Will Some NY School Districts Go Bankrupt? Maybe They Should

November 8th, 2011

By Brian Backstrom

The Sunday Albany Times Union published a commentary by James Hoffman, Ed.D, the superintendent of schools for the Fonda-Fultonville School District, a rural area in Fulton County, west of Schenectady that complained about the inequities in spending among school districts.

Not for the first time has a school district official complained that his or her community does not get their “fair share” of state aid.  Travel to every corner of New York State and you’ll hear agreement on one issue:  the state’s school aid formula is unfair and denies their school district its “fair share.”

Dr. Hoffman dusts off the old staple of upstate versus downstate “wealthy districts,” and declares that upstate New York “has been under attack fiscally for the past two decades …and downstate has won.”

That would certainly come as news to the Campaign for Fiscal Equity crowd, which spent years litigating the state’s school aid formula which it believed cheated New York City, that very large downstate school district.  The state Court of Appeals largely agreed with CFE’s case, and the city was given several billions more in dollars beginning in 2007, though every school district in those ensuing years also received state aid increases.

School aid hikes came to a halt last year and are not returning at least in the short-term.  Combine the state’s fiscal frugality with the new state-imposed property tax cap, and upstate school districts are crying foul.  In fact, many of them, according to Dr. Hoffman, believe they will go bankrupt within the next three years.

Dr. Hoffman, like so many upstate school officials, believes upstate gets cheated on funding since the state still provides school aid to wealthier downstate school districts which in turn are able to spend far more per pupil.  For example, he cites the Bronxville School District in Westchester County that spends $10,000 more per pupil than his Fonda-Fultonville District.

Interestingly, both school districts have a similar student enrollment of around 1,500 students.  The inequity, however, may be more of a complaint for Bronxville, since Dr. Hoffman’s Fonda-Fultonville district receives more than $13 million is school aid compared to less than $2 million for Bronxville.  That amounts to about $1,275 per pupil in state aid for downstate Bronxville while upstate Fonda-Fultonville gets approximately $9,172.

Bronxville and most other downstate school districts are indeed “wealthier” than upstate districts and, accordingly, choose to spend far more per pupil based almost entirely from their own local property taxes.  In Bronxville, state aid accounts less than 5 percent of the district’s budget, while Fonda-Fultonville has more than half its budget financed by the state.  Dr. Hoffman’s gripe that Bronxville spends more per pupil is the choice of Bronxville residents, rather than the fault of the state aid formula, which pays his school district more than six times the amount.  Still, upstate school districts like Fonda-Fultonville do not have the property tax base to increase local spending substantially.

Dr. Hoffman’s gripes about school aid aside, he would be better off focusing on his other point about eliminating state mandates that drive school district costs, including employee pension costs. If the situation for upstate districts with a small local tax base is that desperate to provide a sound, basic education, school districts can and should make the case for a voter override of the property tax cap.

Absent any relief from state mandates along with continued stagnant levels of school aid, school district bankruptcy could be the final outcome that would get the state’s attention for drastic mandate relief and other reform.

Brian Backstrom is President of the Foundation for Education Reform & Accountability and may be followed on Twitter at @nyedreform.

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