Albany Update. December 2016

Transcription

1 Albany Update December

2 The motto of the U.S. Coast Guard: Semper Paratus Always prepared

3 The State Budget Big Picture, Looking Ahead State Operating Funds Budget (millions of dollars) Projected Expenditures 96, , , ,262 Projected Deficit 689 2,063 1,715 Cuts Needed to Achieve 2% Spending Growth 2,844 5,059 7,220 Total Structural Deficit (3,533) (7,122) (8,935) Structural Deficit as % of Projected Expenditures 3.5% 6.8% 8.2% Projected Change in School Aid ($) 1,507 1,109 1,313 1,380 Projected Change in School Aid (%) 6.5% 4.5% 5.1% 5.1% SOURCE: NYS Division of the Budget, FY 2017 Financial Plan, First Quarterly Update SOURCE: Compiled by the Council from NYS Division of the Budget, FY 2017 Financial Plan Mid Year Update. November 2016 Tax receipts for the current state fiscal year are $1.4 billion below the enacted budget projections. 3

4 The State Budget Big Picture, Looking Back 10% % Change in Major State Operating Funds Areas % change over prior year 8% 6% 4% 2% 0% 2% School Aid 1.9% 1.5% 7.1% 8.1% 6.5% Medicaid 3.7% 2.2% 3.0% 3.7% 4.2% All else 1.5% 1.4% 0.6% 1.0% 0.6% Total Budget 2.0% 1.6% 1.8% 2.0% 2.0% SOURCE: NYS Division of the Budget, Enacted Budget Financial Plan for years through

5

6 Compared to one year ago, how has the financial condition of your district changed, in terms of its ability to fund services meeting expectations of parents in the community? Significantly worse Somewhat worse About the same Somewhat better Significantly better 2% 1% 1% 1% 3% 100% 4% 6% 90% 15% 17% 23% 80% 28% 27% 70% 41% 60% 51% 56% 50% 53% 40% 51% 53% 30% 42% 20% 28% 23% 10% 14% 15% 0% 22% 10% 4% 3% 4% 1% Last year was the 1 st that more superintendents responded better than worse. Continued this year. But 6

7 Compared to one year ago, how has the financial condition of your district changed, in terms of its ability to fund services meeting expectations of parents in the community? Significantly worse Somewhat worse About the same Somewhat better Significantly better 2% 1% 1% 1% 3% 100% 4% 6% 90% 15% 17% 80% 28% 27% 70% 60% 50% 40% 30% 20% 10% 0% But, still no more than 1/3 rd of superintendents Have ever responded that their district s financial condition has improved. 7

8 Thinking ahead 3 years or so, how optimistic or pessimistic are you about whether your district will be able to fund programs and services adequate to the needs of your students? Not able now, 6% Other, 1% Very optimistic, 1% Somewhat optimistic, 19% Very pessimistic, 19% Somewhat pessimistic, 53% Only 20% of superintendents responded that they are optimistic about financial prospects. 6% 0f superintendents say their districts can t provide adequate services now about 40 districts 70% are rural 90% serve < 2,500 students 8

9 Near term, long term divergence Poorer districts tend to be more positive about this year, more pessimistic looking ahead. Probably reflective of differences in primary revenue source: School revenue sources and changes in spending % of K-6 Students Share of spending Proposed % % change in State Aid (excl. eligible for free/ reduced price lunch program supported by tax levy change in tax levy Building Aids) Proposed % change in spending 0-10% ("Low Poverty") 80.2% 0.7% 10.7% 1.7% 11-20% 72.2% 0.7% 8.6% 1.6% 21-40% 60.8% 0.7% 7.3% 2.3% 41-60% 47.8% 0.6% 6.0% 2.2% Over 60% ("High Poverty") 40.8% 0.6% 6.0% 3.1% Total State 59.2% 0.7% 6.9% 2.2% SOURCE: Council analysis of NYSED School Aid and Property Tax Report Card data; Big 5 City districts not included 9

10 Which issues cause concern in thinking about the financial outlook for your district? A concern Greatest concern Inadequate state aid 91% 44% The tax cap 89% 28% Increasing needs of students (e.g., increasing student 78% 10% poverty or increasing numbers of English Language Learners, recently arrived immigrant children, or students with disabilities) Expected increases in fixed or hard to control costs (e.g., 76% 9% pensions, health insurance) Declining student enrollment 47% 5% Other (Please specify) 10% 2% Increasing student enrollment 5% 0% Poor or uncertain community support for the schools 10% 0% 10

