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REPORT TO THE BLACK, PUERTO RICAN AND HISPANIC LEGISLATIVE CAUCUS
MARCH 2004

Based on data from the 2000-01 school year only, the five groups of suburban districts were compared to the five large city school districts in two areas: the proportion of students classified as special education and the ratio of instructional expenditures for special education students to instructional expenditures for general education students. [4]

Among the suburban groups of districts, there was not much difference in the average proportion of students in special education. High-needs majority African-American/Latino districts had an average of 12.9 percent of their students in special education, while modest-income majority African-American/Latino districts had 12.1. Both modest-income majority white student districts and middle-income districts had an average of 11.5 of their students in special education, slightly higher than the average for the high-income group of suburban districts, 11.4 percent.

Big Cities
Among the five large cities, New York City had the lowest proportion of students classified as special education.

Spending
Spending for special education instruction varied considerably among the cities, as did expenditures for general education instruction. In the chart below, we compare the dollars spent in each city as well as the ratio of special education to general education expenditures.

Among the five groups of suburban districts, in the school year 2000-2001, there was also some variation in spending for general and special education instruction, but not as much - except for the higher expenditures for special education in the high-needs African-American school districts. This resulted in an average special education to general education spending ratio that was also very high.

A good measure of school district efforts to raise local resources for its public schools is to examine the amount of local revenue that is raised per thousand dollars of property value. This type of analysis tends to nearly always show that lower-wealth districts have to make a greater effort than property-rich districts to raise the same amount of money or less. Wealthy districts can have lower tax rates, but they raise more revenue because the properties within their taxing jurisdiction have more value. When property values fall in a school district, as they have in most of the upstate cities, local tax effort tends to increase just to raise the same amount of revenue or even less revenue.

The group of school districts that made the greatest local fiscal effort during this five-year period is the African-American/Latino high-needs districts. In 1995-96 they raised, on average, $27.99 per thousand dollars of property value. This decreased to $26.95 by 2001-01, still considerably higher than any of the other groups of school districts in the three counties. By 2000-01, the African-American/Latino modest-income districts ($19.72) exceeded the tax effort rates of majority white, modest income school districts ($18.33). The lowest tax effort of suburban districts was made by the highest-income group of districts, which ranged from a high of $13.16 to $12.83, though their revenue was obviously much higher.

The cities tax effort during this five-year period is more mixed. Rochester's already high tax effort increased slightly to just under $24.73, Syracuse remained low and relatively stable ($15.80 to $15.91), while Yonkers significantly decreased its tax effort (from $19.01 to $15.28). Buffalo and New York City increased their rates of tax effort to $23.39 and $17.68, respectively. While Buffalo's property values fell during this period, New York City's increased. [5]

The Educational Priorities Panel did not expect to find such a clear trend of a general decrease in tax effort by downstate suburban districts and a general increase in tax effort among most, but not all, big cities. It has long been assumed that urban cities make less of a tax effort for schools than suburban districts. In the 1995-96 school year, the tax effort rate of the big five cities was lower than the downstate suburbs, but by 2000-01 it was higher.

Building Aid is not a prospective payment to school districts, but is a reimbursement of expenditures that districts have already made for capital repairs (such as a new roof) or new construction (a building addition or a new school). It adjusts for school district wealth and, for projects started after 1998, it adjusts for differences in construction wages among regions. In 2001, EPP released a report, Building Aid Shortchanges the Big Cities, which was an analysis of per-pupil Building Aid payments to school districts averaged over seven years, from 1992 to 1999. Our finding was that every one of the large cities was receiving less per-pupil in Building Aid than the group of school districts of similar wealth in the rest of the state.

This finding may no longer be valid, because it appears that in the latter half of the last decade, most of the large cities pulled ahead in the amount of Building Aid they received. In this analysis, per-pupil Building Aid payments were compared for two school years, 1995-96 and 2000-1. Averages for all payments during the entire five-year period were not computed. New York City shot up from per-pupil Building Aid of $142.20 to $369.71. Buffalo and Rochester also saw significant gains. Yonkers' dollar increase was smaller, $58.86, but it represented an 80 percent jump. Syracuse's Building Aid payments declined by 2000-01, but remained high at $294.54 per pupil.

