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Tuesday, March 15, 2016

DiNapoli Report Examines State School Aid Trends

Over the past ten years, state aid to school districts has increased $6 billion to $23.3 billion in 2015-16, according to a report issued today by State Comptroller Thomas P. DiNapoli which examined school aid patterns and trends in New York.
“School aid is the largest single state-funded expenditure within the budget,” said DiNapoli. “As the start of a new fiscal year approaches, this report is intended to provide policymakers and the public additional information on education funding in New York.”
Over the past decade, school aid has averaged 23.6 percent of state-funded expenditures. The Division of the Budget projects this share to increase to 25.6 percent over the next three years.
The largest component of state school aid is Foundation Aid, a statutory formula enacted in 2007 as the result of a ruling by the State Court of Appeals in the Campaign for Fiscal Equity lawsuit. After the ruling, the state committed to spend an additional $5.5 billion, using a new, transparent funding formula phased in over four years, adjusting aid for differences in both capacity of districts to raise local taxes and costs to provide services.

Following increases of just over $1 billion in school years ending in 2008 and 2009, state budgets during and just after the recession froze Foundation Aid. Starting in the 2012-13 state budget, Foundation Aid distributions increased by between $112 million and $428 million per school year.

Current funding for Foundation Aid is $15.9 billion, compared to the original projection of $18.1 billion by the fourth year of the program.

DiNapoli’s report also shows that starting in 2010-11, the state reduced school aid from levels otherwise driven by statutory formulas by $1.4 billion. These reductions – known as the Gap Elimination Adjustment, or GEA – grew to $2.6 billion in SY 2011-12. The GEA helped New York to close a multi-billion dollar budget deficit by assigning a portion of the state’s funding shortfall to all school districts as reductions in state aid.

In each year since 2012-13, the state has reduced the impact of the GEA by including a separate formula for unrestricted “GEA Restoration Aid” in the budget. This formula has had different calculations in each year, but the net impact over the past four years has been to reduce the GEA’s effect on high-need districts more quickly than on average or low-need districts.

For the upcoming 2016-17 state fiscal year, the Executive Budget proposes a total school funding increase of $991 million, including $266 million in Foundation Aid and the elimination of the GEA entirely for 200 mostly high need districts and reducing it by at least 30 percent for the remaining districts.

Local revenues, predominantly property tax collections, are the largest source of school funding. The relative share of school funding by source has also fluctuated in recent years, with the state’s share peaking at 39.1 percent in 2008-09 and dropping to 33.7 percent by 2011-12. Last year, the state’s share was 35.9 percent, consistent with the average for the ten most recent years, while local revenues made up 59.7 percent of total funding last year.

DiNapoli’s report also highlighted:
·        Total state aid funding for schools is projected to climb to nearly $28 billion by 2019-20;
·        Expense-based aids – state funding for items such as textbooks, student transportation and the construction of school facilities – have not seen major formula changes during the last ten years;
·        In 2015-16, lottery aid is expected to total $3.2 billion, approximately 13.8 percent of overall state expenditures for school aid; and
·        Revenue generated from new casinos that will be dedicated to school aid is expected to reach $168 million in 2019-20.

For more information, read the full report:
New York State School Aid: Two Perspectives: http://www.osc.state.ny.us/localgov/pubs/research/schoolaid2016.pdf