The Governor’s School Aid proposal — understanding the moving parts

Sunday, January 27th, 2013 at 4:09 pm by

Gannett papers and the Buffalo News have articles this weekend citing school officials’ reactions to Governor’s School Aid proposal and explaining some of the complications in understanding the aid calculations.

This post tries to shed some light on the latter point.

There are three major “moving pieces” to Governor Cuomo’s School Aid proposal which affect the aid totals presented for individual districts on the School Aid runs accompanying his proposed state budget:  :

  1. the Gap Elimination Adjustment,
  2. High Tax Aid, and
  3. everything else.

Explaining the parts
The Governor proposes a “Gap Elimination Adjustment (GEA) Restoration” which would generate a $322 million increase in general purpose aid for districts statewide.

The GEA was instituted in 2009-10 under another name as a mechanism to cut School Aid and help close gaping holes in state budgets.  After running the formulas for each aid category, the GEA reduced the bottom-line total aid for each district using a complex series of calculations.

For the current school year, the GEA reduces total aid to school districts by $2.16 billion.  Governor Cuomo’s GEA Restoration would lower the reduction to $1.83 billion in the coming year.

The Governor also proposes changes to the High Tax Aid formula which would reduce that aid to 249 districts by $68.6 million, while also increasing that aid to 62 districts by $18.5 million, resulting in a net $50 million reduction in High Tax Aid statewide.

Finally, the Governor proposes no formula changes affecting how aid would be calculated for 2013-14 for the remaining other aid categories, including such large categories as Building, Transportation, BOCES, and Special Education Excess Cost Aids.

Aid runs show increases and decreases for districts in these other categories, but those shifts result from year-to-year changes in the data used to calculate the aid, not from proposed changes in formulas.  Statewide, aid under these other categories would increase by a net total of $278 million.

Among these  “other aids” is Foundation Aid.  It is the largest category, accounting for nearly three-quarters of the total aid shown on School Aid runs.  Governor Cuomo proposes freezing Foundation Aid for each district at the same level as in 2012-13.

Foundation Aid was enacted in 2007 as the centerpiece of efforts to resolve the Campaign for Fiscal Equity’s challenge to the constitutionality of the state’s school finance system.  Reforms were to be full phased-in by 2010-11, increasing aid to all districts by a total of $5.5 million.

However, the Foundation formula was frozen in three of the past four years, and funding is now $3 billion below the level promised for 2010-11, without taking into account the general aid reduction imposed by the GEA.

Summing up, for the aids presented on the School Aid run, the Governor proposes a $550 million statewide increase through (1) an increase in general aid of $322 million from the GEA Restoration, (2) plus a net increase of $278 million from other aid categories under current law formulas, (3) minus $50 million in High Tax Aid.

Here is a printout showing how aid would change for each of these three major moving pieces for each district under the Governor’s proposal.

Understanding the impacts
The GEA Restoration is generally progressive, generating larger increases for poorer districts.  But for most districts, the restorations remain small relative to what districts have lost.

The poorest 10 percent of school districts (measured by property wealth per pupil) would see their GEAs reduced by an average of 33.4 percent; the wealthiest 10 percent would see an average reduction of only 1.6 percent; and the average reduction statewide would be 14.9 percent.

182 districts – 27 percent of the  total – would lose more in High Tax Aid than they would gain from the GEA Restoration.

Most of the aids increasing or decreasing under the remaining categories are expense-based, reimbursing districts for a share of costs incurred in a prior year.  Generally, wealthier districts show larger increases in these categories, suggesting they are more likely to have maintained the expenditures required to generate state reimbursement.

Here are tables showing how the interplay of these three pieces affect aid for districts grouped by property wealth per pupil and the State Education Department’s Need/Resource Capacity (NRC) categories.  The NRC categories group districts based on a combination of pupil needs measured by poverty status and ability to fund education from local sources.

Other recommendations affecting School Aid
A key point to remember is that, in addition to the $550 million increase shown on School Aid runs, Governor Cuomo has proposed a $203 million “Financial Stabilization Fund” for school districts, to be allocated through a formula to be determined through negotiations with the Legislature.  No money from this proposed fund appears on the School Aid run for any district.

By not allocating the stabilization funds, the Governor gives legislators a way to increase aid for their local school districts, without increasing the overall size of the state budget beyond what he recommends.

In addition to formula aids shown on School Aid runs and the Financial Stabilization Fund, Governor Cuomo proposes $75 million for programmatic initiatives recommended by his “New NY Education Reform Commission,” including providing full-day prekindergarten, extending learning time, rewarding high performing teachers, and creating “Community Schools” offering family support services.

He also proposes a $50 million increase in funding for competitive grant programs to reward management efficiency and performance improvement.

Whatever happens with these two sets of grant programs in the final state budget, funds won’t be allocated to individual districts in time to be included in the budgets they ask voters to approve on the third Tuesday in May.

I’m cited near the end of the Gannett article mentioned at the beginning of this post:

Bob Lowry, deputy director of the state Council of School Superintendents, said he was pleasantly surprised, as well. He expected Cuomo to take money for the competitive grants out of the school aid pot.

The fact that the governor allocated a $611 million increase in aid plus the $203 million for stabilization and $75 million for reform initiatives is encouraging, he said.

“What the governor proposed is more positive than I anticipated, but I also know that it doesn’t do enough to help a great many districts,” he said.

In a recent blog post (The Elephant in the Room), I explained five reasons why leaders in so many districts are worried about insolvency.  The Legislature conducts its annual hearing on the budget for P-12 education on Tuesday.  Our testimony will discuss how the Governor’s budget addresses those five fiscal challenges.

This entry was posted on Sunday, January 27th, 2013 at 4:09 pm and is filed under Finance, State Budget. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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