On Monday, the Rockefeller Institute released its much-awaited recommendations for improving the state’s Foundation Aid formula for funding education.

The 309-page report was completed in just over seven months during which five hearings were held across the state, including an August hearing at Guilderland High School.

 Themes emerged from those hearings about the technical aspects of the formula that needed to be addressed, writes the institute’s president, Robert Megna, in an introduction to the report.

He lists among these themes weightings for English Language Learners, outdated poverty data, the accuracy and specificity of regional costs, and that school districts are being asked to do things now that weren’t expected of them and weren’t even part of the funding equation nearly two decades ago.

“The hearings also reinforced what advocates and administrators have been saying for years: school district leaders and communities need reliable, predictable funding,” Megna writes.

The state had enacted the Foundation Aid formula in 2007 but it was not fully funded until the 2023-24 school year. The following year, Governor Kathy Hochul’s budget proposal included two changes to Foundation Aid. One was to change the way inflation was calculated, using a 10-year average, dropping the highest and lowest figures, instead of using the prior year’s inflation amount.

The other change, which drew the most attention, was doing away with the “hold harmless” or “save harmless” provision, which allows a school district with declining enrollment to still continue to get the same state aid.

Leaders from the state’s school boards association and also from the state’s biggest teachers’ union pushed to preserve hold harmless, which ultimately was kept in place for this school year.

Hochul, however, is now leery of the institute’s recommendation to phase out at least half of hold harmless in three to five years as the Foundation Aid formula is reformed.

A spokesperson for the governor’s office said in a statement to The Enterprise, “As we craft the upcoming Executive Budget, the Governor believes we should avoid proposals that would negatively impact school budgets, such as eliminating the hold-harmless provision of the Foundation Aid formula. This study’s comprehensive findings will help inform ongoing discussions with the Legislature and key stakeholders about how we better align our spending to meet the needs of future generations of students.”

The enacted 2024-25 state budget had called for the Rockefeller Institute to conduct a study to assess the formula and share recommendations for modernizing and improving it.

The report finds that the formula has become outdated and out-of-step with school district needs and responsibilities.

Both the New York State School Boards Association and the Alliance for Quality Education put out statements on Tuesday, calling the Rockefeller Institute report a useful starting point.

The school boards association commends the report for recognizing that “modern-day schools are obligated to provide many more supports and services than ever before, such as mental health services, a zero-emission bus transition and more.”

But it also says, “Where the report falls short, however, is in its recommendations regarding save harmless and guaranteed minimum allocations. Save harmless helps fill in the gaps where state aid formulas don’t adequately recognize student need, but the report proposes several formula recommendations that would likely lead to reductions in Foundation Aid for many districts.”

Similarly, the not-for-profit Alliance for Quality Education says, “Many of the report’s proposals align with our commitment to addressing the disparities that have long held back students from reaching their full potential. Importantly, the recommendations note that the demands placed on schools have changed dramatically since the formula was first created.”

The alliance also stresses, “With uncertainty surrounding federal education funding under an incoming administration, it’s going to be up to our state leaders to make sure that the state fully funds our schools.”

Megna describes the report’s recommendations as “a menu of options for policymakers to consider now and in the years to come that address issues with the formula’s components while giving school administrators the reliability and predictability they need.”

He goes on, “Where necessary, we recommend that policymakers phase in changes so no district sees large year-to-year changes in funding. Foundation Aid formula improvements can be made as part of a multi-year plan, one that comes with the necessary funding to implement those updates and reforms.”

North Star

“Some of the recommendations in this report may appear at first reading to be too big or too bold, but significant change is warranted,” the report says, noting the formula’s use of “old, outdated information” as well as its “outmoded modeling to measure pupil needs and local school district wealth.”

The formula also “reflects an antiquated concept of what public school districts are expected to do, how student success is defined,” the report says.

“Assuming state policymakers enact some of the recommendations quickly, they should not wait another 17 years to examine the Foundation Aid formula for additional needed revision,” the report urges while stressing “changes made to the formula should be transparent and done in a manner that allows districts to plan for and adjust to proposed amendments.”

