School districts on Long Island and across New York State dodged a bullet last month when the legislature rejected Gov. David A. Paterson's call for a midyear cut in K-12 education aid. But their luck is about to run out.
Savvy school officials already realize that Paterson's 2010-11 state budget proposal, due to be presented on Tuesday, is virtually certain to call for a cut in school aid in the year ahead. In fact, for the state to have any hope of fixing its busted finances, that cut had better be an extra large one.
School aid will consume nearly $21 billion in general fund taxes and lottery receipts this fiscal year, making K-12 education the largest single item in the non-federally funded portion of the state budget. Temporary federal stimulus funds are being used to underwrite another $1.4 billion in school aid this year. But the stimulus is scheduled to shrink in 2010-11, and then to disappear.
Left unchanged, the current state school aid formula for 2010-11 would require general fund spending increases totaling more than 26 percent over the next three years. With the state facing a budget gap of at least $7 billion next year, and $14 billion the year after that, these trends obviously are unsustainable.
There's simply no way to restore long-term balance to New York's budget without first halting, and then partially reversing, the state's school spending binge.
It's not as if our schools have been starving. New York spends more per pupil than any other state - 65 percent more than the national average, according to the latest census data. Long Island schools spend even more - more than $20,000 per pupil, fully double the national average. State school aid has increased 75 percent since 1998-99, even though enrollment during this period was essentially flat or declining.
If the past is any guide, Paterson's budget will level the largest state aid cuts on downstate suburban school districts. The Pavlovian response of Long Island lawmakers will be to demand more cash for their districts - period. That's understandable, of course, but it's not enough.
During previous economic downturns, Albany cut aid without reforming the mandates that drive up local school costs. The result: higher property taxes. But these times demand a more comprehensive approach. If a state school aid cut is coming - and for the sake of New York's fiscal health, we should all hope it is - Long Island's school officials and state legislative delegation should unite behind long-overdue reforms to protect local property taxpayers and minimize the impact on classrooms. This means they have to summon the courage and the will to confront one of the state's most powerful special interests: the teachers unions.
A school property tax cap like the one originally proposed by Paterson and passed by the State Senate in 2008 should be at the top of the agenda. The cap, modeled on Proposition 2½ in Massachusetts, would limit school property tax levy increases to inflation (currently near zero), while giving voters the opportunity to "override" the limit if they want to accept and pay for a larger increase for specific local purposes. Taxpayers could also force a referendum to "under-ride" a levy limit if they believe the district can get by on less.
Lawmakers should also enact a state-mandated freeze on teacher salaries. There is precedent for this. In the mid-1970s fiscal crisis in New York City, the state stepped in to halt collectively bargained pay hikes for members of the municipal labor unions. As recently as 2003, the state froze raises for Buffalo unions during that city's fiscal crisis. When Buffalo teachers sued to overturn the freeze, federal courts upheld it.
Teacher salaries continue to rise even as private-sector incomes stagnate. The resulting estimated savings could fully offset more than $1 billion in school aid reductions statewide, including roughly $220 million on Long Island.
The state's Taylor Law provisions that give teachers unions excessive financial leverage in contract talks with school boards must also be repealed. As one example, the Triborough amendment allows teachers to continue collecting longevity "step" increases in their salaries even after their contracts have expired. Then there is a recent court ruling in a Manhasset School District case that further limits school districts from outsourcing services, and a provision in the newly enacted Tier 5 state pension bill that prohibits school districts from making changes in health benefits for retirees without seeking the permission of active employees.
Also, at a time when districts will need to reduce staff, they should have maximum flexibility to preserve the jobs of the best teachers - regardless of their seniority. But that will require reform of the teacher discipline provision (known as "3020-a") that makes it prohibitively expensive to weed out incompetent staff.
Finally, the legislature should seek contracting reforms that would significantly reduce capital construction costs. They should repeal the Wicks Law, which needlessly requires multiple subcontractors on construction projects, and prevailing wage requirements that add hundreds of millions of dollars to school capital expenses.
A campaign favoring many of these changes and more has been unveiled by the New York State School Boards Association, which has identified 55 ideas for making schools more efficient. They should be listened to.
Of course, accomplishing change won't be easy if state legislators remain beholden to interest groups that benefit from the educational status quo. So teachers unions will scream bloody murder - let them. This fiscal crisis would be a terrible thing to waste.
E.J. McMahon is director of the Empire Center for New York State Policy, which recently published "Blueprint for a Better Budget."