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REPORTS

Checkerboard Schooling:
How State Aid Affects High-Minority School Districts in New York State

Table of Contents
Executive Summary
Introduction
Section I. Profile of High Minority School Districts in the Downstate Suburbs
Section II. Profile of the Big City School Districts
Section III. New York’s State Aid for Education
Section IV. The Impact of State Aid on High Minority School Districts
Section V. Student Outcomes
Section VI. The Politics of State Aid
Conclusion
List of Tables and Figures

 

Executive Summary
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 percent 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. The attached maps show a checkerboard pattern, with high minority districts often surrounded by "low minority" districts - those in which 20 percent or less of the enrollment is minority.

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:

  • to use the downstate metropolitan region to analyze the effect of state aid policies on high minority school districts and to identify factors which reduce their aid entitlements;
  • to compare high minority to low minority districts in three downstate counties, Nassau, Suffolk and Westchester and the Big Five to other districts in the same region;
  • to determine if the state provides adequate resources to meet the extra needs of high minority school districts.

Section I. Profiles of High Minority Suburban School Districts
Comparing the demographic characteristics of the suburban high minority school districts to the low minority school districts in the three downstate counties, we found that suburban minority students were highly concentrated in seven school districts that were often isolated from each other. By definition, all seven had minority enrollments of over 80 percent; all but two had minority enrollments of over 90 percent. By contrast, low minority school districts in which non-white enrollment was 20 percent or less of total enrollment (the state’s criterion for low minority districts) had an average minority enrollment of 9.6 percent.

Table 1 shows that in suburban high minority school districts:

  • pupils with limited English proficiency made up 9.8 percent of enrollment compared to 1.5 percent in low minority suburban school districts;
  • the median percentage attendance rate was 91.3 compared to a median of 95.1 in low minority suburban school districts;
  • the median dropout rate was 1.8 percent compared to 0.4 percent in the low minority suburbandistricts;
  • the median suspension level was 9.2 percent compared to 2.2 percent in the low minority suburban school districts.

In the downstate suburbs, most of the children enrolled in high minority school districts live in environments of poverty. (Table 2)

  • The average percent of pupils participating in a free and reduced-price lunch program was 70.9 percent in the high minority districts, compared to 10.9 percent in the low minority districts.
  • Four of the seven suburban high minority districts were below the state average in property and income resources as measured by their combined wealth ratios, or CWR’s. 1
  • Two were close to 1.000, the average CWR for the whole state. In one district, Westbury, the CWR was slightly above the state average.

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:

  • In three of the seven high minority suburban districts, state aid contributed less than 25 percent of total school budgets; in two, 41 percent of the total; in two of the poorest, Wyandanch and Roosevelt, the state contributed 61 percent.
  • Regular instructional expenditures were lower and special education expenditures per pupil were significantly higher in high minority districts as compared to low minority districts.
  • Overall, high minority school districts in the downstate suburbs spent slightly less per pupil, on average, than the average low minority school district’s $13,257 per pupil.
  • Local school tax rates in the high minority school districts were significantly higher than $16.40 per $1,000 full property value, the median for school tax rates in other downstate districts and well above the median tax rate for independent school districts in the state as a whole, which was $15.38 per $1,000 of full property value.

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
Demographic characteristics of the Big Five school districts are summarized in Table 3:

  • The median percent of minority pupils enrolled in each of the Big Five cities ranged from 49.7 percent in Yonkers to 83.9 percent in New York. For the rest of the state of New York, exclusive of the Big Five cities, the median was 3.8.
  • In the large cities, the median percentages of pupils with limited English Proficiency was 15.1 percent of enrollment compared to a median of 0.3 in the rest of the state.
  • The median attendance rate in the Big Five school districts was 89 compared to 95.1 in the rest of the state.
  • The median dropout rate was 5.4 percent for the Big Five compared to 1.6 percent in the rest of the state.
  • The median suspension rate in the Big Five was 9 percent compared to 3.3 percent in the rest of the state.
  • In the Big Five, the percentage of enrolled pupils assigned to special education ranges from 11 percent in New York to almost twenty percent in Syracuse, compared to an average of 13.3 in the rest of the state.

