• Our testimony at last week’s Assembly-Senate budget hearing.
• An excel spreadsheet that produces easy to read printouts of the Governor’s School Aid proposal for any district.
• A power point presentation I did for superintendents in Western New York last Friday.

Part of my presentation attempted to convey how different and better the state budget outlook is for schools compared to a year ago.  Obviously, however, the tax cap is a huge dark cloud on the horizon.

Battle lines are forming over one aspect of the Governor’s education budget – his proposal to devote nearly a third of his overall proposed increase — $250 million – to incentive grants intended to encourage and reward gains in student achievement and management efficiency.

State Education Commissioner John King led off the witnesses at the legislature’s budget hearing and supported holding funding for the incentive grants at $50 million and providing an additional $200 million in general aid to districts.  This was the recommendation in the School Aid proposal adopted by the Board of Regents.

All the traditional education groups called for shifting funds out of the incentive grants and into general aid.  A collection of seven other groups emerged to back the Governor’s plan.  Newsday jumped into the debate with a short editorial siding with the Governor.

In our testimony, I acknowledged that promoting student achievement and management efficiency are desirable goals, but said “more than new incentives, we think changes in old rules are necessary – changes in state mandates which will allow schools to get more impact for students from the resources taxpayers can provide.”

Another concern expressed by some school officials is that their districts simply lack the administrative capacity to devote to assembling a grant application.

A fundamental problem is that, whatever the merits, the timelines for awarding grants do not “sync” with school budget decision-making.  Very little of the funding will be awarded in time for districts to factor into the budgets they will ask voters to consider in May.

Here is an article on the difficulties with the grant programs which ran in several papers in the Gannett chain over the weekend.

The Governor made a lot of news on education over the long weekend, however, revealing plans to use School Aid to force action on teacher evaluation.

Initially, it was reported that the Governor would propose holding up School Aid increases for districts which failed to implement new teacher and principal evaluation procedures by December 31, 2012.

By itself such a proposal would only increase pressure on school districts to compromise with their local unions under a law which the Governor has said, “protected the teachers union at the expense of the students and instituted a system that was destined to fail.”

There had to be more to the plan.  Today’s New York Post and New York Times provide more details.

The Post reports,

Gov. Cuomo will give New York’s teachers one month to agree to a statewide performance evaluation plan — or he’ll write his own educator-rating scheme into the budget for legislative approval, The Post has learned.

In the ultimatum — which Cuomo will level at the United Federation of Teachers and New York State United Teachers as he presents his budget today — the governor will also insist the state union drop its lawsuit challenging certain provisions of the evaluation system, a source close to the administration said.

The governor would have up to 30 days to present a budget amendment that spells out the details of a teacher-rating system, something he promises to do if the unions don’t sign on.

Districts would then have until early next January to get the new system up and running or else the state would withhold a 4 percent increase in school aid, sources said.

 

Governor Andrew Cuomo has reacted to the news with a statement harshly critical of school districts, local unions, and what he refers to as “the Assembly-led legislation” creating the evaluation system.

The USDE cited two concerns – delays in implementing new student data systems and new teacher and principal evaluation systems.

U.S. Education Secretary Arne Duncan said,

“New York made significant progress through Race to the Top over the last year but has recently hit a roadblock that not only impedes Race to the Top but could threaten other key reform initiatives as well.  New York has a chance to be a national leader or a laggard, and we are only interested in supporting real courage and bold leadership.”

The State Education Department issued a statement saying of the report,

“It’s disappointing but not discouraging.  We have to get this done, and we will.  The RTTT report is a reminder that the federal government will hold us to the commitments we made in our RTTT application, just as we will hold districts and educators to the commitments they made.

This afternoon, Governor Cuomo issued a statement.  He said

Secretary Duncan’s report saying New York is on the watch-list for failure is yet another warning that the inability of school districts across the state and their unions to come together has jeopardized the quality of our kids’ education. New York State’s students are now in danger of losing hundreds of millions of dollars because of the failure to devise a teacher evaluation system that works.

The Governor added,

We need to achieve both short term and long term reform of this failed system. I will pursue such reform aggressively.

In the short term, I call on the State Department of Education, local school districts and the union leadership to expedite their negotiations on a teacher evaluation system to prevent the loss of hundreds of millions of dollars in federal funding.

Over the long term, we need to overhaul the system and change the law on the books. The Assembly-led legislation in 2010 protected the teachers union at the expense of the students and instituted a system that was destined to fail.

Here is a link to the USDE’s progress report on New York.

Additional text:

Governor Cuomo’s statement built upon comments he made during a radio interview the day before.  At the conclusion of the interview with Fred Dicker of the New York Post and 1300 AM Albany talk radio, the Governor made it a point to bring up the evaluation issue.

The Governor said,

The law has been a failure. It has not been implemented. It is unworkable. Some would say it was unworkable by design, ab initio [from the initiation], but time has shown that it’s unworkable.

