This essay will talk about state school funding and the Campaign for Equity Lawsuit. But before I describe what I would consider a fair system, after a root-and-branch reform, let me give you the bottom line. Under New York State’s Reverse Robin Hood system, New York City’s share of front door and back door (STAR, son of STAR, anything else they come up with) state education funding is not only less than its share of the state’s public school children but also its residents’ state income tax payments. This must end. Argue all you want about whether educational resources should be redistributed to poor children; it is an outrage that for 30 years they have been redistributed away from poor children. And the level of public school spending, staffing and pay in the rest of New York State is far too high, which is unfair to local taxpayers, to New York City’s schools which get outbid for qualified staff, and to New York City taxpayers who are increasingly expected to accept an even lower share of state education funding to pay for it. The practice of giving more state school aid, under STAR and similar programs, to those who spend the most must end. The fact that spending in the rest of the state is so high, that New York City’s children have been sacrificed to pay for it, is what no one is willing to say. I’m saying it, and demanding that it stop.
New York City residents are slightly worse off than the statewide average, and the city’s school children are much worse off than average, but the complicated set of state aid formulae, taken together, do not reflect this. The most recent year for which data is available is typical. Reeling from 9/11, New York City, which accounted for about 42 percent of the state’s population also accounted for 40.2% of state income tax paid by state residents (that is not including state income taxes by commuters from states like New Jersey and Connecticut, most of which also come from New York City). The city accounted for just 36.4% of the state’s public school children in 2003-04 (see attached spreadsheet), in large part because the low quality of the city’s schools force many parents to either pay for private school – getting nothing for their education tax dollars – or leave the city. But the city only received 34.5% of state education funding that year, including STAR – the state had actually cut the city’s share in the wake of 9/11.
If there were no state school aid, and all public education was funded with local dollars alone, New York City would have therefore been $542 million better off that year. Over the decade beginning in FY 1994-95, it would have been $5.2 billion better off in $2004. In fiscal 1996, when incoming Governor Pataki slashed state school aid to New York City while increasing it to the rest of the state, the city would have been $1 billion better off in $2004 if state school aid did not exist. The state has a habit of kicking the city when it is down. That’s why, as far as state school aid is concerned, I don’t care how much there is in total. I’d settle for zero. Whether New York City taxpayers send money to Albany and get it back, or just pay the same amount locally and cut out the middleman, is of no consequence. At the state level, all that matters is the share.
In most recent years, if New York City were a separate state its spending, staffing and teacher pay (if adjusted for the cost of living) would be among the lowest of the states; even in the best years for school funding (and worst years for the economy otherwise) it is below average every year as far back as the data goes. In the rest of the state, spending started out sky high and has been soaring, fueled in part by STAR money sucked out of New York City. In fiscal 2002, according to Census Bureau data, the national average for public school spending as a share of income was 4.6 percent. Public school spending averaged 5.5 percent of income in the Downstate Suburbs (which would have placed 4th if a separate state), 6.4 percent in the Upstate urban metro counties (2nd if a separate state), and 9.1 percent in the rest of New York State (1st if a separate state by some margin). For New York State as a whole, spending as a share of personal income (5.6 percent) was well above the national average and New Jersey, and ranked 2nd in the nation in FY 2002, despite low spending in New York City. Staffing levels are similarly out of whack for the national average, especially for non-instructional staff, which averaged 369 in New York City and 673 nationally but 961 in the rest of New York State. And from fiscal 2002 to fiscal 2004, staffing and spending as a share of income fell in New York City and soared again in the rest of the state, even as enrollment there began to drop. Son of STAR, of which New York City will get little, was passed to pay for it in place of property taxes.
For Governor Pataki and John Faso, because spending in the rest of New York State is so high, state aid to New York City must be kept low to keep the average down. Or so they say, when the robotically object to the Campaign for Fiscal Equity lawsuit citing statewide figures, an unbelievably offensive deceptions. They want to keep the existing spending gap, so New York City will continue to have the lowest paid and thus least qualified and motivated school staff. Other alternatives, like lower spending elsewhere in the state, are beyond their consideration. That is what it means to be a “conservative” today. But even for “allies” of the Campaign for Fiscal Equity lawsuit like the New York State United Teachers and the New York State School Boards Association, the gap must be maintained. Increases in funding for New York City need to be accompanied by increases in funding for the rest of the state, retaining that gap with higher taxes overall – paid for, in part, by New York City. Eliot Spitzer has apparently signed on to that point of view, calling for even more back door school aid through an expanded STAR to accommodate even higher spending in the rest of the state at the city’s expense. This is outrageous as well.
What would be the ideal?
Something like the system adopted in Michigan, after an extensive public debate and a statewide referendum on two competing plans – both vastly fairer than what we have in New York. A state-funded “foundation” grant per child, with some adjustment for disability, ensures a reasonable level of public school funding without any local school taxes. Those communities with the means and the desire are allowed to spend more, but only up to a cap that prevents the inequalities from getting out of hand. Ideally, a New York system would also take into account differences in student need and differences in the cost of living. My proposal is:
· Aside from the severely handicapped, establish a single level of school aid (including STAR Aid) for every child in the state, almost sufficient in itself to provide a sound basic education in a place with an average cost of living – at say 90 percent of the national average. Upstate, therefore, could have national average school spending with almost no local property taxes for schools at all.
· Children who, when tested each year, were shown to need additional help – due to a minor learning disability, social disadvantage, not being a native English speaker, or for whatever reason – would receive two hours of additional after-school instruction three days per week. Children who were far behind would receive summer school for six hours per day for eight weeks. State funds would cover the full cost of this additional instruction, which would not only help the kids but also provide a longer work day with higher pay for teachers in schools where disadvantaged children were concentrated.
