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State Aid to School Districtsin New York State:An Overview Based on the Laws of 2004

State Aid Work Group

New York State Education Department

August 11, 2004

Attachment C

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School District Types 657 K-12 school districts and 23 non-K-12 districts

employ 8 or more teachers and are eligible for regular State Aid.

All are fiscally independent (with independent taxing and borrowing authority) except the Big Five.

38 Boards of Cooperative Educational Services (BOCES) provide a range of programs and services to groups of school districts other than the Big Five.

Seven districts with fewer than eight teachers are eligible to receive only Operating and Transportation Aids.

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New York State PK-12 EducationA $39 Billion Enterprise (2003-04 Estimated)

Total Revenue from State Sources

Total General and Special Aid Fund Expenditures

Average Total Expenditure Per Pupil*

Average State Revenue Per Pupil*

$17.6 billion including STAR

$39.0 billion

$13,505

$6,098

*DCAADM

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Sources of Revenue for EducationNew York State, Major School Districts, 2001-02

Federal(5%)

Local(46%)

State including STAR(49%)

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Where the Education Dollar is Going New York State, Major School Districts, 2001-02

Operation & Maintenance

8%

Transportation5%

Debt Service5%

Other2%

Non-instructional Fringe Benefits

1%

Board of Education & Central

Adminstration2%

Instruction (incl. Fringe Benefits)

77%

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Local Revenues (2001-02) Constitute 46 percent of education revenues About 91 percent derives from property taxes

levied by boards of education on residential and commercial properties

Only the Big 5 Cities have constitutional tax limits; limits apply to total municipal budget, of which the school budget is a part

The considerable reliance on local revenues results in large spending disparities among school districts

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State Revenues for Education 91 percent of State revenues for education

from State General Fund, primarily from income and sales taxes

State sales tax laws reserve 4.25 percent for the State and permit counties and cities to levy up to an additional 4 percent

Approximately 9 percent comes from a special revenue fund account supported by lottery receipts

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Revenue from State Sources* as a Percent of Total Expenditures

for Public Schools

Low: 1944-45 31.5 percent

High: 1968-69 48.1 percent

Current: 2003-04** 45.2 percent

*2003-04 includes State revenues for School Tax Relief (STAR): 7.0 percent.

** Estimated.

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2004-05 State Aid Programs

Largest Aid CategoriesEstimated

(in millions)

Comprehensive Operating Aid $6,965

Special Education Aids $2,492

Building and Building Incentive Aids $1,399

Transportation Aid $1,160

Extraordinary Needs Aid $974

BOCES/Special Services Aids $658

General Support for Public Schools* $15,265

* includes Transportation Capital Expense Transition Grants of $76 million and Prior

Year Adjustment Aid of $28 million, both of which are funded outside of GSPS.

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How Major State AidFormulas Have Traditionally Worked

There are primarily two types of formulas:

1. Per Pupil Formulas: Pupil Count x Dollar Amount x District Aid Ratio

Used in: Operating, Extraordinary Needs, Operating Standards

2. Expense-based Formulas: Approved Expenses x District Aid Ratio

Used in: Transportation, Building, BOCES, Special Education

Note: The District Aid Ratio varies with district need. It represents the share the State pays; the balance is provided primarily from local sources.

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Three Years of Aid by Need Resource Category

$0

$2,000

$4,000

$6,000

$8,000

$10,000

En

acte

d A

id p

er E

nro

lled

Pu

pil

2002-03 4,934 6,737 6,240 7,684 4,774 2,284

2003-04 4,870 6,773 6,247 7,664 4,701 2,192

2004-05 5,237 7,578 6,436 8,164 4,984 2,290

3 YR % Chg 6.1% 12.5% 3.1% 6.2% 4.4% 0.3%

New York City

Large CitiesHigh N/RC

Urb/SubHigh N/RC

RuralAverage

N/RCLow N/RC

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Traditional Factors That Drive Aid District Fiscal Capacity

Income per pupil and Actual Value of taxable property per pupil (Formula Operating, Special Education)

Income per pupil (Extraordinary Needs Aid) Actual Value per pupil (Transportation [one of two options], Building,

BOCES)

Pupil Need Factors Extraordinary Needs Aid uses an Extraordinary Needs Count, a mixture

of student poverty, students with limited English, and geographic sparsity

Spending Formula Operating Aid (very small portion) Transportation, Building and BOCES Special Education (public and private)

Pupil Counts Used extensively in Formula Operating, Extraordinary Needs and

Special Education Used in minor ways in Transportation and Building Aids

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What Drives 2004-05 Comprehensive Operating Aid?

District Fiscal Capacity, Spending, Pupil Counts As on file for the 2001-02 Executive Budget proposal for 2000-01 aids

(Operating Aid, Tax Aids and Transition Adjustment) Used to determine eligibility for the 2002-03 one percent increase in

COA for low wealth districts (CWR) As on file for the apportionment of 2002-03 aids (Gifted and Talented

Aid, Operating Standards Aid)

Pupil Need Factors As on file for the 2001-02 Executive Budget proposal for 2001-02 aids

Primarily Based on 2000-01 Aids Operating Aid, Tax Aids and Transition Adjustment

Operating Aid Adjustment Factors For 2003-04, a reduction in COA was imposed on all districts with a

lesser percent reduction for high need / low fiscal capacity districts For 2004-05, a 1.75 percent increase is provided for all districts

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STAR School Tax Relief Program--enacted in 1997 and

took effect with the 1998-99 school year The State makes payments to school districts to

compensate them for reduced property tax receipts Began with implementing a State funded school

property tax exemption for senior citizen homeowners

Planned for a 4-year phase-in, subsequent legislation provided for full implementation for seniors in the first year (1998-99)

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STAR (continued) Exemption for owner-occupied

primary residences. Enhanced exemption: $50,000 for

an owner (or one of a couple) over 65; annual income cannot exceed $63,750

Basic exemption: $30,000 for all primary residence homeowners (begun in 1999-00, phased in over 3 years)

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School Tax Relief by School District Need Categories(2003-04)

$651$572

$881

$1,257

$1,437

$987$1,016

24.00%

2.60% 5.60%

38.90%

20.40%

100.00%

8.50%

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

New York City Large Cities High NeedUrban/Suburban

High Need Rural Average Need Low Need State0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

STAR per Enrolled Pupil for 2003-04

Percent of Total STAR for 2003-04

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Highest Need

School Districts

Lowest Need

School Districts

Spending per pupil

$10,072 $12,695

Tax Rate per $1,000 AV

$15.83 $13.13

Local Revenue (excl. STAR) per pupil

$1,849 $9,238

2001-02 Data for First and Tenth Deciles of School Districts Ranked by Need/Resource Index Deciles for all Major Districts Excluding New York City

Highest Need School Districts Tax at a Higher Rate, but Tend to Raise Less and Spend Less

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State Aid Issues School Year 2005-06

Students who attend schools with high concentrations of poverty: Have the farthest to go to meet

the State’s learning standards Are more likely to attend

schools with fewer resources Design a proposal that

recognizes these conditions