1 State Aid to School Districts in New York State: An Overview Based on the Laws of 2004 State Aid Work Group New York State Education Department August 11, 2004 Attachment C

2 School District Types n 657 K-12 school districts and 23 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 38 Boards of Cooperative Educational Services (BOCES) provide a range of programs and services to groups of school districts other than the Big Five. n Seven districts with fewer than eight teachers are eligible to receive only Operating and Transportation Aids.

3 New York State PK-12 Education A $39 Billion Enterprise ( 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 $17.6 billion including STAR n $39.0 billion n $13,505 n $6,098 * DCAADM

4 Sources of Revenue for Education New York State, Major School Districts,

5 Where the Education Dollar is Going New York State, Major School Districts,

6 Local Revenues ( ) n Constitute 46 percent of education revenues n About 91 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 State Revenues for Education n 91 percent of State revenues for education from State General Fund, primarily from income and sales taxes n State sales tax laws reserve 4.25 percent for the State and permit counties and cities to levy up to an additional 4 percent n Approximately 9 percent comes from a special revenue fund account supported by lottery receipts

8 Revenue from State Sources* as a Percent of Total Expenditures for Public Schools n Low: percent n High: percent n Current: **45.2 percent * includes State revenues for School Tax Relief (STAR): 7.0 percent. ** Estimated.

State Aid Programs

10 How Major State Aid Formulas Have Traditionally Worked There are primarily two types of formulas: 1. Per Pupil Formulas: Pupil Count x Dollar Amount x District Aid Ratio Used in: Operating, Extraordinary Needs, Operating Standards 2. 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.

11 Three Years of Aid by Need Resource Category

12 Traditional Factors That Drive Aid n District Fiscal Capacity u Income per pupil and Actual Value of taxable property per pupil (Formula Operating, Special Education) u Income per pupil (Extraordinary Needs Aid) u Actual Value per pupil (Transportation [one of two options], Building, BOCES) n Pupil Need Factors u Extraordinary Needs Aid uses an Extraordinary Needs Count, a mixture of student poverty, students with limited English, and geographic sparsity n Spending u Formula Operating Aid (very small portion) u Transportation, Building and BOCES u Special Education (public and private) n Pupil Counts u Used extensively in Formula Operating, Extraordinary Needs and Special Education u Used in minor ways in Transportation and Building Aids

13 What Drives Comprehensive Operating Aid? n District Fiscal Capacity, Spending, Pupil Counts u As on file for the Executive Budget proposal for aids (Operating Aid, Tax Aids and Transition Adjustment) u Used to determine eligibility for the one percent increase in COA for low wealth districts (CWR) u As on file for the apportionment of aids (Gifted and Talented Aid, Operating Standards Aid) n Pupil Need Factors u As on file for the Executive Budget proposal for aids n Primarily Based on Aids u Operating Aid, Tax Aids and Transition Adjustment n Operating Aid Adjustment Factors u For , a reduction in COA was imposed on all districts with a lesser percent reduction for high need / low fiscal capacity districts u For , a 1.75 percent increase is provided for all districts

14 STAR n School Tax Relief Program--enacted in 1997 and took effect with the 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 ( )

15 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 $63,750 u Basic exemption: $30,000 for all primary residence homeowners (begun in , phased in over 3 years)

16 School Tax Relief by School District Need Categories( )

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

18 State Aid Issues School Year n Students who attend schools with high concentrations of poverty: u Have the farthest to go to meet the State’s learning standards u Are more likely to attend schools with fewer resources n Design a proposal that recognizes these conditions