 

Table 4 shows that the large cities serve a substantially higher portion of poor children than the rest of the state:

  • The percent of pupils participating in the free or reduced-price lunch program in the Big Five ranges from 70.7 percent to 90 percent compared to 30.5 percent in the rest of the state (which includes high minority school districts outside the big cities).
  • All but one of the cities had a combined income and property wealth ratio (CWR) below that of the state as a whole.
  • The state’s share of total district revenue varied from 34 percent in Yonkers to 68 percent in Buffalo. Reflecting regional cost differentials, upstate city school districts have lower wealth, so they receive larger percentages of state aid.
  • With a wealth ratio of 0.990 (below the average ratio for the state) New York City received 43 percent of its revenues from the state; Rochester, with a wealth ratio of 0.588 received 55 percent of its revenues from the state; Syracuse with a wealth ratio of 0.483 received 64 percent of its revenues from the state.
  • 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. Local tax rates in the Big Five cities are simply computed by dividing the amount budgeted for schools by the aggregate property value available to the city. Expressed as dollars per each thousand dollars of full property value, these computed rates are used to represent the city’s tax effort as compared to other districts. As Table 4 shows:
  • Local tax rates ranged from $12.77 per $1,000 in Buffalo to $21.39 per $1,000 in Rochester, compared to a median of $15.38 per $1,000 for the rest of the state.
  • Total expenditures per pupil were considerably lower in the Big Five cities compared to the neighboring suburbs, ranging from $8,213 in New York to $10,856 in Yonkers,. The average for the rest of the state, uncorrected for regional cost differentials was $11,569.
  • Special education costs in the Big Five cities, ranged from $ 7,987 per pupil in Syracuse to $15,321 per pupil in New York, compared to the median of $9,678 per pupil for special education costs elsewhere in the state 2

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New York State’s Aid for Education
New York’s state constitution places the responsibility for public education firmly in the hands of the state. The original formulas for distributing funds for public education were based on the concept of equal educational opportunity; they were intended to pay out aid according to each district’s pupil need, in inverse relationship to district wealth. The state committed itself to share in a district’s expenditures up to a given point, which became known as a per pupil expenditure "ceiling." In the 1920’s, when systematic state aid funding began, one formula incorporated these principles and dispersed most of the state aid. That formula, called Operating Aid, still accounts for about half of all state aid distributed and remains the main vehicle for adjusting school funds to local needs and ability-to-pay. In time, the formula parameters changed and many new aid programs were initiated, often targeted to meet the needs of specific pupil groups or political constituencies.

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:

  • Operating Aid, represented an average of 47 percent of total aid in the suburban high minority districts and 56 percent of total aid in the Big Five.
  • The percentage of total aid accounted for by aid for pupils with disabilities (Excess Cost aids) ranged from five percent in Wyandanch to 18 percent in Yonkers.
  • Extraordinary Needs Aid (ENA) was important for three of the large city school districts, Rochester, New York and Yonkers, but in the suburban high minority areas, ENA accounted for a relatively small percentage of total aid.
  • For the suburban high minority school districts, Tax Effort and Tax Equalization Aids (lumped in the table as Tax Adjustment aids) provided a significant portion of total aid, particularly in Mt. Vernon, Amityville, Hempstead and Roosevelt.
  • The sum of all other separate aids such as aid for pupils with limited English proficiency, for the gifted and talented, for library books, computer programs, and help to meet the new operating standards, was not sufficiently funded to meet effectively the extra needs of high minority school districts.
  • All other programs together contributed less than twenty percent of the total in all but two high minority school districts.

