Education underfunding still foundation of New York’s new budget

April 23, 2014 — Early this month, the New York State Legislature passed a budget that includes significant new tax cuts, most notably $1.5 billion in property tax reductions. Also in the budget are funds for universal prekindergarten — a program that, in New York City, Mayor Bill de Blasio had previously pushed to fund through a dedicated tax increase on the wealthiest New Yorkers.

Gov. Andrew Cuomo and key members of the Legislature have celebrated the new budget as a sign of New York state’s renewed fiscal health: the state, they say, has enough money not only to fund a significant expansion in public education but also to substantially reduce the revenues it brings in every year.

But this budget, according to a recently filed lawsuit, is ignoring a huge obligation: some $3 billion of unmet funding that the state promised to school districts in 2007 in order to comply with an order from the state’s highest court, which ruled that school funding failed to pass constitutional muster. The lawsuit also says that the state would need to draw up a new cost analysis to update the figure to account for inflation, further raising the amount.

The lawsuit’s claim casts an entirely new light on Gov. Cuomo’s assertions that the state is so fiscally healthy that it is generating a $2 billion surplus. This optimistic assessment of the condition of Albany’s coffers underpinned the governor’s insistence that a new tax wasn’t necessary to pay for universal pre-K in New York.

Cuomo’s maneuver on pre-K was intended to defeat what he described as a purely “political position” on de Blasio’s part — in other words, to declare that taxing the wealthiest New Yorkers was not a matter of fiscal prudence or necessity but merely one of political symbolism. If the state was willing — and able — to provide for universal pre-kindergarten, then de Blasio’s plan to finance it with a dedicated tax was unnecessary. As Cuomo said to the New York Times in January, “Why do you need a tax for a service we’re going to fully fund?”

Yet the notion that the state has more than enough money to go around crumbles as soon as the additional school funding is factored in. According to New York City’s Independent Budget Office, state aid for schools in the city is still around $2.1 billion below the promised amount — more than the budget surplus the governor claims for the entire state. Moreover, school aid is not just another budget item that can be modified from year to year; rather, the state is under a constitutional mandate to maintain it at an adequate level year after year (though the precise contours of the continuing enhanced obligation are the subject of dispute).

“There’s a constitutional obligation here,” said Michael A. Rebell, the lawyer behind the suit, New Yorkers for Students’ Educational Rights (NYSER) v. State of New York. “The governor is ignoring that unmet obligation.”

“A sound basic education”

Rebell was also the attorney behind the series of lawsuits that led to the original decision by the New York State Court of Appeals, in 2006, that the state was underfunding public schools in New York City. These cases are known collectively as the CFE decisions, for Campaign for Fiscal Equity, the organization under which Rebell brought the suits.

In 2003, the Court of Appeals ruled in the second of three CFE decisions that the state had a constitutional obligation to “ensure the availability of a sound basic education to all the children of the State.” The court also ruled that the state’s existing system for financing public schools failed to meet that obligation, in that it did not provide the necessary resources that schools in New York City needed to meet this standard.

In follow-up proceedings in 2006, the court ordered the state to substantially increase funding to schools in New York City, setting a minimum of an additional $1.93 billion in yearly funds. But the court specified that this was only a minimum amount, and ordered the state to conduct studies to “ascertain the actual cost of providing a sound basic education in New York City.” This decision came under the governorship of George Pataki, who had been strenuously fighting the CFE cases and had pushed the court to lower the minimum in additional school aid that it demanded from the state.

It wasn’t until the next year, the first under Gov. Eliot Spitzer, that the state Legislature actually drew up a plan to comply with the mandate of the court. This came in the form of the Education Budget and Reform Act of 2007, which committed the state to more than $7 billion in increased school funding, to be phased in over the course of four years. About $3 billion of this was to be directed to schools in New York City, while the rest would go to schools elsewhere in the state.

During the first two years under the new law, the state fulfilled its promises to increase school funding. In New York City, this translated to a $1.1 billion funding increase, according to the Independent Budget Office.

However, beginning in fiscal year 2009-2010, in response to fiscal straits brought about by the recession, the Legislature and then-Gov. David Paterson froze the funding, deferring the planned increase by three years. The Legislature then introduced substantial cuts to school aid from the state. By fiscal year 2011-2012, according to the lawsuit, the cuts amounted to $2.6 billion statewide.

In New York City, this has meant a greater burden on the municipal budget. “The city to some extent has been making up for the money that didn’t come from the state,” said George Sweeting, deputy director of the Independent Budget Office. To date, the city has fronted at least $1 billion of the $2.1 billion the state is short.