MEMORANDUM IN SUPPORT

A BUDGET BILL submitted by the Governor in accordance with Article VII of the Constitution

AN ACT to amend the education law, in relation to the eligibility requirements for the tuition assistance program and the creation of a tuition assistance loan program (Part A); to amend the civil service law, the education law and chapter 363 of the laws of 1998 amending the education law relating to state university health care services and facilities, in relation to the operation of the state university health care facilities (Part B); to amend the arts and cultural affairs law, the civil practice law and rules, the administrative code of the city of New York, the state finance law, the parks, recreation and historic preservation law and the not-for-profit corporation law, in relation to establishing the New York institute for cultural education and providing for the orderly transfer of all functions, powers, duties, obligations and assets of the office of cultural education located in the state education department to the New York institute for cultural education; and repealing certain provisions of the education law relating thereto (Part C); to amend the education law, the public authorities law, the general city law and the state finance law, in relation to education aid; to amend chapter 221 of the laws of 1998 relating to certain state aid payments to the Syracuse city school district, the Utica city school district and the Gloversville enlarged city school district, in relation to scheduled aid deduction; to amend chapter 82 of the laws of 1995, amending the education law and certain other laws relating to state aid to school districts and the appropriation of funds for the support of government; to amend chapter 169 of the laws of 1994 relating to certain provisions related to the 1994-95 state operations, aid to localities, capital projects and debt service budgets; to amend chapter 756 of the laws of 1992 relating to funding a program for work force education conducted by the consortium for worker education in New York city, in relation to the effectiveness of such provisions; to amend chapter 507 of the laws of 1974, relating to apportionment of state monies to certain nonpublic schools to reimburse them for their expenses in complying with certain state requirements for the administration of state testing and evaluation programs, in relation to education aid; to amend chapter 383 of the laws of 2001, amending the executive law, the state finance law and the laws relating to low-cost electricity to certain businesses and provisions of a tribal-state compact, in relation to teachers of tomorrow awards; and to repeal certain provisions of the education law relating to education aid (Part D); to amend the family court act and the executive law, in relation to utilization of detention for juvenile delinquents and persons in need of supervision and reimbursement therefor (Part E); to amend the social services law, in relation to clarifying the authority of the commissioner of the office of temporary and disability assistance in administratively establishing welfare shelter allowance levels, establishing a supplemental rental assistance program, repealing certain provisions of such law relating thereto, and providing for the repeal of certain provisions upon expiration thereof (Part F); and to amend the real property tax law, the tax law and the state finance law, in relation to the school tax relief (STAR) program and to repeal subdivision 9 of section 425 of the real property tax law relating thereto (Part G)

PURPOSE:

This bill contains provisions needed to implement the Education, Labor and Family Assistance portion of the 2002-03 Executive Budget.

SUMMARY OF PROVISIONS, EXISTING LAW, PRIOR LEGISLATIVE HISTORY AND STATEMENT IN SUPPORT:

Part A – Restructure TAP awards to provide incentives for college graduation.

This bill modifies the award parameters for the Tuition Assistance Program (TAP) to provide incentives for graduation; creates a Tuition Assistance Loan Program and makes it easier for students to apply for TAP via the Internet.

Effective April 1, 2002, this bill restructures the TAP program to:

• provide TAP awards to students in two components – a “base” award equivalent to two-thirds of the current TAP award and a “performance” award equivalent to the remaining one-third of the award.
• reward students for successful completion of their degrees by providing the “performance” award upon graduation in an amount equal to their deferred TAP awards, plus any interest incurred by the recipient as a result of using student loans to finance their performance award.
• create a TAP loan program whereby students who have exhausted all their Federal loan eligibility will be able to borrow an amount up to the amount of their TAP performance award.

This bill also enables students to apply for TAP on the Internet by modifying the requirement for signature and affirmation of statements of income used in the determination of financial aid eligibility.

Awards made under the TAP program are currently authorized in Articles 13 and 14 of the Education Law under sections 601, 604, 661-665, 667, and 667-a. Existing law authorizes, for full-time undergraduate students, maximum awards of up to the lesser of tuition or $5,000 (for students receiving first time awards in 2000-01 or thereafter) and minimum awards of $500.

A proposal for providing incentives for improving student graduation rates was advanced in the 1999-00 Executive Budget.

Providing TAP to students in two components – a “base” award and a “performance” award – provides a financial incentive which rewards students for their successful academic progress. This change will also ensure that State taxpayer funds are invested wisely and productively for their intended purpose — enabling needy students to obtain college diplomas.

Providing an incentive for successful graduation is needed since, at the present time, more than one-third of TAP recipients fail to complete their degree programs.

Creating a TAP loan program will ensure that students who have exhausted all their Federal loan eligibility will have the means of financing their deferred performance awards.

Including the payment of interest in the performance awards will ensure that students who complete their degrees do not incur additional expenses because of the deferral of a portion of their TAP awards.

Modifying the requirement for an affirmation signature by deeming a student’s personal identification number as a signature for purposes of electronic filing for TAP will enable students using the Internet to fill out a Free Application for Federal Student Aid (FAFSA) (which is used in the determination of eligibility for the TAP award) and to apply for TAP without the need to submit a supplemental signature form.

Part B – Improve the competitiveness of the SUNY teaching hospitals and clinics by providing additional procurement and employment flexibility.