The report notes that New York state spent $29,873 per pupil on K-12 education in 2022, more than any other state in the nation and almost double the national average of $15,633. Meanwhile, enrollment in the last decade has dropped 10 percent statewide.

A single page of the report has two graphs that vividly illustrate these trends.

From 2012 to 2022, a graph on state expenditures on education shows a steady line up from $60 billion to $85 billion while the graph on public school enrollment for that same decade shows a steady decline from 2,700,000 to 2,400,000.

The report also notes that the state constitution requires the state legislature to “provide for the maintenance and support of a system of free common schools, wherein all the children of this state may be educated” but New York is among those states with the least obligation as the constitution provides no guidance on the meaning of “free” public education.

In 1982, the state’s highest court, the Court of Appeals, interpreted this provision as guaranteeing “a sound, basic education.”

“In the years since,” says the Rockefeller report, “sound, basic education” has “become the North Star terminology guiding both policy and legal action, actions, which often worked to expand the definition to mean an equal or substantially equivalent education for all children everywhere across New York State.”

Recommendations

Following is a summary of the report’s key recommendations:

— Base Foundation Aid

As a temporary measure, the “Successful School Districts” model is to be updated, using the top performing 50 percent of districts on the state’s grades 3-8 math and English Language Arts exams, based on average results over the most recent three years of data, eliminating the old “efficiency screen”;

— Adjusted Foundation Aid Amount

A five-year average annual inflation rate for the Northeast Region is to be used rather than the United States as a whole;

—  Pupil Needs Index 

For the poverty count, the average of the three most recent years of Small Area Income and Poverty Estimates is to be used with the weighting scales to provide more supplemental aid to students from communities with a greater concentration of poverty.

 Free and Reduced-Price Lunch counts are to be discontinued as a stand-alone adjustment, switching instead to Economically Disadvantaged counts as the basis for supplemental poverty-based Foundation Aid allocations.

For English Language Learners, the single 0.5 weighting is to be replaced with a scaled adjustment based on the instructional service hours needed as determined by the incoming assessment given to ELL students to determine proficiency levels.

Rural districts should have the ultimate say in how any actions to provide improved services are developed. Changes to the Foundation Aid formula’s Sparsity Count component should follow those actions.

Of the 332 school districts that currently qualify for sparsity aid, 233 enroll fewer than 1,000 students; locally, Berne-Knox-Westerlo has 655 students. Statewide, 277 districts enroll fewer than 1,000 students total in grades K-12, meaning that 41 percent of school districts serve 6 percent of the state’s K-12 student population.

— Regional Cost Index

The federal Comparable Wage Index for Teachers, which can be generated for school-district and county levels, is to be used to calculate a new, and more locally-specific Regional Cost Index.

— Local Share

The Expected Local Minimum Contribution is to be based on the Income Wealth Index, eliminating the current floor (lower from the current 0.65 to zero) and increasing the current ceiling from 2.0 to 3.0; 2. The public school pupil count is to be replaced with school-age population counts.

The four-tiered structure of the Foundation Aid Combined Wealth Ratio is to be replaced with a single formula while the calculation for poverty levels for school districts is to use a three-year average of federal data to realign the definition of a High Needs district, if such a distinction continues to be maintained in the formula.

Districts are to be allowed the option of different balances between local income wealth and property wealth, either 30 percent income/70 percent property, 50 percent income/50 percent property — as currently, or 70 percent income/30 percent property.

Wealth per capita income is to be based on the total school-aged population in each district.

— Pupil Counts

Funding for students with disabilities should be addressed through categorical aid alone, shifting funding from the one-size-fits-all approach under the current Foundation Aid formula to a categorical aid approach where scaled aid is based on the service levels required.

— Save Harmless

The $500 per-pupil flat-grant option is to be eliminated and the $41 million currently spent on these flat grants to wealthy districts is to be reallocated.

A per-pupil local income and property wealth threshold is to be established above which districts would not be eligible for Save Harmless allocations.

