New York should cut back financial protections for school districts with declining enrollment: report

A study ordered by lawmakers found New York needs to overhaul its primary school aid formula and move away from longstanding financial protections that assures stable funding for school districts losing enrollment.

The 314-page report from the Rockefeller Institute of Government, part of the State University of New York, was released Monday evening. While nonbinding, its recommendations are expected to shape state budget negotiations in the new year.

New York sends most of its education funding to local school districts through an formula known as Foundation Aid, which allocates additional dollars for needier students. Last year, the funding stream accounted for $24.9 billion of a $35.9-billion state school aid package.

“While the Foundation Aid formula is a vast improvement on the education financing approach previously used by the state, several of its components have grown stale,” Bob Megna, president of the Rockefeller Institute, wrote in a cover letter to the report.

Foundation Aid came out of litigation around the turn of the century but for years remained underfunded. By the time it was fully phased in under Gov. Hochul, experts were already calling for an overhaul — including of a student poverty variable.

State lawmakers started the process during the most recent budget cycle. Hochul and the Legislature agreed to change an inflation calculation, resulting in $125 million less in state aid for New York City schools.

Hochul tried implementing more sweeping changes, scrapping a provision known as “save harmless” that ensures all districts receive at least the same funding as the year prior, even if they enroll fewer students. But facing bipartisan pushback in both chambers, the governor eventually settled to study the issue for another year and tapped Megna, a former state budget director, for the review.

At least 88% of school districts have experienced enrollment declines over the past decade, according to the report. Nearly one-fifth of all school districts benefiting from the allocations are considered “low-needs.”

Rockefeller Institute ultimately suggested New York set per-pupil local income and property wealth thresholds, above which school districts would not be eligible for the extra funds. The report also recommended the state phase out at least half of save harmless over five years.

Reps for the governor and the city’s schools did not immediately return a request for comment. A spokeswoman for state Sen. John Liu (D-Queens), who leads the chamber’s local education committee, said the report should answer how much more Foundation Aid funding is needed in the state budget. Researchers declined to calculate a price tag, saying there is “no way to know” which proposals lawmakers would adopt.

During five hearings across the state, the think tank heard from more than 100 speakers for about 12 hours and received 1,800 more written comments. Advocates criticized the needs-based formula for not earmarking additional dollars for homeless students, a growing population, as well as for preschool programs and smaller class sizes in accordance with a new state law.

Megna, in his letter, described the report as “a menu of options” for lawmakers to consider. Among the other proposals made by the think tank were more nuanced rates for students with disabilities and learning English, accounting for their varying levels of services, and updating how the state calculates poverty. But he said improvements should be made over time, as to not destabilize school districts.

“Where necessary, we recommend that policymakers phase in changes,” he said, “so no district sees large year-to-year changes in funding.”