EdVANTAGE Blog

Today, Governor David Paterson submitted a revised state budget-balancing plan with a smaller immediate School Aid cut.

No plan will be approved this week, however.  The Assembly and Senate have gone home for the holiday and will return on Monday.

Governor Paterson submitted two budget-cutting proposals for consideration by the Legislature:

• One would implement  a revised version of his original Deficit Reduction Plan, which included $686 million in mid-year School Aid cuts.
• The other would give the Governor one-time authority to cut spending prescribed by law (such as School Aid), without requiring specific approval of each cut by the Legislature.

The first proposal would reduce the current year cut in aid received by schools to $295 million. Each district would take a cut equal to 1.58 percent of total aid, excluding Building Aid, Universal Prekindergarten, and EXCEL.

I plan to post estimates of the revised cuts on our website shortly.

This proposal would achieve the same $686 million savings for the state by cutting the state contribution to School Aid by an additional $391 million and using  federal stimulus aid to backfill funding to schools.  Accelerating the use of federal stimulus aid would create a larger state deficit in the future.

Both the Democratic and Republican leaders in the State Senate announced their opposition to the second proposal, giving the Governor unilateral authority to cut all spending.  Both also previously expressed opposition mid-year School Aid cuts.

The Governor and State Comptroller Thomas DiNapoli have warned that without action, state government may be unable to pay all its bills in December, including $1.6 billion in School Aid and $461 million in STAR tax relief reimbursement to school districts.

Other state budget news…

Several Legislators and scholars are contending that Governor’s proposal for unilateral budget-cutting authority is unconstitutional.

As written, the bill would authorize his Budget Director to reduce state payments, “provided such reductions are uniformly applied to the extent practicable.”  This could result in larger School Aid cuts than under his original proposals, since the share of cut assigned to School Aid was smaller than its share of total spending.  There is no suggestion of how the cut might be allocated among districts.

In any event, the proposal seems dead on arrival.

Last week, Comptroller DiNapoli estimated that state government could come up $1.4 billion short of having enough money to meet its December cashflow needs.

On Sunday, the Governor released an open letter to Legislators warning of dire consequences for the state if a deficit reduction plan is not adopted in time.  He warned,

Put simply, the State is running out of money. In my conversations with the Division of the Budget, we have begun to discuss a number of options for this eventuality, including delaying payments to school districts, non-profit providers, and local governments, among others.

Governor Paterson also noted a statement last week from Moody’s Investor Services warning of a potential downgrade of the state’s credit rating.

The Governor spelled out his bottom lines:

I believe that any final Deficit Reduction Plan must include actions that are at least 40 percent recurring. Additionally, any consensus agreement must include reductions to health care and School Aid.

He explained,

No one wants to cut health care or education. These are priorities for which I have fought my entire career. But given that they make up more than half of the entire budget, we simply have no other choice but to make reductions to health care and education…  As other states that are now grappling with unmanageable deficits learned far too late, it is better to cut now, than gut later.

Senate Democratic Conference Leader John Sampson responded with his own open letter which noted that his side has agreed to over $1 billion in cuts so far but argued, “We believe there is a better way, and will work with you to close the gap so we can avoid the layoffs of state workers you have threatened, and deeper cuts in next year’s budget. Send us a deficit reduction plan that protects taxpayers, schoolchildren, and working families, and we will pass it tomorrow.”

The Albany Times Union Capitol Confidential blog reported Senator Sampson said of education cuts earlier today, “That’s off the table.”

New York Post State Editor Fred Dicker wrote Monday of  “a rising animosity” among Democratic leaders in state government which complicates negotiations.  The article concluded by noting the political problems which School Aid cuts cause for Long Island’s two Democratic Senators.

Some of the Albany political blogs speculated that the Assembly might agree with the Governor on a deficit reduction plan, then pass it to pressure the Senate into action.  See here, for example.

Today, Speaker Silver has a column in the New York Post (New York State must cut spending).  In an editorial, the Post praises the Speaker as “The last adult in Albany.”

The column does not shed any light on possible Assembly directions on mid-year School Aid cuts.  But as we reported last week, the Speaker told the Buffalo News, “I think that schools can absorb some cuts.”  The paper reported also, that “He would not say how deeply he might be willing to reduce school aid to help trim the state’s $3.2 billion deficit, but said poorer school districts would need to be held harmless.”

The Council’s advocacy has stressed that schools were expecting tough budgets next year, even without mid-year cuts now, and even if the state were able to avoid aid cuts in its next budget, continuing this year’s Foundation Aid freeze instead.

In a survey done by our national affiliate, the American Association of School Administrators, 89 percent of New York superintendents expected to eliminate jobs in their budgets for next year, up from 76 percent this year.  The survey was done before Governor Paterson made his proposals for mid-year budget cuts.

Mid-year cuts would worsen the fiscal outlook for schools in two ways:  first, by forcing them to take actions now they might have saved to soften next year’s budget choices and, second, by further depressing state aid expectations, since it would have to be assumed that state aid negotiations next year would start from the new, lower base.

With the state currently projecting a deficit of $6.8 billion for next year, proposals for further cuts in state aid are sure to be on the table come 2010.