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Thread: Hevesi - Report Finds Problems of Five Largest School Districts

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    Hevesi - Report Finds Problems of Five Largest School Districts

    FOR RELEASE: Immediately
    May 13, 2005
    Comptroller Report Finds Problems of Five Largest School Districts Intensified by Fiscal Struggles of Cities

    The school districts in New York State’s five largest cities are caught in a vise: On one hand, they have the most disadvantaged students, the oldest facilities and new standards to meet. On the other, their financing comes from city governments with growing fiscal problems and increasingly limited resources. These districts also have city tax and debt limits that are not imposed on independent school districts, according to a research brief issued today by State Comptroller Alan G. Hevesi.

    The five largest school districts, New York City, Buffalo, Rochester, Syracuse and Yonkers, also known as the Big Five, are fiscally dependent on their respective cities. Unlike other school districts, they cannot levy taxes or determine how much they will spend independently. Funding must also stay within the tax and debt limits that have been set for these cities in the State Constitution. For example, New York City has a debt limit of 10 percent of its property tax base and the other cities have limits of nine percent, which includes debt for the school districts. As a result, these districts must compete with other municipal projects for operating and capital funding. Other municipalities have separate debt limits for schools and can exclude debt supported by State building aid from their limits.

    “The Big Five school districts have the largest and most disadvantaged student populations in the state, the oldest buildings and a greater difficulty meeting new state and federal standards. The cities they depend on for funding don’t have the resources to adequately respond to their growing needs, and the schools are forced to compete with other pressing priorities,” Hevesi said. “We must find creative solutions on the State and local level to address the schools’ long-term fiscal and capital needs, and we should do this with a full understanding of the cities’ fiscal difficulties.”

    The Comptroller's report found:

    Proximity to Debt Limits Restricts Capital Funding for Some Cities. The average age of the school buildings is more than 60 years. While other school districts have separate debt limits for schools and most can exclude debt supported by State building aid from their limits, debt for capital improvements for the Five Big schools must be included in the overall debt limits of their cities. For example, New York City has a debt limit of 10 percent of its property tax base and the other four cities have limits of nine percent. Buffalo has used 90 percent of its debt limit, while in comparison Yonkers has used only 22 percent.

    Declining Property Tax Margins. Education in the Big Five is funded within constitutionally imposed tax limits. In 2005, three of the Big Five cities have exhausted more than 80 percent of their tax limits, a danger zone identified by the Comptroller’s office, including New York City (94.5 percent), Buffalo (88.2 percent) and Rochester (84.4 percent). Outside of the Big Five cities, school districts do not have tax limits but require voter approval of budgets.

    The Campaign for Fiscal Equity Case (CFE). The CFE decision may have a dramatic impact on the Big Five. Although the ruling only applies to NYC directly, the discussion about aid changes has included all of the big cities, as well as other high-needs districts. Future litigation could include the other four cities and could cause additional stress on city finances as specific local contributions could be mandated.

    Education spending represents more than half of the budget for Buffalo, Rochester, Syracuse and Yonkers. However, because of fiscal pressures, the percentage of education funding that comes from local revenue has decreased over the last decade. Like other low-wealth, high-need districts, the Big Five receive a higher proportion of State aid and rely on a smaller proportion from local sources. State revenues make up about 62 percent of school district revenues in Buffalo, Rochester, Syracuse and Yonkers compared with 32 percent for the rest of the State.

    The brief analyzed local education contributions from 1993 to 2003. Findings included:

    New York City: New York City’s local share of funding for education has remained fairly stable (representing 45 percent of the total spent from all funding sources on the city’s schools in 1993 and 44 percent in 2003), although there were funding cuts in 2002 following the 9/11 terrorist attacks. Overall, local funding for education increased by 74 percent during this period. New York is just below the average for state wealth. It has exhausted 95 percent of its tax limit and 78 percent of its debt limit. Enrollment is 1,100,000 students.

    Buffalo: The amount of local tax dollars spent on Buffalo’s schools has increased by 38 percent over the last ten years. However, its local contribution is only 17 percent of the total spent for education, down from 20 percent a decade ago. In addition, the city has faced severe fiscal difficulties in recent years, and is now under the oversight of the Buffalo Fiscal Stability Authority. To overhaul the city’s school facilities, the Buffalo Joint Schools Construction Board, a new financing and construction model, was created. Buffalo has exhausted 88 percent of its tax limit, 90 percent of its debt limit and has less than half the average wealth of other school districts in New York. Enrollment is 43,000.

    Rochester: Rochester’s local aid to education has not increased since 1993. In fact, the city reduced its support for education by $7 million in 2004-05. The amount of local tax dollars spent on Rochester’s schools declined from 36 percent in 1993 to 24 percent in 2003. However, among the Big Five cities, Rochester has the highest relative tax effort dedicated to schools, with local support representing more than 25 percent of property values. It has less than half the average wealth statewide and has exhausted 84 percent of its tax limit and 71 percent of its debt limit. A Comptroller’s audit recently found that the district requires approximately $8.3 million in additional State aid in order to balance its budget this year. Enrollment is 36,000.

    Syracuse: From 1993 to 2003, Syracuse’s local support for schools has remained the same. However, within this period the city’s aid to schools fluctuated significantly, with four years of substantial increases and three of substantial cuts, including a ten percent cut in 1996. Syracuse has less than half the average wealth statewide and has exhausted 75 percent of its tax margin and 70 percent of its debt limit. Enrollment is 23,000.

    Yonkers: Yonkers’ support for schools has changed substantially during this period, with a pattern of substantial increases in the early 1990s giving way to cuts and flat funding by the late 1990s and early 2000s, including a 12 percent cut in 2000. City support for its schools fell from 57 percent of the total spent on education in 1993 to 33 percent in 2003. While it has above average wealth, Yonkers provides the lowest percentage of property values to fund education among the Big Five. It has used 72 percent of its tax margin and only 22 percent of its debt limit. Enrollment is 27,000.

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