Meeting of the Board of Regents | June 2008
THE STATE EDUCATION DEPARTMENT / THE UNIVERSITY OF THE STATE OF NEW YORK / ALBANY, NY 12234
Subcommittee on State Aid
Recommendations from The New York State Commission on Local Government Efficiency and Competitiveness and The New York State Commission on Property Tax Relief
June 4, 2008
2 and 5
Issue for Discussion
How would the recommendations from The New York State Commission on Local Government Efficiency and Competitiveness and The New York State Commission on Property Tax Relief impact on school districts and BOCES?
Reason(s) for Consideration
This question will come before the Subcommittee on State Aid for discussion at its June 2008 meeting.
The Regents Subcommittee on State Aid began its discussion about the development of the Regents 2009-10 State Aid proposal at its May 2008 meeting. Subcommittee members requested information on the recommendations included in the reports issued by the New York State Commission on Local Government Efficiency & Competitiveness and The New York State Commission on Property Tax Relief.
The New York State Commission on Local Government Efficiency and Competitiveness was established in April 2007 to examine ways to strengthen and streamline local government, reduce costs and improve effectiveness, maximize informed participation in local elections, and facilitate shared services, consolidation and regional governance. The Commission was chaired by former Lt. Governor, Stan Lundine. In January 2008, Chairman Lundine met with the Regents to discuss the work of the Commission and the recommendations that were being developed. Consistent with that discussion, the final report was issued in April 2008 and contains a number of recommendations relating to education, primarily pertaining to school districts and BOCES.
The New York State Commission on Property Tax Relief was established in January 2008 and charged with examining, investigating and recommending “the most effective approach to imposing a limit on local school property tax growth in New York State without adversely impacting the ability of school districts to provide a quality education to all students.” The Commission was charged with developing a package of reforms to address unfunded mandates and other root causes of high property taxes, as well as developing proposals to make the property tax relief system more equitable for middle-class property owners. The Commission was chaired by Nassau County Executive, Tom Suozzi. Vice Chancellor Merryl Tisch is a member of the Commission. The Commission’s preliminary report was released on June 3, 2008. A final report is due by December 1, 2008.
Timetable for Implementation
21st Century Local Government:
Report of the New York State Commission on
Local Government Efficiency & Competitiveness
The Report of the New York State Commission on Local Government Efficiency and Competitiveness contains a number of recommendations relating to education, primarily pertaining to school districts and BOCES. The key recommendations are essentially the same as those that Chairman Stan Lundine discussed with the Regents in January. The final report and the legislative initiatives that the Commission wishes to pursue, inclusive of proposals relating to school districts and BOCES, can be obtained at: http://www.nyslocalgov.org/report_page.asp.
There are recommendations in the report that would affect libraries, such as the recommendation that all governmental elections be held on either the general election day in November or the school district uniform voting day in May. Many public libraries conduct their votes on the uniform voting day, but many others do not. Beyond that, the proposals to consolidate cities and towns and villages and towns would affect any public libraries that were formed by, or receive support from, the municipalities being merged. Otherwise, there are no recommendations in the report that relate directly to libraries.
There are, however, many recommendations relating to school districts, some of which are recommended for legislative action and some of which are proposed for possible future action. The following is a summary of the key recommendations pertaining to schools:
1) Provide the Commissioner of Education with authority to order consolidation of school districts without voter approval based on factors such as size of the school district, declining enrollment, poor academic performance, ability to realize fiscal savings and high tax burden. The order would be subject to approval of the Board of Regents after a public hearing in the area affected by the reorganization.
2) Establish restructuring committees in each BOCES, with representatives of parents, administrators, school board members, teachers and the public to make recommendations on possible reorganizations.
3) Temporarily suspend building aid to school districts identified by the Commissioner or a BOCES restructuring committee as in need of reorganization, but fail to reorganize.
4) Authorize regional collective bargaining through BOCES for their component school districts.
5) Authorize the establishment of new central high school districts on a statewide basis (current law limits new CHS to Suffolk County) and/or authorize the establishment of regional high schools operated by BOCES.
6) Authorize the Big 4 large city school districts to participate in BOCES.
7) Amend State law to eliminate distinctions between common, union free, central and small city school districts. (Deferred-no immediate action)
8) Reevaluate the school aid incentives for reorganization to provide significant incentives for consolidation. (Deferred-no immediate action)
9) Encourage the use of BOCES to provide "back-office" functions (school business and management services) for school districts through a demonstration project to serve as a model for other regions.
10) Encourage the use of BOCES to provide nonpublic school transportation for component school districts through demonstration projects.
The New York State Commission on Property Tax Relief
The New York State Commission on Property Tax Relief is a bipartisan commission charged with examining, investigating and recommending “the most effective approach to imposing a limit on local school property tax growth in New York State without adversely impacting the ability of school districts to provide a quality education to all students.” The Commission was charged with developing a package of reforms to address unfunded mandates and other root causes of high property taxes, as well as developing proposals to make the property tax relief system more equitable for middle-class property owners.
