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NYS Division of the Budget: Andrew M. Cuomo, Governor; Robert L. Megna, Budget Director Division of the Budget Home Page

NYS Division of Budget

Andrew M. Cuomo, Governor
Robert L. Megna, Budget Director

2010-2011 Executive Budget – Briefing Book


Education and Arts

  • State Education Department
  • Council on the Arts

I. Overview

New York maintains its strong commitment to quality public education through support from all levels of government. Our education system is financed with local, State and Federal resources, which together make New York's per pupil spending among the highest in the nation, even in these difficult financial times.

The State share of financial support for education is administered by the State Education Department (SED), under the direction of the New York State Board of Regents, which also establishes education policy. The stated purpose of the agency is to “provide knowledge and skills to all,” which it accomplishes through its oversight and administration of a wide array of programs that serve both children and adults.

The single largest program administered by SED is School Aid. Allocated to school districts primarily through statutory formulas, School Aid helps finance elementary and secondary education for pupils enrolled in nearly 680 school districts. To achieve necessary State savings, this budget recommends a progressively structured reduction to overall School Aid, while providing school districts with new ways to control expenses and access existing resources.

SED also has oversight responsibility for a range of programs that provide funding and education-related services to the citizens of this State. This includes support for cultural education, higher education, vocational rehabilitation programs, and special education services.

The New York State Council on the Arts (NYSCA) is an executive agency dedicated to preserving and promoting New York's heritage of rich and diverse cultural resources and expanding access to arts and cultural institutions statewide. Additionally, NYSCA provides advisory services and financial assistance to the State’s arts community.

II. History/Context

New York public schools spend more per pupil overall ($15,546) than nearly any other state and 61 percent above the national average. New York ranks first in per pupil spending for school district employee salaries ($7,328, or 71 percent above the national average) and benefits ($2,901, which is 109 percent above the national average). This reflects both strong local tax effort and significant State spending on education.

In recent years, during the Wall Street boom, School Aid increased at a rapid and unsustainable rate. Even after the year-to-year reduction to School Aid proposed in this Executive Budget, State support for education would still have increased by $6.1 billion or 42 percent compared to 2003-04 – twice the rate of inflation (19 percent) during that period.

Although the economic downturn began more than two years ago, New York has, thus far, been able to avoid year-to-year cuts to education. At the same time, other states facing budgetary pressures similar to New York have been forced to take major current-year actions affecting schools:

  • 20,000 teachers were laid off in California;
  • Michigan has implemented an across-the-board per pupil funding cut;
  • Illinois has made cuts to its prekindergarten and after-school programs;
  • New Mexico implemented a plan that would cut take-home pay of public school teachers by 1.5 percent;
  • Mississippi cut its Adequate Education Program; and
  • Utah and Hawaii have shortened their school years.

Now, however, with education funding representing over 34 percent of State Operating Funds spending and the State continuing to face massive budget gaps, reductions in overall School Aid support are required. The 2010-11 Executive Budget therefore recommends a year-to-year reduction in School Aid of $1.1 billion or five percent. As education funding in New York is a combination of local and State support, the proposed reduction represents two percent of school districts’ total general fund expenditures statewide.

When faced with fiscal hardships, previous governors have proposed deep reductions to School Aid. The 1991-92 Executive Budget proposed a 10.2 percent cut to total School Aid. In order to manage the financial consequences of September 11, 2001, the 2003-04 Executive Budget included an 8.5 percent reduction to School Aid. Presented with an even greater financial challenge, this proposal seeks to limit reductions to education to five percent.

The Executive Budget also recommends several reforms to help school districts responsibly manage necessary reductions in State funding while minimizing any potential impact on property taxpayers. This budget would allow school districts to utilize excess funds in their employee benefit reserve funds. These amounts are in addition to the nearly $1.5 billion in undesignated reserves reported by school districts.

Additionally, the Executive Budget provides school districts with new flexibility to manage expenses and relief from certain State mandates. This proposal provides schools with a statewide exemption to the Wicks Law, which would save more than $200 million in annual capital costs, and allows for streamlined reporting processes. This budget also places a four-year moratorium on new statutory mandates and requires SED to implement a new regulatory review process intended to deter the promulgation of unfunded State mandates affecting school districts.