The Governor also reiterated his refusal to get involved in resolving the New York City impasse over teacher evaluations, noting,

There are roughly 700 school districts in this state. The answer isn’t “The Governor should intervene between the local political official – the school board – and the union. I can’t negotiate 700 union contracts.

The Governor concluded by expressing respect for teachers and the union, adding, “my mother was a school teacher,” but concluded, “I represent the students.”

A podcast of the interview is available here.  The evaluation discussion comes at the 52 minute mark, near the very end.

In the area of education, the Governor that in his first year he learned the lesson that superintendents, teachers, school boards, maintenance personnel, and bus drivers all have lobbyists, but students do not have a lobbyist.  So he declared he would be taking on a second job in the coming year – students’ lobbyist.

He announced he would appoint a commission on education to recommend reforms in key areas, including teacher accountability and student achievement and management efficiency.

The Governor said, “we need a meaningful teacher evaluation system. The legislation enacted in 2010 to qualify for Race to the Top didn’t work.”

He added, “We must make our schools accountable for the results they achieve and the dollars they spend.”

No details have been provided yet on who will sit on the commission or when it will report.

I was quoted in a New York Times article on the commission and appeared on Time Warner’s statewide Capitol Tonight television show, along with Tim Kremer from the School Boards Association and Nikki Jones from the Alliance for Quality Education.

In the Times article, I said

“There are a lot of people who would disagree with the governor’s rhetoric and parts of his analysis, but would agree with the big picture.  How do we produce more learning for students with the resources our taxpayers can provide?”

On the rhetoric…

There is some grumbling across the education community about the Governor’s assertion that no one advocates for students.  Certainly superintendents see that as central to their work.

Capitol Tonight’s Liz Benjamin asked her guests for their reactions to the Governor’s announcement that he would be the students’ lobbyist.

I gave a two part response.

First, I said “We welcome him,” and added that that is a good perspective for a state leader to take – to be asking how the actions of state government affect student learning.

But I added that everyone working in the schools – teachers, principals, superintendents – got into the business because they wanted to have a positive impact of the lives of children, and that in our surveys superintendents tell us they sought their jobs to be able to affect more children.

On the analysis…

The Governor repeated claims that New York is first in per pupil spending but 38^th in graduation rates.

The numbers are what they are.  But using single broad measures overlooks simple facts and over simplifies complex situations.

As I explained on Capitol Tonight, New York is a high cost state across the board.  We have the highest weekly wages for all workers of any state.  Schools are labor intensive.  It should not be a surprise that we would have high per pupil spending.

I also said that we are a hugely diverse state, in ways good and bad.  Our graduation rate problem is concentrated, rather than universal, mostly focused in typically urban districts.

On the bigger picture…

With all the foregoing in mind, it remains that many in education would agree with the Governor on the bigger picture thrust.  I do.  We need to be asking how can our schools produce the learning our students need now with the resources our taxpayers can provide.

A commission can provide the focus for an extended statewide conversation aimed at answering that question.  So pending further details, we can welcome the idea of a commission.

Capitol Tonight’s Liz Benjamin said she had the sense the Governor would look to fill the commission with people from outside the state’s education system.

I said I hoped it would include insiders as well, because they could speak to what is working well now, and what isn’t.

I also said that it would be a mistake to assume that everyone working in schools now is wedded to the status quo.  Again, they entered education to positively affect the lives of young people.

I went on to add that even if some are wedded to the status quo, the status quo is changing – we have had there years of state aid cuts or freezes, now the tax cap, and continuing cost pressures from pensions and health insurance.  Schools have to change.

A commission can’t just point to what schools are doing wrong, however.  A corollary question for it must be what does the state need to change, in order to help schools produce more learning for students with the resources the taxpayers can provide.

A complication for the commission will be how to work with the $700 million worth of promises the state has made to Washington under Race to the Top, which has already defined a significant and demanding reform agenda for the State Education Department and the schools to execute.

Here is the complete prepared text of the Governor’s address (the education section begins on p. 19 and is preceded by a discussion of mandate relief).

Here is the video of the speech.  He discusses education beginning about 38 minutes in.

Here is the passage on education:

Education Commission to Promote Performance and Accountability

As we reimagine government, we must focus on our core values.

The future of our state depends on our public schools. A strong, effective school system is the hallmark of a healthy democracy.

We must make our schools accountable for the results they achieve and the dollars they spend.

I learned my most important lesson in my first year as Governor in the area of public education.  I learned that everyone in public education has his or her own lobbyist.

Superintendents have lobbyists.  Principals have lobbyists.  Teachers have lobbyists.

School boards have lobbyists.  Maintenance personnel have lobbyists.  Bus drivers have lobbyists.

The only group without a lobbyist?

The students.

Well, I learned my lesson. This year, I will take a second job — consider me the lobbyist for the students. I will wage a campaign to put students first, and to remind us that the purpose of public education is to help children grow, not to grow the public education bureaucracy.

Today, we are driven by the business of public education more than the achievement in public education. Maybe that’s why we spend more money than any other state but are 38th in graduation rates.

