As New York state faces an unprecedented financial crisis, the state government is asking agencies across the board to make tough choices and accept deep cuts.
At the same time, state taxpayers are burdened with higher property taxes than most states in the nation. In order to address that burden, the state’s Commission on Property Taxes issued a multifaceted report calling for, among other things, a cap on the amount school districts can increase property taxes from year to year.
So with decreased revenue from the state and the possibility of a property tax cap, where does that leave schools?
According to the New York State United Teachers (NYSUT), it leaves them in a precarious position.
School districts are going to face some harsh choices, said Carl Korn, chief press officer for NYSUT. They’ll have to cut programs, increase class size, eliminate sports and after-school activities, get rid of extra services like tutoring, school psychologists, school social workers, things like that.
But Gov. David Paterson says the cuts are absolutely necessary in order to get the state back on track, and the Commission on Property Taxes says the tax cap and other measures are absolutely necessary to reduce the property tax burden.
The governor’s budget proposal
The governor’s executive budget proposal, released Dec. 16, calls for deep cuts to education. The budget also includes cuts to health care, increases in tuition to SUNY schools, an increase in dollars allocated to welfare, layoffs of state employees, reforms to the state’s STAR and Empire Zone programs and other cuts and changes.
Paterson said New York faces the largest budget deficit in state history – $1.7 billion currently, with another $13.7 billion in deficit in the coming budget year.
New York is facing a historic fiscal crisis, Paterson said. Given the magnitude of this problem, every area of state spending, including education, will have to experience reductions.
In terms of education, the budget calls for the following, according to a press release from the governor’s office:
The Executive Budget reduces school aid in 2009-10 by $698 million, or 3.3 percent, from 2008-09 while maintaining a commitment to both long-term increases in education investments and the formulas created to equitably allocate these funds. Even after reductions, funding for school aid would still total $20.7 billion in 2009-10, a 42 percent or $6.2 billion increase compared to 2003-04. Proposed reductions are structured progressively based on district fiscal resources and student need. Savings are also achieved through reductions or eliminations in categorical programs to prevent further reductions in direct aid to schools. Gov. Paterson remains committed to the education investment plan advanced in 2007-08 to increase school aid by $7 billion over a multi-year period. But significant funding increases in foundation aid and universal pre-kindergarten that were scheduled to be phased-in over a four-year period will now be phased-in over an eight year period to reflect the need to adapt to the difficult fiscal environment. The executive budget also proposes mandate relief measures to help school districts control costs.
Paterson had tried to avoid such steep cuts earlier this year by calling the legislature into a special session in November. At that time, he asked them to consider an $836 million mid-year reduction in aid to school districts for 2008-09. The proposal would have provided most, though not all, districts with increased funding from last year and would have still allowed overall school aid to increase by 16 percent over the last two years. The legislature, however, failed to act on the proposal, and Paterson said that failure forced him to make more drastic decisions for the 2009-10 budget.
Paterson said he remains committed to educational excellence in New York state, but the state can’t afford to maintain the same level of funding.
Next year, total school Aid is projected to increase by 8.8 percent or $1.9 billion, Paterson said. During one of the greatest fiscal crisis in our state’s history, that is a level of funding we simply cannot afford given that school aid represents more than one-third of the state’s general fund spending.
Capping property taxes
In the past, while such cuts would have been devastating to school districts, they would have been able to maintain programs and staffing levels by raising local property taxes – which is partly why New Yorkers pay 78 percent more than the national average in property taxes. But the Commission on Property Tax Relief, headed by Nassau County Executive Thomas Suozzi, has proposed setting a limit on how much school districts can raise property taxes from year to year.
The Suozzi commission issued its report on Dec. 1 after nearly a year of research, public hearings and testimony. The report calls for, in addition to a tax cap, a circuit breaker, which would limit the amount individuals pay in property taxes based on their income, and mandate relief, which would reduce the costs of educational mandates that are passed on to the school districts, as well as other measures to cut costs (to see the commission’s full recommendation, see the breakout box).
Suozzi said some measures are necessary to reduce the property tax burden.
The debate is no longer whether or not there is a problem or what caused the problem, he said. The debate is instead over how to address the crushing school property tax burden our state faces K The rate of increase of property taxes over recent years is unsustainable, and simply unfair to those who cannot afford to pay.
In his letter to the governor prefacing the report, Suozzi said limiting property taxes would actually help school districts.
The commission believes that reducing voter anger over school taxes will help redirect the attention of New Yorkers toward maintaining and improving educational quality, Suozzi wrote.
Schools at a crossroads
So if both proposals pass as they stand, what happens to schools?
That’s the crux of the issue, Korn said. Schools are really caught in the middle of this.
Korn said the cuts in school aid are damaging enough without the added issue of the tax cap.