11 Other sections of the report Reserves and multi year planning Costs and mandates Why we re number one in per pupil spending Examples of actions districts have taken to reduce or control costs or maximize resources for the benefit of students. What the state could do to help schools maximize resources? 11

12 Western New York Rural Superintendent: We are no longer in control of our financial future...with the heavy dependence on State aid due to the implementation of the tax cap we are limited on our resources short of going after the supermajority. There has been NO break on mandates and in fact we just seem to get more of them placed on us...quite frankly between the myriad of laws, regulations, mandates the operation of schools and education in general is over regulated. We have hoops to jump through that no other level of government faces and yet we face a public vote each year

13 If you re not going to change the rules, you ve got to fund the rules. 13

14 Sustainability State Aid Tax Cap Mandate Relief Maximizing Resources Reserves 14

15 Educational Conference Board School Finance Recommendations $1.5 billion to maintain current services Assumptions 2.75% increase in salaries 6.7% increase for health insurance Reduction in pension costs per TRS estimate 2.2% increase for non personnel costs 1.1% increase in local tax levy Update Foundation Aid formula $500 million for priority initiatives Pre K expansion ELL services Support for Struggling Schools Professional development Career and Technical Education/Multiple Pathways Growth Aid Tax Cap Changes "True 2%" BOCES Capital, PILOTs Others in extended paper 15

16 School Aid Increase Percent Change Foundation Aid Total GEA Restoration Expense Based and Other Aids 10% 8% 6% 4% 2% 0% Total State NYC Big 4 High Need Small Cities & Suburbs High Need Rural Average Need Low Need SOURCE: Council analysis of NYSED School Aid data 16

17 Foundation per Pupil fully phased in $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Foundation per Pupil Districts sorted by Combined Wealth Ratio Percentile R² = % 20% 40% 60% 80% 100% CWR Percentile (1 = poorest) SOURCE: Council analysis of NYSED School Aid data 17

18 % Change in Foundation Aid If fully phased in, with no save harmless % Change in Foundation Aid Districts sorted by Combined Wealth Ratio Percentile 250% 200% 150% 100% 50% 0% 50% 100% 150% R² = % 20% 40% 60% 80% 100% CWR Percentile (1 = poorest) SOURCE: Council analysis of NYSED School Aid data 18

19 Percentage of districts on save harmless on Foundation Aid (receiving more aid in than fully phased in formula would generate) By Need/Resource Capacity Category Total State 38% NYC 0% Big 4 0% High Need Small 5% acities & Suburbs High Need Rural 40% Average Need 43% Low Need 35% SOURCE: Council analysis of NYSED School Aid data By Region Total State 38% Long Island 28% New York City 0% Lower Hudson Valley 22% Mid Hudson Valley 28% Capital Region 44% Mohawk Valley 55% Central New York 36% North Country 63% Southern Tier 51% Finger Lakes 33% Western New York 27% 19

20 Foundation Aid Looking Ahead Increases under fully phased in Foundation Aid, with save harmless % increase over % 40% 30% 20% 10% 0% 23.2% 22.5% 1,432 1,509 % Change Per Pupil Change 17.7% 1, % 3,821 1, % Total State NYC Big 4 High Need High Need Small Cities Rural & Suburbs 17.4% 913 Average Need 4,500 4, % 3,500 3,000 2,500 2,000 1,500 1, Low Need Per pupil increase over SOURCE: Council analysis of NYSED School Aid data 20

21 2016 State Election Results and Impact State Assembly: Remains firmly in control of the Democrats, with 107 seats. The Democratic conference will in all likelihood continue to be led by Speaker Carl Heastie of the Bronx. 62 (58%) of those seats are held by Democrats representing NYC. When you include three additional Democrats representing only dependent (Big City) districts, that number increases to over 60% Practical effect means the Assembly Democrats need only whip an additional 11 votes from other Democrats representing independent school districts to pass legislation. 21