We have to change the paradigm. We need major reform in two areas:

· Teacher accountability and student achievement. We need a meaningful teacher evaluation system. The legislation enacted in 2010 to qualify for Race to the Top didn’t work.

· Management efficiency. We must make our schools accountable for the results they achieve and the dollars they spend.

We cannot fail in our mission to reform public education, because we simply cannot fail our children.

I will appoint a bipartisan education commission to work with the Legislature to recommend reforms in these key areas.

Late yesterday, State Education Commissioner John King announced that he is suspending federal School Improvement Grants to 10 districts which the State Education Department judges do not have teacher/principal evaluation plans which satisfy new state requirements.

The Commissioner said,

“The deadline is real; the funding is suspended,” King said.  “The good news is that six districts (Roosevelt, Poughkeepsie, Buffalo, Syracuse, Albany and Rochester) showed real progress toward meeting the requirements for a teacher and principal evaluation system agreed to in their SIG applications. All 10 districts can request a hearing. If these six districts get back to the table immediately to address the shortcomings in their plans, the hearings should go well for them.”

New York State United Teachers responded to the Commissioner announcement with a statement accusing the Commissioner and SED of taking a “dictatorial approach to reform” and asserting that they have “…demonstrated that they have totally lost their way in shepherding real, meaningful reform.”

Commissioner King appeared on Time-Warner’s Capitol Tonight to discuss his decision.

Reporting on the Governor’s plans to announce an education reform commission in today’s State of the State address, the New York Times noted that Board of Regents Chancellor Merryl Tisch, “said she would urge Mr. Cuomo and his commission to help advance a statewide teacher evaluation system…”

Commissioner King made similar comments in his television appearance.

A collection of education reform groups wrote to the Governor urging that he propose legislation ensure that all districts adopt new evaluation procedures consistent with Race to the Top timelines.

Specifically, the groups recommend,

To ensure that the City and the state’s other districts fulfill New York’s promises to its schoolchildren, we request that you introduce a back-stop measure that requires districts to develop teacher evaluation plans by August 31, 2012.  Any district that has not successfully negotiated its own plan by that date will have to automatically carry out a “default” plan, to be created by the State Education Department.  Those districts would have one year (until August 31, 2013) to install and fully implement their default plan systems.

1. Governor to appoint education commission
2. Teacher evaluation conflicts
3. School finance news

1.       Governor to appoint education commission

The 2012 session of the State Legislature begins on Wednesday when Governor Andrew Cuomo delivers his second, “State of the State” address.

Monday’s New York Daily News reported that the Governor will announce a commission to recommend reforms to the state’s education system.

The Daily News explains,

 Cuomo’s announcement will come just days after he was critical of the city and other districts that failed to reach agreement with their unions on a new teacher evaluation system by an end-of-year deadline.

“The failure to pass the teacher evaluation system is an example that not only is the system broken, but the ability to monitor the system and come up with a method to ensure kids are educated properly is broken,” said a source close to Cuomo.

The education commission he will announce will be designed to look at education from a “student perspective,” the source said.

“What are the performance indicators? How do you judge performance in the education system? How are the services being provided?” the source said. “No one has really looked at it without a particular perspective on what’s going on in education.”

Last Friday, Newsday reported that Governor Andrew Cuomo “wants to take a hard look at school governance.”

Asked in a year-end interview, what surprises he encountered upon taking office, the paper reported,

Cuomo didn’t hesitate before saying, “The need for reform in education is much more striking to me,” adding that he’s troubled by “the lack of performance evaluation-management strategies on the school system.

“The greatest challenge is going to be reforming the education system in this state,” Cuomo said. “It’s probably the most complicated, intractable issue I’ve come across.”

The Governor did not disclose any specific proposals during the interview.

2.       Teacher evaluation conflicts

In the preceding item, the New York Daily News cited the failure of New York City, some other districts, and their teacher unions to reach agreement on new evaluation procedures as an instigation for the Governor’s decision to appoint a commission on education.

Here’s more on that aspect of the story…

At the beginning of last week, State Education Commissioner John King announced that he would suspend federal School Improvement Grants to New York City and nine other districts if they and their local unions were unable to come to agreement on procedures for evaluating teachers and principals consistent with new state requirements.

At that time, Commissioner King said that only Syracuse and Rochester had submitted materials for review of their evaluation procedures.

Subsequently, Buffalo, Albany, and Schenectady submitted materials, although a State Education Department spokesman cast doubt on Schenectady’s chances for approval.

New York State United Teachers issued a statement accusing the Commissioner of “an arbitrary exercise of brinksmanship.”  The union noted that 14 states had received waivers from the U.S. Education Department allowing more time to work out evaluation procedures.

Last Friday, New York City Schools Chancellor Dennis Walcott announced he was breaking off negotiations on new evaluation procedures with the City’s teacher union, the United Federation of Teachers.