The Commission was chaired by Nassau County Executive, Tom Suozzi. Commission members included, among others, Vice Chancellor of the New York State Board of Regents, Merryl Tisch, who abstained from supporting the recommendations of the Commission.
Resources supporting the Commission’s work include: Office of Real Property Services; Division of Budget; Department of Taxation and Finance; State Education Department; Governor’s Office of Regulatory Reform; Governor’s Office of Employee Relations; Department of State; Office of the State Comptroller; Commission Local Government Efficiency and Competiveness.
The preliminary report was released on June 3, 2008 and can be accessed at: http://www.cptr.state.ny.us/
A Summary of the Recommendations, from Appendix 2 of the Report, includes:
1) Principle Recommendation: Implement a Property Tax Cap to limit the growth of school property taxes.The cap would have these elements:
The levy cap would be set at 120 percent of CPI or 4 percent increase, whichever is lower: This is the same formula that applies to the current contingency budget that goes into effect when school budgets fail to pass. Unlike the levy cap in Massachusetts, which is established in law at 2.5 percent, this formula is somewhat higher and allows some flexibility for inflation.
2) New construction should be added to the levy limit:
The construction of new homes and businesses, and major additions and renovations of existing buildings expand the school district's tax base without affecting existing taxpayers. This new growth should be added to the levy cap each year. In the three years ending in 2007, the median annual growth from net new construction in New York has exceeded one percent statewide.
3) “Banking” unused Levy Cap:
If the maximum levy growth permitted under the cap is not used in a given year, the unused portion would be “banked” and may be used in any future year to increase the levy by up to 1½ percent. This provides an incentive to save tax capacity for future years.
4) Separate capital expense / debt service vote:
Capital items – either as a one-time expense or debt service – would continue to be authorized by public vote, and would not be included within the levy cap. If approved by voters, such exceptions would last until payment for the capital item is completed.
5) Budget Votes Limited to Overrides:
The current school budget voting process would be replaced by a cap override vote. School districts would not have to submit their budgets to the voters in years when the tax levy growth does not exceed the levy cap. Levy growth in excess of the levy cap would have to be approved by the voters. By not requiring a vote when the tax levy growth is within the cap, the votes that do take place will take on a greater significance.
6) State Aid growth affects override vote margin:
The vote required to override the levy cap would be contingent on state aid growth by district. If the annual growth for a district of specified core state aid programs is at least 5 percent in the current year, the vote needed to override the levy cap would be 60 percent. If annual growth of state aid is less than 5 percent, a 55 percent vote would be needed to override the levy cap. This assumes that state school aid funding decisions would be reached sufficiently in advance of school budget decisions and the public votes.
Voters could also place on the ballot an “underride” vote to keep the levy growth to a level beneath the calculated levy cap.
8) Dependent Districts:
The Big Five cities (New York City, Buffalo, Rochester, Syracuse and Yonkers) have “dependent” school districts within their city budgets. As a result, Big Five property taxes are not specifically earmarked for education. Thus, a property tax cap applying only to school funding in those cities would require special design considerations, which need to be studied further.
9) Circuit Breaker:
Restructure STAR to fund a new “Star Circuit Breaker” to target individual tax relief.
10) Changing State Law and Mandate Relief/New Mandates:
- No new legislative mandates without a complete accounting of the fiscal impact on local governments, which must include full documentation, local government input and proposed revenue sources to fund the new mandates.
- No new regulatory mandates from the State Education Department without a complete accounting of the fiscal impacts on local governments, which must include full documentation, local government input, and proposed revenue sources to fund the new mandates.
- Mandate accountability through an annual report the Office of the State Comptroller, which should include the cumulative cost to localities of complying with all new regulatory and legislative mandates.
11) Existing Mandates:
- Amend the Triborough provision of the Taylor Law to exclude teacher step and lane increments from continuation until new contracts are negotiated.
- Centralize and streamline school district reporting.
- Create a Commission task force on other State mandates to research other reforms between now and the Commission’s final report (December 1, 2008).
12) Adopt the twelve recommendations of the NYS Commission on Local
Government Efficiency and Competitiveness (LGEC).
13) Recommendations Supplemental to the LGEC Report:
- Require school district reporting on collective bargaining outcomes.
- Convene a study to evaluate creating a new Tier 5 within the pension system.
- Rescind the statutory cap on the BOCES district superintendent salaries.
- Establish a BOCES statewide energy purchasing program to save energy costs.
- Establish Uniform Statewide Assessing Standards.
14) Special Considerations:
- Create a Commission Task Force on Fiscally Dependent School Districts for the Big Four cities.
- Create a Commission Task Force on Special Education.