All suburban groups gained in Building Aid by 2000-01, but the modest-income districts serving a majority of white students surged ahead of all other types of suburban districts in Westchester, Nassau, and Suffolk. These districts have the most students, and we can assume, the highest number of school buildings, of any other group of suburban school districts, so sample size may be a factor. But it could also be true that these districts, since they have a far smaller proportion of high-needs students than the majority African-American and Latino districts, may have more resources to invest in rehabilitating or expanding their school facilities. Either explanation is speculative. Our analysis, which is restricted to state school aid allocations, cannot determine the reasons why Building Aid payments have increased so much for this group of school districts.

The last graph compares per-pupil Building Aid amounts for all the large cities and for all schools districts in Westchester, Nassau, and Suffolk counties. In future years, the Building Aid amounts going to suburban schools districts will appear to be much smaller. In the fall of 2001, during a special session of the NYS Legislature after the 9/11 tragedy and weakening of the economy, Building Aid reimbursement was changed so that it would be based on 'assumed amortization,' that is, it was assumed that school districts had borrowed capital funds where principal and interest were payable over a 15 to 30 year basis. This was true of most large cities. But many suburban districts took out short-term bonds for their capital projects, thereby receiving a bigger annual reimbursement for their payments of interest and principal. This change in the state school aid forced these districts to refinance and to stretch out their debt. On an annual basis, some of these suburban districts began getting less Building Aid starting in the 2001-02 school year, which is outside of the time period of our charts.

One of the objectives of the 'two-way' budget adopted by the NYS Legislature without the participation of the Governor was to shield school districts from large budget cuts during a year when tax revenues fell due to the economic recession. In reviewing the computer-generated aid totals for all districts (computer run SA030-4), EPP found that this objective was met. On a school year basis, funding for school aid categories (not including grants) fell from $14.0 billion to $.13.8 billion (a decrease of $207 million). Excluding changes in Building Aid (some of which reflect refinancing and some of which reflect that only building projects with a signed contract as of February 2003 with a construction firm would be aidable), the drop in state school district funding was reduced only $92 million, a remarkable feat.

The Education Priorities Panel wanted to take a closer look at the separate aid categories for a variety of reasons. Much of the news coverage drew on comparisons with the Governor's planned education cuts. We wanted a clearer picture of state funding for districts based on last year's amounts. Also, the negotiations between the two houses over the education budget reflected a 'trade.' More districts became eligible for Tax Limitation Aid, which provided additional funding for high-taxing districts whose property wealth was 150 percent of the average for the state. In return for this tax relief measure, lower-wealth districts with high numbers of high-needs students were shielded from the full extent of Operating Aid reductions. How did this 'trade' impact the five groups of suburban districts and the cities? EPP also wanted to compare New York City's funding reductions to school districts in the downstate suburbs.

As the chart below documents, almost all groups of districts, except the high-needs African-American/Latino districts, experienced a reduction in Operating Aid (though none experienced the maximum of 6.3 percent). Given that the cities and the modest-income AA/L districts have concentrations of high-needs students, the extent of these reductions are larger than EPP would have anticipated. It is also of note that the group of high-income suburban districts had a similar percentage decrease in Operating Aid of 2.55 percent. The objective of a wealth and need adjusted decrease in Operating Aid is not clearly evident in our group of districts.

On the other hand, both groups of suburban minority districts and Buffalo, Rochester, and Syracuse received a significant increase in Extraordinary Needs Aid. The group of high-need districts included the Roosevelt school district that received a special appropriation of $6 million, some of which was reflected in aid categories. New York City's increase in ENA is inexplicably modest.

The most interesting finding is the one-year drop in special education funding (Excess Cost, both public and private) for New York City and Buffalo at a time when most other cities and groups of districts in our sample are getting increases in the range of 5 to 12 percent. Does this one-year drop in reimbursement for special education claims from New York City represent difficulties in accessing special education services or more success in interventions to prevent referrals? Anecdotal reports of our member agencies suggest that access difficulties may  account for much of the decrease in spending. Outside of special education, the only other area of significant school aid increases for districts was school bus transportation, which is also reimbursable. Because increases in Transportation Aid are included in the year-to-year comparisons of total state aid to each district,  the cuts to instructional funding are somewhat understated in the totals.