EdVANTAGE Blog

The 2011-12 state budget took the unusual step of enacted a two-year appropriation for School Aid, covering both the current and 2012-13 school years.

Under the enacted state budget, School Aid for 2012-13 is projected to increase by $805 million, or 4.1 percent.

Is this a ceiling or a floor, and whichever it is, how solid is it?

The enacted budget also makes the Gap Elimination Adjustment a permanent part of state aid.  Essentially, the GEA will act as a governor (pun intended) which will adjust growth in state aid to match growth in the personal income of New York State taxpayers.

There is a rational basis for the connection – School Aid is the state’s largest single General Fund expenditure and the personal income tax is its largest revenue source.

But the permanent GEA is one more sign that the state has actually given up on the promises of the Foundation Aid formula enacted in 2007 as part of the resolution of the Campaign for Fiscal Equity’s constitutional challenge to education funding in New York State.

Unless there is a prolonged boom in revenues, the state will never reach the funding levels scheduled under the 2007 Foundation formula.

The Foundation formula has now been frozen for three years, and full implementation has now been put off until 2016-17, six years past the original target.

But the further the state has fallen behind, the harder it has become to ever catch up.

For future years, the growth factor will be based on a single year’s change in personal income and will not be allowed to be negative.  For the coming year, the growth factor is based on data between 2005 and 2010, producing the 4.1 percent figure.

Absent other formula changes, the permanent GEA would float up and down to offset increases and decreases in other formulas comprising School Aid to hold the growth in total aid to the change in personal income.

My sense over the years has been that many district leaders would trade-in the historical boom and bust cycle of state aid for more year-to-year predictability, even if meant total aid over the long-haul might average out to be lower.

One superintendent observed to me, “Some of us have learned how to deal with feast or famine cycles in state aid.”  School districts used part of any year’s state aid “feast” to be ready when the state faced another of its famines.

The superintendent added, “The fear now is that we will be expected to continue do this, but without any feasts.”

How far does the two-year School Aid appropriation advance the goal of greater predictability for districts?

Some, but not a lot.

First, even if the $805 million, 4.1 percent increase is absolutely guaranteed, that wouldn’t tell any individual district what it can expect.

The current year budget language provides for the $805 million increase to fund, first, growth in expense-based aids and expenditures for the two new competitive grant programs sought by Governor Cuomo – one to encourage management efficiency, the other to reward student performance gains.

Any remaining growth could also be used to fund increases in Foundation Aid, more of the Governor’s competitive grants, or reductions in the Gap Elimination Adjustment.  But those uses would have to be approved and allocated by law, requiring approval by the Assembly, Senate, and Governor.

So again, no individual district can yet predict how much total aid it will get in 2012-13.

But before trying to anticipate district aid amounts, how assured is the overall $805 million increase?

The increase is enacted as an appropriation.  An appropriation is a law and laws can be changed.

Some may see it as a floor, which the Governor is committed to fund, and which the Legislature could supplement; others may view it as a ceiling – all that schools should expect.

The $805 million School Aid increase is one of many assumptions which added up to an overall projection of a $2.4 billion General Fund deficit for the 2012-13 state budget, equivalent to 4 percent of projected expenditures for the year.

Also, this deficit forecast was made before the dreadful economic news of the past two months.

Under the state constitution, the Governor is obliged to propose a balanced budget.  So he will have propose actions to eliminate the projected $2.4 billion deficit, or whatever the amount is, come January 17, 2012, the deadline for submission of the executive budget.

Most of School Aid is distributed according formulas enacted into state education law.  These permanent law formulas have been used in years past to project aid levels for the year ahead..

Last January, Governor Cuomo sent an angry letter to media outlets around the state blasting “the real Albany sham:  the budget.”

In particular, he was outraged that a large part of the $10 billion structural deficit he inherited was caused by projected 13 percent increases in both Medicaid and School Aid, according to laws on the books.

But as I wrote in this blog last December, no school official I knew was expecting a 13 percent aid increase for 2011-12.

The two-year School Aid appropriation with its anticipated $805 million, 4.1 percent increase for 2012-13 was a Governor’s initiative, so it is harder for him to walk away from than old “permanent law” formula projections.

But he cannot walk away from his obligation under the state constitution to propose a balanced budget.

In any event, no district can count on a 4.1 percent School Aid increase, or any specific amount, for the year ahead.