A Primer on New York State School Aid January 11, 2016
School Aid is the Largest Piece of the State-funded Budget 25% $23.5 Billion New York State School Aid School Year 2015-16 NYS State-funded Budget State Fiscal Year 2015-16 2
Why Does the State Give Schools Aid? While K-12 public education is primarily the responsibility of local governments, the State provides aid to offset disparities in local property wealth and student need. 3
How is Need Defined? CBC assigns districts to a Need/Resources quintile according to their relative ratio of district student poverty and free- and reduced-lunch program participation to property and income wealth per student. 4
State Aid is Targeted but Wealthiest Districts Receive Substantial Funds $15,051 Total School Aid per Student, School Year 2015-16 $12,995 $10,024 $6,985 $3,722 1st 2nd 3rd 4th 5th Neediest Wealthiest CBC Need/Resources Index Quintiles 5
Two Main Types of State Aid Need-based (Foundation Aid) $15.9 Billion in School Year 2015-16 Foundation Aid was adopted in 2007 and calculates aid based on how much a district needs to provide an adequate education and how much the district can reasonably contribute. Expense-based (includes Transportation Aid, Building Aid, BOCES Aid, etc.) $6.4 Billion in School Year 2015-16 The State reimburses districts for certain expenses, such as school transportation and building construction. Reimbursement rates vary by district based on wealth and need factors. 6
Foundation Aid Is More Effective in Targeting Resources to Neediest Foundation Aid per Student, School Year 2015-16 $9,771 $8,513 $6,474 $4,379 $2,178 1st 2nd 3rd 4th 5th Neediest Wealthiest CBC Need/Resources Index Quintiles 7
Issues with School Aid 8
Foundation Aid Should be More Targeted 9
Multiple Local Sharing Formulas Distort Targeting Foundation Aid formulas first calculate how much local districts should contribute based on wealth. Under this calculation 199 districts would get $0 in Foundation Aid. Instead of fixing the formula, others were created. 582 out of 674 schools districts now receive Foundation Aid based on the highest of four different state sharing ratios. 10
Hold Harmless Provisions Continue to Direct Resources to Wealthy Districts No matter what happens to enrollment, student need, or local wealth, Foundation Aid never decreases for districts. So-called hold harmless provisions reduce resources available for districts experiencing growth in student need and declines in property wealth. Many districts were overfunded when Foundation Aid targets were first established because the initial allocation could not be lower than districts historical state funding. Overall, Foundation Aid is still $4 billion below the target, but one-third of districts, 216, are above their district funding targets. 11
Wealthy Districts Are Aided in Other Ways 12
High Tax Aid Allocates $223 Million to Districts with High Property Taxes as a Share of Income High Tax Aid per Student, School Year 2015-16 $331 $92 1st Neediest 5th Wealthiest CBC Need/Resources Index Quintiles 13
STAR Reimbursements Are Higher in Counties with Higher Property Taxes The $3.3B STAR Program operates outside school aid and reimburses school districts for a property tax exemption. School Tax Relief Program (STAR) Reimbursement per Student, School Year 2013-14 $1,702 $1,146 1st 5th Neediest Wealthiest CBC Need/Resources Index Quintiles 14
High Spending Reimbursements Lessen Cost Control Incentives 15
Reimbursements Can Be as High as 98% for Buildings and 90% for Transportation 21 Districts Receive Maximum 98% Building Reimbursement 21 173 Districts Receive Maximum 90% Transportation Reimbursement 173 501 653 16
FY 2016-17 Executive Budget 17
Governor Has Pledged to Increase Aid 4% Next Year and 5% the Following Year Total Actual and Projected School Aid, School Years 2011-12 to 2018-19 $19.5B $20.2B $21.1B $22.1B $23.5B $24.4B $25.6B $26.9B 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Projected 18
Higher Increases are Likely The Governor s pledged growth, about $1 billion in each year, aligns with a statutory cap to limit school aid increases to growth in personal income. However, the State has broken the cap in each of last 3 years. The State Regents and education advocates have called for annual increases greater than $2 billion. And, Senate Republicans have called for eliminating cuts enacted during the recession. These cuts are referred to as the gap elimination adjustment (GEA). 19
Restoring $434 Million GEA Worth Most Neediest to Average Districts Gap Elimination Adjustment per Student, School Year 2015-16 CBC Need/Resources Index Quintiles Wealthiest 1st 2nd 3rd 4th 5th -$17 -$171 -$221 -$317 -$317 20
Questions to Ask How much will school aid grow? How will the increase be distributed? Will it be through need-based aid, expense-based aid, the GEA, or other means? What changes, if any, have been proposed to reform the formulas? Will proposals stay within the statutory school aid growth cap? 21
Ready to Dive In? Check Out These CBC Resources New York State School Aid: A Big Increase, Badly Allocated Among Districts April 2015 Interactive Map of Enacted School Aid per Pupil - April 2015 Fix Broken School Aid Formulas March 2014 Better Targeting New York s Transportation Aid - December 2012 22
Sources New York State Education Department, Statewide Fiscal Profile of New York State School Districts, Masterfile for 2013-14, www.oms.nysed.gov/faru/profiles/profiles_cover.html. New York State Division of the Budget, Preliminary Estimate of 2014-2015 and 2015-2016 State Aids Payable under Section 3609 plus Other Aids (April 2015), http://publications.budget.ny.gov/budgetfp/2015-16sch oolaidruns.pdf. New York State Division of the Budget, Mid-year Update to the FY 2016 Financial Plan (November 2015), www.budget.ny.gov/budgetfp/fy2016fpmidyear.pdf. 23