Albany School District Awash in Surplus CashAugust 24th, 2010
by B. Jason Brooks
The Albany City School District board of education last week set the property tax levy for the current school year, 2010-11, in the amount of $107.1 million – an increase of nearly 3.9 percent over the last school year. This rate increase is certainly not out of the ordinary for school districts, especially given the first year-to-year decline in state school aid in a generation.
Amazingly, this $4 million increase in the property tax levy was approved at the same meeting where it was announced that the school district anticipates an $8 million budget surplus from last year, or 4 percent of the more than $200 million district budget, based on the independent audit being finalized.
The upshot of all this is that the Albany school district is awash in cash.
With an $8 million surplus in the bank, it is questionable why the board raised property taxes by an amount half-again as much, rather than use at least some of this surplus to offset the drop in state school aid. According to district documents, the rationale for the board to leave the surplus untouched is “to cope with the variable (charter school tuition, loss of State-aid) this year and prepare for the large funding deficits looming in the upcoming budget cycles.”
One key factor in the size of the district surplus for the last school year, 2009-10, was the state put a “freeze” on charter school funding levels at lower 2008-09 amounts, which effectively provided an additional $3 million windfall to the district by denying the funds to charter schools. This freeze ignored the fact that the district spends one-third more per student than charter schools receive.
Gov. David Paterson proposed the state continue to freeze charter payments at 2008-09 levels, now two years out of date, but this has not been enacted. Legislation was passed in June that included the charter funding freeze, but the Governor ended up vetoing this bill for other reasons. The state legislature has yet to take up this funding freeze since the veto and it’s not clear whether it will when it resumes session, which is expected next month.
In addition to Gov. Paterson’s freeze proposal, state Senator Neil Breslin, who represents Albany, has recently proposed his own funding freeze bill to affect just charter schools in Albany. This bill was criticized on the Chalkboard blog (here) as demonstrably unfair to charter students who already receive less funding than district students, even as they are disproportionately at greater educational risk.
The absence of the charter funding freeze would mean more than $5.5 million in higher payments to charter schools for 2010-11 above the funding levels from two years ago. The higher charter payments are tied directly to higher school district operations spending in Albany, which totals more nearly $22,000 per student (after removing charter expenses) compared to the $14,000 charter students would receive this year.
With a second charter funding freeze uncertain, it is reasonable to assume the Albany school district is hedging its bets against another charter school windfall that it was gifted last year. Clearly, with $8 million banked from last year’s budget, the district is in a healthy enough financial position to absorb the higher charter school expenses, especially since the district also requires fewer resources from the ongoing exodus of students to charter schools. Credit the Albany school board and Superintendent of Schools, Ray Colucciello, for fiscal prudence. Moreover, the district also will reap additional resources from the $600 million in just-approved federal money for education for New York State.
Imposing another funding freeze on charter schools would allow the Albany school district to “bank” millions of dollars that properly belongs to its resident students attending charters. With $8 million in district funds available from last year, someone needs to inform Sen. Breslin that his charter funding freeze bill is not only unfair and harmful to Albany’s charter students, it is financially unnecessary for the school district.
B. Jason Brooks is director of research at the Foundation for Education Reform & Accountability and may be followed on Twitter at @bjbrooksNY.