The Wall Street Journal reported,

The sticking point for a deal was whether teachers should be able to appeal a low rating to an outside arbitrator. Union officials said an appeal process would prevent principals from abusing their authority, but the city dismissed it as an unnecessary layer of bureaucracy.

Commissioner King issued a statement calling the breakdown in talks, “beyond disappointing,” adding

Sadly, the adults in charge of the City’s schools have let the students down.  SIG schools need to be fixed, and the best way to make that happen is to make sure there’s a quality teacher in front of every classroom and a quality principal at the head of every school.

On New Year’s Eve, Governor Cuomo issued this statement,

Teacher evaluations are critical to ensure our kids have high quality teachers in the classroom because performance counts.

I am disappointed that agreements could not be reached to impose teacher performance evaluations at some of our troubled school districts across the state.

Students lose twice because of this failure. First, the failure to reach agreements on teacher evaluations forces these schools to continue to operate without true accountability, which would ensure students receive a high quality education from high quality teachers. Second, these schools will also lose out on millions of dollars in much needed federal aid.

I urge all involved to get back to the table immediately, put their differences aside and put the kids first. They should agree on an evaluation system that improves performance and prevents the loss of more than one hundred million dollars this year for these schools across the state.

City Schools Chancellor Walcott elaborated his perspective in a Daily News columnon Monday, calling the UFT’s insistence on outside arbitrators to hear appeals “a radical departure” and a “a burdensome procedural layer designed to keep ineffective teachers in the classroom.”

UFT President Michael Mulgrew gave his side of the story on Time-Warner’s Capitol Night.

3.       School finance news

In blog posts last month I summed up the Regents State Aid proposal and offered reflections on the complexities of school district consolidation.

Here are some other items on school finance…

The attorney who led the Campaign for Fiscal Equity’s successful challenge to New York’s system of school finance is contemplating a new effort.

Speaking with the Wall Street Journal, Michael Rebell said he isn’t necessarily headed back to court, but he is leading a research project which will evaluate whether a sample of schools in New York City and around the state are able to provide a sound basic education, as promised under the state constitution.

Mr. Rebell told the Journal, “I don’t rule out litigation.  I’ve been there. I’m prepared to do it if necessary. But we’re in this for the long run, and we’re not looking to just score some quick points and free up a few bucks if we can get it.”

Mr. Rebell also appeared on Capitol Tonight last evening.

On December 15, Governor Cuomo appeared on the Capitol Pressroom radio program to discuss the Regents state aid proposal.

The Gannet News Service Politics on the Hudson Blog observed,

Cuomo, asked several times about the Regents’ proposal by WCNY’s Susan Arbetter, didn’t commit to a specific formula for distributing school aid—always one of Albany’s most scrutinized decisions during the budget process—but said he wants to make sure school performance is part of the conversation.

As the blog reported, the Governor added,

“We want to incentivize performance by the school districts. This system, in my opinion, is sorely lacking in terms of performance,” Cuomo said. “We just fund process. We give school districts a block grant … where they get the same amount whether they are doing great or doing poorly.”

…But Cuomo repeatedly said he wants to focus on performance, without committing to any specific aid-distribution system. Cuomo’s budget proposal will be revealed in January.

“I want to add another component to the conversation, which is let’s talk about the students and whether or not you are educating students,” Cuomo said. “This whole conversation has become about the school district and the teacher and the superintendent, and I want to talk about the student.”

Also in the middle of last month, the Rochester Democrat and Chronicle contrasted the learning opportunities available in poor rural districts and elsewhere.  Phelps-Clifton Springs superintendent Mike Ford warned that his district faces the prospect of eliminating kindergarten and all high school electives next year.

Another potential source of tension in school finance is the disparity between where state revenues come from versus where they go.

The State University’s Rockefeller Institute of Government reported that New York City residents and businesses paid about $4.1 billion more in taxes and fees than the City received in state funding and services in 2009-10.

The suburban counties (Nassau, Suffolk, Westchester and Rockland) paid $7.9 billion more into the state treasury than they received in state aid.

In contrast, upstate regions contributed 28 percent of the state’s revenues and received 42 percent of state outlays.

Writing in the New York Post, the Institute’s Deputy Director, Robert Ward, notes

Regional disputes, often bitter, have haunted New York since colonial days. City and suburban taxpayers might take some comfort simply in knowing that their basic sense of the state’s budgetary balance — we’re paying more than our share! — is, by the numbers, absolutely correct.

Upstaters also have a point when they say that Downstate political sensibilities drive up local taxpayer costs everywhere in New York. Thus, the state sets the rules for programs such as Medicaid and special education — helping to make them far more costly here than in most states — but requires localities to pick up much of the cost, which helps explain the Empire State’s extraordinarily high property taxes.

Nor does the apparent imbalance among regions necessarily mean the current division of dollars is unfair.

For a century or more — certainly since the days of Franklin Delano Roosevelt — Americans, and especially New Yorkers, have believed that redistribution of wealth is a central purpose of government. FDR defined the measure of progress itself as “whether we provide enough for those who have too little.”

