-12 as well as those in ungraded classes for students with disabilities. 11 Attendance rate is defined as "the average daily attendance divided by the possible average daily attendance." 12 Table 1 shows lower attendance rates for the high minority suburban school districts than for the low minority school suburban districts -a median of 91.3 for the high minority districts compares to 95.1 for the low minority school districts. The state uses attendance data in its count of pupils eligible for state aid. The fact that attendance is lower in high minority school districts means that they are entitled to less aid than they would receive were aid computed using an enrollment-only pupil count. Table 1 includes data for downstate suburban districts on enrollment in the regular school program, using a pupil count defined as FTE or "full time equivalent" which accounts for part time enrollments. This is useful in comparing participation in special education to enrollments in the regular education program. The figures are significant because the proportion of total enrollment occupied by special education may account for wide differences among school districts in expenditure and need for resources. The table shows some marked discrepancies between total enrollment and FTE enrollment in regular education, so all the FTE data reported here must be viewed with caution. Total Enrollment as shown in the first column of Table1 is defined as "the number of students enrolled in kindergarten through grade 12 plus those in ungraded classes for children with disabilities" 13 The FTE enrollments listed in the fifth column of the table is differently defined; it is based on average daily membership and includes pupils for whom the districts pays tuition in another school district. FTE enrollment for special education is the sum of all reported full time equivalent K-12 special education pupils.. 14 To highlight the proportion of the student body served in the regular education program as compared to the special education programs in the downstate suburbs, Table 1 (column 7) gives the percentage of total enrollment assigned to special education. For the high minority group of school districts shown here, the proportion of pupils assigned to special education is high in Roosevelt and appears to be especially high in the case of Wyandanch. In the remaining high minority school districts, the percentage of pupils enrolled in special education is similar to that in other downstate school districts and to averages for the surrounding county areas Table 1 reflects the fact that, by definition, the proportion of pupils with limited English proficiency (LEP) is considerably higher in the high minority suburban school districts with a median of 6.4 compared to 1.3, the median percentage for low minority suburban districts. Hispanic students and other recent arrivals constitute significant portions of the enrollment in the downstate counties, especially in Hempstead and Westbury. Dropout and suspension rates 15 were significantly higher among suburban school districts with the highest percentages of minority students as compared to suburban school districts with the lowest percentages of minority pupils. The median dropout rate was 1.8 compared to a median dropout rate for the low minority school districts of 0.4. students. The median suspension rates 16 in the high minority school districts was 9.2 percent compared to a median of 2.2 percent for the low minority school district group.
In the downstate metropolitan counties, despite the widespread ambiance of affluence, many children qualify for free or reduced-price lunch. 17 The presence of poverty is perhaps the fiscal characteristic that most distinguishes high as compared to low minority school districts in the suburban downstate metropolitan area. Table 2 shows plainly that the high minority school districts serve a population of poor children and the low minority school districts do not. In two school districts, Wyandanch and Hempstead, percentages of children participating in the free or reduced-price lunch programs exceeded 100 percent, an indication that the district is serving more than one meal - perhaps breakfast as well as lunch, to its students. 18 The median percent of enrollment participating in the free or reduced-price lunch program in the downstate high minority districts was 73.1 compared to 5.2 percent in the low-minority downstate school districts. County averages for the percentages of enrollment participating in school lunch were 17.4 for Nassau, 23.9 for Suffolk and 29.6 for Westchester. Table 2 presents data on the relative property and income wealth of each high minority downstate suburban school district in the form of a "combined wealth ratio" or (CWR), a ratio which compares a district’s income and property wealth to that of the state as a whole. Together, their CWR’s range from 0.396 in Wyandanch to 1.320 in. Westbury. Four of the downstate high minority school districts were below the state average in property and income wealth; Westbury, Uniondale and Amityville all had property and income resources close to, or slightly above 1.000, the average for New York State. The median CWR for the high minority suburban districts was 0.90, compared to the median of 1ow minority districts of 1.660, reflecting the disparate wealth of the two types of district. Instead of data on dollar allocations of state aid for each school district, the State Education Department’s 1998 report to the legislature offers a variable called "State Revenue Share" defined as the percentage of total revenues that is shared by the state. Total revenues include the local tax levy contribution, federal aid, locally earned revenues and gifts