This bill improves the competitiveness of the State University of New York’s (SUNY) teaching hospitals and clinics by providing additional procurement and employment flexibility for these facilities. This bill also enhances operational oversight of the SUNY hospitals at Brooklyn, Stony Brook and Syracuse by establishing a local Board of Directors at each facility.

Effective April 1, 2002, this bill:

• Provides SUNY’s teaching hospitals and clinics with additional procurement and employment flexibility by:
  • expanding the authorization for payment of pay differentials to all SUNY health care employees in the classified civil service system who provide direct patient care, including diagnostic and therapeutic services;
  • raising the limits for contracts that may be authorized without prior approval by the State Comptroller or Attorney General, outside the formal competitive process and without publication in the Contract Reporter, to $500,000 for consultant services, $2,500,000 for goods, and $2,500,000 for joint or group purchasing consortia purchases; allowing the SUNY Trustees to negotiate annually with the State Comptroller increases in the exemption dollar limits; and requiring annual reports of certain contract activities;
  • permitting contracts for capital facilities and equipment to be authorized without prior approval by the Attorney General through the use of contract forms previously approved by the Attorney General and without prior approval by the State Comptroller and the Director of the Budget when such contracts fall below the contract dollar limits established in this bill;
  • exempting contracts for the procurement of goods and services from the preferred sources requirements of the State Finance Law; and
  • authorizing the use of binding arbitration to resolve disputes regarding contracts between SUNY’s hospitals and clinics and other entities relating to managed care networks, joint and cooperative arrangements, management and administrative services, and risk-sharing.
• Enhances the operational oversight of the SUNY hospitals by establishing three thirteen-member local Boards of Directors to supervise the operations and affairs of the SUNY health care facilities at Brooklyn, Stony Brook and Syracuse. Subject to the general management, supervision and control by the SUNY Board of Trustees, the local Boards would:
  • appoint the chief executive officer for each hospital; review all major operations plans and budget requests; take actions to monitor and restore compliance with statutory and regulatory health care delivery requirements and ensure conformance with all applicable Federal, State and local laws; undertake fundraising and advocacy; and perform such other powers and duties as may be authorized by accreditation entities or §2303 of the Public Health Law; and
  • be permitted to conduct meetings by means of videoconferencing and teleconferencing equipment and to call executive sessions to discuss: strategic marketing plans, analyses, evaluations and pricing strategies or commitments relating to business development, including strategic alliances and contracts for managed care and other network arrangements, risk-sharing contracts, and other similar arrangements, which, if disclosed, could undermine the competitive position of the related state university health care facilities.
• Makes clarifying amendments to the existing SUNY health care flexibility provisions to:
  • allow, notwithstanding the Public Officers Law, SUNY officials who participate with private entities in contracts and arrangements relating to health care to discuss openly the business affairs of the SUNY health care facilities;
  • authorize SUNY officials to appoint directors or members to the governing boards of other entities with which the State University hospitals jointly provide health care; and
  • protect from public disclosure under the Freedom of Information Law, confidential information gained by SUNY officials concerning the entities with which State University jointly provides health care.

Current Education Law authorizes State University health care facility procurement contracts and joint or purchasing arrangements up to $75,000 without prior approval of the State Comptroller or the Attorney General and outside the formal competitive process.

Similar procurement flexibility provisions were set forth in S.3024-B, which passed in the Senate, but was not reported from committee in the Assembly during the 2000 Legislative session. A similar bill was introduced as an Article VII bill with the 2001-02 Executive Budget, but did not pass either house.

Recent developments in the health care marketplace, including Medicare budget cuts, deregulation of hospital rates and the growth of managed care, have made the delivery of health care in New York State increasingly more competitive. SUNY’s teaching hospitals and clinics, by virtue of the various legal constraints imposed on them as State institutions, are currently unable to compete effectively. Specifically, SUNY’s teaching hospitals and clinics are being hampered by time-consuming public contracting and bidding rules, legal limitations on their ability to enter into joint ventures with other health care organizations, and institutional obstacles to their development of vertically and horizontally integrated delivery networks. Providing SUNY’s teaching hospitals and clinics with added management flexibility will enable them to work cooperatively with other health care providers to develop high-quality, cost-effective systems of care. Increased management flexibility and autonomy also will promote more effective long-term planning, expedite short-term decision-making and help ensure the future competitive and financial stability of SUNY’s teaching hospitals and clinics.

The creation of local Boards of Directors for SUNY’s teaching hospitals at Brooklyn, Stony Brook and Syracuse will ensure that each facility operates within statutory and regulatory guidelines, is accountable - similar to other hospitals throughout the State C to a local oversight board, and is able to respond quickly to changing operational and local health care delivery needs.

Part C – Establish the New York Institute for Cultural Education (NYICE) to assume responsibility for the State Museum, State Library and the State Archives and provide for the transfer of these programs from the State Education Department.

This bill establishes a new public benefit corporation — the New York Institute for Cultural Education (NYICE) — which will assume responsibility for the cultural education programs that are currently administered by the State Education Department (SED). The creation of NYICE will provide greater prominence and visibility for the State Museum, State Library and State Archives, and provide an administrative structure that would enhance their ability to contribute to the State’s economy, tourism and cultural enrichment.