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:

  • In the suburbs, total state aid per pupil was greater for the poorest of the high minority school districts; in two it was lower than the average for the low minority suburban school districts (Table 6).
  • But, in the downstate Big Five cities of Yonkers and New York, total state aid per enrolled pupil was $2,197 and $3,641 respectively, well below the state average of $ 3,876 per pupil.

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 to some districts and cut-backs or limits on receivable aid in others. It contains two contradictory elements, restraints on the overall aid entitlement and assurances to school districts of no total dollar loss in aid. Because its guarantee is framed in terms of total dollars, rather than dollars per pupil, it protects districts even if their property appreciates and their enrollments decline. It applies caps on aids earned that prevent 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.

  • In 1998-99, high minority school districts in the downstate area that otherwise would have gained aid were disproportionately penalized while richer low minority suburban districts that stood to lose aid because of declining enrollments and/or a growth in wealth were held harmless.
  • All the big cities but Buffalo lost potential aid disproportionately in the form of the Transition Adjustment because of limits on the increase in aid earned as compared to the previous year.
  • The percent of total aid deducted was more than 30 percent of their total dollar aid in three of the high minority suburban school districts.
  • When all the state’s school districts were ranked according to the amounts of aid per pupil lost in "caps" on allowable aid imposed or gained in the form of save harmless awards by the Transition Adjustment, the high minority school districts showed up as big losers. Figure 3 lists the top winners and losers in aid as a result of the Transition Adjustment.
  • Four of the high minority suburban school districts were among the state’s 25 most penalized as Figures 3 and 4 show.
  • Four of the state’s seven suburban downstate high minority districts lost more than one thousand dollars per enrolled pupil in 1998-99, and per pupil losses in two other downstate high minority districts were each at least twice as high compared to the average loss in the Transition Adjustment in each of the downstate counties and the average for all the low minority districts in the downstate area.
  • In the downstate suburban area, the state withheld over $38 million in caps imposed through the Transition Adjustment;
  • The addition of Rochester and New York City to this list would bring the total loss from caps to $94 million for all nine high minority and downstate school districts - about 30 percent of all the caps imposed statewide.

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 examined in detail trends in pupil enrollment between the years 1990 and 1998 to determine the extent to which high minority school districts in the suburbs had major enrollment gains in any year. (Table 7).
  • We looked at changes in CWR over time to determine whether they might explain some of the gains in Operating Aid that resulted in caps for high minority school districts.
  • Combining findings in these trends with data on Tax Effort and Tax Equalization Aids, we constructed a multiple regression model to explain variation in the Transition Adjustment. The model encompassed all school districts in the downstate area, and all of the Big Five Cities.

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:

  • It guarantees no loss of total dollar aid to all districts whatever their change in wealth or enrollment.
  • It does not permit the formula to account for new needs that affect poor districts especially as their enrollment increases.
  • It does not allow changes in local property value or community income levels to affect aid entitlements.
  • It tends to cancel out beneficial aid programs intended to benefit high-need districts because these new initiatives produce exactly the increase in aids that the caps target.
  • It discriminates in its selection of aids to include in the computation. For the year 1998-99, the Tax Adjustment aids and Operating Aid used to compute the Transition Adjustment disproportionately penalized New York City, the downstate metropolitan area, and the high minority school districts within it.

Pupil Outcomes
How do present state policies affect students? If the inequities demonstrated in our analysis of New York state’s distribution of school aid are to be addressed, the disturbing deficiencies in academic achievement of students in high minority school districts must be acknowledged and taken into account. The State Education Department’s report to the legislature in April, 1998 illustrates serious gaps between high minority school districts 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 both 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.

Table 8 reports data from the 1998 State Education Department’s report on staffing and course offerings in the downstate suburban districts:

  • In high minority school districts, pupil/teacher ratios ranged from 14 to 18, with a median of 15 - higher than in low minority districts, which had an median of 13.
  • Median teacher salaries were similar for both high and low minority districts, suggesting that market factors strongly influence salary rates in these districts.
  • High minority districts had fewer permanently certified teachers, a median of 75.5 cent compared to 81.8 percent in low minority school 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.

