Archive for March, 2009

School aid figures available (and murky); on-time budget in doubt

March 31st, 2009 by Robert Lowry

Estimates of School Aid for individual districts under the state budget agreement are now available here.

We and the School Boards Association have been taking calls from from puzzled reporters asking for help in interpreting the aid runs.

At the bottom, the runs present totals which include increases in federal Title I and IDEA aid.  We’ve urged reporters to use instead the totals above — changes in aid including the building-related aids, but excluding the federal aid.  These are the figures that papers usually report.

We also explain that federal “supplement, not supplant” requirements are expected to prevent districts from using most of the new aid to offset local taxes, or to preserve existing programs or positions.

It now seems possible that the Legislature will be not be able to complete action on the budget today, in time to meet the midnight deadline for a literally on-time budget.

One of the members of State Senate’s narrow Democratic majority went to an area hospital with pneumonia today.  The Senate recessed for several hours to await her return, without having passed any of the nine bills comprising the state budget.

The Senate now plans to reconvene at 5:30 pm.

As of now, the Assembly has passed two of the nine bills.

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State budget details emerging (REVISED)

March 29th, 2009 by Robert Lowry

The Assembly and Senate have printed bills needed to enact a state budget and are expected to begin passing them on Tuesday.  The Governor has issued news releases highlighting aspects of the budget agreement, clearly suggesting that he is on board as well.

School Aid and State Funding Issues
As expected, the Legislature’s budget would eliminate the Deficit Reduction Assessment in School Aid, and reject the Governor’s proposal to shift preschool special education costs on to school districts. Federal stabilization funds for education would be used to pay for these restorations.

Stabilization funds are also to be used to fund changes in aid levels since the November school aid database was compiled.  The Governor proposed freezing aid calculations based on the November data.

As proposed by the Governor, Foundation Aid would be frozen for 2009-10 and 2010-11.

We and others have warned that failing to provide an increase in Foundation Aid, or other general aid increase, may result in school layoffs beyond what has been anticipated in light of the federal stimulus aid.

Also, the federal law governing the stabilization funds appears to require that they be used to (1) restore aid under the state’s primary school aid formulas and public higher education funding levels to the greater of 2007-08 or 2008-09 levels, and (2) to allow formula increases and “adequacy and equity adjustments” enacted before October 2008 to be implemented. The planned use would not address the second set of requirements.

The federal law is not clear on how a state is to reconcile the requirements if its stabilization fund allocation is inadequate to fund all of them over the next three years.

The scheduled full phase-in of the Foundation Aid formula would be postponed for two years, until 2013-14.

Funding for major reimbursement aids (BOCES, Building, Transportation, and Private Excess Cost Aid) would be provided according to current law formulas, as would funding for most categorical programs.

High Tax Aid for each district would be continued at 2008-09 levels.

The media is reporting that School Aid would be flat.  But the net effect of freezing Foundation Aid, eliminating the Deficit reduction Assessment, and allowing reimbursement aid formulas to run would be a $405 million increase in total School Aid.

A news release from the from the Governor’s Office notes that school districts will also receive a total of over $800 million in additional federal Title I aid for disadvantaged students and Individuals with Disabilities Education Act IDEA funds for special education.  Most of this aid comes “with supplement, not supplant” limitations on how it may be used.

Other Issues
STAR property tax rebates: As proposed by the Governor, the Middle Class STAR Rebate program would be repealed.  The Senate is saying that it will continue to seek adoption of a property tax circuit-breaker credit.

Traditional STAR “floor” reduction: The proposal to further raise the maximum allowable one-year decrease in the value of STAR exemptions is not included in the agreed-upon budget.  The Governor’s budget would have raised the maximum decrease from 1 percent to 18 percent.

EBALR reserves: The Legislature does not allow districts to use “surplus” funds in Employee Benefit Accrued Liability Reserve accounts to offset aid cuts.

MTA payroll tax: Agreement on a “bailout” plan for the Metropolitan Transportation Authority has not been reached, but state leaders say they continue to make progress and hope to have an agreement by Tuesday.   News reports have said that a plan is likely to include a payroll tax on employers in the MTA region, including school districts.

State taxes and PILOTs on state property: The agreed-upon budget does not freeze or cut state tax payments and payments in lieu of taxes on state properties as proposed by the Governor.

Contract for Excellence: Districts required to file a Contract for Excellence in 2008-09 would be required to maintain their current C4E expenditure levels into 2009-10, unless all schools are now in good standing.

Charter school tuition payments: School district per pupil tuition payments to charter schools are to be frozen at 2008-09 levels, consistent with the freeze of Foundation Aid.

