The Honorable the Members of the Board of Regents


James A. Kadamus


Full Board


State Aid to School Districts


April 6, 2004




Policy Evaluation


Goal 5






            Attached for your review and discussion is a comparison of three proposals concerning State Aid to school districts for school year 2004-05: the Regents, Campaign for Fiscal Equity, and the Governor’s Commission on Education Reform, submitted by Chairman Frank G. Zarb.


These three proposals are striking for the number of common elements that they contain.  Except as noted in parentheses, all three proposals:


·        Require a statewide solution, not just new funding for New York City

·        Recommend a multi-year phase in of new funding system

·        Simplify the aid system, especially through consolidation of aids

·        Focus on aid for school operation and maintenance

·        Base costs on Regents standards

·        Base funding on actual costs of educating students

·        Adjust costs over time (Regents, CFE)

·        Provide an adjustment for variations in purchasing power around the State

·        Tie finance reform to a measure of accountability

·        Provide a measure of tax relief or tax equity (Regents, CFE)

·        Improve early childhood education (CFE, Zarb)

·        Recommend an increase in the billions of dollars

·        Separate aid for high-cost students with disabilities


Differences in the proposals are also significant.  The key differences are:

·        Whether to include aid for at-risk students together with aid for the instruction of all students;

·        Whether to include aid for students with disabilities together with aid for the instruction of all students;

·        Whether proposed changes concern total aid (with some measured degree of loss) or simply the increase in aid (and no loss); and

·        Whether or not to mandate the local share and how to enforce such mandate.




A Comparison of Proposals on State Aid to School Districts for School Year 2004-05



Regents Proposal

CFE Proposal

Zarb Commission

What’s proposed?

Foundation formula based on the cost of education

Some recommendations on Building Aid and other aids

Foundation formula based on the cost of education

Aid for tax relief

Aid for school construction

Simplified funding based on a cost study (including a proposed Basic Operating Aid)

What is the proposed increase?

State Aid only

$880 million (2004-05)

$6 billion (2004-05 if foundation aid fully implemented)


$9.5 billion (State Aid for full implementation in 2004-05 dollars)

Federal, State and Local funding.

First-year funds to focus on new planning & accountability system

$2.5 billion to $5.6 billion


What’s included in Foundation/Basic Operating Aid?

General education instruction

General education instruction

Special education

Early education (ages 3, 4 and 5) Programs for English language learners

General education instruction

Special education (except high cost and private)

Pre-K programs

How is aid for at-risk students treated?

Included in foundation formula with weightings for high need pupils

Included in foundation formula with weightings for high need pupils

Provided with a separate Supplemental Needs Aid and plan (consolidates 3 aids)

What’s the phase-in period?

7 years

4 years

5 years

How are school districts phased-in to the new funding system?

A wealth adjusted limit on loss and cap on increases would allow districts to lose or gain from 5 to 15% in the first year.  The cap on increases would be phased out over time.


No loss


No loss

How much goes to the New York City district?

Year 1: 43% of the increase

Full implementation: 64% of the increase

Final number to be determined.  3/1/04 estimate: 49%.

Total NYC spending gap is $1.9 billion to $4.7 billion as determined by Standard & Poor’s (S&P) Study. State share undetermined.


How much goes to all high-need school districts?

Year 1: 84% of the increase

Full implementation: 88% of the increase

Final number to be determined.  3/1/04 estimate: 79%.


What’s the local share?

An expected contribution based on Actual (property) Value and income per pupil

A mandated local share based on a poverty-adjusted measure of income and property wealth (Combined Wealth Ratio)

An optional local share based on income, property wealth and student needs.

Extends NYC maintenance of effort provisions to the Big 4.

How is Foundation Aid/Basic Operating Aid targeted?

Student poverty

Geographic sparsity

Regional cost differences

Student poverty

English language learners

Special education students

Geographic cost differences

Economies of scale (school size)

Regional cost differences

Geographic sparsity

How does the distribution of adequate funding compare?

The Regents proposal recommends a greater percent of the distribution to the NYC school district and less to average- and low-need districts than the CFE proposal.

The CFE proposal recommends less to NYC and more to average and low need school districts than the Regents.


What are adjust-ments for regional cost differences?

(NYC cost factor)

Regents Regional Cost Index (based on professional, non-teaching salaries)



Geographic Cost-of-Education Index (based on district-specific teacher costs)


Two Alternatives:

Regents Regional Cost Index and Geographic Cost-of-Education Index

(1.24[1] or 1.496[2])

How is Federal Aid treated?

Not included

IDEA and Impact Aid considered a credit to the local contribution

Title I and most other Federal aids for K-12 education added to the estimate of funding required to provide a sound basic education

Federal aid is used to contribute to part of the total cost of an adequate education.

What is the basis for cost increases?

2% per year of phase in period (2004-05 - 2010-11)

CPI adjustment over 3 years


How are aids for instructional materials treated?

Continued separately

The public school portion of Textbook, Software, Library Materials, and Hardware Aids is consolidated with Foundation Aid.  The nonpublic portions are administered by SED.

Consolidation of five aids into an Instructional Materials Aid


What other recommendations are proposed?

Grants for overcrowded schools

Incentives for integration of students with disabilities

Year of public discussion on including special education funding in the foundation formula


Cost includes funding for ½ day programs for 3-year olds and full-day programs for 4-year olds and kindergarten.

Small class sizes

Extended day and year programs

Full inclusion of 95% of students with disabilities

Recommendations on staffing including specialists in art and music

May 1 fiscal year

Simplified building aid cost allowance calculation.

Consolidated aid for high-cost pupils with disabilities.

Commitment to a State Aid formula on a two-year basis with no mid-year cuts.




Regents Proposal

CFE Proposal

Zarb Commission






Successful School Districts (Expenditure per Pupil in successful school districts)

Model Schools (as  defined by an expert panel of approximately 60 educators around the State in a Professional Judgement Process and costed out by the research team)

Four different options for identifying successful districts (including the Regents criteria)

Cost of What?

General Education instruction (K-12)


General and special education instruction (age 3 – grade 12)

General and special education (excluding high-cost students with disabilities) (pre-K-12)

Administrative costs

Operating and maintenance costs

What performance standards are used?

An average of 80% passing on 7 state examinations (grade 4 and commencement level)


All students meeting Regents diploma standards

Regents criteria and NCLB standards, including dropout rates, % of students earning a Regents diploma and test performance.

How is efficiency considered?

Ranks adequately-performing school districts on spending and assesses costs in the bottom half.



Ranks adequately performing school districts on spending and assesses costs in the bottom half.




Regents Proposal

CFE Proposal

Zarb Commission





How is accountability treated?

Nationally recognized assessment and accountability system already in place

Detailed performance and accountability data reported for all schools

Districts required to ensure that failing schools are provided with additional resources and support

Schools in need of improvement required to develop school improvement plans

Schools have three to five years to improve. Schools that fail to improve must be phased out

Significant school improvement in all types of districts over the last four years






Recommendations are forthcoming

Establish an independent Office of Educational Accountability

Appoint interim administrator in failing schools

Accelerate teacher discipline and removal process

Eliminate tenure for principals and administrators

Require a Regents-appointed panel to review current performance standards

Allow retired public employees to serve in school districts while still receiving their pension.










[1] S&P, p. 45

[2] Regents State Aid Proposal