ALBANY COUNTY — Representatives from the largest public schools in the state to some of the smallest gathered in Guilderland this week to deliver their thoughts on the existing state Foundation Aid formula before the Rockefeller Institute of Government, which has been tasked with studying the formula.

In this fifth and final hearing, on Aug. 14, all the speakers agreed that the formula is an inadequate model for the reality districts face.

Governor Kathy Hochul requested the study after her proposal to eliminate the formula’s hold-harmless provision, which ensures that schools will receive at least as much aid each year as they had the previous, and to lower the inflation factor raised hackles in schools across the state, particularly in rural districts where those changes would reduce aid and gut budgets. 

The state legislature ultimately rejected the hold-harmless elimination for the current school year but did accept a lower inflation factor, which the New York State School Boards Association said in a statement earlier this year “does not come close to meeting the ever-expanding demands that public schools face.”

At the listening session in the Guilderland High School auditorium, speakers conveyed that they didn’t particularly care whether hold harmless was in place, so long as the state did its job delivering necessary funds to schools on measures more sophisticated than enrollment levels, which is where shrinking rural districts stand to lose their funding without hold harmless.

NYSBA view

“We need to do something better than a formula that is simply not being applied to nearly half the districts in the state,” Brian Fessler, NYSBA’s director of governmental relations, told the Rockefeller panel. “But the answer can’t be to just slash their funding.”

Explaining that schools that rely on hold harmless are “overwhelmingly high and average need,” Fessler said that a new formula should attempt to capture the reality of economies of scale that make dealing with population changes and other budget impacts proportionally more expensive for smaller districts.

He also criticized the state for pointing to high reserves and fund balances as evidence that districts were overfunded, as New York State Budget Director Blake Washington did when he wrote in Empire Report in January that “districts are receiving resources faster than they can actually spend it.”

“Reserve funds are essentially restricted savings accounts, which allow for districts to plan for expenses that are simply unrealistic to pay for in a single year or through a pay-go process,” Fessler said at the hearing. “The capital reserve for school building construction and renovation is a common example. Fund balance is the small positive budget margin that school districts can end a budget year with. 

“This fund balance is not only a natural result of annual budgeting, but is also a critical tool to address the unpredictable nature of public budgets — on both the revenue and expense side of the ledger. The recent rhetoric around Foundation Aid and fund balance is not only unfair to districts, but it is counterproductive as threats to state aid push districts to rely on the few tools they have in order to ensure their students continue to receive the programs and services they require and deserve.”

Fessler said that the formula needs more accurate measures for student poverty, which is currently based on 2000 census poverty data and the number of students getting free and reduced-price lunches, while “addressing the external limits on the expected local contribution calculation such as the Income Wealth Index floor, the unique circumstances of fiscally dependent districts and the existence of a property tax cap.”

Expanding on the tax cap, which is a state-set measure derived from a variety of factors each year, Fessler said that, because the tax cap and Foundation Aid formula are blind to each other — meaning that the limit on what funding a district can raise is not affected by what it will funding it will receive according the formula — it limits “the ability of a district to reach the expected local contribution portion of the formula, while the disconnect also ignores the fact that districts must lean more on property taxes when Foundation Aid and other state aid is insufficient.”

Districts do have the ability to override the cap with a supermajority vote, as Berne-Knox-Westerlo had attempted to do twice this year, but failed each time, forcing the district into a contingency budget.

“The story test”

Executive Director for the New York State Association of School Business Officials Brian Cechnicki told the panel that, in its current configuration, the formula is comprehensive, but not comprehensible, leading to criticisms from officials and the public that it is not transparent enough.

“I don’t believe that we need to lose a more comprehensive and effective formula for the sake of making it easy to understand,” he said, “but the complicated parts of the formula should be able to be translated into a logical and understandable narrative.

“Here’s something that passes the story test,” he said. “Students in poverty require more resources for education, so we had a 0.65 weighting per identified student to the per-pupil amounts to account for it.” 

What doesn’t pass the test, Cechnicki said, is that to account for the “unique cost challenges” in rural districts, the formula has a “calculated student weighting equal to the lesser of 25 minus the number of students per square mile divided by 50.9.”

“I’ve worked on this formula for 17 years and I still can’t come up with a good one-liner that explains that,” he said.