Cost containment: We don’t see any new efforts to assist schools with cost containment in the education budget bills. If the Legislature does achieve a timely budget, its planned session schedule leaves close to three months to pursue this priority.  A news release says that the houses will continue to negotiate possible mandate relief.

Income Tax Increase
The budget does include an increase in state personal income tax rates on higher income New Yorkers.

The current maximum rate is 6.85 percent on households (joint filers) with income over $40,000. The agreed upon state budget would raise the rate to 7.85 percent on incomes above $300,000 (above $200,000 for single filers). The rate on incomes above $500,000 would rise to 8.97 percent, the same as New Jersey’s current top rate.

The increases are expected to raise $4 billion in additional revenues for the state this year and would expire after three years.

Process more or less on schedule
On Saturday, the Legislature printed seven of the nine bills needed to enact a state budget.  The remaining bills were printed on Sunday.

The Legislature needed to print its bills by midnight Saturday to be able to vote on them on Tuesday (March 31) without obtaining permission from the Governor. The State Constitution requires bills be in print for three days before they may be voted upon, unless the Governor issues “messages of necessity” for immediate votes.

With two budget bills not printed until Sunday, the Legislature will not be able to produce a literally “on-time” budget unless the Governor permits early votes on the two bills.  Since the Governor’s office has issued news releases highlighting elements of the budget, it seems his assent would be forthcoming.

Senate Republican Leader Dean Skelos has threatened to have his members boycott sessions to pass the budget if they feel they have had inadequate opportunity to review details. Without some Republican members, the Senate would not have a quorum, denying state leaders the ability to pass the budget before the start of the fiscal year.

Senator Skelos issued a news release on Sunday condemning the agreed-upon budget and promising to fight against its adoption, but he did not repeat his boycott threat.

We will update this post as more details become available.

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Council and School Boards Association warn state leaders on impact of ‘flat’ aid

March 29th, 2009 by Robert Lowry

The Council followed up its Thursday news release on potential school layoffs by joining with the New York State School Boards Association to send a letter to state leaders on Friday.

The letter warns state leaders about the consequences of “flat school aid,” as the apparently agreed-upon state budget proposes.

The letter explains that school leaders have been doing their best to respond to the wishes of voters and politicians to hold down property taxes.  But if state aid is essentially flat, schools will need to make cuts to to offset scheduled increases for salaries, health insurance, utilities, and other costs.

Consequently, significant school layoffs are probable, contrary to one of the expected outcomes of federal stimulus aid for schools.

The letter cautions that planned state support may be “insufficient to comply with federal stimulus fund expectations, creating risks for the state and the schools, either in how our application is received or subsequently in how our use of the funds is reviewed.”

To help schools meet costs and hold down property taxes, we call for a year-to-year increase in state aid “consistent in magnitude with that proposed by the New York State Board of Regents.”

The Buffalo News gave the most extensive coverage to our layoff news release.

Newsday did its own survey and reported that most Long Island school districts are planning to cut teachers and other staff, noting, “The scaleback plans are far beyond anything seen since the early 1990s.”

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Council estimates 7,800 school layoffs outside the Big 5 cities

March 26th, 2009 by Robert Lowry

Today we issued a news release with our estimate that school districts outside the Big 5 cities are facing the need to layoff as many as 7,800 teachers, administrators, and support staff.

Hundreds more positions are likely to be eliminated by not filling vacancies created by retirements and resignations.

The estimate is based on survey results from a sample of districts.

A key message for the Council is that school leaders need answers.  Federal stimulus aid will reduce the number of layoffs needed, but right now districts don’t know how much aid to expect, or what strings may be attached to the aid.

Districts have deadlines set in state laws and collective bargianing agreements that dictate when decisions must be made.

Another message is that this year is different.

The last time state aid was cut — in 2003 — school districts proposed budgets with tax increases averaging over 10 percent.

Some poor districts, with nothing to cut that is not mandated, and other districts with unique circumstances may propose large increases, but our clear sense is that most districts are working hard to keep local tax increases to a minimum.

That forces deeper spending cuts to offset built-in cost increases and reduced or flat state aid.  Since 70 percent of school spending is for personnel, any significant cuts require cutting jobs.

Testifying before the New City Council today, City Schools Chancellor Joel Klein said that his system may need to make 3,000 to 5,000 layoffs even after federal stimulus help is applied.

Our release also contrasts the estimated school layoffs, with the 8,900 state employee layoffs called for by Governor Paterson on Tuesday, and the 5,000 IBM layoffs announced on Wednesday.

In some counties the numbers of school layoffs reach into the hundred.  If one private employer announced these numbers, it would be front-page, top-of-the-broadcast news.