Similarly, enrollment-loss thresholds are to be established at which districts would be allocated reduced Save Harmless payments while aid from wealthier districts experiencing enrollment losses is to be redistributed to less-wealthy districts experiencing enrollment increases.

At least 50 percent of Save Harmless is to be phased out over five years as the Foundation Aid formula reforms are made, allowing districts to retain varying portions of their Save Harmless allocations over the phase-out period based on district wealth calculations.

Currently, nearly one-fifth of all Save Harmless funding goes to low-needs districts.

Total K-12 enrollment statewide has dropped by more than 10 percent in the past 10 years, with school districts now serving nearly 300,000 fewer students. More than 88 percent of all school districts enroll fewer students now than they did 10 years ago.

While the overall and per-pupil costs of providing a sufficient education to students certainly have increased, accommodating changes in aid amounts to account for sizable decreases in student populations seems reasonable.

— Set-Asides

Set-asides are to be eliminated, converting desired targeted funding to categorical aid programs. With few exceptions, districts should be free to dedicate Foundation Aid dollars (and other resources) to general educational costs as needed to fulfill the requirement for the provision of a “sound, basic education.”

State mandates for directed spending on such things as magnet schools, teacher support, and attendance improvement programs should be separately funded through categorical aid programs.

— Reserve Funds

School districts currently can retain only 4 percent of their annual budgets as an unrestricted year-end balance; they would instead be authorized to retain an additional 6 percent, for a total of up to 10 percent, subject to a developed and approved plan for spending the additional funds within five years.

School districts on Save Harmless aid payments would be required to use at least a portion of this year-end balance excess as an offset to their Save Harmless allocation.

The current ceiling on allowable year-end fund balances would be increased, providing districts with greater ability to plan for near-term expected and unexpected expenses.

For districts on Save Harmless, at least a portion of the excess year-end surplus would be required to be used as an offset against the Save Harmless allocation.

Other reforms

The Rockefeller Institute’s report says that its research along with comments made at the public hearings pointed up fiscal challenges and conditions faced by local school districts that are not directly addressed by components of the Foundation Aid formula.

Therefore, the report lists ideas for reform in these four areas outside of the Foundation Aid formula:

— Mental Health

The need for student mental health services, hearing testimony revealed, “has increased to an unprecedented and unforeseen level.”

Currently more than 260 school-based health centers serve more than 250,000 students from low-income families in some of the state’s highest-need communities. These centers are operated by public and private hospitals, regional health centers, and other providers in the community.

While need has increased, state funding support has dropped.

The report recommends using a cooperative shared-services model to meet mental-health needs.

“Clinical social workers, community mental health workers, school psychologists, and other mental health service providers located at BOCES could be shared by neighboring districts within a BOCES region, with the intent to make sure each one of the 37 BOCES regions has a structure that, in partnership with local mental health providers, can ensure that mental health services are accessible to students in all schools in their region,” the report says.

It recommends a five-year plan to implement such a system

— Growth Aid

“State policymakers could consider reestablishing a categorical funding program to provide same-year supplemental aid to districts experiencing unusual surges in enrollment or in counts of ELL students and students with disabilities,” the report says.

— School TAx Relief

Current state law allows the STAR credit realized by local homeowners to increase by up to 2 percent annually.

The Rockefeller Institute proposes capping the STAR credit at its current dollar value, eliminating future increases. Going forward, any calculations that would have resulted in increased STAR credit amounts for homeowners would instead be redirected to school districts.

Redistribution could occur within each county: The total value of the credit increase within a county would be allocated among all school districts, with the least wealthy districts getting larger proportionate shares.

— Electric Buses

New York state has mandated school districts transition entirely to electric school buses by 2035, in addition to requiring that all new school buses sold in 2027 and beyond be zero-emission vehicles.

“School districts face enormous costs from this policy, including approximately double the expense for each electric bus versus that of a traditional diesel bus, infrastructure overhauls at many district bus garages to guarantee sufficient charging power for electric vehicles, and ensuring adequate numbers of trained maintenance staff in each district,” the report says.

The Rockefeller Institute recommends that the state fully underwrite the costs to transition each local school district to an all-electric school bus fleet.