Cechnicki said that another “story” the formula is trying to tell is that district wealth increases as property values go up, which he says is not the case because the amount of taxable property in a district no longer has a meaningful impact on the additional level of tax levy that the district can issue.”

He also said that the formula’s consideration of population changes is overly simplistic. 

Without hold harmless, districts would be twice hit for population loss, Cechnicki said, first because the student is no longer there to justify the money, and again because the district is then expected to be able to spend more on the remaining students. 

“But apply that concept to a real situation and it’s not true,” he said. “I’ve examined two small neighboring districts in the state and assumed that, if we moved one student per grade from a K-8 district to a neighboring K-12 district, the story test tells us that, functionally, nothing has changed in either district [at the classroom level], but the formula calculates that one district can now spend 3.5 percent more locally and the other 3.5 percent less.

“There are inherent realities and demographic shifts that go beyond the simplistic consideration of students and their cost moving between districts, which the formula is currently ignoring.” 

Cechnicki finished by saying that he feels there is more transparency in school funding than “any other level of government,” and that the issue is not a “lack of information, but an overabundance of information that is not thoughtfully and effectively constructed, and I hope that a future Foundation Aid formula can help close that gap.” 

Big city view

Executive Director of the Conference of Big 5 School Districts Jennifer Pyle said that the districts her organization represent enrolls 43 percent of the state’s pupils and faced “significant challenges” prior to the COVID-19 pandemic that have only gotten worse. 

She said that the city districts — in Buffalo, New York City, Rochester, Syracuse, Yonkers, Albany, Mount Vernon, and Utica — have been receiving a growing number of refugee students, many of whom speak limited if any English and require more resources from the districts. 

She also said that the districts serve 50 percent of the state’s special-education students, and also experience “staggering” levels of poverty.

Pyle said that free and reduced-price lunch numbers do not reflect the number of students in need because community eligibility, whereby districts can serve reduced-price lunches to the entire student body if it meets a certain threshold of students who need it, discourages some parents from filling out the need forms and deflates the numbers.

She added that the 2000 census poverty data is too outdated to balance things out, failing to capture changes in population.

“The state must construct a formula that’s not only reflective of community demographics, but will continue to utilize inputs that are dynamic in nature and adjust to our ever-changing population shifts,” Pyle said.

She also pointed out the limitations imposed by the tax cap, and said that the formula does not account for regional cost variations. 

Finally, Pyle said that flexibility will be a critical part of a successful formula, arguing that “local funding decisions are best managed by school leaders who understand the unique needs of the pupils they serve.” 

Rural and suburban views

Roger Catania, who represents the 4th Judicial District in the New York State Board of Regents, spoke about rural poverty, as well as the larger distances those districts cover and the extreme weather they may face to highlight those districts’ unique needs.

In Franklin County, he said, 60 percent of students are economically disadvantaged and some ride a bus for an hour or more one-way.

He also said that rural communities are frequently “property rich and income poor,” because they have a large population of wealthy seasonal residents while year-round residents are “typically working families.” 

Catania said these districts also face the same unpaid mandates as other districts, but have fewer resources to devote to them.

“In the Hammond Central School District, only a few miles from the Canadian border in St. Lawrence County,” he said, there are 231 students but only two administrators and 2.5 administrative assistants “who run the entire district’s day-to-day operations, as well as handle all the requirements, including everything from attendance to tax collection, to Chief Information Officer [functions], data reporting, safety plans, workplace violence prevention programs, financial oversight, and many, many, many more.

“Every law and rule adds to that burden,” he said.

Catania added that rural schools are frequently the largest or even the only support system in those communities and provide services that go beyond basic education, like those for mental health.

He said that characterizations of overfunding “just don’t reflect the reality of the districts I represent,” and that the formula needs to better capture the factors that show rural schools’ actual needs.

Marie Wiles, superintendent of the suburban Guilderland schools, testified that districts are tasked with a large number of responsibilities such as workforce integration, social-emotional learning, and mental-health services, and reiterated that updated metrics and a more precise measure of each district's unique needs is required.

 “We need a formula that addresses today’s challenges and anticipates future needs,” she said. Echoing her school district’s mission statement, Wiles urged, “Let’s empower our schools to provide each and every student with the opportunities they deserve to succeed in the 21st Century.”