This bill provides for:

• the creation of a new public benefit corporation — NYICE — to administer programs for the preservation, development and promotion of New York’s cultural resources, including the State Museum, the State Library and the State Archives;
• selection of 15 members to serve renewable five-year terms on the Board of NYICE as follows: eight members appointed by the Governor, two each by the Senate and the Assembly majorities, one each by the Senate and Assembly minorities and one by the Board of Regents;
• reassignment of responsibility from SED to NYICE for the administration of State aid programs for public libraries and public broadcasting stations, and grants to local governments and nonprofit organizations for preservation of records and documents;
• transfer of responsibility from SED to NYICE for designated programs relating to cultural resources and associated staff, facilities and funding by July, 2002;
• increase of an existing fee for the filing, recording and certifying of records by county clerks from $5 to $20 to provide funding for NYICE;
• maintenance of all rights and privileges of current SED employees who are being transferred to NYICE;
• continuation of SED’s responsibility for chartering museums and libraries and licensing of public television and radio stations; and
• amendments to the Arts and Cultural Affairs Law, State Finance Law, Parks, Recreation and Historic Preservation Law, and the Not-for-Profit Corporations Law to reflect the creation of NYICE and the transfer of functions from SED to NYICE.

The Education Law assigns to SED the responsibility to administer the State Museum (§§ 232, 233-a, 234 -235-b), the State Library (§§ 232 and 245 - 252), Library Aid (§§ 271-285), Public Broadcasting Aid (§ 236) and grants for historic documents and records (§ 140).

The Arts and Cultural Affairs Law assigns SED the responsibility to administer the State Archives (§ 57.05) and the Local Government Records Management program (§§ 57.07-57.11).

Proposals to establish a separate agency for the State’s cultural resources (the Office of Cultural Resources), and effect the transfer of various cultural education programs from SED to the new agency were introduced as Article VII bills accompanying the Executive Budgets in 2000-01 (Part C of S.6291/A.9291) and 2001-02 (Part B of S.1145/A.1997). They were not passed by the Legislature. The 2002-03 Article VII bill differs from the earlier proposals in two significant respects: administration and staffing for the State’s cultural education programs will be transferred to a public benefit corporation, instead of a State agency; and the new Institute will have its own revenue source outside the State’s General Fund.

This bill increases the prominence and visibility of the State’s cultural institutions by establishing NYICE as a separate public benefit corporation with the sole purpose of developing and promoting cultural resources. The new public benefit corporation would:

• forge partnerships with Federal and local governments, nonprofit organizations and the private sector to support cultural institutions and programs across the State;
• transform the State Museum into a more vibrant, attractive and high-tech resource to showcase New York’s cultural heritage;
• increase opportunities for the State Library and State Archives to emerge as world-class information centers; and
• allow the Board of Regents to focus attention on its constitutionally assigned responsibility for oversight of the State’s education system and free the Regents from the distraction of administering ancillary functions (e.g., the State Museum, the State Library, and the State Archives).

Part D – Implement school aid reforms, including the creation of Flex Aid.

This bill contains various provisions needed to implement the Education portion of the 2002-03 Executive Budget. Accordingly, this bill contains recommendations to reform existing law, including providing school districts with increased flexibility by consolidating various existing aid programs into a new Flex Aid program, better targeting fiscal resources through changes in building aid reimbursement, advancing several mandate relief measures and accelerating prior year claims amounts owed to certain school districts. Additionally, to ensure fairness in the distribution of school aid, this bill also contains recommendations to include payments in lieu of taxes (PILOTs) made by owners of electric generating facilities to school districts in calculating local fiscal capacity for use in school aid formulas.

Flex Aid

Effective July 1, 2002, this bill amends the Education Law to:

• Allow school districts the necessary flexibility to meet educational needs and priorities identified at the local level by repealing various sections of Education Law and establishing a new, flexible operating aid program — Flex Aid. Specific existing formula/payment provisions that will be repealed or modified include: operating aid; extraordinary needs aid; tax effort aid; tax equalization aid; gifted and talented aid; public and private excess cost aid; minor maintenance aid; educationally related support services aid; operating standards aid; limited English proficiency aid; BOCES aid; and special services aid.
• Distribute prospective Flex Aid increases, within amounts appropriated, through a formula that incorporates various factors — including a poverty measure and a regional cost factor — to target funding to high needs school districts.
• Require school districts with academic achievement deficiencies, as measured by the results of the English language arts and mathematics assessments, to dedicate a portion of their Flex Aid funding to providing academic intervention services or other services designed to improve student learning and performance. This set-aside requirement would be phased-out as school district performance improves.
• Require the State Education Department (SED) to develop a performance index that would include measurements of school district performance on statewide assessments, Regents examinations and graduation rates. Beginning in 2003-04, school districts that demonstrate improved performance according to this index would be eligible to receive an Improved Performance Incentive Grant.
• Provide for certain school districts to set aside a portion of Flex Aid funding for limited English proficiency programs and also require New York City to dedicate $33.3 million of its Flex Aid allocation, the same amount that it formerly received through the minor maintenance program, to school facilities maintenance.
• Make conforming changes to numerous provisions of law reflecting the new Flex Aid program.

