School district leaders are raising concerns about reduced state school aid levels in Gov. Andrew Cuomo’s budget proposal, arguing a withdrawal of state funds will catch up with districts after federal stimulus dries up.
District superintendents and education advocacy groups have raised the specter of the so-called “Gap Elimination Adjustment,” a dreaded policy that reduced state school aid over four years following the Great Recession. While federal support in those years held district aid cuts at bay for a couple of years, when the tide of federal support subsided, districts were forced to manage budgets with eroded state funding and districts did move to cut budgets.
Now, educators fear a similar policy by a new name has made its way into the governor’s latest budget proposal, which relies heavily on federal aid to bolster most school budgets for the 2021-2022 school year but also includes a set of proposed changes in school funding policy the education community is gearing up to fight against.
“Using these federal funds, allocated to school districts by Congress, to balance the state’s budget, as the governor proposes, ignores lessons we should have learned during the last recession and sets the state for a Gap Elimination Adjustment 2.0,” Brian Cechnicki, executive director of the state Association of School Business Officials, said in a statement Monday criticizing the governor’s proposal.
School leaders and policy analysts have said last week’s budget proposal was among the most confusing in decades, and the much-anticipated school aid runs, which outline district-specific funding estimates, included line items that have not been included in recent years.
The governor proposed consolidating 11 reimbursement categories into a single “services aid” line item, eliminating a slew of spending categories that districts received state aid based on an annual reimbursement process. The proposal also cuts the overall baseline of state spending on the combined categories by nearly $400 million from last year.
State law outlines the reimbursement rules for district spending on transportation, BOCES, textbooks, computer software and hardware and other areas. Districts spend money in those categories, submit claims to the state at the beginning of the following year and then get reimbursed in the subsequent state budget. The annual cycle gives district officials some control and predictability over how much state aid the district can expect in any given year. The governor’s proposal effectively wipes away the expense-based reimbursement system.
The aid runs also include for the first time a line item for STAR payments, a mix of payments to districts and homeowners under the state School Tax Relief program. The payments have flowed to districts and taxpayers over the years, so that homeowners can benefit from a reduction in their local tax bill but school districts don’t lose out on the revenue, but has not been included in the school aid runs in the past, and school leaders have cautioned that the STAR payments are not revenue or school aid that districts can use to fund general expenses.
The inclusion of the STAR payments this year caused some confusion and angst among school leaders, and the STAR line-item was immediately followed by the proposed “local district funding adjustment,” a reduction in aid to districts that for many districts matched the size of their listed STAR payment.
“So what the governor has done, he has reduced at his end, at the state level, and he has taken aid from the federal level and transposed it,” Fonda-Fultonville Superintendent Thomas Ciaccio said during Monday’s school board meeting. “There are definite questions with the aid run and to be honest with you we are still trying to work through the changes. Some of these are smoke and mirrors, some of these are sleights of hand.”
Ciaccio raised concerns with the school board that the governor’s proposal obscured the negative financial consequences facing school districts over multiple years and said the local reductions effectively “reinstated” the old GEA.
“That was not a good time for us here, a very difficult time,” he said of the GEA, noting the Montgomery County school district lost about $10 million over four years as a result of those earlier state cuts.
The state reduction and the cut to the new services category was designed to not add up to more than what any particular district would receive in federal aid for next school year. But if yet more federal aid does not come into the state to bolster budgets this time next year, districts could see a reduced state funding baseline when the federal money runs out and state officials set out on a budget that funds the 2022-2023 school year.
When factoring in the proposed district-level reductions, Capital Region school districts will see their underlying state aid baseline fall by as much as 19 percent in South Colonie and Shenendehowa school districts. Some districts, including Schenectady and Amsterdam, will see their state aid levels increase slightly, by less than 1 percent.
“If you look at the bottom line, it does look good, but it’s really not as good as it would seem,” Amsterdam school business official Colleen DiCaprio said last week. “It’s one-time (federal) revenue. So, what are we going to do in the next couple of years?”
The state aid reduction in the governor’s proposal appears to land more heavily on the region’s wealthier districts, which dedicate a rely on state aid to cover a smaller portion of their budgets. South Colonie, North Colonie, Guilderland, Burnt Hills-Ballston Lake, Shenendehowa and Saratoga Springs school districts would all see a 10 percent or higher loss in state aid, under the governor’s proposal, much of which is partly masked by the federal support.
Some advocates and district leaders have called for spending flexibility so districts can use the federal money over multiple years and an expanded ability to hold surpluses as a fund balance. Many people have called the governor’s proposal the most confusing they have seen in decades.
Niskayuna Superintendent Cosimo Tangorra Jr. at Tuesday’s school board meeting said deciphering the governor’s proposal was taking longer than in past years.
“Over the past 20-some-odd years, I have never seen a budget proposal presnted by the executive in this manner, so it’s taking everyone longer than usual to disentangle the particulars of the executive’s proposal,” he said.
He said he and other superintendents in the region planned to kick off their annual legislative advocacy efforts with state lawmakers, highlighting areas of focus and underlining the chief concerns of district leaders.
“We are solidly concerned about having the state budget gap backfilled with federal dollars creating a signifciant cliff two and three years from now,” Tangorra said.