Wednesday, February 3, 2016

School Report, 2016

The good news is that the state has a surplus and can afford to restore aid to schools. The bad news is that the state isn't ready to do that.

New Yorkers will hear a lot in the next month or two about how much support the governor's budget is giving to schools and how much more the legislature hopes to supply but just somehow can't. At the Community Forum in Auburn last night, board members and educators learned once again how we on the sidelines will be affected by these internecine budget battles.

First, a short history. In 2007, the legislature created a system of Foundation Aid in response to the state's loss of the court case that sought to fund schools more fairly. That Foundation Aid was meant to grow incrementally over the next 10 years to a point where the courts had determined that fairness lay. Then came the crash of 2008. Foundation Aid was frozen for the budget of 2009, and although it's thawed slightly over the past couple of years, it's nowhere near the 10-year "fairness" point that was originally planned.

After the crash, the state found itself with a gap between revenues and outlays. It chose to nab that missing money from the money promised to schools, creating the prettily named Gap Elimination Adjustment. Over the years since 2010, Central New York Schools have lost over $600 million in promised funds, with each district giving up dollars to plug the state's gap.

Then came the tax cap, sometimes incorrectly termed "the 2% cap." This cap meant that schools could not make up the difference between their original spending plans and the plans decimated by the GEA by raising taxes willy-nilly on the citizens of their districts.

Put it all together, and as Dr. Timbs told Central New York School Board Association members last night, "We have lost a generation of kids waiting for the state to comply with the court order."

But now the state has a surplus and could set things to rights again. However, the governor's proposal adds just $266 million, or 1.7%, to Foundation Aid, and puts back only $189 million out of the $434 million in GEA the state owes to schools. And to add insult to injury, this year's tax cap for schools is as close to zero as you can get. Not 2%. Not 1%. This year it averages 0.12%, which for all intents and purposes might as well be zero. (The original definition of the state's tax cap was as follows: "With some exceptions, the State’s Property Tax Cap limits the amount local governments and most school districts can increase property taxes to the lower of two percent; or the rate of inflation." The CPI, used as the measure of inflation, is 0.12% this year. The formula is complex, and some districts will have a cap higher and some lower—but I don't think anyone will be close to 2% this year.)

The poorest local schools will have 100% of their GEA restored this year. Candor's and Newfield's will be at $0, bringing them back to 2010 levels. Other local schools will get anywhere from 34% to 45% of their GEAs restored. But all of our local districts will face the ongoing deficit in court-promised Foundation Aid, and they will not be able to make it up with an increase in the tax levy. Keep in mind that a rollover budget includes contractual salary increases, health insurance (about 7% locally), workers' comp, debt service... This year, Dryden is managing to roll over retirement, utilities, and equipment/supplies with no increase to any of those—but that's not going to be true of all districts.

The upshot is this: CNYSBA is calling for elimination of the entire GEA in this year's budget. The money is there; there's no point to the GEA's existence except to manipulate spreadsheets to make NYS's situation look better than it is. CNYSBA is calling for $880 million in improved Foundation Aid, distributed fairly so that the districts that need it most get most. Legislators may point out that poor districts get the most aid now, which is true, but as I've quoted Timbs before, on average, poor districts in NYS get around 8 times more state aid than wealthy districts do. However, our wealthy districts are overall 14 times richer than poor districts. And this year, NYS's wealthiest districts, those with the largest tax bases, won't be able to raise the millions they usually easily raise through property taxes, so they will be competing fiercely for the same aid our needier districts require.

It takes 60% voter approval to override a school tax cap. I don't think you will see many schools trying; such votes rarely succeed. What you will see are more districts entering that netherworld of "fiscally stressed" schools, a world where inequity reigns, and the poor stay poor.

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