to the school district. Table 2 shows that the state shared a greater portion of total school expenditures in the high minority districts than in the low. The state’s equalizing formulas require the state to contribute more to low-wealth school districts than to high-wealth districts. Because the high minority suburban school districts are relatively low in wealth, the state formulas provide more for them than for more affluent school districts and one would expect a higher State Revenue Share in the poorer, high minority school districts than in the more affluent low minority districts. The state share of total revenues is not perfectly consistent with the local CWR because total revenues are composed of both local and federal funds and the local contribution in the form of property taxes varies. For example, the state shares the same portion of expenditures in Roosevelt and Wyandanch (61 percent of total expenditures) although their CWR’s are not equivalent. Variation in local tax effort, federal aid and the type of state aid allocated to the district account for this discrepancy. Additional factors which tend to inhibit the equalizing components of state aid are discussed below. Tax rates and expenditures for the two groups, high minority and low minority school districts in the downstate suburbs differ substantially. Unlike high need school districts in the rest of the state, where regional costs are lower, the high minority school districts in the downstate counties make a relatively high tax effort so that, with their limited resources, they can spend about as much per pupil as their wealthy neighbors, as the column on Total Expenditure per pupil shows. 19 Despite somewhat higher levels of state support, the high-minority school districts in the downstate area had to tax themselves more heavily than the low-minority school districts to support their schools. Unlike high need school districts in upstate areas, high minority school districts in the downstate area typically taxed themselves at rates of $21.00 to $31.20 per $1,000 full value of property, while the low-minority school districts taxed themselves at lower rates; the median was $16.40 per $1,000. Table 2 shows that, compared to the low minority suburban school districts, the high minority suburban districts report similar total expenditures per pupil, but lower instructional expenditures per pupil. 20 They had markedly higher special education instructional costs per pupil. The median expenditure per pupil in suburban high minority was $16,330 compared to $13,767 in low minority districts. 21 In other words, the high minority districts in the downstate suburbs, with lower income and property values, had to stretch to compete with neighboring school districts in which per pupil spending was relatively high. While holding down instructional spending (possibly at the expense of pupil outcomes) they could meet market costs of special education and non-instructional services. Section II. Profile of the Big Five City School
Districts In Table 3, the contrast between size of enrollment in the large cities and in school districts outside of the city is highlighted. All the Big Five cities enroll 23,000 or more pupils and, by law, are dependent school districts that are not empowered to levy their own taxes, but rather, are funded by the municipal government. The cities vary in scale. New York City, with more than a million students, is more than twenty times as large as the next largest city, Buffalo, with its enrollment of 46,069. Yonkers and New York City are in the high cost downstate region while the other three cities are in upstate areas where costs are lower. Minority enrollment in the Big Five City school districts ranged from 50 percent in Syracuse to 84 percent in New York City, while in the rest of the state (R.O.S.) the median percent of enrollment that was minority was 3.8 percent. In the Big Five city school districts the percentage of pupils with limited English proficiency (as expressed by LEP rates) was 15 percent, considerably above the median LEP rate in the rest of the state which was less than 1 percent. The disparity in LEP rates reflects the concentration of immigrants and non-English speaking children in large cities, particularly in New York and Rochester.
Table 3 shows that the Big Five City school districts differ markedly from the rest of the state, not only in terms of size, but in the problems they face in maintaining attendance and discipline, serving pupils with limited English proficiency, and retaining pupils in school. Table 3. shows that
Table 4 demonstrates that the fiscal characteristics of the Big Five City school districts differ sharply from those that are typical in the rest of the state. The large cities all have participation rates in the free or reduced-price lunch program of 70 percent or more, while the median percentage for participation in the lunch program outside the Big Five cities is 30.5 percent. The cities are now relatively poor in combined income and property wealth. Only one, Yonkers, has a CWR wealth ratio of over 1.000 (the state average). Because much of state aid is not fully equalized and contributions from city and federal sources vary with regional costs, the state’s share of each city’s total revenues varies, ranging from 34 percent in Yonkers to 68 percent in Buffalo. The state’s revenue share for New York City, with a local wealth ratio that was slightly below the state average, was 43 percent. In the rest of the state, the median state revenue share was 46.7 percent. Maintaining tax effort in the Big Five has been an on-going issue throughout the last decade. Each year, municipal budgets must be passed determining the local share of