Small City School Districts Fight Back

1. NYS ASSOCIATION OF SMALL CITY SCHOOL DISTRICTS SCSD NEW YORK STATE SMALL CITY SCHOOL DISTRICTS ASSOCIATION OF New York State Association of Small City School Districts Small City School Districts Fight Back …Foundation Aid has been successively slowed, frozen, reduced and now, in 2011-12, virtually eliminated through two almost mortal blows: the more than $2.5 billion in education aid cuts under the Gap Elimination Adjustment (GEA) and the cap to education aid under the Personal Income Growth Index Cap (PIGI Cap). Foundation Aid is now almost unrecognizable when compared with the vision that its proponents had 5 years ago and its goals may be now unachievable. Whether the GEA and the PIGI Cap are the death knell for education finance reform in New York State remains to be seen. Certainly they present the proponents of reform and the literally millions of children in the state’s poorest districts with grim prospects for strengthening the education systems in their districts. In any event, it is essential that the depth of funding inequity in the state be plumbed in order to understand the difficulty of challenges before them. Dr. Bruce Baker, Professor, Rutgers University, Graduate School of Education (October 1, 2011)

2. Small City School Districts Fight Back • I. Goals • II. Barriers to Success • A) Greater Burdens • 1. Wealth Gap • 2. Student Need Gap • B) Failure to Provide Sufficient Education Aid Results In: • 1. Tax Gap • 2. Spending Gap • 3. Student Performance Gap • C) Raising the Cost of Success • 1. Cut Scores • D) State Lowers Support for Success • 1. Gap Elimination Adjustment • 2. Foundation Aid Freeze/Slow Down • 3. Personal Income Growth Index Cap • 4. Tax Levy Cap • III. Strategies for Success • A) Frame the Debate • B) Legislative Solutions • 1. Foundation Aid Formula Reform • 2. Budget Vote/Tax Levy Cap Reform • C) Judicial Solutions • D) Greater Cost Efficiencies

3. I. GOALS Insure every child in small cities is given the opportunity to receive a quality educationClose the student performance gapHelp each small city district become a “successful school district” Currently, the State and the Courts have defined a “successful school district” as one in which 80% achieve proficiency on Grade 4 ELA and Math tests and the average of passage rates among the 5 Regents exams required for graduation is 80% (note that the actual graduation rate can be lower than 80% in a “successful school” although we will use graduation rates in this presentation as a measure of success). While we believe this standard is too low and mischaracterizes the quality of staff work and teaching being done in small city schools despite inadequate resources, it is a benchmark which is helpful to show the extent of the challenges before us.

7. II. Barriers to SuccessThe primary barrier to student and district success is the failure of the State to target sufficient amounts of education aid to higher need/lower wealth districts. State education aid formulas fail to account for the greater burdens facing small city districts. This failure results in higher taxes, lower per pupil spending and lower student performance. A) Greater Burdens 1. Wealth Gap 2. Student Need Gap

8. Wealth Gap

9. Student Need Gap

10. B) Failure of State to provide sufficient education aid results in:1. Tax Rate Gap2. Spending Gap3. Student Performance Gap

11. Tax Rate Gap 2010 REAL PROPERTY TAX RATES (full value/1000)

12. Spending Gap

13. C) Raising the Cost of Success 1. Cut Scores

14. Cut Scores

15. D) State Lowers Support for Success 1. Gap Elimination Adjustment 2. Foundation Aid Freeze/Slow Down 3. Personal Income Growth Cap 4. Tax Levy Cap

16. Gap Elimination Adjustment

17. Gap Elimination Adjustment – Reverse Targeting The following chart shows that GEA has impacted poor/high need districts the most (reverse targeting). More total dollars (as a percent of AOE) are taken from districts already taxing at higher rates and spending less per pupil.

18. FOUNDATION AID TIMELINE FY 2006-07 TO PRESENT PROMISED PROMISED PROMISED PROMISED PROMISED ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL 2007-08 and2008-09Foundation Aid Increased (37.5%) but Less Than First Planned (42.5%)–Second Step Toward Implementation 2008-09 to2009-10Foundation Aid FROZEN 2006-07 to 2007-08Foundation Aid Increased – First Step Toward Implementation 2009-10 to 2010-11Foundation Aid DECREASED even though Federal funds were used to backfill the State’s Gap Elimination Adjustment 2010-11 to 2011-12Foundation Aid DECREASED – Federal funds gone and State implemented the Gap Elimination Adjustment along with Medicare reimbursements and phase in extended to 2015-16

19. Personal Income Growth Index Cap The 2011-12 State Budget enacted the Personal Income Growth Index Cap on education aid for 2012-13 and thereafter under Education law sections 3602 (1)(aa), (1)(dd) and (18). The US Department of Commerce data shows that between 2008 and 2010 the PIG Index grew by only .5% annually. (See Exhibit B attached) School Tax Levy Cap

