Albany Update Northeastern Council of School Superintendents www.nyscoss.org Lake Placid October 2017
State Budget Outlook for Now Governor s Budget Division is required to do quarterly updates to State Financial Plan Budget Division Mid-Year Update (November 2017) projected a $4.4 billion structural deficit for 2018-19 equivalent to about 4.5% of projected expenditures (corresponding projection for one year ago: 2.7%). The State Comptroller projects 2018-19 tax receipts to be $3.3 billion less than the Budget Division. Neither projections reflect impact of expired authorization for federal Children s Health Insurance Program and Disproportionate Share Hospital Payments first year impact = about $1 billion each. Governors must propose balanced budgets. Federal actions would worsen outlook (next slide) could see a temporary surge in revenue once federal tax reform is enacted. 2
Threats from Washington Tax Reform House and Senate bills would end deductibility of State and local income taxes and cap deductions for property taxes at $10,000 House would limit mortgage interest deduction to interest on mortgages up to $500,000 Concern for New York is impact on high income taxpayers state derives 42% of its income tax receipts from 1% of taxpayers Many sources project home values in some communities could drop by 10 to 20 percent New York already sends $48 billion more to Washington than it gets back (about $2,400 per person) Health care: Example: Cassidy-Graham: Would reduce federal health care funding to New York by $51 billion between 2020 and 2026, while increasing funding to some other states (Examples: Texas, $34 billion; Georgia, $10 billion; Mississippi, $6 billion; Virginia, $5 billion; Alabama, $4 billion) Estimated $18.9 billion annual impact starting after 2026 Jeopardizes $270 million in Medicaid funding to schools Jeopardizes health insurance coverage for 2.7 million New Yorkers potentially over 1 million children 3
How the SALT threat affects low income regions REGION 2014 Adjusted Gross Income per Weighted Pupil Share of 2014 Adjusted Gross Income Total State $201,103 100% Downstate Upstate Long Island $226,963 19.3% New York City $220,643 46.2% Lower Hudson Valley $333,589 11.8% Mid-Hudson Valley $148,134 3.5% Capital Region $160,985 4.0% Mohawk Valley $104,306 1.1% Central New York $132,827 2.9% North Country $97,338 1.0% Southern Tier $116,969 1.7% Finger Lakes $139,447 4.1% Western New York $134,422 4.4% Share of 2017-18 School Aid 100% 12.3% 40.3% 4.4% 5.0% 5.0% 3.2% 5.5% 3.1% 4.4% 7.8% 9.1% Share of School Aid Divided by Share of AGI 1.00 0.64 0.87 0.37 1.42 1.23 2.86 1.91 3.16 2.61 1.91 2.04 Downstate $234,440 77.3% Upstate $135,357 22.7% 57.0% 43.0% 0.74 1.89 SOURCE: Council analysis of NYSED School Aid data 4
ECB School Finance recommendations (released Monday) $1.5 billion increase needed to maintain current services 2.5% increase in salaries (national survey of all employers) 5.9% increase in health insurance (projected increase for state) Increase in TRS employer rate from 9.8% to 10.5-11.0% 2.1% increase for all else (Budget Division CPI forecast for 2018) 2% increase in local revenue estimate of 2018-19 tax cap $500 million for critical priorities Phase-in and Update Foundation Aid Adjustments to tax cap
Foundation Aid: The good and the bad $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Fully Phased-in Formula Correlates with Wealth Districts sorted by Combined Wealth Ratio Percentile (1% = Poorest) 0% 20% 40% 60% 80% 100% $20,000 SOURCE: Council analysis of NYSED School Aid data R² = 0.873 Too many districts on save-harmless NEED/RESOURCE CATEGORY % of Districts on Save-Harmless (2017-18) Share of Total Save- Harmless (2017-18) Total State 42% 100% High Need Small Cities & Suburbs 4% 1% High Need Rural 44% 21% Average Need 48% 62% Low Need 39% 16% REGION % of Districts on Save-Harmless (2017-18) Save- Harmless per Pupil Total State 42% $919 Long Island 31% $737 Lower Hudson Valley 24% $327 Mid-Hudson Valley 28% $2,017 Capital Region 48% $1,064 Mohawk Valley 60% $992 Central New York 44% $810 North Country 67% $1,466 Southern Tier 53% $1,524 Finger Lakes 36% $941 Western New York 38% $656 6
Enrollment vs. Poverty 250,000 Statewide change in total enrollment Statewide change in students eligible for Free/Reduced Price Lunch program 200,000 189,315 150,000 131,969 100,000 50,000 57,346 - (50,000) (100,000) (43,224) (32,045) (75,269) 2007-08 to 2011-12 2011-12 to 2015-16 2007-08 to 2015-16 SOURCE: Kids' Well-Being Indicator Clearinghouse, NYS Council on Children and Families, Web. 28 September 2017 7
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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 100% 2% 90% 23% 80% 70% Somewhat better Significantly better 1% 1% 1% 3% 4% 3% 6% 15% 17% 21% 28% 27% 41% 2015 was the 1 st year that more superintendents responded better than worse. 60% 50% 53% 40% 30% 42% 51% 56% 51% 53% 62% Continued this year. But 20% 28% 23% 10% 14% 15% 11% 22% 0% 10% 4 3% 4% 2% 1% 2011 2012 2013 2014 2015 2016 2017 9
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? 100% 2% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Somewhat better Significantly better 1% 1% 1% 3% 4% 3% 6% 15% 17% 21% 28% 27% 2011 2012 2013 2014 2015 2016 2017 No more than 31% of superintendents have ever responded that their district s financial condition has improved. 10