  • In three of the suburban high minority districts, less than 10 percent 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 percent, the median for low minority school districts.
  • In the suburban high minority districts, between 60 and 89 percent of the students graduating were college bound in 1995-96 compared to 91.7 percent in the low minority 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:

  • Pupil/teacher ratios were markedly higher in the large cities especially in New York and Yonkers, 15 and 15.6 respectively, compared to a median of 13.6 in the rest of the state.
  • Median teacher salaries in New York and Yonkers were lower than the average in the rest of the state, but data for the individual big cities was incomplete and did not adequately reflect regional cost differentials.
  • The Big Five had fewer teachers with permanent certification; 75.5 percent of all teachers was the median for those permanently certified in the Big Five districts compared to 81.1 percent in the rest of the state.
  • Median years of experience of teachers in the city school districts was similar to that in the rest of the state.
  • In the Big Five school districts, less than 20 percent of the pupils typically graduated with Regents’ diplomas on 1996-97; in the rest of the state 49 percent did.

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

  • On the 1996-97 Regents’ high school examinations, given at the high school level, fewer pupils were given the test in the suburban high minority than in the suburban low minority school districts. Differences in the percentages of pupils tested in the Big Five school districts and in the rest of the state were even more substantial.
  • In Comprehensive English, 59 percent of pupils in suburban districts were tested in high minority districts, compared to the median of 80 percent in low minority school districts. Table 11 reflects a similar pattern for the Big Five Cities where the median was 45 percent compared to 77 percent in the rest of the state.
  • In U.S. History, Sequential Math I, and Biology, similar discrepancies in the percent of children tested existed between high and low minority school districts in the suburbs as well as the big cities.
  • The percentages of enrolled pupils passing the tests showed similar disparities.
  • The data on the percent of total enrollment passing each test revealed even greater disparities between scores in the Big Five school districts and those for districts in the rest of the state. In general, less than half of big city children succeeded in passing the Regents’ tests given in 1998.

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
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
In conclusion, we found that state funds do not provide enough support for children in high minority school districts in either the downstate suburbs or the state’s largest cities. 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 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
You are on an airplane, stacked in a holding pattern above New York City. As the plane circles the metropolitan area, you look down on treetops and gardens, ribbons of highway, commercial strips glowing with neon, development houses clustered on curving streets and many swimming pools. In the distance the towers of Manhattan rise. The ocean laps along the southern shore and bridges crossing the waters of Long Island Sound link Manhattan and Westchester county to Brooklyn, Queens and the Long Island counties of Nassau and Suffolk. You do not see the checkerboard map that describes the diverse populations of school districts in the suburban region below. You do not see the invisible borders that carve out the 162 separate school districts that are defined by state law and designated by maps. (See Figure 1)

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:

  • Do current state aid programs provide adequately for the extra academic needs of schools districts serving primarily minority students?
  • Do the complex state aid formulas now in place increase resource inequities?
  • Do political or economic exigencies distort the original objectives of New York State’s system of funding public education?

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:

  • Present comparative demographic and fiscal profiles for high and low minority school districts in the downstate suburbs as well for each of the Big Five school districts as compared to the rest of the state excluding the big cities.
  • Describe the current state aid system and examine the impact of major state aid formulas that were expected to support low-wealth, high minority school districts in the downstate metropolitan counties of Westchester Nassau and Suffolk and the Big Five City school districts.
  • Identify those programs within the state school aid system that counter the equalizing intent of such formulas.
  • Review the impact of caps on aid and save harmless guarantees and identify possible causes for the disequalizing effect of the Transition Adjustment included in the state aid formula.

