Despite budget ultimatums, state, local officials move ahead

On Board Online • March 2, 2015

By Cathy Woodruff
Senior Writer

Facing a plethora of potentially paralyzing policy ultimatums and financial question marks embedded in Gov. Andrew Cuomo's 2015-16 executive budget, state legislators and local school officials are finding ways to move forward with their work, anyhow.

Senate Republicans are among the first to ignore, at least for now, a list of conditions the governor said the Legislature would have to meet before he would agree to an education budget. The GOP lawmakers even are choosing to overlook a lack of preliminary state aid runs, which normally form a basis for negotiations and illuminate how a governor's aid proposals would play out in practice.

"This year, we are in a unique situation. We don't have school runs. But that's not going to dissuade us," Senate Education Committee Chairman John Flanagan told reporters at a Capitol news conference. "In fact, in a weird way, it helps us to prioritize."

When he released his executive budget in January, Cuomo offered lawmakers two budgetary options.

He offered a $1.1 billion aid increase if the Legislature agrees to his conditions, which include controversial revisions to teacher tenure and evaluation laws. If lawmakers do not embrace his reform plan, he suggested a $377 million increase, most of which would be consumed by reimbursements for this year's capital and transportation expenses. Language in the governor's appropriations bills, however, actually provides for no aid increase if his proposed reforms are not enacted.

At their news conference, the Senate Republicans said that they consider the $1.1 billion figure to be a "floor" that is likely to be exceeded by the Senate. They also announced that they would make repealing the gap elimination adjustment (GEA), which deducts millions from local school aid allotments each year, their top priority in negotiations on the education budget.

"We are maniacally focused on this," said Flanagan, a Long Island Republican.

This year, $1.036 billion is being withheld from school districts as a result of the GEA, a strategy first implemented in 2009-10 (then called a "deficit reduction assessment") to help close large state deficits triggered by the recession. The GEA deductions, which are skimmed from funding that normally would flow to schools as a result of state aid formulas and reimbursements, reached a high of $2.6 billion in 2011-12 and have been reduced gradually since then.

Now, Flanagan and other Republican senators say, it's time to end the GEA entirely, and they argue that should take priority over foundation aid increases.

"I don't believe you can get to where you need to be as long as the GEA is lingering," Flanagan told reporters. "It's like an albatross that's hanging around everybody's neck."

Flanagan estimated that elimination of the GEA would channel another $500 million to average-need school districts and $250 million more to New York City.

Majority Democrats in the Assembly haven't yet announced their school aid priorities, but the group traditionally has favored more substantial increases through foundation aid.

Legislative leaders have said little about prospects for resolving the divisive policy issues the governor has linked to school aid. In addition to revamping teacher tenure and beefing up the role of state tests in teacher evaluations, Cuomo is seeking to raise the cap on new charter schools and enact a so-called Dream Act college aid program for immigrant students.

While they wait, local school officials are struggling to prepare their budgets using the scant information available.

District officials normally rely on the executive budget when they start crafting their local budget plans. Having that information in hand helps them comply with strict time lines and other legal requirements for budget development, public disclosure and hearings.

"The executive budget is considered the baseline," said Deborah H. Cunningham, director of education and research for the New York State Association of Business Officials. "That executive proposal has a lot of standing in the courts. Now, it's very ambiguous as to what school districts should use."

Districts can be optimistic or pessimistic in their assumptions, because there is no authoritative source of information. Questar III BOCES State Aid & Financial Planning Service has produced spreadsheets based on data compiled by the state in mid-November to try to predict what districts could expect in each aid category assuming there were no changes to the law that determined aid distributions in the current year.

"Questar is trying to fill an informational void," said NYSSBA Executive Director Timothy G. Kremer. "But it's really the responsibility of the governor to provide baseline figures. Districts need an official source, not only for the district-level financial information but for updated guidance on how it is appropriate to use the information."

NYSSBA and allied groups have pointed out that the governor's public statements about the assumptions that districts should make do not match the language of his executive budget (click for story).

Cunningham said many business officials are looking back to the state's building and transportation reimbursement projections from November to help with calculation of property tax levy limits, which are due to the state comptroller by March 1. The complex formula used to calculate district caps involves use of an "exclusion" allowed for local capital expenses. The exclusion, Cunningham said, is determined by subtracting state aid, grants and fund balance figures from anticipated capital expenses.

While budgeting always involves some guesswork, this year is extraordinary, local officials say. Many local officials around the state are expressing frustration, dismay or anger that the hardball political tactics unfolding in Albany are undermining their ability to responsibly craft school budgets.

"I understand the politics of it, but the end result is that the ones paying the penalty are the local school districts," said school board President Jesse Flint of the Canaseraga school district in Allegany County. "I'm not sure they understand the impact it has here in rural New York. It really makes the budget process borderline impossible."