Will Gov. Kathy Hochul attempt to update decades-old NYS school aid formula?

ALBANY — New York Gov. Kathy Hochul is slated to release her state budget proposal on Tuesday and the big question on the minds of state education leaders and advocates is whether she will update the nearly two-decade-old method of allocating school funding.

The complex state funding formula, known as Foundation Aid, was enacted in the 2007-08 school year. It is the single largest source of financial support for public schools in the state, sending billions of dollars to Nassau and Suffolk counties alone.

Education advocates for almost two decades have called for the formula to be updated to factor in changing student populations, regional costs and changes in poverty, and to more equitably distribute aid.

"At the end of the day this is about providing billions of dollars to school districts and indirectly to the students that our districts educate," said Brian Fessler, director of governmental relations for the New York State School Boards Association. "We need to make sure the dollars that it spits out and the numbers that it spits out needs to match the realities and the day to day of what our school districts are facing," he said of the formula.

New York has the highest per-pupil spending of any state. The state budget includes $35.9 billion in funding for schools, $24.9 billion of which is for Foundation Aid for the current fiscal year.

Hochul and the State Legislature last year signaled a willingness to modernize the formula, earmarking $2 million for the Rockefeller Institute of Government to analyze Foundation Aid. The Albany-based think tank in December released a 314-page report outlining recommended changes — changes Hochul could include in her executive budget proposal for the next fiscal year, which starts on April 1.

Some suggested tweaks, such as providing more aid for English language learners, who typically need additional support and services, as well as using updated poverty data, could benefit Long Island, which has seen an increase in these higher-need students, according to education advocates.

Other changes could result in less funding for some wealthier schools, such as by eliminating a policy known as "save harmless" or "hold harmless," which guarantees no school district receives less aid than the year before, even if enrollment changes.

Hochul could propose anything from small adjustments to the formula to a multiyear plan for sweeping changes.

Or, she may decide to hold off on changes altogether as she mounts a potential reelection bid for 2026, said Lawrence Levy, executive dean of Hofstra University's National Center for Suburban Studies.

It’s a politically fraught topic of billions of taxpayer dollars and the needs of children. "It’s almost a symbolic issue that has tremendous political weight," Levy said.

Need for change

The Foundation Aid formula was put in place for all districts after the state’s highest court in 2003 upheld a lower court's decision that New York was underfunding New York City schools and not meeting its constitutional burden to provide students with a "sound basic education." It was intended to create equity and give school administrators a better idea of the aid they’d receive each year.

The formula takes into consideration a number of factors to determine aid, including student need, regional cost differences, the cost of a successful education, and local district fiscal capacity, including how much districts expect to raise from local sources, primarily property taxes. While parts of the formula are updated regularly, some are frozen. For example, it still uses 2000 census poverty data.

Over the past 18 years, poverty levels have increased in some areas, populations have shifted, student needs have increased and what’s considered student success has changed as the state puts less emphasis on standardized testing.

Our schools are doing so much more than they’ve ever done

— Melinda Person, president of New York State United Teachers

"Our schools are doing so much more than they’ve ever done," said Melinda Person, president of New York State United Teachers, the state’s largest teachers union, representing nearly 700,000 members. Schools are now providing meals and clothing and meeting other social and emotional needs of students, she said.

The current levels of funding are not addressing the needs of districts, said Laura Harding, president of the Long Island-based civil rights group, ERASE Racism.

"We need a redo of the actual formula itself to really come up to speed to provide our districts, who are dealing disproportionately with these issues and who have historically been underfunded, to be properly funded," she said.

And that means more money going to the highest-need districts, and less to the wealthiest, which can raise funds in other ways such as through taxes.

"Equity feels like a loss to people who have privilege," Harding said. It’s not one district that is gaining and the other is losing, she said. "What they’re gaining is really trying to bring them on par with what you have."

'Menu of options'

The Rockefeller Institute report suggested a "menu of options" for policymakers, some that would need a longer, more phased-in approach, and others that could be put in place as soon as the next fiscal year. 