Thus, Albany will distribute some $20 billion in education aid this year based partly on how many children in each school are poor enough to qualify for free lunch. Individuals’ age and need will help drive more than $50 billion in Medicaid and welfare spending.

On the other side of the ledger, the state’s major source of revenue, the personal-income tax, is designed to take more from individuals who have more….

Finally, in the past I have noted the powerful impact of two costs — pensions and health insurance — on school spending and taxes.

For four successive years in the last decade, increased costs for those two items roughly matched or exceeded increases in state funding, contributing to a run of higher than historically typical local tax increases.  More recently, districts have cut other spending on balance to absorb pension and health costs while holding down overall spending and taxes.

Monday’s New York Daily News carried a column by the Speaker of the Massachusetts State House of Representatives on that state’s successes in managing pension and health care costs of its workforce.

Here is a piece from the Boston Globe providing more details on the health insurance initiative.

Mr. Grishman has served as Superintendent of the Jericho Union Free School District of Nassau County since 1995.

Announcing the selection, Council President Marilyn Terranova, said,

Hank’s selection recognizes his career of successful school district leadership serving diverse communities across our state, as well as his support for colleagues through wide-ranging contributions to the Council’s work.

Mr. Grishman has served as a superintendent in five New York State school districts covering a span of 33 years.

He is also a past President of the Council.

Here is the Council’s news release announcing the selection.

And here is Newsday’s coverage.

The Regents proposal would attempt to re-start the Foundation Aid formula which was first enacted in 2007 as a resolution of the Campaign for Fiscal Equity’s challenge to the constitutionality of the state’s system of funding public schools.

Big increases in Foundation Aid were approved in 2007-08 and 2008-09, but the formula has been frozen for the past three years.

Meanwhile total aid from all formulas (excluding Building Aid and Universal Prekindergarten) has been reduced through large “Gap Elimination Adjustments” in each of the last two years.

The Regents propose an overall increase in aid of $805 million or 4.1 percent, consistent with the unique two-year appropriation for School Aid in the current state budget.

In effect, the Regents chose through their proposal to take the role of advising elected state officials how to best allocate the scheduled increase.

It was disappointing to us and other groups that the Regents accepted the $805 million figure as a given, without first making some effort to determine a level of need, particularly since the $805 million increase is partly diluted by the loss of federal Education Jobs money.

“High need” districts, as defined by the State Education Department, would receive 73 percent of the overall increase proposed by the Regents, slightly more than their 68 percent share of current overall aid.

The Regents new approach to Foundation Aid
The centerpiece of the Regents proposal is a recommendation to re-start the Foundation Aid formula.

The Regents have not published a complete explanation of their new Foundation Aid formula, but a few key points are known.

First, the Regents would create a new “Foundation Aid base” by combining the old Foundation Aid and four other formulas – Academic Enhancement Aid, High Tax Aid, Supplemental Public Excess Cost Aid, and the Gap Elimination Adjustment.

Due to limits on the state’s fiscal capacity, the Regents would not revive the promise of the 2007 formula of 3 percent annual aid increases for all districts.

But they would provide a “save-harmless,” so that no district would receive less in Foundation Aid in 2012-13 than it received in 2011-12 from the combination of formulas consolidated to form the Foundation Aid base.

The original formula allowed districts two methods for calculating how much they are expected to contribute from local revenues.  The Regents would drop the “aid ratio” option for calculating the local share and require all districts to use an “expected local tax rate” approach.

The Regents would also eliminate a cap on the income wealth index (IWI) which limited its benefit to low income districts.  The IWI adjusts how much districts are expected to raise locally based on how the adjusted gross income of their residents compares with the statewide average per pupil.

A brief explanation of the original Foundation Aid formula is provided at the end of this post.

In total, the Regents propose a $376 million increase in Foundation Aid, equivalent to a 3 percent increase over the 2011-12 base.

Commentary on the Foundation Aid proposal
― The Foundation Aid freezes and Gap Elimination Adjustments of the past three years essentially wiped out the state’s efforts at implementing school finance reform in 2007-08 and 2008-09.  The Regents Foundation Aid base for 2012-13 is only $20 million greater than the 2006-07 starting point base, or 0.2 percent.

― Paraphrasing Regents State Aid Subcommittee Chair Jim Tallon, having a formula that giveth (Foundation Aid) and a formula that “taketh away” (the GEA) is confounding.  Whatever its other effects, folding the GEA into the new Foundation formula improves the understandability of aid calculations, making the state more accountable for its funding choices.

― It is an arcane point, but the Council, New York State United Teachers and others vigorously opposed the use of the expected tax rate approach to calculating the local share when it was first proposed by the Regents and then Governor Spitzer five years ago.

Our concern over the expected tax rate approach arose from historical volatility in property values.

Briefly, the method multiplies a standard “expected” tax rate (originally $16 per $1,000 of full value property wealth) by the district’s property wealth.  So, if a district’s property value increases and nothing else changes, its expected local contribution will rise and its Foundation Aid will decrease, or with save-harmless, be frozen.