School Facilities/Building Aid

This bill amends subdivision 6 of section 3602 of the Education Law to provide aid to school districts for the State share of hard dollar construction projects on the basis of assumed amortization. This bill also provides school districts with access to the Dormitory Authority for construction management and other services through amendments to the Public Authorities, the Education and the Local Finance laws. Specific provisions will:

• Promote stability and predictability in the payment of building aid by replacing the existing expenditure-based reimbursement system for hard dollar projects — which are typically smaller construction projects, financed on a “pay as you go” basis — with a system whereby reimbursement of the State share of the project would be based on assumed amortization consistent with the useful life of projects. This is similar to changes enacted in October 2001 for bonded projects.
• Clarify that the refinancing costs for the State share of projects that are refinanced to conform with assumed amortization provisions are fully reimbursable.
• Provide aid for building projects approved by the local voters after July 1, 2002 according to the building aid ratio calculated at the time of State Education Department approval for aid. Reorganized school will be eligible for incentive building aid on all projects approved by voters within five years of the reorganization.
• Allow school districts access to the Dormitory Authority of the State of New York (DASNY) to provide services other than financing — such as design and construction management — to all school districts.
• Encourage cost efficiency by providing school districts with an exemption from the Wicks Law requirements that mandate the use of multiple contractors for school construction projects.

Preschool Special Education

Effective July 1, 2002 the existing restriction on the creation of new or expanded preschool programs which include only children with disabilities will be continued for three years.

Mandate Relief

Effective July 1, 2002 and April 1, 2002, respectively, this bill modifies Education Law to reduce administrative burdens on school districts and increase efficiency by:

• Expanding Wicks Law exemptions, thus simplifying the contract process for building projects and reducing construction-related expenses.
• Requiring the Commissioner to review reporting requirements for school districts in order to make recommendations to reduce such reporting.

Prior Year Claims

Effective immediately, the Municipal Bond Bank Agency would be authorized to issue debt on behalf of each of the Big 5 cities, with the authorized issuances at amounts which reflect the amounts of prior year claims owed by the State to each of the Big 5 cities and approved for payment.

PILOTs

Current law (section 485 of the Real Property Tax Law) requires that the property tax base of local school districts used for school aid computations include the “actual valuation equivalents” of PILOTs collected from owners of nuclear power generating plants. This bill amends sections 3602(1)(c) and 3602(31)(a)(7) of the Education Law to require that PILOTs received by school districts from other electric generating facilities are also converted to “actual valuation equivalents” and included in the district tax base.

Other Miscellaneous Provisions

This bill also makes other amendments to the Education Law which:

• Require SED to update its criteria for approving reorganizations of school districts;
• Ensure that changes in the Consumer Price Index cited in the Property Tax Report Card and other notices to school voters are based on consistent definitions and periods of time;
• Repeal or modify several programs, consistent with 2002-03 Executive Budget recommendations; and
• Establish a process for providing academic intervention services through a secular third-party, within amounts appropriated, to students who attend non-public schools.

Flex Aid

This bill recommends the elimination or modification of numerous provisions of law which currently govern the programs that Flex Aid will replace, including the following:

• Section 1950 of the Education Law provides for the payment of BOCES aid;
• Section 3602(12) of the Education Law authorizes State funding for operating aid and extraordinary needs aid, sets forth formulas for calculating these aids as well as formulas used to calculate numerous set-asides, and includes several provisions related to reporting requirements and planning requirements;
• Section 3602(16) of the Education Law provides for the payment of tax effort and tax equalization aid;
• Section 3602(18) of the Education Law provides for the factors used in calculating the transition adjustment;
• Section 3602(19) and Section 4405 of the Education Law provide for the payment of public and private excess cost aid for special education and set forth the formulas and factors that are used to determine the amount of such aid;
• Section 3602 (6-d), (17), (22), (23) and (32) of the Education Law provide the formulas and requirements for receiving aid through the minor maintenance, special services, limited English proficiency, gifted and talented and educationally related support services aid programs; and
• Section 3602(38) of the Education Law authorizes and provides a formula for distributing State funding for operating standards aid.

School Facilities/Building Aid

Section 3602(6) of the Education Law provides for the payment of building aid to school districts for capital costs of school facilities. Recent reforms allow for the payment of bonded projects based on assumed amortization. Current law provides that hard dollar projects are reimbursed in the year following actual expenditures.

Various sections of Public Authorities Law, including sections 1676, 1678 and 1680, authorize certain entities to avail themselves of services of the Dormitory Authority of the State of New York.

Mandate Relief

Section 305 of the Education Law enumerates the duties of the Commissioner of Education.

Section 3602 of the Education Law, as well as many other sections, authorizes educational programs and require or authorize the Commissioner of Education to require plans and reports related to these programs.

Sections 1604 (42), 1709 (25) and 2512 (7) of the Education Law authorize school districts to contract with the dormitory authority of the State of New York for financing and refinancing of school capital facilities. This bill adds construction and construction management services to this authorization and makes clear that Wicks Law bidding requirements do not apply to such contracts.

Preschool Special Education

Section 4410 of the Education Law governs the provision of preschool special education services to children, including the limitations on establishing new preschool programs that only serve disabled children.

Prior Year Claims

Section 3604(5) of the Education Law provides for the payment of prior year school aid claims in accordance with annual appropriations for such purpose and in the order that such claims have been approved by the Commissioner of Education.

PILOTs

Chapter 87 of the Laws of 2001 created a new section 485 of the Real Property Tax Law, which required that PILOTs received by school districts from nuclear power generating plants be converted into actual valuation equivalents for school aid purposes. No such provision applies to PILOTs made by non-nuclear power companies.

Other Miscellaneous Provisions

Section 314 of the Education Law provides for periodic updates of the State plan for school district reorganizations; however, this plan has not been updated in over 40 years. Section 3602(14) of the Education Law provides for financial incentives for reorganized school districts.

Chapter 507 of the Laws of 1974 provides for the payment of State funds to certain non-public schools.