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
The state’s five largest cities, Buffalo, New York, Rochester, Syracuse and Yonkers together enroll 42 percent of all the state’s pupils and 79 percent of the state’s minority pupils. Many of these students are in school buildings that are themselves more than 80 percent minority, although their schools may lie within districts that do not meet the state’s criterion for high minority. Most pupils in the Big Five cities live and learn in a segregated environment. To compare available data on conditions in high minority schools in our largest cities with conditions elsewhere in the state we must look at statewide data exclusive of the Big Five cities, rather than at statewide averages, which include and are influenced by the city data. 22

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

  • Attendance rates in the Big Five districts were much lower than those elsewhere in the state, ranging from 87 percent in New York City to 91 percent in Buffalo and Syracuse. Outside the cities, in the rest of the state, the median attendance rate was 95.1.
  • Dropout rates in the Big Five cities ranged from 2.1 percent in Buffalo to 7 percent in Rochester. Outside the cities, in the rest of the state, the dropout rate was only 1.6 percent. Suspension rates ranged from 3.2 in New York City to 14 in Syracuse, while in the rest of the state the median percentage was 3.3.
  • In the Big Five City districts, the percentage of pupils enrolled in special education ranged from 11 percent in New York City to 20 percent in Syracuse, compared to 13.3 percent, the median percent of enrollment that was enrolled in special education in the rest of the state.

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
Background
The New York State constitution requires the state to "maintain a system of common schools wherein all children may be educated." firmly establishing the state’s responsibility for public education. At the start of the century, the state encouraged the development of public schools by distributing small amounts of money to supplement the local contributions that supported the then mostly rural local schools. Aid was based on per-teacher quotas and varied according to the way the district was classified. 23 Later, state policy encouraged the formation of local education centers, the building of high schools and the consolidation of small local school districts. By the 1920’s, interest shifted to the creation of a statewide system for distributing school funds. A search began for criteria that would distribute school funds fairly and free school funding from political bias.

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:

"The state should insure equal educational facilities to every child within its borders at a uniform effort throughout the state in terms of the burden of taxation; the tax burden of education which would, throughout the state be uniform in relation to taxpaying ability, and the provision of the schools should be uniform in relation to the educable population desiring education."

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 percent of total state expenditures appropriated as school aid reached its high point in 1989-90, then fell sharply as the state faced up to its $6 billion budget deficit. To reduce its overload of debt, the state began to cut back funds for education, beginning with a "restructuring" of its Teacher Retirement System (TRS), which reduced aid by the amount that would have been paid to TRS on behalf of school districts and required a $67 million cutback in school aid. In 1990, the legislature passed an unprecedented mid-year "Deficit Reduction Assessment" in the form of a $190 million "give-back" by local school districts 29 The restructuring disrupted payment schedules and required many local districts to borrow funds to meet on-going needs. 30 Overall, state aid dropped by $500 million between 1990-91 and 1991-92. In 1993-94, the save harmless guarantee that was previously included in Operating Aid assuring no reduction in total dollars over the aid received in the previous year, along with new restraints on allowable increases in aid, were incorporated into one program, "Transition Aid." Transition "Aid" is now more properly referred to as the "Transition Adjustment."

The Package of Aids
The impact of state aid on school districts of various types in New York State must be viewed as a total package. 31 The Governor’s Executive budget for 1999-00 lists 19 formula-based aids, and about 30 other aid categories and grants. 32 State aid has mirrored legislative efforts to solve specific problems, such as rapidly rising property values that produce loss of state aid in affluent suburbs or meet the needs of certain constituencies such as pupils with limited English. New aid programs are frequently added to what has become an accretion of programs and policies. However, many are underfunded. While each separate aid program or formula 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 state aid allocation.