School aid cuts either put pressure on the property taxpayer or force devastating cuts in school programs, he said. Schools are going to have to cut programs or lay off staff, or they’re going to have to raise taxes.
In addition, Korn said NYSUT doesn’t believe the tax cap will provide actual relief.
We see it as a politically expedient gimmick that won’t reduce taxes, he said. It provides the illusion of relief, but it doesn’t actually help the taxpayer.
Instead, NYSUT supports the idea of a circuit breaker.
The circuit breaker provides real relief without damaging education, he said. A circuit breaker caps taxes based on your income level, so it actually provides relief to people who need it.
NYSUT has also proposed other alternatives to alleviate the property tax burden, including increased utilization of BOCES programs, consolidation of districts or at least district services and a progressive income tax.
But at the moment, none of those are being discussed in the legislature. Korn said he can only hope Paterson’s proposed budget is changed by state legislators, and that the tax cap proposal isn’t approved as is.
If they both go through, Korn said, the results could be devastating.
The recommendations
The New York State Commission on Property Tax Relief, led by Nassau County Executive Thomas Suozzi, issued its final report Dec. 1. Within that report, the commission made the following recommendations to address the state’s property tax burden:
Create a property tax cap
‘ ‘Limit the tax levy increases to 120 percent of the Consumer Price Index or 4 percent, whichever is lower.
‘ ‘Allow districts to bank any amount below the tax cap for use in future years – up to 1.5 percent per year.
‘ ‘Provide an option for school boards to increase the tax levy by more than that amount by putting it to a public vote. The budget would have to be approved by 55 percent of the voters if the district received less than a 5-percent increase in state aid, or 60 percent if the district received more than a 5-percent increase in state aid (override vote).
Reexamine and rework the STAR program into a circuit breaker
‘ ‘Create a percentage of income that anyone would pay for school taxes, based on income range (about 6 to 8 percent) and location.
‘ ‘Force the state to shift the money – at least $2 billion – currently going to School Tax Relief (STAR) Exemptions and rebates to replace the amounts that are eliminated from property owners by the limits.
Change state law and mandate relief
‘ Reduce the burden of excessive mandates
‘ ‘No new legislative or regulatory mandates without a complete accounting of the fiscal impact on local governments, including proposed funding sources.
‘ ‘Mandate accountability through an annual report from the state comptroller’s office.
‘ Decrease school district personnel costs
‘ ‘Adopt regional or statewide bargaining agreements.
‘ ‘Increase health insurance premium contributions by employees and provide coverage jointly with other public employers or school districts.
‘ ‘Create a new Tier 5 in the pension system for new employees.
‘ ‘Amend collective bargaining agreements to exclude teacher step and lane increments from continuation until new contracts are negotiated.
‘ Limit other operational costs
‘ ‘Increase the threshold amounts for determining when separate contracts are required in construction projects.
‘ ‘Increase threshold amounts for purchasing under competitive bidding requirements.
‘ ‘Increase participation in statewide energy efficiency programs through collaborative efforts of state agencies.
‘ ‘Centralize and streamline school district reporting to decrease personnel and duplication of services.
‘ ‘Simplify or eliminate other individual education mandates.
‘ Improve special education
‘ ‘Shift the emphasis of State Ed from regulatory enforcement to outcome based accountability through targeted intervention.
‘ ‘Accelerate the integration of special education with general education, increasing opportunities for students who need extra help within the general ed setting.
‘ ‘Decrease special ed classification rates by requiring State Ed to review districts with classification rates 20 percent higher than the state average.
‘ ‘Reduce the cost of litigation by promoting alternative dispute resolution, improving the consistency and effectiveness of hearing officers and shifting the burden of proof back to the plaintiff.
‘ ‘Increase collaboration.
‘ ‘Secure additional federal funding.
‘ Seek economies of scale and enhanced educational opportunities
‘ ‘Require consolidation of school districts with fewer than 1,000 students and grant the commissioner of education discretionary authority to order consolidation of school districts with fewer than 2,000 students.
‘ ‘Restructure reorganization state aid.
‘ ‘Simplify consolidation by amending state law.
‘ ‘Eliminate the necessity for State Ed to approve BOCES participation in agreements with municipalities to provide non-instructional services.
‘ Grant mayoral control and provide funding flexibility for the Big Four city districts (Syracuse, Albany, Buffalo and Rochester)
‘ ‘Exempt the Big Four districts from the proposed tax cap.
‘ ‘Adjust the maintenance of financial effort requirements to reflect declining student populations.
‘ ‘Grant mayoral control for the Big Four districts.
‘ Encourage efficient delivery of social services
‘ ‘Direct appropriate agencies to collaborate and coordinate with each other and with school districts.
‘ Address other equity concerns for property taxpayers
‘ ‘Create countywide property tax assessment and uniform statewide assessment standards.