Flex Aid

The proposed Flex Aid program will simplify and reduce the number of existing school aid formulas and also provide school districts with greater flexibility in the use of State aid. Under the proposed formula, over 70 percent of total school aid will be made available to school districts through flexible operating aid. This will address the need to increase the amount of flexible operating aid school districts receive so that they have the ability to target available resources to meet the educational needs of students.

Although this approach provides school districts with increased flexibility, it recognizes that schools must be held accountable for student performance. Therefore, school districts with identified educational deficiencies will be required to set aside a portion of Flex Aid to remedy these problems. Similarly, performance measures will also be used as the basis for rewarding school districts for improved educational performance.

School Facilities/Building Aid

Under this bill, changes are recommended conform State reimbursement of hard dollar facility projects with the financing of bonded projects. This will permit the State to better plan and manage cash flow for costs of school construction.

Other changes such as providing an exemption to the Wicks Law and basing building aid on the current wealth of a school district (for projects approved by local voters after July 1, 2002), will ensure that limited State resources support the most pressing school facility needs.

Mandate Relief

This bill requires the commissioner of education to review all plans and reports required of school districts to determine their continued usefulness in providing evidence of the effective use of State funds. This review is intended to streamline the administrative burden on such districts while providing the State with useful information on the use of State resources.

Currently school districts are required to issue multiple bids for school construction projects. Elimination of this mandate through the use of the Dormitory Authority of the State of New York will save school districts approximately more than 10 percent on average on the cost of building schools.

Special Education

Provisions of this bill related to preschool special education are intended to ensure that the development of any new preschool special education programs is targeted towards creating settings that educate children in the least restrictive setting that is appropriate. This is consistent with State and Federal policy which requires that disabled children should be educated with and share as many experiences as possible with their non-disabled peers. However, recognizing that there are instances when specialized classrooms serving only disabled children are needed, the State Education Department would continue to have the flexibility to approve new programs when there is a demonstrated need for such a program.

Prior Year Claims

Because the State’s current financial circumstances do not permit a significant school aid increase for the 2002-03 school year, bonding prior year claims is a way to accelerate aid to help meet the immediate financial needs of the Big 5 city school districts while limiting the impact on the State financial plan.

This mechanism will help eliminate the accumulated amount of prior year school aid claims which accrued prior to the enactment of legislation in 1996 which established a statute of limitations for the submission of school aid claims. This legislation has substantially prevented the prospective accumulation of such liabilities. In the future, the State will address such claims as they become payable.

PILOTs

Due to the recently completed deregulation of the power generation sector, valuation of the more than 100 power generating plants in the State has become more complex and subject to considerable volatility in the market. To gain some stability and predictability in their finances and to avoid costly litigation, local governments (including school districts) and power companies have sometimes made long-term agreements that result in granting property tax exemptions for power plants and establishing PILOTs. In such instances, the school districts’ taxable property value would show a reduction, with the potential for unfairly large State aid payments. Chapter 87 of 2001 addressed this issue in the context of nuclear power plants by treating PILOTs as if they were tax levies and reflecting them in calculating the tax base for school aid computations. By making that approach applicable to the owners of non-nuclear power generating facilities, this bill averts unfair redirection of school aid.

Other Miscellaneous Provisions

The existing State plan for reorganization has not been updated since 1958 and criteria used to develop the plan several decades ago do not necessarily reflect current research and understandings about school size and student achievement. This bill ensures that the Commissioner updates this plan for future reorganizations.

Continuing a process for funding of academic intervention services to non-public school students will ensure that these students have access to additional academic services as necessary. Limiting such State costs to the appropriated amount will ensure that an affordable amount is dedicated for this purpose.

Part E – Enhance the utilization of juvenile detention resources by limiting the length of stay for youth in detention facilities.

This bill will better utilize juvenile detention resources by limiting the duration of detention for persons in need of supervision (PINS) and juvenile delinquents (JDs) and requiring that the Office of Children and Family Services (OCFS) assess the need for juvenile detention capacity in certifying or re-certifying juvenile detention programs.

Effective April 1, 2002, this bill:

• adds a new subdivision to section 720 of the Family Court Act (FCA) to limit detention of a youth in a PINS proceeding to longer than 45 days without the approval of OCFS;
• adds a new subdivision to section 304.1 of the FCA to limit detention of a youth in a JD proceeding to longer than 45 days without the approval of OCFS;
• amends subdivisions 2 and 2-A of sections 530 of the Executive Law to reduce State reimbursement to counties from 50 percent to 25 percent for county expenditures for PINS and JDs held in detention for more than 45 days. State reimbursement of county detention expenditures would not be affected where the detained youth is a State charge, an alleged or convicted juvenile offender, or placed in detention by OCFS;
• requires OCFS to develop a methodology to assess the need for detention capacity and to promulgate regulations using this needs assessment as a criterion for certification or recertification of juvenile detention programs; and,
• provides OCFS with authority to promulgate on an emergency basis any regulations needed to implement the provisions of the bill.

Article 7 of the FCA governs PINS proceedings. Section 720 of the FCA establishes parameters for the detention of PINS. In cities with a population of one million or more, the court may order the detention of an alleged or adjudicated PINS in a foster care facility. Although there are expedited timeframes governing the PINS adjudication process, the statute does not set a specific limit on the duration of juvenile detention.