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
New York State’s system of funding education combines both state aid and locally generated funds. It was based on the concept that state aid should supplement the local contribution and compensate for disparities in local ability to pay and for local differences in need. Operating Aid has been the engine for accomplishing these objectives and remains the state’s chief vehicle for equalizing state aid entitlements. It was designed to help defray the on-going operational costs of every public school district Originally, it was the state aid formula - the mechanism that was expected to equalize aid on the basis of objective, measurable criteria. More than 80 percent of all state school aid was allocated in the form of Operating Aid, with only two or three expense-based aids supplementing the total dollar distribution. Now, many other aid programs and separate formulas add to the complexity of the state’s contribution to the funding of public schools. Nevertheless, the formula for distributing Operating Aid remains the most important aid and still incorporates the basic equalizing intent of the state’s funding mechanism.

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
Extraordinary Needs Aid has become one of the largest categories of aid, distributing 6 percent of total aid distributed by the state. It was initiated in 1993-94 when the Board of Regents recognized that the extra high needs of urban school districts and sparsely populated rural districts were not being met. The formula for ENA reflects this concern. 1) It counts as eligible for ENA aid the number of pupils receiving special aid for limited English proficiency; 2) and the percent of pupils participating in free and reduced price lunch programs.3) The ENA formula adds a factor to measure geographic sparsity in rural school districts, and 4) gives extra aid to districts with a concentration of poor pupils in excess of 78.6 percent. The formula, like Operating Aid, is wealth adjusted, but uses a special sharing ratio based only on relative income per pupil, not property wealth. When first established, ENA aid was largely ineffective because it was included in the Transition Adjustment’s capping provisions then in effect. To free the program from these restraints, it was excluded from the list of aids covered by the Transition caps in 1996 and now contributes more effectively to the large cities for which it was designed. A specific save-harmless clause now assures districts of at least as much ENA as they received in the previous year.

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
Measures to alleviate local property taxes where the burden is especially high have been included in the package of state aids since the early 1980’s. Formulas relating the districts’ expenditures (tax levy) to its available property tax base were devised to target aid to districts where property values were rising rapidly. From its inception, New York City was excluded from this aid program, known in its original incarnation as High Tax Aid. It chiefly benefited the surrounding suburban school districts where rising property taxes were the major political issue.

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
Aid for pupils with disabilities, called Excess Cost Aid, is an important component of the total aid package. Statewide, pupils served in special education programs are given extra weights in the district’s wealth measure and in computing district expenditure per pupil, but not in total aidable pupil units (or TAPU), the pupil count used to distribute most aids. Excess Cost Aid is provided according to the hours that are required for each type of disability. Those served by the district in full time programs receive additional aid. High Cost Aid is provided for more severely disabled pupils who are placed in full time, private residential programs. Excess Cost services for both types of pupil have greatly expanded over the years and so have Excess cost aids. They now account for 15 percent of the total state aid distributed. In the high minority school districts, Excess Cost Aids play a slightly more important role than in the low minority school districts, accounting for 20 or more percent of total aid in five of the high minority districts, 14 percent of total aid, on the average, in downstate low minority school districts and between 18 and 22 percent of the total aid received for the three downstate counties.

Additional Aids
The total aid package includes many aid programs, some with a long history like Transportation Aid and Building Aid, each of which represents about 7 percent of total aid statewide. Aid is provided for the purchase of library books, and for both computer hardware and software; for pupils with limited English proficiency (LEP); for the gifted and talented; extra support to keep pupils in regular, rather than special education programs (Educationally Related Support Services called ERRSA). While these "other" aids demonstrate that the state has acknowledged some important needs, together they account for only 5 percent - a relatively small portion of the total aid received by high minority school districts.

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
Of particular interest in the current year is Operating Standards Aid. The Board of Regents in 1997 approved a comprehensive plan requiring students to meet higher learning standards. Students in the past have been able to take the less demanding Regents’ competency tests for graduation and many pupils with limited English proficiency or other limitations were not required to take the more challenging exams. Beginning in June, all high school students were required to take a six-hour, rigorous Regents’ examination in English and in the following year, will be required to achieve a passing grade of 55 on the test in order to graduate. Freshmen in the entering class of 2001 will be required to score at least 65 on the test. They will be expected to take more rigorous courses in math and science.

