EdVANTAGE Blog

New York State has a budget, or part of one.  When the rest of the budget might get done is up in the air.  Where does that leave schools?

By the end of June, the Assembly and Senate passed all the appropriations bills needed to fund state agencies, thereby eliminating the threat of a government shutdown.

The budget also requires passage of separate pieces of legislation, for example, to align School Aid formulas and other programs with funding levels set by appropriations, and to raise revenues needed to fund the budget.

The two houses also passed most of this supporting legislation, including a bill covering education.  The Assembly passed a “revenue” bill to increase some taxes and fees; the Senate left Albany without acting on the bill but promising to return.

Governor Paterson played the next act in the drama, probably setting some sort of record for most vetoes in a compressed time span.  He vetoed over 6,700 legislative additions to the budget, including the Legislature’s restoration to School Aid.  Then, last week, he vetoed the entire education “language bill.”

The principle fault the Governor cited in the Legislature’s budget plan was a failure to include a contingency plan to accommodate a potential shortfall in Medicaid assistance from Washington — an enhanced federal match to state expenditures that New York and at least 18 other states have been counting on.

So where are we?

First, at some point, the Senate will need to pass the revenue bill and the Governor will need to sign it, or all three parties will need to agree on an alternative.  Without roughly $1 billion the bill is  expected to raise, the state cannot claim a balanced budget.

Second, the majority opinion seems to be that, even with the Governor’s vetoes, there is enough in law now to allow the state to pay School Aid for the 2010-11 school year.

To make School Aid paymkents, the State Education Department needs two things:  (1) appropriations to pay from and (2) a set of instructions on how to pay — aid formulas prescribed by state law.

SED now has appropriations for School Aid — at the level proposed by the Governor back in January (appropriations proposed by the Governor become law as soon as they approved by both legislative chambers — he doesn’t get to veto his own stuff).

Many School Aid formulas are prescribed in permanent law, but on hearing of the Governor’s first vetoes, I presumed that the formulas on the books would drive a spending level much greater than the approved School Aid appropriations — since the Governor’s proposed $1.4 billion School Aid “Gap Elimination Adjustment” (GEA) is not part of permanent law.

I was reminded, however, that Governor Paterson had taken advantage of a misguided State Court of Appeals decision allowing Governors to propose changes to permanent state law within appropriations and forbidding the Legislature to amend those appropriations.

The Governor’s GEA was included in a School Aid appropriation that has become law, with the result that enacted School Aid formulas would drive a level of spending roughly on par with what the state has appropriated.

With the vetoes, all districts lose aid from what the Legislature would have provided (reducing the GEA by 40 percent for every district).

But some districts derive a benefit from the vetoes, because the Legislature would have frozen calculations on aid for 2009-10 based on what was estimated at the time of the Governor’s January budget submission, costing districts some districts hundreds of thousands of dollars in aid.  As I’ve explained elsewhere, in some aid categories districts do not have data required from the state until after January.

Third, the vetoed education language bill included provisions beyond School Aid formula changes.

One especially damaging effect is that without the bill a freeze on tuition levels for school district payments to charter schools expires.  This threatens a sudden $7 billion hole in the Albany City School District budget, for example.

The bill would also have extended an arcane provision first enacted in 1991 to allow districts to take an advance of future state aid payments to avert harm from mid-year aid cuts enacted that year.  It has been extended annually ever since, allowing New York City, for example, to budget an advance of roughly $200 million.

There are many other uncontroversial but still consequential provisions requiring annual extensions.

The bottom-line?   Although it appears the state could make School Aid payments without further action by the Governor and Legislature, they must still enact agreements on revenues and some education legislation and that causes some continuing uncertainty for schools.

A 1998 law provides that Legislators cannot be paid until the State Comptroller certifies that they have adopted a budget  — Assemblymembers and Senators have not received any of their salaries since the start of the current fiscal year on April 1.  The Comptroller will not certify until both houses have passed at least a revenue bill.

Not being paid is one source of pressure on Legislators to reach resolution of the budget.

School district deadlines for adopting tax warrants could be another.