While for the most recent pair of years statewide property wealth is down nearly 2 percent, double digit percentage increases have not been unusual in past years.

In contrast, the impacts of changes in wealth are moderated under the aid ratio approach because wealth is always measured in comparison to state averages.  Only if a district’s increase in wealth exceeds the state average will its local share rise.

Reservations over the expected tax rate approach rise with the advent of the tax cap, which will limit the ability of districts to increase taxes by an “expected” amount.

Expense-based aids
As I wrote in a recent blog post, projected 2012-13 increases in expense-based aids (Building, Transportation, BOCES, and special education) under current law formulas came in well below what would have been expected based on historical patterns — $253 million instead of something in the vicinity of $400 million.

This appears to be one more example of districts scaling back spending to hold down taxes while absorbing the impacts of state aid cuts and surging pension and health care costs.

The Regents propose no changes in the expense-based aids for the coming year, “because districts have already incurred expenses” those formulas reimburse.

But the Regents do recommend changes in reimbursement for expenses districts will incur after July 1, 2012.

The proposal explains,

By supporting more aggressive cost-containment measures in the expense-based aids, the Regents propose to shift a greater percentage of State resources allotted for the General Support for Public Schools toward instructional educational costs.

In Building Aid, the Regents propose to eliminate a 10 percentage point bonus to the state reimbursement share, to discontinue the ability of districts to use the most favorable aid ratio of any year going back to 1981-82, and to discontinue state support for “excessive amounts” of incidental costs.

The Regents would also require projects to have a minimum use life of at least 15 years to qualify for Building Aid, and would require that school buildings comply with high performance design standards, such as the best value based on life cycle cost.

The Department estimates that eliminating the 10 percentage point incentive would save the sate $296 million annually, and elimination the choice of aid ratios would save $198 million.

The Regents would also eliminate a choice of reimbursement ratios under Transportation Aid and that “…aid be made more progressive and responsive to school districts’ current fiscal capacity, i.e., more strategically target aid to the highest need districts and support greater flexibility for shared pupil transportation services.”

The Regents recommend some expansion in the role of BOCES, but also ask that BOCES Aid be made “…more progressive by eliminating the multiple aid ratio choices and refining the computation of the State share to better reflect districts’ fiscal capacity.”

All these changes would require approval by the Assembly, Senate and Governor and would be made prospectively, to aid calculations starting in 2012-13, not next year.  Also,the Building Aid proposal would not retrocatively reduce state reimbursement shares for projects already approved.

There are parallels between debates over the role of mandates and growth in expense-based aids.

In an atmosphere of constrained resources, if mandates are maintained, then schools will be forced to find savings from areas not dictated by mandates.  If expense-based aids continue to grow and state resources are limited, then general purpose aids will bear the brunt of co0st containment.

So whatever the merits of the Regents’ specific proposed changes to the expense-based aids, they have started a discussion worth pursuing.

Again, one new fact for that discussion is the surprising slowing of expense-based aids that has already occurred, as districts have apparently scaled back on the expenses these formulas reimburse.  The slowing appears generally greater in poorer districts.

In explaining recommended Building Aid changes, the Regents proposal claims, “”The goal of encouraging school districts to invest State and local funds in their facilities has been accomplished…”  Leaders of some poorer districts, especially from urban areas dispute that conclusion.

Other Elements
While folding old High Tax Aid allocations into the new base for Foundation Aid, the Regents also propose a new, more targeted High Tax Aid formula which would distribute $58 million.  The proposal would also increase UPK funding.

The proposal recounts past efforts by the Legislature, Governor, and the Regents themselves at mandate relief and outlines some new ideas.

The Regents also call for exploring different approaches to school district organization to promote high performance, but offer only limited clues as to what might be done:

• Explore reorganization options for school districts on a broader level, including consideration of multi-district reorganizations; and
• Expand legislation to allow regional high school districts permitted by law only in Suffolk County to occur in the rest of the State.

Finally, the Regents also acknowledge the prominence of health insurance costs in driving overall school spending, but only point to existing cost savings models, such as consortia, and do not recommend new steps to help better manage health care costs.

Explaining the old Foundation Aid formula

A streamlined explanation of the 2007 Foundation Aid formula is that aid was calculated using “four moving pieces”  — multiplying a (1) standard per pupil amount by factors to adjust for differences in (2) pupil needs and (3) regional variations in the cost of providing education, then deducting an (4) expected contribution from local resources.

The standard per pupil amount was calculated based on an estimate of what it would cost a successful and efficient district to provide a sound basic education to a student without special needs.

Multiplying that figure times the regional cost and pupil needs factors and by the district’s total enrollment represented the estimated total cost of providing a sound basic education to its mix of students.

That sum was then reduced by an expected local contribution.  Districts were allowed the more favorable of two methods for calculating their local share.

One calculated the local share based on what the district would raise from an “expected local tax rate.”  The original expected rate was $16 per $1,000 of property value.