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
Growth Aid was designed to compensate school districts with marked increases in enrollment relative to the state as a whole. In theory, increased enrollment should be reflected in greater aid because aid is distributed on the basis of pupils. As data on pupil attendance rates show, attendance rates in large cities are well below attendance rates elsewhere. In 1998-99, attendance in 1996-97 is the basis of computing operating aid. It is multiplied by the ratio of 1996-97 enrollment to 1997-98 enrollment to provide an adjustment for growth.38 Basing growth rates on attendance in large cities substantially reduces support for the growth in enrollment that they are experiencing. A supplement to basic operating aid is available in the form of Growth Aid. A district with enrollment growth in excess of 0.4 percent in the base year is eligible for a percentage increase in operating aid based on the extent to which the district’s growth exceeds 0.4 percent. The aid was funded at $58.4 million statewide, providing only nominal amounts of aid to qualifying districts.

Section IV. The Impact of State Aid on High Minority School Districts
Table 5 reports aid per pupil amounts in the most important state aid categories for the suburban high and low minority school districts, each of the Big Five school districts, the downstate counties and for the state as a whole. 39 The table shows that the downstate big cities of Yonkers and New York receive considerably less in total aid per pupil than the state average. This is especially striking in the case of New York City, because New York City is not wealthy, as defined by the aids formula; its CWR is 0.990, slightly below the state average (Table 4). Despite its less-than-average wealth and despite its very high pupil needs, New York City receives $3,641 per enrolled pupil - less than $3,878, the state average of total aid per enrolled pupil.

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 most striking spread in per pupil aid between high and low minority districts shows up in the Transition Adjustment. The Transition Adjustment clearly reflects the tension between legislative efforts to ameliorate conditions in high need school districts and political pressures to restrict overall state expenditures. As Figure 4 and Table 5 show, four of the state’s eight downstate high minority districts lost more than one thousand dollars per enrolled pupil in 1998-99, and per pupil losses in the other four high minority districts were each at least twice as high as the average loss through the Transition Adjustment in each of the downstate counties and the average for the low minority districts in the downstate area.

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 have traditionally protected districts against loss of enrollment by guaranteeing that districts would receive no reduction in total aid year after year. In the 1970’s save harmless assurances first guaranteed school districts no less aid than the total dollar sum of formula aids received in the previous year, or aid received on a per pupil basis in the previous year. The per pupil save harmless option was dropped when most districts in the state entered a decade of falling enrollment in public schools and budget constraints at the state level. To further mitigate the loss in aid that many districts would sustain as enrollment declined, districts were offered the options of computing state operating and other aids based on the number of weighted pupils in the previous year, or an average of the number of weighted pupils in the two years preceding the year in which aid was paid. Over time, guarantees of no loss in total aid prevailed, but per pupil save harmless guarantees were eliminated, masking the shrinking task of schools, especially in suburban areas, where, over the years, the same amount of school aid was applied to fewer and fewer pupils, permitting smaller and smaller classes.

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
Since most state aid is distributed on the basis of a pupil count, change in district enrollment is a crucial in determining a school district’s revenues. Enrollments began to increase when the baby-boomers reached school age in the 50’s, then to level off and, in the 70’s, to decline. In urban centers, and especially in New York City, the decline in enrollments was less marked than the decline elsewhere in the state. Enrollment in the cities began to increase in the 80’s and to rise rapidly in the last decade, a shift that should have resulted in a greater portion of all state aid flowing to New York City. But increases in aid that were produced by higher enrollments have not been realized; they have been partially cancelled out by caps imposed through the Transition Adjustment. The Transition Adjustment measures the difference in total dollars of aid received in the year in which aid is paid and the previous or base year. It does not take into account differences in the number of pupils enrolled. When considered on a per pupil basis, the failure to account for enrollment change can mean a considerable loss in actual aid available for each additional pupil that the district must serve.

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