Testimony of the New York State School Boards Association to the Joint Legislative Fiscal Committees on the 2010-2011 Executive Budget |
February 2, 2010
Legislative Office Building, Albany, New York
Thank you for this opportunity to share the perspective of the nearly 700 member school districts of the New York State School Boards Association and the over 5000 locally elected school officials who govern them.
We recognize that the Executive Budget proposal is the first step in the budget process.
And we fully grasp the severity and gravity of the fiscal crisis gripping our state. We don’t envy you the responsibility of striking the right balance between our state’s many competing priorities in the face of recovering revenues to fund them. But know this; our state’s future most assuredly hangs in that balance. In the information age, our state’s future rests on education.
The world presses forward. Our high school graduates will apply to colleges and universities that are becoming more and more selective. They will work in businesses that demand higher-order critical thinking skills along with proficiency in science, math and technology. Our schools must prepare them for these challenges, but they need resources to do so. Our commitment to this effort will define our state’s competitive position into the next generation.
State School Aid Funding Reform: Kids First
But it is more than a commitment we speak to. It is a constitutional obligation to our children. We have made great strides together in adopting new state school financing and accountability approaches. Now that emerging success story is threatened by our dismal economy. Will you preserve public education as the state’s top priority in difficult fiscal times? We currently stand at $4.2 billion below the amount promised by the state to settle the CFE lawsuit. Last year school districts were asked to operate without any additional operating aid. They were asked to restrain local taxes, improve programs and services, save jobs and absorb these responsibilities without additional state operating resources. Now the governor would have them absorb $1.4 billion in operating aid cuts on top of that already Herculean effort. How is it that some of our state leaders can in good conscience demand local school property tax relief and yet pull the rug out from under our school districts as we strive to raise the student achievement that our economy (both state, national and world) demands? Local property tax increases statewide plummeted the past three years. Test scores have been improving. There is a nexus between state aid, student achievement, and local property tax relief.
Will you ultimately find the ways and the means this year and next to provide universally adequate, equitable and predictable resources for all of our school districts? Doing so is essential to the success of our educational mission and to the property taxpayers whose support is vital to that mission.
We applaud the governor’s commitment to fully funding reimbursable school expenses like BOCES, transportation and building aid, as schools have already paid out this money based on a statutory promise of repayment. But I urge you to moderate the governor’s $1.4 billion dollar proposed reduction in Foundation Aid and to not bind yourself to yet another aid freeze. I also urge you to preserve the Foundation Aid formula, but not be so quick to accept the governor’s proposal to stretch out its full implementation so long as to functionally jeopardize adequate funding for yet another generation of children. If school districts are to keep their promise of improved academic achievement of our students and wise fiscal stewardship of public funds, you must keep your promise of predictable and adequate funding. And finally, we take strong exception to the unwise premise that school districts should completely exhaust their financial reserves in the face of an uncertain future when even the state is not offering to use any of its own reserves to offset the state’s deficit. We object for the same reason as the governor: Complete depletion of reserves places school districts at risk in an emergency, it increases the cost of borrowing and it lowers our bond ratings. More importantly, it misuses funds that are largely locally generated. Asking school districts to replace state aid with local emergency funds is confiscatory and certainly defeats at the outset any call for relief from unfunded mandates. The loss of $1.1 billion magnifies the impact of all state mandates on local taxpayers.
All of this takes place within the historical context of last year’s freeze and the imminent future loss of federal aid. Were it not for your heroic intervention, even the present would have been tainted by the destabilizing influence of mid-year aid cuts. Simply put, Governor Paterson would force schools to live paycheck to paycheck and then repeatedly threatens to hold up the checks! If school districts are forced to deplete reserves, how would they cope with the governor’s efforts to delay aid payments? In the final analysis, this deliberation must ultimately determine the allocation of limited state resources. NYSSBA certainly recognizes the importance of many state functions, but few carry with them either a constitutional imperative or hold the very future of the state within their charge. Last year combining federal stimulus funds and local resources saved an estimated 28 thousand jobs in a time when (in many locales) the schools are the economic engine of the community. To do that with flat state aid, schools were forced to withhold new contributions to the reserve funds that help mitigate local tax increases.
There are natural disasters whose impact is exacerbated by their lack of warning, a lightning strike. But there are other calamities that provide more than adequate warning, like a hurricane building several hundred miles away (or the elimination of federal stimulus funding following two years without a state aid increase). Would you willingly fail to prepare, risking placing children in harm’s way, in the face of such a certain threat?
In other words:
Last year, in year one - the state failed to contribute, the federal government provided increased funds and school districts both restrained job loss and local tax increases. To do this, they were forced to forego contributing to their emergency fund balances.
This year, in year two - the governor proposes not only freezing but cutting aid, the federal government will provide some additional funding and school districts would be forced to completely deplete emergency fund balances while attempting to restrain both job losses and local tax increases. They will not succeed.