"The report is not the end, it’s the beginning of our conversation," Person said, adding that she doesn’t expect everything to be done in one year.

The recommendations aim to more equitably distribute aid, so districts with larger populations and those in high-poverty areas would get more funds. And schools with students with higher needs — such as economically disadvantaged students, English language learners and students with disabilities — would get more funding to better support those students.

The report suggests replacing outdated poverty measures and updating student population calculations. It calls for modernizing and in some cases replacing how inflation, regional costs and local contributions are calculated to better reflect the costs faced by districts.

"We appreciated that they emphasized the importance of predictability and funding and making some of the factors more stable year-to-year," said Robert Lowry, deputy director for advocacy, research and communication for the New York State Council of School Superintendents.

There’s also a need to revise what’s known as the "successful schools model," which calculates a measure of success by looking at per-pupil spending in successful districts. It largely uses test scores to measure academic outcomes, and the report recommends finding alternative measures.

The institute also recommended phasing out the "save harmless" policy.

Hochul last January threatened to cut the policy, which would have resulted in less state aid for 337 of the more than 700 school districts in New York, including 44 on Long Island.

But in December Hochul said she doesn’t plan to cut the provision.

Ending save harmless would be "very dangerous" to many schools on Long Island and around the state, said Senate Education Committee chairwoman Shelley Mayer (D-Yonkers), adding that it’s a "nonstarter" for her.

Harding, however, hopes Hochul will phase it out because it "really reinforces the disparity and the inequity in state-level funding," she said. 

Reelection politics

There’s concern over whether recommendations from the report and stakeholders will be implemented given the governor’s focus on potential reelection, Harding said.

Hochul entered her fourth full year in office with lackluster polling, some of which political analysts say is due to widespread anti-incumbent sentiment nationally.

She has only two January-to-June legislative sessions to prove herself to voters if she plans to run for reelection in November 2026.

School aid is a "third-rail issue," Levy said, meaning it's a controversial issue typically avoided by politicians.

"State legislators, every one of them represents a school district, and you get very little praise when you maintain the status quo or improve things just a little bit, but you get an awful lot of criticism, often angry, if you take something away," Levy said.

If she runs, Hochul will need the support of the suburbs, such as Long Island, which historically have been election battlegrounds.

A lot of districts on Long Island could benefit with a formula that more fairly measures wealth and need

— Lawrence Levy, dean at Hofstra University

While it may not be worth the "political trauma for the relatively modest gains you’ll get on a place like Long Island," Levy said, "at the same time, this is a different era where a lot of districts on Long Island could benefit with a formula that more fairly measures wealth and need."

If Hochul does propose changes to the formula, she’ll likely frame it around affordability and saving families money, which was the theme of her State of the State address last week, Levy said. "Every extra dollar that a district gets that can ease a tax increase or maintains the status quo, is a dollar in the pocket."

Looking ahead

The governor’s budget proposal sets the agenda for the discussions with the State Legislature. And with school aid making up a large portion of the state’s budget, it’s expected to be a main topic of discussion for the coming months.

"It’s really big, it’s really complicated. It’s really important" Fessler said. "Even though the report offers a lot of ideas and suggestions it still requires a lot of hard decisions to try to move the needle."

There’s also the question of how the recommended changes would play with each other and how they would play out for particular districts, Mayer said. "There’s a lot of moving parts here. We’ll see where the governor starts here and then we'll respond."

The main goal is to "achieve greater fairness," she said.

There’s also a question of cost, Lowry said. "If you did everything that was recommended, the state would likely spend more on education, even if you did save harmless," he said, adding that it depends on the mix of changes adopted and how they’re phased in.

The state’s financial plan estimates an additional $1 billion increase in education spending in the upcoming year, while State Education Department estimates show a $1.7 billion year-over-year increase, with $1.4 billion increase in Foundation Aid, if the formula runs as currently written.

Assembly Education Committee Chairman Michael Benedetto (D-Bronx), said he will have to take a look at the governor’s proposal, and then there will likely be hearings on any proposed changes.

"We’re committed to make sure our school districts have the resources that they need to educate the children of our state," he said.