Article 3 of the FCA governs JD proceedings. Section 304.1 of the FCA establishes parameters for the detention of JDs. Again, as with PINS cases, although there are expedited timeframes applicable to the JD adjudication process, the statute does not set a specific limit on the duration of juvenile detention.

Section 530 of the Executive Law requires the State to reimburse counties 100 percent of their eligible expenditures for the detention of juveniles who are State charges. For other youth, the State is required to reimburse counties 50 percent of their eligible expenditures for juvenile detention. In cities with a population of one million or more, the State is required to reimburse the City 100 percent of the per diem rate set by OCFS for the foster care facility where the detained youth is a State charge, or 50 percent of the per diem rate where the detainee is not a State charge.

Section 398-a of the Social Services Law requires OCFS to establish per diem rates for care provided to foster children in foster care facilities.

Because detention is care and maintenance and not treatment, it is in the best interests of detained youth that the adjudication and dispositional process occur promptly and without undue delays. This bill reduces State reimbursement from 50 to 25 percent of county expenditures for youth who remain in detention beyond 45 days as an incentive for counties to monitor detention usage and court delays to avoid the unnecessary use of detention.

In addition, this bill is consistent with overall child welfare financing reform advanced in the 2002-03 Executive Budget. The reform proposal provides counties with 65 percent open-ended reimbursement for preventive and other related services that are essential in avoiding unnecessary reliance on detention and foster care placements.

OCFS currently is not authorized to limit the number of beds in an existing or proposed detention facility based on need. This proposal requires OCFS to develop a methodology for assessing the need for detention capacity and use that information when determining whether to certify or re-certify juvenile detention programs. Counties would be required to submit justification for requested bed capacity as part of the certification or recertification process. This will enable the State to develop and maintain detention capacity based on need, and result in a more efficient use of State and local resources.

Part F – Establish a new supplemental rental assistance program and clarify the authority of the Commissioner of the Office of Temporary and Disability Assistance to establish welfare shelter allowance levels.

This bill amends the Social Services Law to clarify that the Commissioner of the Office of Temporary and Disability Assistance has the authority to administratively establish welfare shelter allowance levels, and to establish a new supplemental rental assistance program. The bill:

• amends sections 131-a, 344 and 350 of the Social Services Law to clarify that the Commissioner of the Office of Temporary and Disability Assistance has the authority to administratively establish welfare shelter allowance levels, and to establish standards governing such levels;
• establishes a supplemental rental assistance program to provide rent supplements that are in addition to the existing public assistance shelter allowance for families that are homeless or facing eviction; and
• allows such supplemental rental assistance program to take effect in any social services district, at its request, if the Office of Temporary and Disability Assistance determines that such assistance is necessary because circumstances in the district limit the availability of housing. The need for continuing supplemental rental allowances in an individual local social services district would be subject to review not less than annually. If it is determined that such allowances are no longer necessary, households currently in receipt of allowances would be able to continue to receive the additional payments during a transition period of up to twelve months while they relocate to less costly housing.

The State Supreme Court’s decision in Jiggetts v. Grinker, which determined that the State’s administratively established schedule of welfare shelter allowances is inadequate for Family Assistance cases in New York City, was based on sections 344 and 350 of the Social Services Law. Section 131-a of the Social Services Law sets forth provisions relating to monthly grants and allowances of public assistance.

The bill is necessary, in the context of the pending Jiggetts litigation, to clarify that the Commissioner of the Office of Temporary and Disability Assistance has the administrative authority to determine the level of public assistance shelter allowances. The bill also authorizes the payment of supplemental shelter benefits when necessary to provide housing to homeless families or to prevent eviction.

The Jiggetts litigation began in 1987. On September 5, 1997, the State Supreme Court declared that the State’s schedule of welfare shelter allowances was inadequate for Family Assistance cases in New York City. In October 1999, the Court of Appeals denied the State’s request to appeal the State Supreme Court decision, ruling that a decision about the request to appeal could not be made until the trial court ruling was final and disposed of outstanding issues concerning legal fees. After the Court of Appeals decision, the case remained inactive until October 2001, when plaintiffs filed a motion asking the State Supreme Court to order the State to promulgate new shelter allowances within 60 days or determine the new allowances after holding a hearing.

If the State is forced to increase the welfare shelter allowances, it could result in an unbudgeted cost increase of substantial magnitude. This bill would moot the litigation and avoid such a cost increase by clarifying that the Commissioner of the Office of Temporary and Disability Assistance has the authority to administratively establish welfare shelter allowance levels and by establishing new and more comprehensive standards under which the Commissioner would set the allowance levels. These changes not only would protect State taxpayers against a judicially-imposed increase in welfare spending, but also would verify that the shelter allowance portion of the public assistance grant is to be set administratively by the Executive Branch rather than by the courts.

There are currently approximately 17,000 families that have intervened in the Jiggetts case and receive a court-ordered monthly shelter supplement averaging $280. In addition, there are Jiggetts-like cases underway in large upstate counties (Westchester, Nassau and Suffolk) which also have intervener processes in place. The bill would allow these persons to continue to receive current rent supplements that were granted as part of these court cases, and also would establish a new supplemental rental assistance program so that other families facing eviction because of a shortage of affordable housing could access an additional grant for shelter. In addition, the bill would allow certain homeless families to access rent supplements in order to find housing and leave shelters and hotels. At present, homeless families can receive rent supplements in Suffolk, Nassau and Westchester counties as a result of Jiggetts companion litigation specific to those districts. The bill is expected to facilitate 500 additional placements of homeless families per year. State expenditures are expected to be substantially offset through shortening of family stays in shelters and hotels.