Capital Region Superintendent: We are still recovering from the 2008 economic downturn where staffing and programmatic cuts were extremely deep. We are trying to add back a little each year, but still well below where we were in 2008. This has created huge inequities in available student opportunities compared with our wealthier suburban neighbors. While we are getting by financially, we are not back to pre-2008 staffing levels, even ten years later with enrollment levels remaining roughly the same. This opportunity gap is a loss for our students and their futures. Mohawk Valley Superintendent: While the funding and educational models of our schools has largely stayed the same, the needs of our students and communities continue to increase. We can not simply maintain the status quo due to the increasing mental health, special education, and ELL needs while the fiscal conditions and employment prospects of our communities continue to worsen. Schools require the fiscal and educational flexibility to transform school so that all our students have an opportunity to be postsecondary ready. Lower Hudson Valley Superintendent: Annual budget development is like playing "Wheel of Fortune." We don't know what the tax cap and/or state aid will be entering the budgeting process and whether we will 'lose a turn' or hit a high dollar number on the wheel. Long Island Superintendent: So much of what residents will experience in taxes and program is now out of our control. Southern Tier Superintendent: Students coming to kindergarten are bringing significant levels of need both academic and social/emotional. The lack of mental health services in counties has put the burden of provision of these services on the schools and we are ill prepared to deliver the level of service children and families need. As a result, students fail to perform and lag academically and soon enough exhibit significant deficits in achievement that make them qualify for special education services which is burgeoning and very expensive. Ad to that the difficulty in finding qualified and capable teachers with the right certifications and we are heading for a crisis. 11
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? There was a nine point increase over last year in the percentage of superintendents answering somewhat or very optimistic. Not able now, 7% Very Other, 1% Very optimistic, 2% Somewhat optimistic, 27% pessimistic, 13% Somewhat pessimistic, 50% But Only 29% of superintendents responded that they are optimistic about financial prospects. 7% 0f superintendents say their districts can t provide adequate services now about 50 districts 68% are rural 80% serve < 2,500 students 12
To what extent, if any, have the considerations listed below been problems for your school district? Significant problem Somewhat of a problem Not a problem at all 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Capacity to help to students in meeting non-academic 45% 43% 12% Finding an adequate number of qualified teachers 34% 46% 20% Controversies over state policies causing a negative 32% 58% 11% Capacity to offer classes beyond minimum state 20% 38% 41% Substance abuse by students or family members of 18% 67% 15% Capacity to provide extra academic help to struggling 18% 54% 29% Impact of increase in the minimum wage 16% 57% 27% Teacher attendance 16% 50% 34% Student achievement in meeting state standards 14% 55% 31% Administrative capacity to comply with state initiatives 14% 48% 38% Parental support for student learning 10% 44% 46% 13
% of superintendents choosing as 1 of 3 top priorities Changing priorities: If your district were to receive a funding increase beyond what would support current operations, what would be your top 3 priorities? 70% 60% 50% 40% 30% 20% 10% 0% Increase counseling, social work, or mental health or similar services for students Increase extra academic help for struggling students Increase enrichment/advanced classes Expand or initiate prekindergarten Reduce property tax levy 66% 64% 23% 57% 53% 47% 51% 48% 52% 37% 38% 35% 35% 30% 30% 31% 27% 27% 28% 28% 25% 22% 23% 19% 19% 18% 16% 18% 11% 13% 2011 2012 2013 2014 2015 2016 2017 14
Priorities North Country Compared to Entire State What would be your top 3 priorities for funding if your district were to receive an increase in revenue beyond what would be needed to comply with mandates and maintain current services, or realize a reduction in costs with similar impact? Priority North Country State Increase mental health, counseling, social work, or similar services for students 64% 52% Increase extra academic help for struggling students 41% 35% Increase enrichment/advanced classes 31% 28% Expand or initiate prekindergarten 21% 18% Reduce property tax levy 18% 18% Increase career and technical education opportunities 15% 15% Increase/improve special education for students with disabilities 15% 7% Expand professional development 15% 17% Improve facilities 13% 13% Strengthen administration (district or building level) 13% 8% 15
A Sustainability Agenda State Aid update and phase-in Foundation Aid Tax Cap amend it to support multi-year planning Mandate Relief Maximizing Resources to benefit students Reserves give schools tools like those available to municipalities Inaction on the tax cap or maximizing resources will require continuing large aid increases If you are not going to change your rules, you have to fund your rules (or change your rules or fund your rules ) 16
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