EdVANTAGE Blog

A report by Rutgers University and the New Jersey Education Law Center ranks New York near the bottom of all states in school funding equity.  Only four states had a wider gap in per pupil spending between high and low poverty districts.

This finding is based on old data — from the 2006-07 school year.

New York’s ranking may have improved in the two years that the state’s Foundation Aid formula was operating –2007-08 and 2008-09.

That reform was enacted to resolve the Campaign for Fiscal Equity’s challenge to constitutionality of the state’s school finance system.

In both years, the poorest 20 percent of districts in the state were able to propose the largest percentage increases in spending, while proposing lower than average tax increases.  (See slide 6 here for example).

But with austerity in state aid to schools the last two years, equity has  suffered.

In 2009-10, Foundation Aid was frozen.  Since state aid typically comprises a larger share of their total revenues for poor districts, that meant that those districts had more of their total revenues frozen.

In 2010-11, state aid has been cut.  Although the calculation used to make the reduction — the Gap Elimination Adjustment” — attempted to moderate the cuts based on variations in student need and local ability to pay, poorer districts are still most likely to lose ground.

Below is a table which explains why.  An expanded and more polished version is available here.

Districts are grouped by property wealth per pupil.  Tax levy data is taken from the property tax report cards districts submitted with their proposed budgets.  The Big 5 Cities are omitted — their budgets are not subject to voter approval and so they are not required to file property tax report cards.

Looking at the  state as a whole, changes in the two major school revenue sources were expected to roughly offset each other:

• State Aid:  Decrease by $576 million from prior year (under the Governor’s aid proposals, which essentially became law and which most districts budgeted for, with no enacted budget until August).
• Local Tax Levy:  Increase by $583 million from prior year

Accordingly, as the table shows, the tax levy increases statewide were equivalent to 101 percent of the state aid reduction.

Given the proximity of these totals, it might be asserted that, had there been no aid cuts, districts could have avoided local tax increases altogether.

It is more likely though, that with more state aid there would have been a mix of lower tax increases and fewer spending reductions (30 percent of districts proposed year-to-year cuts in their total spending).

But as the table suggests, there were wide variations among high and low wealth districts, measured by property wealth per pupil.

Despite facing smaller percentage reductions in state aid, the poorest 20 percent of districts replaced less than half those aid cuts through local tax increases.

On the other hand, the wealthiest 20 percent of districts were able to more than replace state aid losses through local tax increases, despite the fact that their aid cuts averaged almost four times as much as those for the poorest districts in percentage terms (8.5 percent for the wealthiest 20 percent of districts, compared to 2.2 percent for the poorest).

I’d add that it is not as though these higher wealth districts proposed raising spending dramatically more than their counterparts.  Their spending increases averaged 1.8 percent, and as I have written previously, mandated pension costs alone could have consumed most of those sums.  Also, their proposed tax increases were below the statewide average.

For a single year, the consequences may not be that significant.  But if the pattern continues, poorer districts will fall further and further behind.  Bear in mind, also, as the New Jersey report found, poorer districts tend to spend less per pupil to begin with.

Finally, as one superintendent speculated to us, a property tax cap could amplify the effects of austerity in state aid, by altering the dynamics of how that aid is distributed.

More affluent districts have been more able to sustain school services expected by residents through local tax increases.  With that ability constrained by a tax cap, they would become more dependent on state aid.  These communities also often command more attention from the political parties because they tend to be more “up for grabs” than poorer areas.