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New York’s School Aid Cuts Will Disproportionately Harm Poor Districts

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A recent Albany Times-Union report “recently warned officials they should expect state aid payments to be reduced by 20 percent.”  The source of the report was the Questar III Board of Cooperative Educational Services State Aid and Financial Planning.  The Times-Union article went on to report that “Freeman Klopott, a spokesman for the state budget office, said reductions of 20 % are being done across the board.”

Cutting school aid by the same percentage for each district will have a much larger negative impact on poor districts than wealthy ones.  School aid pays for a larger percentage of school budgets in districts with low property tax wealth than in those with high wealth.  Because aid makes up a larger portion of district budgets in poor districts, equal percentage aid cuts will have bigger budget impacts than in districts with high property wealth.

The school aid cuts were made necessary by state level revenue shortfalls related to the Covid-19 outbreak. New York revenues for the current fiscal year are expected to be 15% lower than pre-Covid projections.  Although a number of governors, including Governor Cuomo have called for federal assistance to help states and localities make up the lost revenues, to date the President and U. S. Senate Republican leadership have been opposed to substantial assistance.

The disparate impacts of the aid cuts can be seen in high and low property wealth districts.  For example, in Albany County, the North Colonie School district has relatively high property wealth per student – $871,507 in 2019.  If the 20% cut in school aid was applied for the full year to the state aid received by North Colonie in 2019, the district would lose only 3.7% of its revenue.  But in neighboring Watervliet, with $371,589 in property wealth per student, the district would lose 13.5% of its revenue. Per student, Watervliet would lose $3,238, while North Colonie would lose $735.

There are numerous examples of the disparities that a uniform percentage reduction in aid will create.  In Oneida County, the Utica City School District had only $155,526 in property wealth for each student.  The impact of a full year 20% cut in school aid would be a loss of 14.6% of district revenues – $2,838 per student. In nearby New Hartford, which has $590,785 in property wealth per student, the impact would be 5.6% – $1,208 per student.

In Monroe and Erie Counties, across the board school aid cuts in Buffalo and Rochester would be more than four times as large on a per student basis as they would be in neighboring wealthy suburban communities – more than $4,000 per student compared to about $900.

Wealthy districts in the New York Metropolitan Area would be almost unscathed by the cuts.  Harrison will see a cut of 0.8% – $267 per student.  Southampton would see a cut of 0.9% – $451 per student, and Locust Valley, in Nassau County would lose 1% of district revenues – $450 per student.  In essence, the cuts operate as Robin Hood in reverse.

School districts in upstate counties will be much harder hit than those in the New York Metropolitan area by across the board cuts.  Downstate counties with high property values averaged impacts of less than 5% of district revenues, while upstate counties in most cases had total revenue impacts that were greater than 10% in the 20% cut scenario.

We do not yet know the final size of school aid cuts that will be imposed to make up for the state revenue shortfall because changes in future revenues and Federal assistance are not yet known.  However, any aid reductions that are imposed on an across the board basis will have a much greater impact on poor districts with low property wealth than on wealthier districts.

Conclusions

Governor Cuomo often speaks of the need for intelligent policy responses to state and local problems.  Across the board school aid cuts are not an intelligent solution to the problem of reduced state revenues.  Because state school aid is a much more important source of school district revenue for poor districts than wealthy ones, across the board cuts have a much greater impact upon them.  In some cases, with across the board aid reductions, poor districts will face cuts that are more than four times as large per student as wealthy districts in the same county.

Uniform, across the board reductions were imposed because of a provision in the State Aid to Localities Budget Bill, noted here, in a blog post by E. J.  McMahon of the Empire CenterIf “a General Fund imbalance has occurred during any Measurement Period,” the budget director will be empowered to “adjust or reduce any general fund and/or state special revenue fund appropriation … and related cash disbursement by any amount needed to maintain a balanced budget,” and “such adjustments or reductions shall be done uniformly across the board to the extent practicably or by specific appropriations as needed.”

A more intelligent approach would equalize the impact of the aid cuts by imposing the largest cuts on the wealthiest districts and the smallest cuts on the poorest.  A simple sliding scale approach could be implemented.  Governor Cuomo should show leadership by calling on the State Legislature to fix the State Budget to ensure that school aid reductions do not magnify the existing revenue disparities between rich and poor school districts.

 

 

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