Archive for April, 2011

Property Tax Report Cards: Districts holding down spending; poorest districts struggling hardest (UPDATED)

April 27th, 2011 by Robert Lowry

The State Education Department has released its annual compilation of school district “Property Tax Report Cards,” detailing the proposed changes in spending and tax levy that districts will ask voters to consider when they go to the polls in three weeks, on May 17.

Similarities between this year and last
The statewide average proposed changes in spending and tax levy are strikingly similar to those of one year ago.

Statewide, districts are proposing spending increases averaging 1.3 percent, and tax levy increases averaging 3.4 percent.

A year ago, proposed spending rose by an average of 1.4 percent and tax levy rose by an average of 3.2 percent.

Challenges:  Declining state aid, rising benefit costs
The figures are similar because the basic dynamics of school budgeting are similar.

For 2011-12, as in 2010-11, school leaders and voters must put together budgets which absorb reductions in state aid and accommodate surging costs for pensions and health insurance.

School leaders have worked hard to hold down spending and tax increases in the face of these two pressures.

Our estimate is that mandated pension costs alone would drive up overall school district spending by 1.4 percent, even if districts could freeze all other costs.  The implication is that districts did freeze all other spending, on balance.  Pension costs rose by a similar amount a year ago.

Over one-third of the state’s school districts proposed cutting their spending below 2010-11 levels.  Yet the overwhelming majority of these districts (more than 85 percent) still found it necessary to propose increasing their tax levy, due to reductions in state aid.

Nearly two-thirds of districts (65 percent) are proposing spending increases below 1.92 percent, the maximum increase school boards may adopt under a contingent budget, in the event that voter approval is not forthcoming.

The State Education Department holds that a district’s spending under a contingency budget may not exceed that in a proposed budget defeated by the voters.   So, notwithstanding the 1.92 percent cap, those districts whose budgets are not approved by the voters would have to adopt budgets below that limit.

More reliance on reserves
School districts are increasing their use of reserves to balance their budgets.

They are reducing their undesignated fund balances by an average of 18.3 percent.  Without the use of fund balance, districts would need to raise tax levies by an additional 6.8 percent on average, or make cuts of a corresponding magnitude.

Steep increases in pension and health insurance costs will not go away after this year, so few districts are draining their reserves in a single year.  Next year is expected to be a better year for state aid, but districts face the prospect of a zero percent property tax cap.

State government is not exhausting reserves this year, either.

Poorest districts generally struggling the most
In some years there are striking differences across districts.

In 2003, another year state aid was reduced, the poorest 20 percent of districts (measured by property wealth per pupil) proposed the smallest spending increases and the largest tax increases.

In contrast, in 2007, the poorest districts proposed the largest spending increases and smallest tax increases.  That was the year the state enacted school finance reforms as part of a resolution of the Campaign for Fiscal Equity’s challenge to the constitutionality of the state’s education finance system.

Most striking this year are the generally low spending increases being proposed by the poorest districts, again measured by property wealth per pupil.

While the poorest 20 percent of districts are proposing tax increases close to the state average (3.1 percent compared to the 3.4 percent state average), they are proposing close to flat spending levels, with their average increase being only 0.1 percent.

These poorest districts must accommodate the same pension cost pressures as all other districts, so their nearly flat overall spending suggests that they are making even greater programmatic reductions than their more affluent peers.  These districts also typically have fewer resources to begin with.

Here is a chart showing the average proposed spending and tax levy changes for districts grouped by property wealth per pupil.

The poorest districts are also relying more heavily on reserves in assembling their budget proposals.  For example, without the sums they are using from fund balances, they would need to raise taxes by an additional 16.7 percent, or make equivalent cuts.

Austerity in state aid often hurts the poorest districts most, even when state government tries to adjust cuts based on need and ability to pay.

The average cut in total state aid for the poorest group was 4.8 percent, compared to 8.1 percent for all other districts.  Yet these districts replaced only 27 percent of their state aid cuts through local revenues, compared to 88 percent for all other districts.

None of the figures cited above include data for the Big 5 Cities (Buffalo, New York, Rochester, Syracuse, and Yonkers).  The large cities do not conduct budget votes and are not required to submit Property Tax Report Cards.

UPDATE:

Speaking with reporters on Long Island yesterday (Thursday, April 28), Governor Cuomo said “I think school districts did a good job of finding economies.”

The Governor also said, “What it says to me is if you impose fiscal discipline on a system, on a school system in this case, you will see a response.”

As the figures I cite above indicate, this is not the first time schools have shown fiscal discipline — the average school spending and tax increases were strikingly similar a year ago, as were the pressures on schools — state aid reductions and pension cost increases.

 

 

 

 

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Why are so many school districts planning layoffs?

April 26th, 2011 by Robert Lowry

Governor Cuomo has said that school districts can absorb state aid reductions in the recently enacted state budget without resorting to teacher layoffs.

Yet a recent survey by the New York State School Boards Association found that 81 percent of districts were expecting to lay off teachers.