22 2016 State Election Results and Impact State Senate: Status quo maintained The Republicans hold 31 seats, Democrats hold 31 seats, and the 63 rd seat is held by Simcha Felder, elected on the D, R, and C lines and conferencing with the Republicans. But he is traditionally thought of as a Democrat. The Independent Democratic Conference, which has partnered with the Republicans for the last 6 years, now has 7 members, up from 5. They will likely continue to partner with the Republicans. Only 2 Republicans solely represent dependent school districts. Senator Flanagan will likely continue as the Majority Leader. 22

23 2016 State Election Results and Impact State Senate: Status quo maintained Whether Flanagan maintains control hinges on whether Simcha Felder continues to conference with the Republicans, and to date, that is his plan. Senator Felder has a large Hasidic population that send their children to yeshivas. The election results have made him more powerful. The Governor has not indicated that he will work to persuade Senator Felder or the IDC to work with the Democratic conference. 23

24 The Preet Effect The work of United States Attorney Preet Bhararra continues to influence events in Albany Most recently, former senior aide and campaign official to the Governor, were indicted under federal corruption charges. Also charged were close associates of the Governor, Todd Howe and Alain Kaloyeros. The aura of Bhararra will continue to impact legislative decision making and influence deals that may be made. President Elect Trump has told Mr. Bharara he will be reappointed. 24

25 The Governing Dynamic With leadership in both houses and the governor unchanged, it is unlikely we see substantial shifts in education ideology. Hot button issues will remain in focus State aid distribution Tax cap Education Investment Tax Credit Charter Schools 25

26 State Aid Distribution Shares: The legislature traditionally distributes aid on a percent basis to long island, NYC, and rest of state in identical percentages annually. Long Island: 12.94% NYC: 38.86% ROS: 48.2% Since shares were broken last year in order to eliminate the GEA, it is possible they may be broken again as part of a quid pro quo, but it is unlikely. 26

27 A history of shares State Increase (in millions) NYC Share Long Island Share Statewide increase ($ in millions) $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 $1,299.9 $1,350.1 $1,400.8 $1, % 38.86% 38.86% 38.86% 38.86% 37.46% $936.6 $ % 12.96% 12.96% 12.96% 12.96% 14.29% with "Final GEA Payment" SOURCE: Council analysis of NYSED School Aid data 60% 50% 40% 30% 20% 10% 0% 27

28 Tax Cap Based on inflation to date, the allowable growth factor will be slightly greater than 1% Nonetheless, this will be the 4th consecutive year below the advertised 2% Proposed changes: Flat 2% for allowable growth factor. Flexibility for the carryover provision. Prohibit negative tax caps. Require the Tax & Finance Department to promulgate regulations implementing exclusions relating to PILOTs and BOCES capital projects. Authorize two budget proposals, one within the cap, and one to override the cap. 28

29 Education Investment Tax Credit (EITC) Various iterations of the EITC over last several years Tax credits have ranged from 75% to 90% for donors. Proposals for credits as high as $300 million annually. Funds would be distributed as scholarships for students to attend non public schools, including religious entities. Strong support from the Governor, Senate, and some NYC Assembly Democrats. Philosophical Opposition: Public schools are the main entity responsible for educating students. Fiscal Opposition: Every dollar spent on non public education reduces the overall funding available for public schools. 29

30 Charter Schools Tuition: Freeze on charter school basic tuition is scheduled to end after the school year, as well as the supplemental basic tuition payments. Charter School Cap 156 remaining statewide. 30 of those are reserved for NYC. With NYC approaching its individual cap, there may be proposals to increase cap. SUNY Regulations: June 2016 legislation authorized SUNY to promulgate their own charter school regulations. 30

31 TRS Reserve Fund The Teacher Retirement System has previously introduced legislation to authorize a TRS reserve. Bill has not moved in either house and has faced stiff union opposition. TRS will likely introduce an amended version with provisions intended to reduce union opposition. NYSUT may not support, but it will be helpful if they don t oppose. The drop in TRS rates provides a good talking point for why now is the right time to establish this reserve. 31

32 District Superintendent Salary Cap Cap has not been updated in over a decade. Cap remains tied to the Commissioner s salary in Legislation to adjust the cap to the current Commissioner s salary passed the Senate but has not advanced out of Ways & Means in the Assembly. 32