III. Proposed 2010-11 Budget Actions

This proposal achieves necessary savings through a 2010-11 year-to-year reduction in School Aid of $1.1 billion on a school year basis. This five percent year-to-year decrease would be achieved through several actions:

  • The Executive Budget recommends maintaining operating formula aid categories at current levels. The largest formula aid category is Foundation Aid, which at $14.9 billion has grown by 19 percent since 2006-07. The 2010-11 Executive Budget also extends the existing statutory freeze on Foundation Aid for one year through 2011-12. Additionally, the full phase-in of Foundation Aid would now take place over a ten-year period (complete in 2016-17) rather than the seven-year period assumed in current law.

    Other individual aid categories would also be continued at the same level in 2010-11 as is currently being provided, including Universal Prekindergarten. Funding for Universal Prekindergarten has grown by 35 percent since 2006-07.
  • The Executive Budget recommends a one-time $1.4 billion reduction to certain formula-based School Aid categories. This is comprised of a one-year $2.1 billion Gap Elimination Adjustment for the 2010-11 school year, partially offset by the use of the remaining $726 million of the American Recovery and Reinvestment Act (ARRA) State Fiscal Stabilization Fund - Education Fund award. The reduction is structured so that a low-wealth district will face a smaller percentage cut than a higher-wealth district. In addition, the GEA is adjusted for student need, administrative efficiency, and residential tax burden.
  • This $1.4 billion GEA and other reductions totaling $41 million are partially offset by $367 million of growth in existing expense-based aids (such as Building Aid, Transportation Aid and BOCES Aid) in accordance with current statutory formulas and expected reimbursement claims.

The Executive Budget seeks to maximize use of Federal funds. In addition to using Federal ARRA funds to partially offset the GEA, this proposal increases the use of Federal funds to help support special education programs funded outside of School Aid. This budget also includes an appropriation of $750 million in anticipation of a successful application for competitive funds through the Federal Race-to-the-Top program. Although this Federal funding would not provide direct fiscal relief to the State, it would provide additional resources to school districts and the State Education Department to fund educational improvements, statewide.

Reimbursement for categorical special education programs has been modified to align fiscal and programmatic responsibility, and funding for certain other education-related programs are reduced or eliminated to avoid other reductions in direct aid to school districts.

This overall funding proposal maintains New York's strong commitment to education aid. The total recommended 2010-11 School Aid amount of $20.5 billion would be $3.4 billion more than if spending were limited to inflation growth since 2003-04. More than 67 percent of all 2010-11 School Aid would be used to benefit students in high needs school districts.

IV. Summary of Spending (All Funds)

Category 2009-10
($ in millions)
2010-11
($ in millions)
Change
Dollar
(in millions)
Percent
School Aid (School Year) 21,613 20,527 (1,086) (5.0)
Overall Education and Arts Spending (Fiscal Year) 28,562 28,012 (550) (1.9)

 

Estimated 2009-10
School District
Total General
Fund Expenditure (TGFE)
($ in billions)
Year-to-Year
Reduction in Total
School Aid
($ in billions)
Year-to-Year
Reduction in Total
School Aid as a
Percentage of TGFE
52.1 B 1.1 B 2.1%

V. Major Initiatives

Gap Closing Actions

Proposal 2010-11
($ in millions)
Fiscal Year
2011-12
($ in millions)
Fiscal Year
School Aid
Reduce School Aid through a Gap Elimination Adjustment (2010-11 SY: $2,138 million) 1,496 641
Eliminate Funding for Teacher Centers (2009-10 SY: $35 million) 25 35
Reduce Supplemental Funding to the Roosevelt Union Free School District (2009-10 SY: $6 million) 4 6
Delay Phase-in of Foundation Aid and Universal Prekindergarten 0 730
Total 1,525 1,412
Other Education and Education Related Programs
Consider Wealth as a Factor in Reimbursing Summer School Special Education Costs (2010-11 SY: $86 million) 68 28
Use Federal Funds for Preschool Special Education 61 0
Reduce Funding for Comprehensive Attendance Program for Nonpublic Schools 2 2
Eliminate Funding for Schools Under Registration Review (SURR) Grants 2 2
Reduce Funding to Independent Colleges and Universities (Bundy Aid) 1 1
Total 134 33
Arts
Reduce Funding for Arts Grants 7 7
Total 7 7
State Operations
Require NYSTI and The Egg to Become Self-Supporting 2 4
Additional Agency Reductions 5 5
Total 7 9