support for public schools. Municipalities receive state school aid in the form of budget revenues. To date, there has been no reliable mechanism to assure that the funds received by the Big Five cities as state aid will be fully applied to the school systems, or that the funds will be assigned to the targeted programs or pupil groups for which they were intended. Since by law, the Big Five cities do not levy their own taxes for schools, "local tax rates" reported for the Big Five cities are simply computed figures derived by expressing budgeted funds for schools as a percentage of available property values. These implied rates were lowest in Buffalo and New York City, $12.77 per thousand dollars of total property value, and $13.59 per thousand dollars of total property value, respectively. Rochester showed the highest imputed tax rate, $21.39 per thousand, with Syracuse and Yonkers both at $17.20 per thousand. Implied tax rates in the Big Five cities rates are relatively low compared to the median full value tax rate for the rest of the state of $15.38 per thousand dollars of property value. Comparisons would be much more meaningful if corrected for regional differentials in cost. Even without a correction for regional cost differentials, it is clear from Table 7 that New York City spent considerably less in total expenditures per pupil, $8,213 per enrolled pupil, than the average district in the rest of the state, $11,569 per enrolled pupil. Total expenditures per pupil were $10,856 in Yonkers, and between $9,508 and $10,176 in the other cities. In instructional expenditures for regular education per FTE pupil, expenditures in the Big Five cities ranged less widely, from $4,399 in New York City to $6,728 in Yonkers, and were close to the average for the rest of the state, $5,916. The important distinction in expenditure patterns between the Big Five and the rest of the state is in the area of special education. Special education expenditures per pupil were especially high in New York, Yonkers and Rochester, $ 15,321, $14,290 and $13,229 respectively, well above the $11,000 average for the rest of the state. Section III. New York’s State Aid For Education The approach now underlying the distribution of school aid in New York state was adopted from a British concept and put forward in a report prepared for the Educational Finance Inquiry Commission (1921-1924) by George D.Strayer and Robert M. Haig. They proposed a tax equalization formula for allocating funds based on the principal of "equalization of educational opportunity." 24 The authors explained that funds should be inversely related to each school district’s capacity to raise local revenues, and commensurate with the extent of the district’s education task. At the same time, they were concerned with equalization of tax burden:
To measure fiscal capacity, the Strayer-Haig formula related the dollar value of the local tax base to that of the state as a whole and to measure educational task, it counted the district’s enrolled pupils. The state assured that all districts, no matter their wealth, would receive at least a minimum, flat grant. Professor Paul Mort of Columbia College helped to implement this proposal, which took shape as the Cole-Rice laws of the 1920’s. Despite a series of adjustments, the plan soon fell short of its basic goals, equalization of expenditures and tax effort. In 1962, the state aid formula was again modified, following recommendations made by the Diefendorf Commission. Aid was distributed on the basis of an aid ratio relating each district’s taxing capacity to that of the state as a whole. The state committed itself to share in local expenses up to a dollar per pupil "ceiling," with not only a maximum but a minimum guarantee. These concepts persist today in the basic state aid program, Operating Aid. The "ceiling" still represents a hypothetical expenditure per pupil. The state "shares" part of the locality’s expenses, permitting the local school district to determine its own budget and levy property taxes to support that budget. At first, the state committed to share 49 percent of the total expenses of the average local school district; later in 1968-69, it reduced this commitment to 46 percent. The percentage representing the state’s share was again reduced to 36 percent when the ceiling was raised in 1974 and remains in today’s basic formula for Operating Aid as the share factor used in computing aid for a district of average wealth. 25 Additional aid programs such as Transportation Aid and Excess Cost Aids for children with disabilities were soon added to the basic formula. The package of aids that make up the current "system" grew to unwieldy proportions, as will be described below. School revenues from state sources went from $4 billion in 1980 to $9 billion in 1990 and total expenditures doubled, increasing from almost $10 billion in 1980 to $20 billion in 1990. 26 The operating aid ceiling and flat grant were raised. At the same time, most school districts were experiencing a marked decline in enrollment. On a per pupil basis, enrollment decline resulted in increased aid. With the notable exception of large cities like New York City, it meant smaller classes at the school level, and reduced teacher pupil ratios. The decline in enrollment was such that, by 1982-83, over a third of the state’s school districts, 263 districts, were receiving aid on a save-harmless basis. Several were receiving aid based on a save-harmless figure that dated back to 1965, almost twenty years earlier. 27 The fact that so many districts were receiving aid on a save harmless basis in 1982 clearly demonstrated that the formula then in place was not working. Political and judicial pressure to reform the system mounted in that year, as the court case, Levittown v. Nyquist moved to the highest court. 