Meeting of the Board of Regents | January 2008

SUMMARY

Issue for Discussion

The Subcommittee will discuss the Regents 2008-09 State Aid proposal in light of new data from school districts in November, 2007.  The intent is not to debate a revised Regents State Aid proposal but to give the Executive and Legislature the benefit of the Regents thinking about how to strengthen the foundation formula enacted into law in 2007.

Reason(s) for Consideration

Review of policy.

Proposed Handling

This question will come before the Subcommittee on State Aid at its January, 2008 meeting.

Procedural History

The Regents adopted their State Aid proposal for 2008-09 in October, 2007, and requested that staff update it with new data from school districts available in mid-November.

Background Information

              The data filed by school districts for inclusion in the November database exhibits significant change in expenditure patterns and demographics.  The incorporation of this new data generated a larger than anticipated $321 million year-to-year increase over the computerized aid proposed by the Regents in October.  This resulted in a proposed overall increase of $2.24 billion, which is significantly more than forecast by the Executive and legislative branches.  The major elements of this change are the following:

• The Department’s computation of the Foundation Aid phase-in resulted in a larger increase in Foundation Aid for 2008-09 than the Executive and Legislature projected in the Financial Plan update. 
• Some districts, notably New York City, experienced a dramatic growth in income wealth.  As income increases, the district’s formula-based aid per pupil will normally decrease. 
• Expenditure based aids grew considerably in districts outside of New York City, increasing the overall share of aid for these districts.
• Student enrollments are declining in New York City further contributing to a reduced share of aid for New York City.

Retaining the principles the foundation formula was intended to meet requires continued attention to the affects of changes in the variables.    

Recommendation

I recommend committee consideration of various approaches to State Aid which addresses the new data presented above.  

• Use an alternative phase in of the foundation formula reflecting a better understanding of the intent behind the original legislation.
• Use a choice of two years of income data (selected income) throughout all formulas and the statewide average, as is done with Full Value, to provide more stability in funding for school districts.
• Adjust the inflation factor used for the foundation formula from 3.2 percent to 2.6 percent to reflect more recent Consumer Price Index data.
• Continue current law in relation to High Cost Aid.

Timetable for Implementation

This discussion will inform the Executive and Legislature of options for improving the effectiveness of the State aid package in supporting school reform efforts for school year 2008-09.