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Bad to worse — state revenues continuing to decline

March 24th, 2009 by Robert Lowry

Earlier today Governor Paterson, Assembly Speaker Silver, and Senate Majority Leader Smith announced that projected state revenues through the end of the 2009-10 state fiscal year are now expected to come in $2.2 billion lower than what the three parties estimated in their consensus revenue forecast one month ago.

In their February 24th consensus forecast, the Governor and legislative majorities agreed that the state would take in about $1 billion less than what was reflected in the Executive Budget proposed by Governor Paterson back in December.

After the Legislature approved a 2008-09 mid-year deficit reduction plan in February, it was estimated that the structural deficit in the state budget for 2009-10 was $13 billion.

Absent any revisions on the expenditure side, today’s news would mean that state leaders now must close a $16.2 billion deficit to enact a balanced budget.

The revenue fall-off is blamed on “worsening turmoil within the financial sector and broader economy.”  The news release recites well-publicized evidence of the economy’s struggles, including rising unemployment rates and claims.

The news release concludes:

The Governor and Legislature will accommodate these new costs as part of a fiscally responsible Enacted Budget.

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State budget news

March 23rd, 2009 by Robert Lowry

My sense is that the Governor and Legislative Leaders continue on a timeline to produce a state budget within eight days, in time for the start of the state fiscal year on April 1.

A few items from the news on how state budget negotiations may be proceeding…

Fred Dicker of the New York Post writes, “Gov. Paterson and legislative Democrats have secretly agreed on an $8 billion, two-year tax hike on individuals making more than $500,000 a year that will ‘sunset’ around the time he plans to run for election in 2010, legislative sources told The Post.”

Mr. Dicker adds that a temporary increase in the 4 percent state sales tax to 4.5 percent is also under “intense discussion.”

The column also speculates on possible shifts in the regional distribution of school aid.

Newspapers in the Gannett chain report that Senate Democrats are pushing to restore funding for the Middle Class STAR Property Tax Rebate program. Governor Paterson proposed eliminating the $1.4 billion program, one of the largest single cuts in the entire state budget.

My presumption had been that the program would not be restored. Although the first two years of property tax rebates more than offset tax levy increases for taxpayers and districts, it has not yet built up a constituency of supporters like that of School Aid or the traditional STAR program.

The New York Times reported on Long island and Westchester school districts contemplating layoffs of instructional personnel, some for the first time in decades. The articles notes, “Most of the region’s school boards are aiming for budgets that keep the tax levy increase below 4 percent, a challenge made more frustrating by the uncertainty about state aid.”

A week ago, Gannett papers published a similar article presenting statewide perspectives, and stressing the reluctance of districts to count on federal stimulus aid until more is known about how much aid they will receive, when, and what strings may be attached.

A column from the Associated Press warns that an on-time budget could be a mixed blessing, if state leaders rely on federal stimulus aid and “temporary” state tax increases (as described above) to put off tough choices until after the next statewide election, in 2010.

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Regents elect Dr. Merryl Tisch as Chancellor

March 16th, 2009 by Robert Lowry

Today the State Board of Regents elected Dr. Merryl H. Tisch to serve as Chancellor. The Chancellor acts as chair of the Regents.

She will be the first woman to lead the Regents in the 225-year history of the Board.

Chancellor-Elect Tisch issued a statement outlining her priorities:

As Chancellor, I will insist that we continue to raise standards for all of our children and hold every school district accountable for their results, while providing the support necessary to get that done.

We will reform and expand our data system to make it easier to use, faster, and more complete, extending from pre-kindergarten through college.

We will embrace innovation with a data-driven approach that seeks to constantly identify and advance policies and best practices to raise test scores, raise graduation rates, and finally close the achievement gap…

We will continue to find new ways to recruit the best and brightest into teaching and keep them there with an openness to alternate routes to certification and experiments to reward excellence.

We will find new ways to increase the number of excellent teachers working in schools with students who need extra help, including black and Latino students, English Language Learners and students with disabilities.

And we will move forward with the effort begun by Chancellor Bennett, the Board of Regents, and Commissioner Mills to redesign the State Education Department so that we can better support local innovation in our highest performing districts and engage more deeply with districts that are struggling and in need of additional support.

Our first order of business will be the completion of a timely and orderly search, both wide and exhaustive, for a successor to our Commissioner, Richard Mills, who will retire in June after leading change in the State for fourteen years.

Dr. Tisch is a resident of Manhattan and has served as a Regent for 13 years, including the last two as Vice Chancellor. She previously was Co-Chair of the Regents Committee on Elementary, Middle, Secondary, and Continuing Education and Chair of the Committee on Vocational and Educational Services for Individuals with Disabilities.