Part G – Establish a cost of living adjustment for the STAR income eligibility ceiling, triennial renewals and simplified income verification for seniors.

This bill protects senior taxpayer STAR savings by providing a cost of living adjustment for the Enhanced STAR income eligibility ceiling, reduces senior renewal requirements for Enhanced exemptions from annually to once every three years, and further improves and simplifies the administration of the School Tax Relief (STAR) Program.

Senior Exemption Eligibility Issues

Cost of Living Adjustment for Enhanced STAR (Section 3): Effective immediately for school years beginning with 2003-2004 and thereafter, a cost of living adjustment will be made to the income eligibility ceiling for the Enhanced STAR exemption, equivalent to the increase in the Consumer Price Index used by the United States Social Security Administration to annually adjust social security benefits. This cost-of-living adjustment will ensure that modest increases in Social Security or other retirement income do not make seniors currently receiving Enhanced STAR benefits ineligible in future years.

Income Requirements and Verification (Section 3): To receive the Enhanced STAR exemption, an applicant must qualify based on his or her income for the income tax year immediately preceding the date of making application. This creates problems in jurisdictions which have taxable status dates earlier than April 15 (as most do), and also leads to unwarranted differentiation among applicants (e.g., some will submit their 2001 income tax returns with their applications for the 2002-2003 school year, and others will submit their 2000 returns, depending on when they file their applications). The bill establishes clear and uniform standards by specifying that for the 2003-2004 school year, all applicants would have to qualify based upon their 2001 incomes. The $60,000 income eligibility ceiling would be adjusted for calendar year 2001 incomes by a cost-of-living adjustment (COLA) as previously described. For each succeeding school year, the income tax year and the income ceiling, with its applicable COLA, would be advanced by one year.

Section 3 also provides renewing senior homeowners the option of authorizing the Department of Taxation and Finance to verify their income eligibility, effective in 2005. Seniors who do so would not have to furnish their income tax returns to the assessor upon renewal.

Application Renewals (Section 8): To ease the burden on seniors and assessors relative to the annual renewal process and income eligibility verification, the bill provides that applicants for the Enhanced STAR exemption would only have to renew their Enhanced exemption once every three years beginning with applications filed on the final assessment rolls completed in 2002.

Third Party Notifications (Section 5): This bill amends the process authorized by Chapter 233 of the Laws of 2001, which allowed senior homeowners to designate a third party to be notified when Enhanced STAR renewal applications are due. This bill would conform the notification process to the three-year renewal cycle and designate local assessors to administer the third-party notification process.

Filing Extensions in Hardship Cases (Section 6): The bill authorizes the filing of an application for the Enhanced exemption after the taxable status date, but on or before Grievance Day, where there was a death or illness in the applicant’s immediate family which prevented the applicant from filing a timely application. Similar flexibility currently exists in the context of the senior citizens exemption (RPTL 467(5-a)).

Non-senior Siblings (Section 2): A 1999 amendment expanded the Enhanced exemption to property owned by siblings when only one is 65 or older (Chapter 405, Part A, L.1999). It has been argued that if a senior owns property jointly with his or her non-senior sibling, the Enhanced STAR age requirement is satisfied, even if the senior primarily resides, and is receiving the Enhanced STAR exemption, elsewhere. This proposal clarifies that the property must be the primary residence of the senior sibling in order to receive an Enhanced STAR exemption.

General Eligibility Issues

Special Situations (Section 4): This bill clarifies eligibility for the STAR program for the following situations:

• Married couples with two homes: At present, if a husband and wife own two homes, they could seek two separate STAR exemptions by claiming that one home is the husband’s primary residence and the other is the wife’s. This bill clarifies that a husband and wife may receive no more than one STAR exemption, unless they are legally separated.
• Parcels with two homes: The bill provides that when a parcel contains more than one owner-occupied home, each home may receive a STAR exemption. Currently, such a parcel may receive only one exemption.
• Residences split by municipal boundaries: The bill provides that when a residential structure is located in more than one municipal corporation, the exemption must be apportioned between them in the same manner as the full value of the structure was apportioned. The law is currently silent on this point, although Counsel to the Office of Real Property Services has issued an informal opinion saying that apportionments should be done in such cases.

Procedural and Technical Issues

Exemption Terminology (Section 1): This bill amends subdivision 2 of section 425 of the Real Property Tax Law to clarify and define the terms “basic” STAR exemption and “enhanced” STAR exemption for purposes of the School Tax Relief program.

Additional Time to Revise Estimates of New York City Personal Income Tax Revenues Foregone (Bill section 13): Effective immediately, this bill amends section 54-f(3)(c) of the State Finance Law to extend from two years to three years following the initial estimate the determination period for revising the estimate of the annual amount due to be paid to New York City for tax receipts foregone as a result of Chapter 389 of the Laws of 1997, which reduced City personal income tax rates and created the State School Tax Reduction Credit, with the estimate determined in this third revision to be considered final.

Existing law relating to STAR eligibility and administrative issues appears in Section 425 of the Real Property Tax Law.

The 2001-2002 Executive Budget included similar proposals for providing a cost-of-living adjustment for the Enhanced STAR income eligibility ceiling, allowing seniors to authorize the Department of Taxation and Finance to verify income eligibility, extending the time for revising New York City personal income tax receipt estimates and other administrative clarifications. (S.1145/A.1997).

