Distribution of New York State School Aid New York State Network for Economic Research December 4, 2002 Cynthia S. Searcy, MPA Marcia Van Wagner, PhD Citizens Budget Commission

Overview Why is the CBC interested in school aid distribution? What data are used in the analysis? What do the data reveal about school aid? How would the CBC equalize school aid? What effect does equalization have on school aid distribution?

CBC’s Interest in School Aid School aid accounts for almost 20 percent of the State’s budget School aid has increased 40 percent since or $5.3 billion Issues of equity and adequacy are being addressed through CFE litigation

Data New York State Annual Financial Report (ST-3) Unaudited, reported district revenues and expenditures Caution: districts can interpret instructions and account codes differently More information at:

Data 680 districts Analysis uses revenues not expenditures Includes building and transportation aid Analysis uses Total Weighted Pupil Units (TWPU) Special attention to New York City, its surrounding suburbs, Big 4, and high need districts

School District Characteristics School Year

School District Performance School Year

District Revenues Per Weighted Pupil School Year

Equalization Approach Minimum local tax effort set at state median (0.0135) Minimum revenue per weighted pupil set at state median ($8,432) Excludes federal revenue Districts that meet minimum revenue level with local effort get no state aid

Minimum Local Tax Effort: Revenue Per Weighted Pupil

Minimum Local Tax Effort: State Aid Per Weighted Pupil $0

Equalization: How much does it cost? State aid increases 5.7% from $13.7 billion to $14.5 billion 99 districts get no state aid $378.5 million is redistributed from low need districts to high need districts

Is Equalization Fair? Equalization results in 71 high need districts with less state aid Less state aid results when districts are expected to raise more local revenue under the minimum local tax effort Equalization does not compensate for other local burdens that compete with education resources (e.g. Medicaid)

Adjusting for Local Medicaid Burdens Localities paid approximately 22 percent of the State’s Medicaid costs in FY2000 Localities with large Medicaid populations pay more--squeezing resources for other services such as education The Medicaid burden can be distributed across the state by requiring all districts to contribute at the median level (0.0028)

Tax Rates: Actual, Equalized & Adjusted for Medicaid Burden

State Aid Per Weighted Pupil with Medicaid Adjustment

Medicaid Adjustment: How much does it cost? State aid increases 20 percent from $13.7 billion to $16.5 billion 108 districts get no state aid $441.7 million is redistributed from low need districts to high need districts

Opportunities for Further Research Refine data--update data, test for different outcomes without building and transportation aid, get district level Medicaid spending Evaluate minimum local tax effort Evaluate appropriate minimum revenue per pupil and pupil weights