Next year, in year three - the state will hopefully provide additional resources, but the federal funding that has averted disaster in the past years will be exhausted and school districts will be faced not only with attempting to recover from multiple years of diminished state funding, but will be forced to adjust to the loss of billions in lost federal aid. They will be devastated. Programs and services will suffer, thousands of jobs will be lost. Many will be teaching jobs that will affect the educational opportunities our children receive. Taxes will escalate and education will suffer. As a result, the economic future of our state will decline. The public, already fatigued by high taxes will no doubt continue the backlash against its elected officials-both local school and state. The consequences, for good or ill, will be attributed to state legislators.
The public’s frustration will also be expressed at the one opportunity they have to vote against higher taxes; the local school district budget vote. While such frustration is always injurious, the defeat of local school budgets this year or next will be catastrophic. Current laws determining the school district contingency budget cap will force schools to actually spend less than the previous year. To ask this in the face of double digit, uncontrollable costs like health insurance and retirement system contributions is unconscionable. When the only option available to school districts (to accomplish such an onerous task) is to eliminate the jobs of those who prepare our state for the information age, that result is irresponsible. This year the difference between the cost to provide existing educational programs and what is allowed under a contingency budget is the highest in history; with the most severe consequences. You must authorize a five year rolling average of the consumer price index to determine contingency budgets for school districts. For the same reason that “smoothing” was implemented for retirement system contribution rates, a degree of rationality must be restored to the dire conditions imposed by a contingency school budget.
When Will You Make Mandate Relief Real for Schools?
We have long argued that a whole host of cost-saving measures could mitigate the need for state and local tax revenue to support our operations. We have provided innumerable studies, recommendations and lists of suggestions for making schools more efficient and cost effective. We have testified before a myriad of legislative and governor’s commissions to convey one simple message. There are two sides to the ledger: expenses and revenues. If you can lower your expenses then you can lower the revenues you need. But this does not magically happen at the wave of a wand. A penny saved is a penny unappropriated. There must come a time (and we would argue that the nation’s highest combined taxes and dramatically reduced state revenues dictates that now is that time) when the political forces that ushered in an era of greater public employee salaries and benefits than is available to the state residents who must pay them must yield to the economic reality that presently confronts us. Adherence to the old laws that hamstring public employers in bargaining more reasoned salary and benefits for public employees confounds any attempt at stemming rising taxes, or creating an attractive economic environment. Public education is a labor intensive enterprise, with personnel costs comprising over 70 percent of all costs. Any legitimate effort to address school spending with diminished resources will take political resolve from both state and local officials. Any other path unerringly leads to a dismantled educational delivery system or economically injurious local tax rates. Simply put, untie our hands or lose the future. To prepare for a prosperous future, you must free the schools.
To his credit, Governor Paterson is advancing a handful of cost saving measures for your consideration. There is much that we can support in the governor’s budget proposal: A Wicks Law exemption. Removal of legal barriers to health insurance cooperatives. Help with energy conservation. Paperwork reduction to eliminate redundant reporting requirements and to streamline planning. Procurement flexibility allowing us to piggyback on state and municipal contracts. Buffer us from suddenly enacted newly mandated costs. Surely, there must be some ideas among them that you in the legislature can embrace, plus others that you can advance. Dollars saved here can be redeployed to the classroom and to spare our taxpayers.
Extraordinary times call for extraordinary leadership. And such times also provide rich opportunities for systemic improvement. We cannot think of a better time to finally allow school districts to operate free of outdated and burdensome state strictures. Our school boards and property taxpayers need relief from externally imposed mandates that unnecessarily drive up the cost of providing an education. We urge you in this year of fiscal crisis to own up to the cost drivers that our state laws and regulations serve to unnecessarily and wastefully burden our schools and our taxpayers. It is time for you to ensure that our education dollars are going to education as efficiently and as effectively as possible.
Schools continue to face dramatic increases in health care premiums. Fuel costs are totally unpredictable. School districts in fact face a multitude of expenses that are rising beyond the simple rate of inflation. (School districts are not individual consumers and comparisons to the CPI or “rate of inflation” are misleading and inappropriate. For instance, consumers do not pay the employer rate for retirement and health care-both typically increasing by double digits each year. Nor do consumers run fleets of diesel powered buses, heat multiple buildings, pay Workers Compensation Insurance, large scale liability insurance and a multitude of other costs that have nothing to do with the “rate of inflation.”)
If we expect our schools to hold the line on local costs (to restrain property tax increases), they must be given the means to put a halt to cost increases that are currently beyond their control. This is more critical than ever under the current fiscal circumstances. We cannot justify one unnecessarily wasted cent any longer. The dollars we are given must go further than ever before. If you can’t reduce the mandates and clear the statutory and regulatory obstacles to efficient management under these fiscal circumstances, then there is truly little hope for the vitality of our state’s future.