28 State aid to local school districts becomes the focus each year of a political drama. Efforts to meet new needs, to help schools keep pace with rising costs, to consolidate aid programs, simplify and reform the system of distributing aid - all must be fought out on the stage of the budget battle. In the legislature, annual priorities often center on cost control. Partisan, as well as personal, political ambitions frequently play a decisive role. As a result, the emerging "system" of funding schools contains many contradictions. While it sometimes reflects reform intentions, the bottom line is often disappointing. The state gives with one hand, takes away with the other. A review of how these conflicting tendencies have affected school districts in the last ten years will illustrate this point. Deficit Reduction The Package of Aids Looking at the package of 1998-99 aids for the state as a whole, we see that about 95 percent of state aid distributed is currently distributed in six major categories, as shown in the attached pie graph. (Figure 2) Operating Aid accounts for 52.3 percent of all state funds. Programs to serve special education students (Excess Cost Aids) now account for 15 percent of total state aid. Transportation and Building aids, both based on district expenditures, together account for 6.9 and 7.8 percent respectively. Extraordinary Needs Aid receives 6 percent of the total and Tax Effort and Tax Equalization aid together account for 6.9 percent of the total. The sum of all "Other Aids" constitutes only 5 percent of the total state aid package. Table 5 shows amounts of aid per pupil received in major state aid categories in1998-99 by the high minority school districts, and each Big Five city district along with the average low minority school district and the average for each downstate county and for the state as a whole. Operating Aid Operating Aid continues to set a fixed amount of aid per pupil in the form of a "ceiling," or proxy for a dollar expenditure per pupil, and allocates a share of that amount to all public school districts. Current law fixes the ceiling at $3,900 per pupil and, while keeping the state’s share at 36 percent for a district of average wealth, it offers four options for computing a varying state share which adjust up or down, depending on the district’s property and income wealth per pupil. 33 In other words, the option to choose among four levels of state/district sharing provides an equalizing factor by varying the share ratio according to district wealth. Operating Aid currently provides another small adjustment based on a district’s actual expenditure per pupil,giving a little more aid to those districts that spend under $8,000 per pupil. To smooth out the effect of enrollment growth, the formula counts aidable pupils using a ratio of the two previous years. For aids payable in 1998-99, for example, operating aid is calculated using the ratio of its 1996-97 pupil count to its 1997-98 pupil count. 34 The program continues an especially non-equalizing feature: every school district, however wealthy, is guaranteed at least a minimum of aid in the form of a flat grant of $400 per pupil.
Operating Aid remains the most important component of the total aid received by all high minority school districts as Table 6 shows. Bear in mind the previous findings; suburban high minority school districts are poorer in property wealth and income wealth than low minority school districts and other neighboring districts, a fact reflected in the county averages. Therefore, the state state’s share of total revenues was higher in high minority school districts than in low. The state contributed 61 percent of all revenues in two of the suburban high minority school districts, 41 percent in two others and between 23 and 15 percent in the other three (Table 2). The state contributed less, an average of 15 percent, of all revenues in the low minority school districts. As a percent of total aid (not the total revenues, which include federal aid as well as locally raised revenues) Operating Aid for the suburban high minority school districts varied in 1998-99 from 38 percent in Roosevelt to 65 percent in Uniondale. The range in variation is not surprising, as the districts differ in local property wealth and income as well as in their pupil counts and attendance ratios, all of which largely determine the amount payable as Operating Aid. They differ, too, in the mix of other aid programs that comprise their total state aid entitlements. Operating Aid for low minority school districts comprised on the average 41 percent of total aid Among the three downstate counties, the average percentage of total aid represented by Operating Aid was 41 percent in Suffolk and 46 percent in both Nassau and Westchester. Extraordinary Needs Aids School districts outside the big cities in the non-rural metropolitan suburbs do not benefit significantly from the program. In only three districts among the eight high minority school districts outside New York did the district’s percentage of total aid represented by ENA reach double digit levels. (This was true for 1998-99 aid, which exempts ENA from the Transition Adjustment and also provides a separate save harmless provision to ensure no loss of ENA funds over the previous year’s entitlement.) Low minority districts outside the big cities receive even less ENA, an average of only 1 percent. For the counties, the average percentage of total aid represented by ENA varied between 2 and 5 percent. The Big Five cities all received significant percentages of their total aid in the form of Extraordinary Needs Aid.
