NYS Regents want to update school funding formula that dates to 2007

ALBANY — The state Board of Regents wants to change an outdated formula to fund schools equitably, but state and local politics may be obstacles to fixing a system that analysts say leads the state to spend more on school aid each year. 

The Board of Regents’ proposal calls for a $1 million study by independent education finance experts to identify improvements to the school aid formula. The formula includes benchmarks from a quarter-century ago that are still used to determine a district’s financial need and to allocate funding, despite the dramatic changes in schools and the communities they serve.

Many Democrats and Republicans agree the formula needs to be updated to more fairly distribute state aid to schools based on current conditions, such as poverty and enrollment. But some say the effort could continue to be thwarted if it means the formula dictates their school districts should get less state aid year-to-year.

The current school aid formula was implemented in 2007 and was considered a major political victory at the time. It consolidated 30 measures of a school district’s needs and wealth. The goal was to ensure greater fairness in providing aid to all schools, with more money going to the schools in most need, often in communities too poor and with too little of a tax base to supplement funding from local property taxes.

“Implementing these changes would move toward more equitable funding based on current district need, rather than based on a district’s circumstances two decades ago,” the Regents stated in their current proposal to the legislature. “Deeper study and broader engagement are necessary to review formula elements such as measures and weights of student need.”

Supporters say failure to revise the formula is costing some poorer districts critical funds while providing an unfairly large share to some wealthier districts.

“The formula itself needs a lot of work,” said Rick Timbs, a former educator and executive director of the Statewide Schools Finance Consortium. The group represents school districts in average- and lower-income communities. “The formula is outdated and some of the metrics are the wrong ones, and it tends to be fairly arbitrary.

"I have had legislators say they are afraid to change the formula because there will be winners and losers. I say, ‘There are winners and losers now. Give me a break.’ ”

Some of the factors in the school aid formula that critics say need to be updated are:

Poverty and need are based in part on statistics from the 2000 U,S, Census, A measure that judges poverty by how many students qualify for free and reduced-priced lunch, Many school districts now offer free breakfast and lunch to all students, But critics say the new practice masks poverty because many districts no longer track the family income data that used to be required to qualify for free lunch, Special education funds are based in part on data from the 1990s, before the movement to teach special education students in general classrooms, District wealth is calculated in part by a combination of property values and residents’ income, before the explosion of property values and property taxes that is outpacing income in many areas, including on Long Island, No accounting for the sharp increase in migrant families, No accounting for the spike in mental health services and other needs exacerbated by the COVID-19 pandemic,.

Gov. Kathy Hochul and the legislature could consider the Regents' proposal as they begin negotiations over the 2024-25 state budget, which is due by April 1.

Hochul’s $233 billion budget proposal would increase school aid by $825 million, to $34.5 billion. She and the legislature have increased school aid by more than $5 billion over the past two years.

The Regents' review likely will face opposition.

“It’s a tough process because there are going to be winners and losers,” said Assemb. Michaelle Solages (D-Elmont), the deputy majority leader.

“We should all take a deep breath and look at the proposal,” Solages said. But some “people are trying to put the house on fire, as if we are doing something wrong just by wanting to have a conversation … the funding formula needs to be amended, but we have to have the right conversation.”

At a budget hearing earlier this month, state Education Commissioner Betty Rosa urged the legislature to fund the Regents’ proposal, saying the study could be done in three to five years.

But the bipartisan outrage at the hearing aimed at Hochul's proposal to end the hold-harmless provision of state aid was a hint of the potential political reaction to any similar reduction of aid for some schools from an updated formula.

Hold harmless means that no district, regardless of wealth, would get less state aid than the year before, even if the formula calls for less aid. And some legislators in both major parties called the proposal to end it “devastating” and “outrageous,” leading to cuts that would force layoffs and gut programs.

Assemb. Ed Ra (R-Franklin Square) said there is “universal opposition” right now among lawmakers on both sides of the aisle to take any action that would reduce aid to any school districts year to year. “But I do think we need to be funding this study ... the tricky part is any change in the formula is likely to have winners and losers.”

Sen. Jack Martins (R-Old Westbury) said the general consensus in the legislature is that "the formula doesn’t work.” But he cautioned that reducing aid year to year to many districts would be “opposed by all four corners of the state and both sides of the aisle.”

State School Boards Association Executive Director Robert Schneider said schools already are contending with the loss of special, post-pandemic funding from the federal government and rising costs and he warned against any year-to-year reduction in aid. But the association also supports “comprehensive revisions” to the aid formula, “including crucial updates to antiquated demographic data.”

Meanwhile, independent financial analysts said avoiding the Board of Regents’ proposed study would cost some students and taxpayers more the longer the formula’s flaws go unaddressed.

“The bottom line is that aid increases should go to where there is rising need," said Patrick Orecki, director of state studies for the independent Citizens Budget Commission. "… Current formulas and aids don't do that well enough.”

“This is a highly political process,” said Marina Marcou-O’Malley, co-executive director of the Alliance for Quality Education, a public school funding advocacy group. “That should not be the case.”

“We ought to come up with a process in which everybody has input and especially education finance experts,” Marcou-O’Malley said. “In our state, that’s the Board of Regents. We follow them on everything else, why not follow them on this?”

Fiscal conservatives also call for changing the formula, which continues to drive more state spending on schools.

“The Regents are correct about updating the formula, but they aren't going nearly far enough,” said Ken Girardin, research director for the Empire Center for Public Policy, a think tank based in Albany.

"In almost any other state's budget, the growth of school aid would have been checked by the pressure it put on other state priorities," he said.

The Senate’s Democratic majority is expected to support the Regents’ proposal in budget negotiations, said Senate Education Committee chairwoman Shelley Mayer (D-Yonkers).

“We absolutely need to review and begin the process of updating the formula,” Mayer said. “There could be winners and losers, and we hope that’s not the case, but our first commitment is to the kids.”