School Aid

  • Reduce School Aid Through a Gap Elimination Adjustment (GEA). The Executive Budget recommends a school year-to-school year reduction in School Aid of $1.1 billion (five percent). This proposed reduction represents two percent of school districts' total General Fund expenditures statewide. Even after the year-to-year reduction to School Aid proposed in this Executive Budget, State support for education would have increased by $6.1 billion since 2003-04, a growth of 42 percent.

    The proposed total School Aid amount of $20.5 billion is achieved through a one-year $1.4 billion reduction in formula-based aids. This reduction is comprised of a $2.1 billion reduction in State General Fund support, partially offset by the use of the remaining balance of $726 million from the Federal ARRA State Fiscal Stabilization Fund - Education Fund. This reduction is structured so that a low-wealth district would take a smaller percentage cut than a higher-wealth district. In addition, the GEA is adjusted for student need, administrative efficiency, and residential tax burden. The GEA is applied against formula-based School Aid, excluding Building Aid and Universal Prekindergarten. Growth of $367 million in expense-based aid is also expected, bringing the overall reduction to $1.1 billion. (2010-11 School Year Savings: $2.1 billion; 2011-12 School Year Savings: $0; 2010-11 State Fiscal Year Savings: $1.5 billion; 2011-12 State Fiscal Year Savings: $641 million)
  • Eliminate Funding for Teacher Centers. Funding for this discretionary grant program, which offers both online and classroom-based professional development activities for school personnel, is eliminated. In addition to program revenues, Teacher Centers were funded through the State Fiscal Stabilization Fund - Other Government Services in 2009-10. This Federal funding has been redirected to help finance a portion of the State's costs for preschool special education. (2010-11 School Year Savings: $35 million; 2011-12 School Year Savings: $35 million; 2010-11 State Fiscal Year Savings: $25 million; 2011- 12 State Fiscal Year Savings: $35 million)
  • Reduce Supplemental Funding to the Roosevelt Union Free School District. The Executive Budget reduces this Supplemental Education Grant from $12 million to $6 million due to the school district’s improved fiscal circumstances as reported by the Office of State Comptroller. The $6 million reduction in the Academic Improvement Grant reflects the elimination of Federal ARRA funding for this program. This Federal funding has been redirected to help finance a portion of the State's costs for preschool special education. (2010-11 School Year Savings: $6 million; 2011-12 School Year Savings: $6 million; 2010-11 State Fiscal Year Savings: $4 million; 2011- 12 State Fiscal Year Savings: $6 million)
  • Delay Phase-in of Foundation Aid and Universal Prekindergarten. Funding for a number of individual aid categories that provide operating support to school districts, including Foundation Aid and Universal Prekindergarten would be continued at the same level in 2010-11 and 2011-12 as is currently being provided. Additionally, the full phase-in of Foundation Aid would now take place over a ten-year period (complete in 2016-17) rather than the seven-year period assumed in current-law. (2010-11 School Year Savings: $0, 2011-12 School Year Savings: $1 billion; 2010-11 State Fiscal Year Savings: $0 million; 2011- 12 State Fiscal Year Savings: $730 million)