· Set a “maximum” level of school expenditure at 25 percent above the national average. School districts could spend above the maximum, but their state aid would be reduced by one dollar for every dollar spent over it. Only school districts exceeding the maximum would be required to have their budgets approved by referendum, and if the referendum failed, spending would be cut to the maximum. Even at the maximum, local taxes would cover only 28 percent of school spending upstate.
· Adjust the maximum upward Downstate based on a higher cost of living, based on the average annual earnings per private sector employee compared with the national average (with exceptionally high-paid Finance and Insurance sector excluded). Typically, private sector workers Downstate earn about one-third more than the national average.
· Require school districts to spend more Downstate in proportion to the cost of living criteria above, funded by a countywide (or in New York City citywide) property tax. This would ensure that poor Downstate suburban districts could get up the national average, with adjustment for the cost of living, despite limited local resources.
This proposal, if implemented, would put New York City in a position to adequately fund its schools, especially if the state takeover of base Medicaid costs (but not all Medicaid costs) I proposed earlier were implemented at the same time.
In the rest of the state, what share of school districts would be over the maximum as I define it? Just about all of them, last time I checked. But not all, and having some school districts exempted from referenda while other nearby districts are forced to have them could prompt some interesting questions.
School districts would be free to forgo two dollars of state aid to spend each dollar over the maximum if they couldn’t get by on 25 percent more than the national average adjusted for the cost of living. Or, if they could not get by on that amount (perhaps due to soaring retiree obligations in the face of declining enrollment) they could go bankrupt and be reorganized into larger more efficient districts. The state could set aside money for this purpose. In any event, the soft cap would increase pressure to bring down school spending where it is high (the opposite of STAR, which enables it) while the foundation would bring up spending where it is low. This is a shift in incentives, just as my Medicaid proposals are shifts in incentives. I ask the Campaign for Fiscal equity, to whom I provided much data over the years, what is it that you want? More spending on everyone (with New York City’s share used for an earlier retirement, as passed by the legislature), until a fiscal disaster is caused and there is less spending on everyone, with New York City on the short end in each case? Or fiscal equity?
And STAR and Bruno’s check? The rest of the state could keep it, but it would be included with the rest of the school aid and deducted from the total, increasing the pressure to cut school spending elsewhere. But sorry, money sent to school districts to spend (school aid) and money sent to districts or individuals to offset money they had spent (STAR and Son of STAR) are, de facto, the same thing. Perhaps the state could demand that the city eliminate Bloomberg’s check at the same time, and add it to the school budget.
I’ll talk about other, non-funding proposals to improve the schools next week.
But let’s get back to the bottom line. For years, Governor Pataki fought the Campaign for Fiscal Equity lawsuit on grounds of “judicial activism” while promising a more equitable distribution of state education resources “when we can afford it.” Well, we’ve just gone through an economic boom, and New York City’s share of state education funding, staffing and spending has if anything gone down. And we might be heading for a bust. What if the state “cannot afford” to provide more funding to New York City?
Well it can certainly afford to keep the city’s funding steady while slashing to the rest of the state. A recession would help public education by diverting more talented workers, lacking other options, into teaching. Falling funding elsewhere in the state would direct those qualified teachers to New York City. Additional better-off parents with easier-to-teach kids and qualified teachers might then decide to stay, easing the burden on the city’s schools. In the mid-1990s the state did the opposite. At a key moment, when enrollment was rising due to the “baby boom echo” and the teacher shortage was at its worst, it cut the city’s aid and sent city tax dollars to the over-funded schools elsewhere. Meanwhile, an early retirement incentive (which the legislature unanimously passed a bill repeating this year) sucked qualified teachers out of the schools into a life of leisure, with cheaper uncertified teachers hired to replace them. Turnover soared, including mid-year turnover, and stayed high for years.
I remember the consequences. That year, the year before my oldest would have enrolled, there were 35 kids in the local kindergarten and no teaching supplies for a year. We sent our kids to Catholic School, getting nothing, until recently, for all our tax dollars. Other parents followed their tax dollars to the suburbs. Others have spent a decade fighting to get their kids into the limited number of special deal schools were an education remained on offer. And those kids whose parents lacked our resources, who were already at a disadvantage due to what happened at home, who were in the worst schools where decent teachers transferred out of? They were not educated, and have been written off, even by Mayor Bloomberg. The current administration has been working to improve first the elementary schools, and then the middle schools, while creating small new high schools for those who came after. Those whose education began in the 1990s have been jammed into big high schools, where the city and state wait for them to move on. They are cash cows.
No one even talks about this. And to the extent that justice requires restitution, it isn’t coming. Not from the Court of Appeals. Not from the next Governor. Not from the state legislature. We have a whole structure of beneficiaries who are the fiscal equivalent of holocaust deniers, except that they don’t have to deny because no one brings it up. I don’t expect justice. But here again is my bottom line. I don’t want a single state tax dollar of mine used for education spent outside the City of New York for the rest of my life. Every such dollar, at a minimum, has to come back – even if, in some gentrified future, New York City is richer and its children better off than average. I’ll pay to improve the schools here, but not one cent for the 100,000 extra employees local governments, most in education, that have been added elsewhere in the state over the past 15 years. The rest of the state cannot continue to do worse than to do nothing for New York City’s schools. This isn’t about judicial activism or high school spending. This is about what may be the most unjust state aid system anywhere in the United States in the past half century.