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State Aid Work Group New York State Education Department September 2008

State Aid to School Districts in New York State: An Overview of the Foundation Formula Based on the Laws of 2008 Prepared for Discussion by the Regents Subcommittee on State Aid. State Aid Work Group New York State Education Department September 2008. Overview. State Aid Primer

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State Aid Work Group New York State Education Department September 2008

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  1. State Aid to School Districtsin New York State:An Overview of the Foundation FormulaBased on the Laws of 2008Prepared for Discussion by the Regents Subcommittee on State Aid State Aid Work Group New York State Education Department September 2008

  2. Overview • State Aid Primer • School District Concerns • Policy Discussion • Appendix: Reference Materials 2

  3. State Aid Primer

  4. Foundation Aid • Change to a needs-based formula, based on the cost of success, in 2007-08 and beyond • Aid = [Cost of adequate education x pupil need x regional cost] – expected local contribution 4

  5. The State-Local Partnership in Three Types of Districts

  6. Contract for Excellence (C4E) • Applies to 39 school districts versus 55 last year • Contract funds can be used in any of six allowable program areas • NYCDOE must also do a class size reduction plan • Second-year C4E districts must maintain programs committed to in the prior year

  7. C4E EligibilityRequirements • C4E requirements apply to districts receiving an additional $15 million or a 10 percent increase in Foundation Aid or a Supplemental Educational Improvement Plan Grant and: • Requiring academic progress year 2 or above or, • In need of improvement year 2 or above, or • In corrective action or, • Restructuring status. • Also, applies to districts that filed a Contract in 2007-08 with a 20 percent cumulative increase in aid, or $27.5 million over two years, and SINI 2 or worse accountability status.

  8. Issues of Accountability and Sustainability Raised by C4E • The maintenance of effort requirement ensures that State Aid continues to support proven programs • Increased flexibility varies by district accountability and fiscal status • When fully phased-in, increases will be based on inflation • The balance between new programs and maintaining existing programs creates a tension especially in times of scarce fiscal resources

  9. Sustainability and Accountability 9

  10. New York State School Aid:Expense-based Aids as a Percent of General Support to Public Schools Includes: Building and Building Incentive, Transportation, BOCES and Special Services, High Cost Public Excess Cost and Private Excess Cost Aids.

  11. District Concerns Discussion by Bob Lowry, Deputy Director, New York State Council of School Superintendents

  12. Policy Discussion

  13. Policy Questions Sustainability and Competing Priorities • What should the Regents proposal be for sustaining the foundation formula? • For example, what are the trade offs in a school aid plan that costs $1.0 billion versus $2.0 billion? • Factors to consider: • Providing aid to all districts (minimum guarantee)? • Targeting to high need or C4E districts? • Pre-K, foundation formula or aid on expenses districts have already incurred? 13

  14. Policy Questions Contracts for Excellence • If the State Aid increase is limited, • Who should be subject to Contracts for Excellence? • How much should be devoted to new programs versus maintenance of effort? • How do we ensure districts have the resources to be successful? • How should districts transition to smaller increases when Foundation Aid is fully phased in? Local effort • Education finance is a State-Local partnership: • What is the right balance between State Aid and school district contributions? Cost-efficient Strategies • Should the Regents recommend cost-efficient or mandate relief strategies to complement the Regents Foundation Aid proposal? 14

  15. Four Discussion Points • Preserve the strength of the foundation formula--needs-based, education-oriented and predictable • Without growth, it is difficult to demand that C4E districts implement new programs • Maintain the commitment for dollars and additional accountability for the highest need districts • Preserve existing State commitments to pay aid on expenses districts have already incurred (BOCES, Building, Trans, Excess Cost) 15

  16. Appendix:Reference Materials

  17. Total Revenue from State Sources Total General and Special Aid Fund Expenditures Average Total Expenditure Per Pupil Average State Revenue Per Pupil $23.2 billion including STAR $51.4 billion $18,384 $8,298 New York State PK-12 EducationA $51.4 Billion Enterprise (2007-08 Estimated) 17

  18. Sources of Revenue for EducationNew York State, Major School Districts, 2006-07 18

  19. School Tax Relief (2007-08) by School District Need CategoriesTotal STAR Payments for 2007-08: $3.7 billion 19

  20. 2008-09 State Aid Programs 20

  21. Factors that Drive Foundation Aid • Phase-in period(currently we are approaching the third year in a four-year phase in)—A longer phase-in will require less money. • The estimate of costs. Foundation Aid, in contrast to its predecessor Operating Aid, calculates aid based on a study of school district costs. This is updated every three years (next in 2009). In between cost studies, the law adjusts aid for inflationary growth (currently 2.9 percent for 2008-09)—Higher estimates of inflation will require more money. • Controls placed on the formula through caps and minimums(currently the increase in the formula is capped at 15 percent and provides a guaranteed minimum increase of 3 percent)--Higher caps and minimum guarantees require more money. 21

  22. Factors that Drive Foundation Aid • Expected local contributionis based on a district’s relative wealth and what they can be expected to raise. (A district of average wealth receives a state share of about 40 percent)—A smaller local share requires more State Aid. • Related data changes • Enrollment changes • Fiscal capacity changes (e.g., increased property values) • Increases in expense-based aids (e.g., Transportation, BOCES, special education and Building) 22

  23. 2008-09 Legislation on C4E • Gave districts greater flexibility • Higher inflation adjustment for most (4% vs. 3%) • More of increase can be spent to continue existing programs (35% and 50% for most vs. 25%) • For ROS districts, greater flexibility was linked to improvement in accountability status • For Big 5 districts, greater flexibility was given to districts that received smaller increases 23

  24. New York State School Aid:Expense-based Aids as a Percent of General Support to Public Schools

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