The other used New York’s traditional “aid ratio” approach, which calculates a percentage of cost to be paid by a district out of local resources.  The percentage share rises as district wealth increases.

The standard expected tax rate was adjusted by an “income wealth index” which compared the district’s adjusted gross income (of residents) per pupil to the state average.

Applying the IWI raised or lowered the expected tax rate, within limits, based on whether the district’s income per pupil was above or below the state average – a below average income district had its expected local contribution lowered, wealthier districts were expected to contribute more.

In contrast, the aid ratio method calculated a percentage share of cost for each district based on the ratio of its property wealth and income per pupil compared to state averages, each weighted at 50 percent.

Districts with below average wealth were expected to pay a lower percentage of costs from local resources, while wealthier districts were expected to pay more.

Finally, during the initial four-year phase-in period, all districts were promised annual 3 percent increases in Foundation Aid over the prior year, with the first year based on what districts received in total from the 30 previously separate aid categories consolidated into Foundation Aid.

Large increases in Foundation Aid were enacted for two years — $1.1 billion in 2007-08 and $1.2 billion in 2008-09.  But the formula has been frozen for the past three years.

]]> http://blog.nyscoss.org/2011/12/15/hitting-the-reset-button-on-school-aid/feed/ 4 http://blog.nyscoss.org/2011/12/09/debating-school-district-consolidation/ http://blog.nyscoss.org/2011/12/09/debating-school-district-consolidation/#comments Fri, 09 Dec 2011 17:31:45 +0000 Robert Lowry http://blog.nyscoss.org/?p=3062 State Education Commissioner John King has sparked a debate over school district consolidation…

First some humor, at least an attempt:

The CEO of a failing baby food company calls a meeting of senior corporate executives and leads off, “I don’t understand why we are losing money.  We use the best ingredients.  We spend the most on advertising.  We have a great marketing strategy.  We have a great delivery system.  We even have the most attractive packaging.  Why aren’t we selling more dog food?”

Silence.

Finally, the most junior executive speaks up from a distant corner of the room, “Babies don’t like it.”

The point?

Voters also often don’t like something it is presumed they should like – school district consolidation.

Over the past few weeks, Education Commissioner John King has spoken of the potential benefits of school district consolidation in stops around the state, and in a televised interview (the school discussion begins 10 minutes in).

Here are reports on the Commissioner’s observations from the Mid-Hudson Valley, Long Island, and Westchester County.

The Commissioner has stressed that broader consolidations, more than just a pair of districts, but perhaps countywide school systems, could better support comprehensive learning opportunities for all students, enhance administrative efficiency, and improve funding equity.

He has stressed that the greatest opportunities for savings would probably come from school district mergers downstate.

But current law generally gives the final say to local voters, with a requirement that voters in each separate district give their approval.  Over the past decade or so, fewer than a quarter of studied mergers have come to pass.

This past week, voters in Oppenheim-Ephratah rejected a proposed merger with Saint Johnsville, whose voters gave the proposition overwhelming support.

Superintendents of both districts expressed discouragement with the outcome.

Here are some observations about school district consolidations:

♦ There are some places upstate where superintendents are strong supporters of consolidation – because they see districts are running out of kids and they cannot offer comprehensive high school programs and consolidation is geographically feasible.

♦ Generally, consolidations have not produced upfront savings, because reductions in administrative costs are more than offset by the practice of leveling up compensation of the merged workforce.

♦ Savings in upstate rural districts are likely to be especially limited because they already often very lean administratively.

♦ Merging combinations of small, poor school districts would result one larger poor district, providing only a temporary break from deeper structural challenges in school finance.

♦ Everyone wants to “marry-up,” but no more than half the districts can.  All districts would prefer to merge with a more affluent neighbor, to share the neighbor’s wealth and lower tax rates for their residents.

♦ There are legitimate concerns about accelerating the decline of rural communities from closing schools.

♦ School district consolidations are also controversial because they can affect the most consequential financial decision most families make — where to buy a home.  Schools systems often are a critical consideration affecting home values.

♦ In some places regional high schools should be authorized while allowing districts to maintain their elementary schools, this would preserve at least some community schools as well as shorter bus rides for younger children.

♦ There is already a lot of activity aimed at sharing and consolidating administrative and other overhead functions.  These don’t raise concerns about direct impacts on children or losses of community identity.

♦ In downstate regions, typically there have not been the steep enrollment declines found upstate.  But these are areas where districts tend to be more geographically compact and they may realize more administrative savings from consolidation.

♦ Consolidation among smaller downstate districts could also improve funding equity in these areas.  There are also nasty demographic issues in some cases, however.

♦ There are other states with comparable numbers of districts which don’t spend what we do, so the number of districts we have does not fully explain our high overall per pupil spending.

♦ As a cost saving strategy, “the juice may not be worth the squeeze” with consolidation.  If we merge a bunch of small districts, the aggregate savings, by definition, will be small.