20. School Tax Levy Cap In June of this year the Legislature and the Governor at last reached a compromise on the expiring rent control laws affecting primarily NYC by conceding reluctantly to the Governor’s push for a school tax levy cap. The cap limits growth in levies to the lesser of 2% or the CPI with few exceptions from the computation and will hurt lower wealth districts the most. The law sunsets in five years as does the rent control law insuring the issue will be revisited (Education Law section 2023-a). (See Exhibit C attached)

21. III. STRATEGIES FOR SUCCESS:—How Small City Districts Are Fighting Back If they get you answering the wrong questions, they don’t have to worry about the answers.– Thomas Pynchon • A) REFRAMING THE DEBATE • The most important “court” is the court of public opinion. • The most important thing to remember and to remind legislators and the public is that the state is not fulfilling its constitutionally mandated duty to fund a meaningful high school education in higher need, lower wealth districts. • The education debate has been muddied by a focus on important but secondary issues such as the Triborough Law, school tax rates, teacher quality and tenure • With the PIG Cap, the GEA and the Tax Levy Cap, education finance as we have known it has been ended. Education Aid is no longer an entitlement. Under current law (PIGI Cap) Foundation Aid may never be fully funded. • The status quo in NYS of education finance is unacceptable and contrary to avowed public policy. The Baker Policy Paper shows that NYS is the 6th most regressively funded education systems in the nation. • Thus it is imperative that we continue working with the Regents and the Legislature to target aid to lower wealth, higher need districts via Foundation Aid reforms.

22. B) LEGISLATIVE SOLUTIONS 1. Foundation Aid reform to fully fund formula and increase targeting to higher need/lower wealth NEW YORK STATE ASSEMBLYMEMORANDUM IN SUPPORT OF LEGISLATIONsubmitted in accordance with Assembly Rule III, Sec 1(f) BILL NUMBER:SPONSOR:TITLE OF BILL: An act to amend the education law, in relation to amending the foundation aid formula.  PURPOSE OR GENERAL IDEA OF BILL: To permit computation of foundation aid sufficient to insure funding of a sound basic education. SUMMARY OF SPECIFIC PROVISIONS: To eliminate unnecessary minimum aid provisions and caps on provisions inhibiting the funding of a sound basic education and to enact a regional cost index reflecting current cost differences among various regions in the state JUSTIFICATION: New York State school districts face unprecedented educational and fiscal challenges. These challenges have threatened the capacity of many districts to provide a sound basic education as required by the state constitution. Current provisions in the foundation aid formula do not deliver the aid to all districts necessary to enable them to meet this requirement. Moreover, enactments in the 2011-12 state budget have established restrictions on foundation aid which will make it impossible or at least highly unlikely that this aid will ever be fully phased-in. The state constitution requires and promises that a sound basic education be provided to all children wherever they reside and whatever school district they attend. This bill would make it possible to fulfill that promise. PRIOR LEGISLATIVE HISTORY: This is a new bill. FISCAL IMPLICATIONS: To be determined. EFFECTIVE DATE: This act shall take effect immediately.

23. 2. Budget Vote and Tax Levy Cap Reform NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f) BILL NUMBER: SPONSOR: TITLE OF BILL: An act to amend the education law, in relation to amending budget voting and elections in small city school districts.   PURPOSE OR GENERAL IDEA OF BILL: To permit boards of education in small city school districts the option to adopt a school budget without voter approval as long as the adopted budget does not exceed the tax levy cap in education law section 2023-a. To permit boards of education in small city school districts the option to conduct board elections at the same time the general elections are conducted.   SUMMARY OF SPECIFIC PROVISIONS: To permit boards of education in small city school districts the option to adopt a school budget without voter approval as long as the adopted budget does not exceed the tax levy cap in education law section 2023-a. To permit boards of education in small city school districts the option to conduct board elections at the same time the general elections are conducted.   JUSTIFICATION: New York State school districts face unprecedented educational and fiscal challenges. These challenges have threatened the capacity of many districts to provide a sound basic education as required by the state constitution. Small city school districts are struggling to find ways to cut expenses without jeopardizing essential educational programs. This bill would provide small city school districts the option to eliminate the expense of budget voting as long as the board approved budget did not require a tax levy increase in excess of the tax levy cap (Chapter 97 of 2011) and to consolidate board elections with the general elections thus saving the considerable expense of a separate election in May each year.   PRIOR LEGISLATIVE HISTORY: This is a new bill.   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: This act shall take effect immediately.