She was also a member of the Governor’s Commission on Property Tax Relief but abstained from the Commission’s recommendations.

In addition to her role as a Regent, Dr. Tisch serves as chairperson of the Metropolitan Council on Jewish Poverty. She was once a first grade teacher in a New York City nonpublic school.

As Chancellor, Dr. Tisch will succeed Robert Bennett of Buffalo, who was the 2007 winner of the “Friend of the Council” award.  He will remain on the Board.

To succeed Dr. Tisch as Vice Chancellor, the Regents chose Dr. Milton Cofield of Rochester.

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Governor omits schools from study of retiree health costs

March 11th, 2009 by Robert Lowry

Last week, I reported that the Governor’s Budget Division had released a report on the savings his “Tier V” public pension proposal could achieve for state and local taxpayers.

That report received little attention from the media.

Another action by Governor Paterson concerning retiree benefits received even less media notice – none as far as I know.

The Governor announced appointment of a task force on public retiree health benefits.

School districts are not represented in the membership of the task force.

Not only that, that task force is directed to study the provision of health care coverage to public employee retirees, except those from school districts, BOCES, and New York City.

The Governor’s Executive Order creating the task force says it is to investigate and research current practices and possible changes to retirees’ health coverage, except for those from New York City and those covered by Chapter 729 of the Laws of 1994 and subsequent laws extending its application.

Chapter 729 is the law which barred school districts and BOCES from reducing health insurance benefits unless comparable reductions are made to benefits for corresponding active employees. If the active employees are represented by a union, any reduction would need to be collectively bargained.

One of the themes of the Council’s budget advocacy this year has been that even with optimistic assumptions concerning continuation of new federal support and recovery in the state’s fiscal capacity, schools face accelerating cost pressures, including rising pension contributions, mounting retiree health insurance costs, and a loss of “turnover savings” due to a slowing of retirements.

A few weeks ago, the State University at Buffalo issued a report on the potential fiscal impact of retiree health insurance costs with the ominous title, “The End of Local Government as We Know It.”

The UB report studied Western New York’s nine largest local governments, including two school districts. It concluded that the nine entities faced a combined $3.7 billion in unfunded liabilities for retiree health care over the next 30 years.

Last May State Comptroller Tom DiNapoli issued a report warning that state and local governments and school districts need to begin planning to accommodate costs for retiree health insurance, as directed by a national accounting standard.

Currently, schools and local governments have no legal way to set aside funds for these costs. The Comptroller has proposed legislation – which the Council supports – to create trust funds for this purpose.

It is hard to reconcile the Governor’s omission of schools from his task force study and his support for a property tax cap and insistence that public spending must be restrained in light of new economic realities.

Fiscal realities cannot be permanently eluded just by ignoring them.  Ultimately retiree health costs will have to be accommodated within school budgets that voters will support.

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Center for Rural Schools website launched; PreK studies highlighted

March 11th, 2009 by Robert Lowry

Last session, legislation was adopted to create the New York State Center on Rural Schools at Cornell University.  The Center aims to be a leader “in solving systemic problems and improving opportunities, practice, policy for rural schools and the communities they serve.”

The Center just recently launched a website: www.nyruralschools.org.

They have done some interesting work in analyzing the roll-out of Universal Prekindergarten in rural communities. Several papers are available under “Useful Information” here.

The Center plans a summit on small schools for March 26th in Liverpool (near Syracuse).

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President gives major education policy speech

March 10th, 2009 by Robert Lowry

President Barack Obama gave a major speech on education policy today.

The Washington Post‘s coverage begins, “President Obama today sharply criticized America’s public school system, and he outlined a strategy to reward good teachers and fire bad ones, establish uniform academic achievement standards and increase spending on the first and final stages of a person’s education.”

But Education Week‘s Politics K-12 blog titles its post, “Everyone Loves Obama Speech,” and notes, “President Barack Obama’s first major address on education is drawing praise from everyone from Capitol Hill Republicans to public charter school advocates to the National Education Association.”

The blog adds, “Not surprisingly, some of these groups came up with different interpretations of the remarks, particularly on alternative pay for teachers.”

The Washington Post‘s Jay Mathews, one of the nation’s leading education columnists, writes, “President Obama’s education speech this morning was, in my memory, the largest assemblage of smart ideas about schools ever issued by one president at one time.”

You can read the speech here.

Education Week also reports that the President today made an unscheduled appearance at a meeting of the Council of Chief State School Officers, the association of state education commissioners, in his words, “hitching a ride” with his Education Secretary, Arne Duncan.

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