♦ Focusing primarily on school district consolidation diverts attention from other actions which may yield more immediate benefits for sustaining student opportunities or managing taxpayer costs.

The bottom-line on the debate, however, is that voters generally have the final say under existing law and they have opposed consolidations, more often than not.

So if one believes that voters are too often making the wrong decision on whether or not to consolidate their local school systems, then that begs the question, what should be done?:

♦ Nothing — New York’s strong tradition of local voter control is justified;

♦ Make the choice clearer, by somehow providing better information to voters;

♦ Make the choice more compelling, for example, by strengthening incentives or by threatening reduction in state aid if a state-endorsed merger is not locally approved; or

♦ Take the final decision away from the voters in some cases.

If one favors more aggressive state authority, then what criteria should be applied and what procedures should be followed?

As criteria, simple enrollment cut-offs don’t work. Some of the smallest districts measured by enrollment are among the largest measured in square miles.

For process, the Education Department could be authorized to order consolidations, or to recommend them with either a streamlined process for approval, or consequences if not locally approved.

Or the state could follow the the military base-closing model, empowering a special commission to develop a plan for school district consolidation which the Legislature would vote up or down, without change.

The Council has not adopted  positions on what, if anything, should or should not be done to support actual school district consolidation.

This past August, the Onondaga-Cortland-Madison BOCES held a one-day conference on consolidation.  OCM BOCES has a website with many good pieces of background information on the process now, and research on the effects of consolidation.

The agreement improves the outlook for School Ai in next year’s state budget.

The centerpiece is a proposal to lower personal income tax rates for 4.4 million New Yorkers with incomes up to $300,000, raise rates on those with incomes greater than $2 million, and generate an estimated $1.9 billion in revenue for the state.

Under the agreement, for couples making more than $2 million annually, the new rate would be 8.82 percent, lower than the 8.97 percent due under a continuation of higher rates enacted in 2009, but more than the 6.85 percent they would pay upon the scheduled expiration of those rates after December 31.

The Governor had steadfastly opposed a so-called “millionaire’s tax” which was estimated to promise roughly $5 billion in revenue for the state.

But in video remarks the Governor said,

…we need revenue. As a matter of simple math, there is not an intelligent or productive way to close the current gap without generating revenue. The gap is just too large and it goes on for too long.

While I am against higher taxes and I believe our long-term economic future for this state is enhanced by in fact lowering taxes to make us more competitive, the deal with this emergency, short-term we do need additional revenue.

If I were to close the entire gap by budget cuts it would decimate essential services doing real harm to the State’s economy and strangling local governments all across this state.

The Governor has responded thoughtfully and resourcefully to changing circumstances.  The fiscal conservatism he has exhibited to this point unquestionably strengthened his standing to lead this change now.

The package says nothing about School Aid funding for next year.  But it would absolutely improve the state’s capacity to pay for School Aid.

In his video remarks, the Governor said that the state’s projected deficit for next year is $3.5 billion, equivalent to roughly 5.8 percent of projected spending.

That deficit figure assumes an $805 million (4.1 percent) increase in School Aid, the balance of the unique two-year appropriation for School Aid included in this year’s state budget.

But under the state constitution, governors are required to recommend a balanced state budget to the Legislature each year.

If the Governor sought to close the gap entirely through cuts, and the cuts were allocated in proportion to each area’s share of total spending, then School Aid would need to be cut by more than $500 million.

The extension of the millionaire’s tax, as tenaciously advocated by Speaker Silver over the past year, would generate an additional $5 billion in revenue.

A $5 billion revenue boost would obviously do more for the state’s capacity to fund School Aid than the agreed upon $1.9 billion, but $1.9 billion more revenue is better than zero.

The scheduled $805 million School Aid increase would be partly diluted by the loss of federal Education Jobs Fund.

But it would still be a better starting point than any of past three Governor’s budgets, all of which proposed reductions.

It would even be a better end point than the last three enacted budgets.  The last two imposed year-to-year cuts, and the 2009-10 budget increased total aid by 1.9 percent while freezing Foundation Aid and other categories.

Prior to recent deterioration in the state’s financial outlook, both Senate Leader Skelos and Assembly Speaker Silver had said they looked at an $805 million increase as a base they anticipated would be improved upon.

Yesterday’s agreement does not address how School Aid will be distributed in 2012-13.  That will be resolved through the regular state budget process, commencing on January 17, the deadline for the Governor to submit his budget proposal.

In a post last week, I explained some of the considerations for School Aid next year arising from projected growth under current law formulas totaling $316 million.

Assuming no change in current law formulas and $805 million overall School Aid growth, the state would then have $489 million to allocate as increases, through a reduction in the Gap Elimination Adjustment, an increase in Foundation Aid, some combination of those two actions, or other means, for example.

The package also includes $50 million for flood relief grants and a reduction in the Metropolitan Transportation Authority payroll tax.  The pieces are described at the end of the leader’s news release.

A bit more detail on the MTA payroll tax reduction is available here.