Public Education Finance in New York State

New York State, which has the highest per pupil total current spending of public elementary-secondary school system and the second highest per pupil total expenditure has a headache for its increasing disparity of state aid and educational quality among different jurisdictions. As a matter of fact, in New York State the proportion of formula assistance, designed to decrease the gap between the needs and revenue raised by local jurisdictions, is almost the 10^th lowest in all of the 50 states.

State aid formula reform in New York State in 2007-2008

Pre reform

The 2007-2008 reform was not the first try to solve the “equity” problem. As early as 1993, litigation CFE v. State was initiated by the Campaign for Fiscal Equity and New York City parents in response to the long-term underfunding of New York City schools.

However, Governor's and the Legislature's failed to comply with the July 30, 2004 deadline in the state Court of Appeals' landmark June 2003 Campaign for Fiscal Equity (CFE) decision, which was providing its schoolchildren with the opportunity for a "sound, basic education,". Again, in the 2005-06 Executive Budget, the Governor failed to meaningfully respond to the decision or to reform the irrational and unfair state school aid system. The Governor failed to propose a reform of the state school aid formula based on student needs.

Reform in 2007-2008

In addition to providing the largest one-year increase in school aid, the 2007-08 state budget also provides every school district with predictable state aid increases for each of the next three years.

Also, the Foundation Aid formula has been changed. The new Foundation Aid formula combined nearly 30 separate aid formulas into a single aid formula. Also, Foundation Aid is calculated based on the actual costs associated with providing an adequate education and is adjusted for:

o Disadvantaged students and special needs students;

o Regional cost;

o Local contribution based on the wealth of a district.

The results of the reform

Pros:

· Except the large cities, the 2007-2008 reform in aid formula have moved state aid amounts closer to those provided by a need-based foundation formula.

Cons:

· For the large cities, the new Foundation Aid formula made the situation even worse. Recent aid changes still leave large cities in the state with a much smaller relative aid amount than they would receive with a straightforward need-based formula.

· The state aid formula still favors downstate districts at the expense of upstate districts.

Except the above comparisons between need and actual foundation aid of different areas, a research from Statewide School Finance Consortium shows the distribution of foundation aid in jurisdictions with different wealth and tax effort levels:

· The CWR and FRPL measures of poverty graph (graph 2) clearly illustrates that significant amounts of funding flows to wealthy districts with some combination of low FRPL percents and/or a relatively high CWR.

· The CWR and Local Tax Effort graph (graph 3) demonstrates that those school districts with the highest CWR and lowest Tax Effort (tax rate on true per $1000/full value) received significant aid. The law of opportunity costs again is a factor as aid was denied to lower wealth/higher tax rate school districts by the current distribution to wealthier districts with lower tax rates.

Therefore, although to some extent the new foundation aid formula has eliminated the inequity among all the jurisdictions in New York State, more improvements need to be made to achieve need-based foundation aid.