For years we have been asked to name the mandates that inhibit cost effective operation and we have done so, repeatedly. Then you asked how much could be saved by eliminating those mandates. We now have a figure for you. According to a sophisticated study conducted by the school business officials and superintendents of the nine member school districts of READ in the Lower Hudson Valley, fully 16.3 percent of their budgets are spent on mandates. Extrapolated statewide, this equates to nearly $9 billion; a figure that dramatically eclipses even the governor’s harmful aid cut proposal. Mandate relief would provide real fiscal relief.
Cost Shifts to Local Taxpayers
In this year’s executive budget, the governor has not only proposed cutting $1.4 billion in state school aid, but he has proposed much more in cost shifts to local property taxpayers.
Pre-School Special Education – The governor proposes shifting millions upon millions in costs to school district taxpayers for this program for pre-school age children with disabilities. Currently this program is funded by the state and counties. Contrary to misinformation being circulated, this is not a school-based or school-managed program. It is strictly a federally mandated program. This is a new and undeniably large unfunded mandate for local taxpayers. The governor’s rhetoric indicates that schools control this program and so it is only fitting that local school taxpayers pay for any county cost increases beyond the arbitrary figure of 2 percent. To shift this cost from one local tax bill to another does nothing for the taxpayer. This is a singularly inept response to county officials who naturally want to relieve pressure on their own taxes, but the focus should be on real relief and not redirecting where the bill goes.
MTA Tax – The fiscal impact of this tax on our school districts is astronomical and frankly we are mystified that one level of government is imposing such a tax on another, especially given the questionable nexus between its purpose and our employees. By definition local school employees in suburban counties do not regularly use the services of the MTA. They live and work outside of the City. Why would the state tax its schools to support commuter operations unless it is to shift the cost of those operations away from the state and onto the backs of the local property taxpayer? BOCES and special act school districts pay this tax in full and pass on that cost to local school districts. All schools must be permanently exempted from this tax.
Other Issues of Importance
Allowing Districts Access to Certain Reserve Funds – We strongly support the governor’s proposal to allow districts to withdraw funds certified by the State Comptroller to be in excess of the amounts required to fund employee benefits accrued liabilities in order to maintain educational programming in the 2010-11 school year.
Given the severity of this fiscal crisis, making use of these funds to offset program cuts and higher local taxes is of paramount importance.
State Education Department (SED) – Sadly, two thirds of SED funding is tied directly to federal programs and requirements, leaving precious little staff to actually be of service in supporting schools. This problem would be compounded under the governor’s plan by cutting several million dollars from SED’s budget in the coming year. Innovation, consolidation of services, efficiencies in operation and implementation of best practices would all be fostered by sufficient resources for SED. We request that you restore SED funding.
School Resource Officers – These state troopers provide an invaluable service to our schools, our children and our communities by mentoring, modeling proper behavior, buffering and protecting our children. To allow the governor to remove these officers from the schools is to put those students and communities at greater risk. The stories of crime and catastrophe prevented by their presence are legend. They must be allowed to remain in force in our schools.
Retirement Incentive – While early retirement of teaching staff assists school districts in controlling costs and managing their budgets, that process must be completed in a timely fashion. Schools are presently preparing their budgets for community consideration. They must provide 45 days notice to their communities of the amount to be requested. Potential retirees must inform their school of that decision in a time period that allows schools to avoid unnecessarily elevating budget figures, needlessly raising taxes or laying off staff and cutting programs. Any early retirement incentive legislation must include a window of notification that coincides with the school budget calendar for it to be of use to schools and taxpayers.
Combined Instructional Materials Aid – In an era of diminished resources, schools must be given the flexibility to utilize remaining funds in the manner that most efficiently addresses their most pressing needs. Combining existing aid categories like textbooks, computer hardware and software allow school districts to allocate funds to those most immediate needs. This re-designation costs the state nothing and affords tremendous flexibility for schools. It is the type of efficiency that difficult fiscal times demand.
Special Education Summer School – For those districts offering a summer special education program, current state aid is 80 percent, with district picking up 20 percent. Governor Paterson would base the state's payment on the Foundation Aid State Sharing Ratio. This presents a severe disincentive for districts to provide this vital service to our most disadvantaged children. It also represents the very kind of cost shift the governor pledged to eliminate. We respectfully request that you reject this unwise proposal.
Finally, we would ask that you examine what our schools have accomplished in the midst of such adversity. Last year school districts collectively imposed the lowest tax rate in seven years. They did it with the lowest amount of state aid in six years. Everyday they are finding new ways to become more efficient and more effective. They are attempting to adjust to a new era of a stagnant tax base and fluctuating resources. They must succeed and they can succeed with your continued support. While it is true that the future of our children is up to us, it is also true that our state’s future is up to them. If only in our own self interest, we must equip them to compete, to attract opportunity and to build anew.
Thank you for the opportunity to comment at this crucial juncture in the future of public education and indeed, our state.
Respectfully submitted,
DAVID A. LITTLE, Esq.
Director
Governmental Relations
,
DAVID A. LITTLE, Esq.
Director
Governmental Relations