Tax Effort and Tax Equalization Aids Under the 1998-99 law, there were two tax adjustment aids: Tax Equalization Aid and Tax Effort Aid. Tax Equalization Aid provides aid "for school districts and their taxpayers burdened with exceptionally high tax rates." 35 Tax Effort Aid provides aid to districts in which the property tax on residential property exceeds three percent of the district residents’ adjusted gross income. It is defined as a rate of $19.50 per $1,000 of full value needed to fund the district’s approved operating expenses if less than $8,000 per pupil. It is not available to property-rich districts with a full value property value ratio of more than 2.00. Together, the tax adjustment aids provide relief for districts that have relatively high tax rates in terms of the relationship between taxable property and expenditures and those districts in which the tax levy is relatively high in relation to income. Both adjustments channel aid to high minority school districts in high cost areas like the downstate metropolitan region. Two high minority districts, Hempstead and Mt. Vernon receive a major portion of their aid (45 percent in Mt Vernon and 41 percent in Hempstead) in the form of Tax Effort and Tax Equalization aids. Because these aid programs are still subject to caps under the current Transition Adjustment, Mt. Vernon and Hempstead, both high need, high minority school districts, were effectively prevented from realizing the full amounts that the tax adjustment aids would otherwise have contributed. In response to Governor Pataki’s initiative, the legislature enacted the STAR (State TAx Relief) program in 1997, giving tax relief on residential property to all taxpayers in the form of property tax exemptions directly payable to the taxpayer. Senior citizens with limited incomes will receive payment in the current year. The state will reimburse school districts for the resulting loss. The program attempts no adjustment for wealth or pupil needs. Its effect is regressive because the wealthier the taxpayer, the larger the reimbursement. The program is not a school aid program, but rather a vehicle for tax relief. It provides affluent taxpayrs direct and grossly unequalized tax relief with state funds that might otherwise have supported school programs. Excess Cost Aids Additional Aids
Among the many programs that were added to the state aid package to meet the needs of specific pupil groups, programs like (LEP); ERSSA for mainstreaming special education pupils, and recently, Operating Standards Aid to help pupils meet the new rigorous academic standards imposed by the Board of Regents, were intended to benefit high need and high minority school districts. A brief account of some targeted aids that affect high need school districts follows. Operating Standards Aid Recent pre-tests found that throughout the state, 27 percent of those tested failed to meet the passing grade in English. 36 In New York City the percentage was 37 percent. Reports from teachers and administrators throughout the state have indicated that thousands of students will have difficulty meeting the new requirements. A program to help students prepare for the tests and to support activities and programs to train teachers and improve educational practices was designed by the Board of Regents. It provides aid on the basis of a formula which takes into account, not only a district’s wealth and level of spending, but adjusts the pupil count in recognition of extraordinary pupil needs. For the year 1998-99, only an estimated $81.96 million was allocated statewide for Operating Standards Aid 37 - hardly enough for the thousands of students who urgently need help. Schools must now focus on ways to bolster learning practices, to provide tutoring, teacher training and summer school support if the Regents’ leap to new, higher state standards is to succeed. New funds must be found to support their efforts. Growth Aid Section IV. The Impact of State Aid on High Minority
School Districts Tables 6 shows the relative importance of component aid programs within the total aid package. It makes clear the importance of Tax Effort and Tax Equalization Aids for suburban high minority school districts. High minority Big City school districts received more Extraordinary Needs Aid (ENA) than other districts as the legislation intended. As Table 6 shows, ENA did not supply a significant percentage of the total aid in high minority districts outside the Big Five. Unlike the downstate Big Five cities of Yonkers and New York, the suburban high minority school districts receive considerably more state school aid per enrolled pupil than their neighbors in the downstate area. Part of their advantage derives from their Operating Aid entitlements, which are determined by the relative wealth of the district and comprise a large percentage of total aid for most of the suburban high minority districts, as Table 6 confirms. The Transition Adjustment The Transition Adjustment contains two contradictory factors: a guarantee of aid to districts that stand to lose aid through formula changes, increased wealth or falling enrollment and restraints on districts that would otherwise be entitled to increased aid. As a result, many legislative initiatives intended to bolster aid in high need districts or serve a specific category of districts or pupils have not had full effect. For example, ENA (Extraordinary Needs Aid), aid to districts making extra tax efforts, and aid to support minimally disabled pupils in the regular education program, ERSSA (Educationally Related Support Services) were designed to produce substantial increases in the total of formula aids for high need school districts. At its start, these programs were included in the formula aids that were subjected to the Transition Adjustment, with the result that their intended impact was substantially thwarted. Although the list of aid programs subjected to the Transition Adjustment has been pared down every year until now only three aid programs are subject to the Transition Adjustment, the overall limitations on allowable increases in state aid continue to distort the equalizing impact of the total state aid program. For aid in 1993-94, the Transition Adjustment imposed a 3 percent cap on total aid allocations for all districts except New York City which was allowed not more than a 1.55 percent increase. 