Other Education and Education-Related Programs

  • Consider Wealth as a Factor in Reimbursing Summer School Special Education Costs. The 2010-11 Executive Budget proposes to more closely align State reimbursement to school districts for summer school special education costs with wealth-based aid ratios used during the regular school year. Additionally, the priority of payment would be for claims from the 2009-10 school year, with State reimbursement for costs incurred prior to the 2009-10 school year limited to $50 million during the upcoming fiscal year. (2010-11 Fiscal Year Savings: $68 million; 2011-12 Fiscal Year Savings: $28 million)
  • Use Federal Funds for Preschool Special Education. The Executive Budget recommends use of one-time Federal ARRA funding to forestall reductions in State support for preschool special education. Total ARRA funding for preschool special education is increased to $194 million to maintain the State commitment to this critical program. (2010-11 School Year Savings: $61 million; 2011-12 School Year Savings: $0)
  • Reduce Funding for the Comprehensive Attendance Program (CAP) for Nonpublic Schools. Under the Executive Budget, annual reimbursement to nonpublic schools for the costs of the CAP program would be reduced by $1.5 million. Nonpublic schools would continue to receive $109 million in aid for mandated services, including traditional attendance-taking as well as other mandated activities. (2010-11 Fiscal Year Savings: $1.5 million; 2011-12 Fiscal Year Savings: $1.5 million)
  • Eliminate Funding for Schools Under Registration Review (SURR) Grants. The Executive Budget proposes to eliminate separate State funding for SURR grants. (2010-11 Fiscal Year Savings: $2 million; 2011-12 Fiscal Year Savings: $2 million)
  • Reduce Funding to Independent Colleges and Universities (Bundy Aid). The Bundy Aid program provides unrestricted financial assistance to New York’s independent colleges and universities based on the number and type of degrees conferred at each institution. The Executive Budget recommends a $700,000 reduction to Bundy Aid. This is in addition to the recurring impact of a $1.9 million reduction to this program included in the 2009-10 Deficit Reduction Plan. After savings actions, $39 million in funding is recommended for Bundy Aid in fiscal year 2010-11. (2010-11 Fiscal Year Savings: $0.7 million; 2011-12 Fiscal Year Savings: $0.7 million)

Arts

  • Reduce Funding for Arts Grants. NYSCA awards over 2,300 competitive grants to not-for-profit arts and cultural organizations annually, including theatres, museums, and musical performance organizations. The Executive Budget recommends a $6.5 million reduction to these grants. This is in addition to the recurring impact of a $1 million reduction to the program included in the 2009-10 Deficit Reduction Plan. After savings actions, $35.2 million in funding is recommended for arts grants in fiscal year 2010-11. (2010-11 Fiscal Year Savings: $6.5 million; 2011-12 Fiscal Year Savings: $6.5 million)

State Operations

  • Require New York State Theatre Institute (NYSTI) and the Empire State Plaza Performing Arts Center (The Egg) to Become Self-Supporting. These two public benefit corporations have similar missions to promote appreciation for the arts through dance, theatre and artistic presentations. In prior years, NYSTI received $3.1 million in State funding and The Egg received $600,000 in State funding. These subsidies supplement revenue generated through ticket sales, donations and sponsorships. The Executive Budget phases out the State subsidy for NYSTI and eliminates the subsidy for The Egg. Both institutions would be expected to fully support their operating budgets through non-State revenue sources. (2010-11 Fiscal Year Savings: $2.1 million; 2011-12 Fiscal Year Savings: $3.6 million)
  • Additional Agency Reductions. The Executive Budget recommends an additional $4.7 million reduction in available funding to the operations of SED and an additional $600,000 reduction to the operations of NYSCA. The agencies would manage the reductions through strict limits on staffing, improved procurement of energy, vehicles, supplies, equipment, technology, and other services, the development of shared services and other actions. (2010-11 Fiscal Year Savings: $5.3 million; 2011-12 Fiscal Year Savings: $5.3 million)

Other Budget Actions

Reduce Mandates on School Districts. Legislation would be advanced as part of the budget to reform a system that has produced an overly burdensome system of State mandates. Further, the Executive Budget would provide relief from certain existing mandates to assist school districts in controlling costs and adjust to the changing economic climate. These school district-specific actions are in addition to a broader package of local government mandate relief proposals that would address procurement reform and pension costs. Elements of the proposal include:

  • Four-Year Moratorium on Unfunded Statutory Mandates. This proposal would help school districts avoid future cost increases.
  • State Education Department Regulatory Reform. This proposal would apply the same requirements regarding regulatory adoption procedures to the State Education Department that currently apply to other State agencies via Executive Order 17 issued in 2009. These requirements include the preparation of a fiscal note including local impacts and a cost-benefit analysis, as well as identification of a funding source for any new regulations or legislation.
  • School District Exemption from the Wicks Law. The Executive Budget proposes to repeal multiple bidder requirements for school districts. This would provide long-term capital and debt service savings to school districts and the State. This recommendation is expected to generate $200 million in annual capital savings to school districts, and the resulting debt service savings would provide savings to school districts as well as the State, which provides reimbursement through building aid.
  • Reduce Paperwork. This proposal streamlines existing reporting requirements and eliminates required reports that are deemed to be outdated or no longer serve a public policy purpose. School districts would also be allowed to file reports electronically unless restricted by the Commissioner. In addition, the Department would develop one consolidated reporting system that captures all information required by New York State or collected by the State for the Federal government.
  • Reform Procurement Practices. School districts would be provided with greater flexibility to purchase from existing contracts held by other government entities and allowed to purchase based on “best value”, the most advantageous balance of price, quality and performance. The State already has the ability to purchase in this manner.
  • Authorize Regional Student Transportation. School districts would be able to reduce expenses by contracting with other entities, including school districts, counties and municipalities to provide more efficient student transportation and to partner together on school bus maintenance.
  • Other Mandate Reform. With Federal laws ensuring that each school district provides appropriate educational space for students with disabilities in the least restrictive environment, State reporting requirements for special education space planning are now duplicative and can be repealed without impact. Also, Federal law now mandates transition planning requirements for children who no longer receive special education services. Therefore, certain duplicative State requirements for transition notification can be repealed.
  • Maintain the Contract for Excellence Program. In recognition of the fiscal circumstances facing the State and the suspension of increases for Foundation Aid, the provisions of the Contract for Excellence program are maintained for the 2010-11 school year consistent with the 2009-10 provisions. All districts currently in the program would be required to continue in the program with a reduced financial liability unless all school buildings in a school district are reported as “In Good Standing” for purposes of the State accountability system. This approach would ensure participation of 25 school districts including all “Big 5” city school districts. Seven school districts that participated in the Contract for Excellence program in the 2009-10 school year would leave the program for the 2010-11 school year since they have mitigated their academic issues and are “In Good Standing.” The school districts that remain in the program would be required to maintain funding for existing Contract for Excellence programs less the percentage reduction in the Gap Elimination Adjustment.
  • Allow Access to Employee Benefit Accrued Liability Reserve Funds. A school district’s governing board would be permitted to authorize a withdrawal of excess funds in an employee benefits accrued liability reserve fund in order to maintain educational programming during the 2010-11 school year. The amount withdrawn could not exceed the Gap Elimination Adjustment for a school district. The State Comptroller would first certify that the withdrawal amount is in excess of the amount required for employee benefits.
  • School District Charter School Payments. In recognition of the freeze in Foundation Aid for the 2010-11 school year, the per pupil charter school payments made by school districts to charter schools will be maintained at current levels. The 2009-10 State Budget initiated a one year freeze on these per pupil charter school payments. The 2010-11 Executive Budget will extend that freeze for one additional year.
  • Contingency Budget Calculation. This proposal would prevent mandatory negative spending growth for school districts that are operating under a contingency budget by limiting the spending cap calculation to no less than the previous year’s spending levels. The current statutory provisions for the calculation of the contingency budget cap does not account for a period of deflation, which may apply to the 2009 calendar year.

Limit Growth in County Costs for the Preschool Special Education Program. In order to better align fiscal and programmatic responsibilities and limit expenses for counties, school districts will be responsible for any year-to-year growth in county costs exceeding two percent. Cost increases would be moderated by encouraging the use of nearby providers and by more timely State action on local audits.


Supporting Documents:

Description of 2010-11 New York State Executive Budget Recommendations for Elementary and Secondary Education (PDF, 2.08MB)

School Aid Runs published by the State Education Department (PDF, 5.02MB)

 

    Briefing Book Table of Contents    |    Entire Briefing Book (PDF)

 

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