Allowing senior homeowners to renew their STAR Enhanced exemption every three years is a new proposal.

This bill will protect senior taxpayer savings and simplify the renewal process by providing a cost-of-living adjustment for the income eligibility ceiling for Enhanced STAR, extending the Enhanced exemption renewal period from annually to every three years, and allowing senior homeowners to authorize the Department of Taxation and Finance to verify their income eligibility instead of providing tax returns to local assessors.

The modifications to eligibility requirements included in the bill will open STAR more fully to homeowners and ensure the eligibility of some who were unintentionally excluded. The amendments will provide more explicit guidance to local officials in many circumstances and ensure like treatment of similar situations in the nearly one thousand different local assessing units responsible for administering the STAR exemption application process.

Adding another year to the period for revising estimates of New York City income tax receipts foregone due to STAR will provide the time necessary to receive more final tax collection data for the year and will allow the State Commissioner of Taxation and Finance to determine a more accurate estimate of the amount due to New York City.

BUDGET IMPLICATIONS:

Part A – Restructure TAP awards to provide incentives for college graduation.

Enactment of this bill is necessary to implement the 2002-2003 Executive Budget since the amount appropriated for TAP reflects the enactment of this legislation.

Part B – Improve the competitiveness of the SUNY teaching hospitals and clinics by providing additional procurement and employment flexibility.

Enactment of this bill is necessary to implement the 2002-2003 Executive budget since the transfer of $119.7 million in additional support to the SUNY hospitals is part of a strategic plan whereby the hospitals generate additional savings and revenues made possible through this flexibility legislation.

Part C – Establish the New York Institute for Cultural Education (NYICE) to assume responsibility for the State Museum, State Library and the State Archives and provide for the transfer of these programs from the State Education Department.

This bill is necessary to implement the 2002-03 Executive Budget, which discontinues General Fund support for the cultural education programs in SED and proposes dedicated revenues to fund NYICE at a level of $26 million.

Part D – Implement school aid reforms, including the creation of Flex Aid.

Enactment of this bill is necessary to implement the 2002-03 Executive Budget through establishing a framework for school aid formulas and providing for savings of $130 million during the 2002-03 school year related to changes in the financing of the State share of “hard dollar” capital projects in building aid. Additionally, prior year claims provisions will permit the acceleration of $214 million in prior year school aid claims owed by the State to the Big 5 city school districts, including $204 million for New York City.

Part E – Enhance the utilization of juvenile detention resources by limiting the length of stay for youth in detention facilities.

Enactment of this bill is necessary to implement the 2002-2003 Executive Budget. OCFS estimates that up to 10 percent of all care days currently exceed 45 days for PINS and JDs. Accordingly, State savings associated with this bill are estimated at $1 million for the 2002 calendar year with savings primarily attributable to a reduction in reimbursement for care days in excess of 45 days. As counties and the Family Court continue working to reduce detention length of stay below 45 days, full annual State savings could exceed $2 million.

Part F – Establish a new supplemental rental assistance program and clarify the authority of the Commissioner of the Office of Temporary and Disability Assistance to establish welfare shelter allowance levels.

Enactment of this bill is necessary to implement the 2002-03 Executive Budget because an increase in the welfare shelter allowances could result in a significant and indeterminate increase in welfare costs not covered by the proposed Executive Budget or State Financial Plan.

Part G – Establish a cost of living adjustment for the STAR income eligibility ceiling, triennial renewals and simplified income verification for seniors.

Enactment of this bill is necessary to implement the 2002-2003 Executive Budget. Extending the senior renewal requirements from annually to every three years and simplifying the income verification process will reduce local administrative costs. Extending the STAR exemption to a small number of currently ineligible properties should not significantly increase costs because the affected properties are already included in the U.S. Census Bureau’s estimates of owner occupancy used to formulate STAR cost estimates. Providing a cost of living adjustment to the income ceiling for Enhanced STAR would increase the future costs for the program by an estimated $10 million in 2003-04 and an additional $10 million annually thereafter.

EFFECTIVE DATE:

Part A shall take effect April 1, 2002; provided, however, if this act shall become a law after such date it shall take effect immediately and shall be deemed to have been in full force and effect on and after April 1, 2002 and shall apply to academic years starting July 1, 2002 and thereafter.

Part B shall take effect April 1, 2002.

Part C shall take effect April 1, 2002, and the transfer of functions from SED to NYICE shall take effect July 1, 2002.

Part D shall take effect July 1, 2002, except that selected provisions will take effect immediately or other specified dates.

Part E shall take effect April 1, 2002; provided, however, if this act shall become a law after such date it shall take effect immediately and shall be deemed to have been in full force and effect on and after April 1, 2002.

Part F shall take effect on the sixtieth day after it shall have become a law; provided that subdivision 4 of section 131-aa of the Social Services Law, as added by section 1 of this part, shall expire and be deemed repealed 3 years after such effective date.

Part G shall take effect immediately, and sections 1 through 11 of this part shall apply to the administration of the STAR exemption authorized by section 425 of the Real Property Tax Law beginning with final assessment rolls to be completed and filed in 2003, provided, that for purposes of administering the STAR exemption on final assessment rolls to be completed in 2002, the provisions of section 425 of the Real Property Tax Law that shall have been in effect on the last day preceding the effective date shall continue in effect as if not repealed by this act.

Article VII Education, Labor and Family Assistance Bill (S.6258/A.9760)