41 Since that year, the Transition Adjustment has continued, but with annual adjustments that change not only the list of aids subject to the Transition Adjustment, but the permissible increases in specified formula aids and the limits imposed on total state aid. The law for 1998-99 sets a maximum (or "cap") of 5 percent over Operating and Tax Adjustment Aids received in the previous (base) year. 41 It continues a 17.6 percent limit on the increase permitted in the total of basic Operating aid and Tax Adjustment Aids due in the current year compared to the sum of those aids in the previous (base) year. The 1998-99 law provides for a positive, save harmless adjustment ( a minimum of 1.8 percent times the base - the total aid received the previous year) 42 Thus, districts that would otherwise lose aid were held harmless and, in fact, are assured of an overall increase in aid, while those high need districts that stand to gain aid are restricted by caps. All downstate groups, both high and low minority districts lost aid in caps applied by the Transition Adjustment, but losses in high minority districts were much greater than in others. The caps that applied to high minority school districts deprived them of some of the aid that was coming to them in the three aid programs subject to the Transition Adjustment, Operating Aid, Tax Effort Aid and Tax Equalization Aid. As Table 6 indicates, the three aids that are capped are important components of the total aid packages of suburban high minority school districts, accounting for more than half of their total aid entitlements, even after caps were applied. In the language of the State Education Department, in all but one high minority school district, Roosevelt, the loss resulting from the Transition Adjustment in the current year was attributed to the limitation "Maximum Change @ 17.6 percent" over the base year, that is, the limitation on the allowable increase in aids covered by the Transition Adjustment over those paid in the previous year. Figure 3 shows all the state’s school districts ranked according to the per pupil aid attributable to the Transition Adjustment. The list of winners ranks districts in order of save harmless aid gained per enrolled pupil. Most winners are upstate districts, many are affluent and small, vulnerable to annual loss of enrollment. In contrast, losers received cuts applied in the form of caps. They are concentrated in cities like Yonkers and Mt. Vernon and other high minority school districts in the downstate area where Tax Effort and Tax Equalization Aids, enrollment growth and/or new pupil needs would have produced increases in state aid. (Figure 4). Why is it that the high minority school districts are capped when the kinds of pupil they must educate and the limited resources available to them should entitle them to a larger share of state aid than they actually receive? Can we identify the components of this punitive program -certainly not an "aid" - which appear to reduce aid entitlements disproportionately in the high minority school districts? There are several explanations for the contrary and anti-equalizing impact of the Transition Adjustment: Save Harmless Guarantees
Save harmless guarantees still determine aid for a large number of suburban school districts in which aid entitlements continue, from year to year, without correction for enrollment loss or wealth appreciation. According to a report prepared for the Board of Regents, "only one in eight districts receives State operating aids as determined by formula without adjustment." 43 In 1997-98, 319 school districts, or 46.8 percent of the total number of districts, received aid on a save harmless basis, 40.5 percent had their formula entitlements capped and only 12.8 percent of districts statewide were subject to no adjustments. The report estimated that: "... $514.1 million was withheld from school districts in 1997-98 to prevent aid increases that would occur if the formula were permitted to operate. In effect, these districts are treated as if they had to serve 202,000 less pupils than they actually do. Another estimated $136.4 million was paid in save-harmless aid to ensure that no losses are incurred, even though the formula would reduce aid. In effect, these districts are treated as if they served roughly 140,000 additional students.’ 44 For 1998-99 the same pattern of save harmless aid paid and cuts imposed continued. Statewide, $ 453.7 million was withheld from school districts in 1998-99. At the same time, $141.8 million was returned to school districts in the form of save harmless aid. The three downstate suburban counties together lost $248 million in the form of caps - aid that would otherwise have supported programs in the less affluent districts. The same counties gained $50 million in save harmless aid, a net loss of 197 million for the three counties. The nine high minority districts ( including Rochester and New York City) together lost $94.3 million in aid that they would have earned had the aid formulas been given full rein. Their losses comprised 30 percent of the statewide total Transition Adjustment. Principal losers among the high minority and Big City school districts are shown in Figure 4. Enrollment
Table 7 illustrates enrollment trends in high minority school districts for the years between 1990 and 1998 for different groups of districts. It shows more rapid growth of "Enrollment Register for Regular Educa |
