State Aid to School Districts in New York State: An Overview of the Foundation Formula Based on the

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State Aid to School Districtsin New York
StateAn 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

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Overview

• State Aid Primer
• School District Concerns
• Policy Discussion
• Appendix Reference Materials

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• State Aid
• Primer

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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

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The State-Local Partnership in Three Types of
Districts
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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

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C4E Eligibility Requirements

• 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.

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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

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Sustainability and Accountability
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New York State School AidExpense-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.
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District Concerns

• Discussion by Bob Lowry, Deputy Director, New
  York State Council of School Superintendents

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Policy Discussion
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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?

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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?

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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)

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AppendixReference Materials
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New York State PK-12 EducationA 51.4 Billion
Enterprise (2007-08 Estimated)

• 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

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Sources of Revenue for EducationNew York State,
Major School Districts, 2006-07
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School Tax Relief (2007-08) by School District
Need CategoriesTotal STAR Payments for 2007-08
3.7 billion
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2008-09 State Aid Programs
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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.

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Factors that Drive Foundation Aid

• Expected local contribution is based on a
  districts 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)

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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

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New York State School AidExpense-based Aids as
a Percent of General Support to Public Schools