24. C) JUDICIAL SOLUTIONS Hussein v State of New York – purpose is to mandate state funding of sound basic education Taking the Next Important Steps I. Lift Stay Motion II. Oppose State’s appeal to Court of Appeals III. Summary Judgment Motion (Partial) to Roll Back GEA Cuts IV. Temporary Restraining Order to Prevent GEA Offsets to Fall Aid Installments

25. D) GREATER COST EFFICIENCIES Mandate Relief- identify initiatives for cost savings through mandate relief Utility Taxes- support small city districts efforts to establish utility tax Health Benefits Pilot Study – Flex Care- save on cost of health benefits by buying as a consortium Energy Cooperative – Lynx EMS- save on cost of electric service by buying wholesale Charter School Conversion Initiative- encourage district conversion of public schools to charters

26. EXHIBIT A

29. EXHIBIT B • Education Law § 3602 (1) • aa. "Total personal income of the state" shall mean the total personal income of the state of New York as published by the United States department of commerce* • Education Law § 3602 (1) • dd. "Allowable growth amount" shall mean the product of the positive difference of the personal income growth index minus one, multiplied by the statewide total of the apportionments, including the gap elimination adjustment, due and owing during the base year, commencing with the base year computed for the two thousand twelve--two thousand thirteen school year, to school districts and boards of cooperative educational services from the general support for public schools as computed based on an electronic data file used to produce the school aid computer listing produced by the commissioner in support of the enacted budget for the base year. Education Law § 3602 (18.) Allocable growth amount apportionment. Such amount shall be apportioned for a school year pursuant to a chapter of the laws of New York enacted for the state fiscal year in which such school year commences, and shall be allocated to purposes including but not limited to competitive grant awards made pursuant to subdivisions five and six of section thirty-six hundred forty-one of this article, the foundation aid phase-in amount or other foundation aid increase allocated pursuant to subdivision four of this section and the gap elimination adjustment restoration amount apportioned pursuant to subdivision seventeen of this section. In the event that a chapter of the laws of New York enacted for the state fiscal year in which such school year commences is not enacted, the allocations in support of subdivisions five and six of section thirty-six hundred forty-one of this article shall equal the allocations in support of such awards in the base year, and the apportionments pursuant to subdivisions four and seventeen of this section for the current year shall equal the apportionments for such subdivisions four and seventeen for the base year.

30. Exhibit C 2023-A - Limitations upon school district tax levies. Repeal Date: 06/16/2016 § 2023-a. Limitations upon school district tax levies. 1. Generally. Unless otherwise provided by law, the amount of taxes that may be levied by or on behalf of any school district, other than a city school district of a city with one hundred twenty-five thousand inhabitants or more, shall not exceed the tax levy limit established pursuant to this section, not including any tax levy necessary to support the expenditures pursuant to subparagraphs (i) through (iv) of paragraph i of subdivision two of this section. 2. Definitions. As used in this section: a. "Allowable levy growth factor" shall be the lesser of: (i) one and two one-hundredths; or (ii) the sum of one plus the inflation factor; provided, however, that in no case shall the levy growth factor be less than one. b. "Available carryover" means the amount by which the tax levy for the prior school year was below the applicable tax levy limit for such school year, if any, but no more than an amount that equals one and one-half percent of the tax levy limit for such school year. c. "Capital local expenditures" means the taxes associated with budgeted expenditures resulting from the financing, refinancing, acquisition, design, construction, reconstruction, rehabilitation, improvement, furnishing and equipping of, or otherwise providing for school district capital facilities or school district capital equipment, including debt service and lease expenditures, and transportation capital debt service, subject to the approval of the qualified voters where required by law. d. "Capital tax levy" means the tax levy necessary to support capital local expenditures, if any. e. "Coming school year" means the school year for which tax levy limits are being determined pursuant to this section. f. "Inflation factor" means the quotient of: (i) the average of the national consumer price indexes determined by the United States department of labor for the twelve-month period preceding January first of the current year minus the average of the national consumer price indexes determined by the United States department of labor for the twelve-month period preceding January first of the prior year, divided by: (ii) the average of the national consumer price indexestdetermined by the United States department of labor for the twelve-month period preceding January first of he prior year, with the result expressed as a decimal to four places. g. "Prior school year" means the school year immediately preceding the coming school year. h. "School district" means a common school district, union free school district, central school district, central high school district or a city school district in a city with less than one hundred twenty-five thousand inhabitants. i. "Tax levy limit" means the amount of taxes a school district is authorized to levy pursuant to this section, provided, however, that the tax levy limit shall not include the following: (i) a tax levy necessary for expenditures resulting from court orders or judgments against the school district arising out of tort actions for any amount that exceeds five percent of the total tax levied in the prior school year; (ii) in years in which the system average actuarial contribution rate of the New York state and local employees' retirement system, as defined by paragraph ten of subdivision a of section nineteen-a of the retirement and social security law, increases by more than two percentage points from the previous year, a tax levy necessary for expenditures for the coming fiscal year for school district employer contributions to the New York state and local employees' retirement system caused by growth in the system average actuarial contribution rate minus two percentage points; (iii) in years in which the normal contribution rate of the New York state teachers' retirement system, as defined by paragraph a of subdivision two of section five hundred seventeen of this chapter, increases by more than two percentage points from the previous year, a tax levy necessary for expenditures for the coming fiscal year for school district employer contributions to the New York state teachers' retirement system caused by growth in the normal contribution rate minus two percentage points; and (iv) a capital tax levy.