Why?

This is the Governor’s first year in office, but it is not the first tough year for school budgets.

Our analysis finds that in the current (2010-11) school year, 75 percent of the state’s school districts are already receiving less aid from the state than they did two years ago, in 2008-09.

With the further cuts in the enacted state budget for 2011-12, over 90 percent of the state’s districts are due to receive less state aid next year than they did three years ago, in 2008-09.

When Building Aid is excluded, only four of the state’s 676 districts eligible for regular School Aid are to receive more aid in the coming year than they received three years ago.  Building Aid reimburses districts for capital construction expenses.

Here is a spreadsheet with the figures for all districts.

Between 2008-09 and 2011-12, School Aid will have dropped by 8.0 percent statewide.  Excluding Building Aid, state funding for school operating costs will be down by 12.4 percent.

At the same time schools have been facing cuts in aid for ongoing operations averaging 4 percent per year, they have also been dealing with surging costs for pensions and other benefits which would drive up their overall spending by around 2.5 percent per year, even if all other costs could be frozen.

Here is a chart with our estimates for districts other than the Big 5 Cities (Buffalo, New York, Rochester, Syracuse, and Yonkers).

To manage austerity in state aid and surging benefit costs, schools have already been seeking ways to achieve savings without hurting opportunities for students.  But for most districts, the easier options have now been exhausted.

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More on leadership change at the State Education Department

April 18th, 2011 by Robert Lowry

The New York Daily News reports that outgoing State Education Commissioner David Steiner will return to his former position as Dean of the Hunter College School of Education, and will lead a new City University Institute on Education Policy.

Meanwhile, Peter Meyer of the Thomas B. Fordham Institute has several pieces on Commissioner Steiner’s service and his departure:

They are all worth reading, but to pick only one, I would recommend the first.

The Fordham Institute is not affiliated in any way with New York’s Fordham University.  Education Next is a journal of the generally conservative Hoover Institution at Stanford University.

No word yet on who will succeed Dr. Steiner as Commissioner, or when a decision will be made, but speculation continues to center on current Senior Deputy Commissioner John King.

* Here is a post presenting our own more mathematical analysis of how New York gained enough points on its second Race to the Top application to win funding.

 

 

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On mandates

April 18th, 2011 by Robert Lowry

Friday’s New York Times carried an article on the struggles of New York public schools to cope with a mountain of mandates.

For me, it raises questions about how to best pursue meaningful help from the state in reducing and controlling the cost pressures schools must accommodate.

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Category: Finance, Legislation | 1 Comment »

Transition at the State Education Department

April 12th, 2011 by Robert Lowry

Today’s Buffalo News editorializes that John King “deserves strong consideration” to succeed David Steiner as State Education Commissioner.

Dr. King currently serves as the State Education Senior Deputy Commissioner in charge of P-12 education (prekindergarten through grade 12).

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It’s a ZERO percent tax cap for schools…

April 8th, 2011 by Robert Lowry

With the state budget out of the way, other legislative priorities move to the front-burner, including the Governor’s proposal to cap property tax levy increases by schools and local governments.

The bill passed the Senate back in late January.

This week have been reports on plans for an aggressive push for the bill by the Administration, and on possible compromises through adjustments and exemptions from the cap.

All the reporting consistently refers to the proposal as seeking a “2 percent cap” on property tax increases.

For schools, that is wrong.

Under the bill, districts which do not obtain voter approval for their proposed tax levy would be capped at their prior year tax levy — no increase — a zero percent cap.

The bill states,

If, however, the tax levy proposition is then not approved by the qualified voters, then the trustees or board of education shall adopt a budget that requires a tax levy no greater than that for the prior school year.

See page 5 here.

For schools, the lesser of 2 percent or an inflation measure is the trigger for determining how big a majority is required to pass a proposed school tax levy increase:  50 percent plus one to pass increase up to the trigger, 60 percent plus one to pass an increase above the trigger.

In contrast, local governments would be permitted to increase their local tax levy by the lesser of 2 percent or the inflation figure without obtaining voter approval.

Similarly, in Massachusetts , cited as having a model tax cap, communities may increase their tax levies by up to 2.5 percent without seeking voter approval.

Category: Finance, Legislation | 2 Comments »

Comissioner Steiner leaving, Cathie Black out as New York City Schools Chancellor UPDATED

April 7th, 2011 by Robert Lowry

On the Capitol Pressroom radio show today, State Board of Regents Chancellor Merryl Tisch acknowledged rumors that Education Commissioner David Steiner is exploring other options, saying, ““I have heard a lot about that.  I believe the commissioner is exploring options, but I think no decision has been made.”

Also today, New York City Mayor Michael Bloomberg announced that he has accepted the resignation of Cathie Black as Chancellor of the City public schools.

UPDATE (4 pm, April 7):  The State Education Department issued statements by Commissioner Steiner and Chancellor Tisch confirming that Dr. Steiner will leave sometime later this year.  No successor has been designated.

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