1. 1 State Aid to School Districts in New York State: An Overview Based on the Laws of 2007 State Aid Work Group New York State Education Department April 25, 2007 Attachment B

2. 2 School District Types n 652 K-12 school districts and 25 non-K-12 districts employ 8 or more teachers and are eligible for regular State Aid. n All are fiscally independent (with independent taxing and borrowing authority) except the Big Five. n 37 Boards of Cooperative Educational Services (BOCES) provide a range of programs and services to groups of school districts other than the Big Five. n Six districts with fewer than eight teachers are eligible to receive only Operating and Transportation Aids.

3. 3 New York State PK-12 Education A $48.3 Billion Enterprise (2006-07 Estimated) n Total Revenue from State Sources n Total General and Special Aid Fund Expenditures n Average Total Expenditure Per Pupil* n Average State Revenue Per Pupil* n $21.40 billion including STAR n $48.3 billion n $17,104 n $7,578 * DCAADM

4. 4 Sources of Revenue for Education New York State, Major School Districts, 2004-05

5. 5 Where the Education Dollar is Going New York State, Major School Districts, 2004-05

6. 6 Local Revenues (2004-05) n Constitute 50 percent of education revenues n About 90 percent derives from property taxes levied by boards of education on residential and commercial properties n Only the Big 5 Cities have constitutional tax limits; limits apply to total municipal budget, of which the school budget is a part n The considerable reliance on local revenues results in large spending disparities among school districts

7. 7 State Revenues for Education n 88 percent of State revenues for education from State General Fund, primarily from income and sales taxes n State sales tax laws reserve 4 percent for the State and permit counties and cities to levy up to an additional 4 percent n Approximately 12 percent comes from a special revenue fund account supported by lottery receipts

8. 8 Revenue from State Sources* as a Percent of Total Expenditures for Public Schools n Low: 1944-4531.5 percent n High: 2001-0248.2 percent n Current: 2006-07**44.3 percent *2006-07 includes State revenues for School Tax Relief (STAR): 7.0 percent. ** Estimated.

9. 9 2007-08 State Aid Programs

10. 10 Three Years of Aid by Need Resource Category

11. 11 How Major State Aid Formulas Work There are primarily three types of formulas: 1. Foundation Formulas: Adjusted Expense – Local Contribution Used in: Foundation Aid 2. Per Pupil Formulas: Pupil Count x Dollar Amount x District Aid Ratio Used in: Hardware Aid 3. Expense-based Formulas: Approved Expenses x District Aid Ratio Used in: Transportation, Building, BOCES, Special Education Note: The District Aid Ratio varies with district need. It represents the share the State pays; the balance is provided primarily from local sources.

12. 12 Traditional Factors that Drive Aid n District Fiscal Capacity u Income per pupil and Actual Value of taxable property per pupil (Foundation, Special Education) u Actual Value per pupil (Transportation [one of two options], Building, BOCES) n Pupil Need Factors u Foundation Aid uses an Extraordinary Needs Count, a mixture of student poverty, students with limited English, and geographic sparsity n Spending u Textbook, Library, Software, Hardware (up to a per-pupil cap) u Transportation, Building and BOCES u Special Education (public high cost and private) n Pupil Counts u Used extensively in Foundation, Universal Pre-Kindergarten and Special Education u Used in minor ways in Transportation and Building Aids

13. 13 Foundation Aid: 2007-08 and Beyond n Change to a Needs-based, Cost-adjusted Formula n District’s State Aid per Pupil = [Foundation Cost X Pupil Need Index X Regional Cost Index] – Expected Local Contribution.

14. 14 What are the Components? n The Foundation Cost is the cost of providing general education services, measured by determining instructional costs of districts that are performing well. n The Pupil Needs Index recognizes the added costs of providing extra time and extra help for students to succeed.

15. 15 Foundation Aid, con’t. n The Regional Cost Index recognizes regional variations in purchasing power around the State, based on wages of non- school professionals. n The Expected Local Contribution is an amount districts are expected to spend as their fair share of the total cost of general education.

16. 16 The Increase in 2007-08 Foundation Aid by Need Resource Category Note: Includes Supplemental Educational Improvement Plan Aid.

17. 17 Foundation Aid per Pupil in 2007-08 and 2010-11 by Need Resource Category

18. 18 Highest Need School Districts Tax at a Higher Rate, but Tend to Raise Less and Spend Less

19. 19 STAR n School Tax Relief Program--enacted in 1997 and took effect with the 1998-99 school year n The State makes payments to school districts to compensate them for reduced property tax receipts n Began with implementing a State funded school property tax exemption for senior citizen homeowners n Planned for a 4-year phase-in, subsequent legislation provided for full implementation for seniors in the first year (1998-99) n Middle Class STAR Program--enacted in 2007-- targets tax relief to middle income homeowners

20. 20 STAR (continued) n Exemption for owner-occupied primary residences. u Enhanced exemption: $50,000 for an owner (or one of a couple) over 65; annual income cannot exceed $67,850 n Basic exemption: $30,000 for all primary residence homeowners (begun in 1999-00, phased in over 3 years)

21. 21 School Tax Relief (2006-07) by School District Need Categories

22. 22 State Aid Issues School Year 2008-09 n Continue to phase in a foundation formula based on the cost of success n Continue to phase in support for early Childhood Education n Strengthen accountability through contracts for excellence n Provide for sustainability in funding and cost-effectiveness in operation