School Aid Budgets

• Foundation Aid Formula: As with the current year, the budget allocates the vast majority of operating aid through the Foundation Aid Formula, which uses objective criteria to better target State funds to high needs districts, and is tied to the Contracts for Excellence accountability measures created last year. Foundation Aid represents $14.5 billion of total school aid, and will increase of $899 million or 6.59 percent from 2007-08.
• Cumulative Increase: The cumulative increase delivered to districts over the last two years would total $3.18 billion or 17.8 percent under this proposal.
• Contracts for Excellence: The Budget refines the Contracts for Excellence accountability initiative to ensure that these guidelines apply to districts’ annual expenditures for at least three years once they have qualified for the program. Districts that make adequate yearly progress in school improvement would no longer be subject to these requirements. Additionally, programs to aid English Language Learners meet grade level requirements have been added to the other approved uses of Contract for Excellence funding. These include: lowering class size, increasing student time on task, providing full-day prekindergarten, expanding teacher quality initiatives, and restructuring middle or high schools.
• Other Aid Categories: Two aid categories were revised to use wealth factors to allocate funding in a manner more similar to the Foundation Aid Formula: High Tax Aid, which is provided to districts where the property tax burden is high relative to income; and BOCES Aid. After these changes, overall BOCES funding will total $595 million, a year-to-year decrease of $31 million, while High Tax Aid will be $100 million, the same level as 2007-08. These changes will better target funds to high-needs and average-needs districts.

Foundation Formula Revisions

At the time the 2007-08 Budget was enacted, funding for Foundation Aid was expected to increase by $1.25 billion in 2008-09. Several factors combined to change this projection.

Updated wealth and demographic information reported by school districts, which are components of the Foundation Formula, significantly altered the amount and distribution of this category of aid, which would have totaled $992 million in 2008-09 if no other actions were taken.

Reflecting the difficult fiscal circumstances facing the state, the Executive Budget recommends adjusting the projected expansion of Foundation Aid, saving $93 million in the 2008-09 fiscal year. These changes to the formula, which would bring the total increase to $899 million, include:

• Enhancing the Foundation Aid Formula to ensure that high needs school districts continue to receive the greatest increases in Foundation Aid;
• Decreasing the minimum increase in total Foundation Aid that a school district can receive from 3 percent to 2 percent, and decreasing the maximum increase from 25 percent to 15 percent; and
• Decreasing the second year phase-in of the program from 42.5 percent of the planned four year increase to 37.5 percent.

The Budget includes certain additional aid streams that partially offset the reduction in Foundation Aid. Specifically, the Budget includes $179 million in Academic Achievement Grants for New York City, $100 million in High Tax Aid for districts statewide and $39 million of incremental Special Services funding – primarily for the Big 5 cities. When the $318 million from these additional aid streams is added to the $899 in Foundation Aid in the Executive Budget, it represents an aggregate of $1.2 billion in operating support.

Other education initiatives contained in the Executive Budget include:

• Universal Pre-Kindergarten: The Budget provides $452 million in funding for Universal Prekindergarten. This represents a $79 million increase compared to projected spending on that program in 2007-08, and would support 120,000 students receiving these services, an increase of over 27,000.
• Healthy Schools: The Budget increases reimbursement to schools for the expansion of access to nutritious meals – particularly for low-income students – by $9 million for the 2008-09 school year in support of a Healthy Schools Act.
• Pre-school Special Education: The Budget caps the annual growth in local preschool special education costs for counties outside of New York City. Under this initiative, counties will realize savings of $31 million in their 2009 fiscal year. Additionally, school districts will be required to assume a portion of the costs associated with administering committees on preschool special education (CPSEs) and providing student evaluations. These actions are consistent with the principles articulated by the Temporary Task Force on Pre-school Special Education created in last year’s budget.