Even before Hochul proposed cuts, many school NY districts were struggling

COVID-19-related federal aid is running out, and tax revenues were also impacted by the pandemic.

Gov. Kathy Hochul visits a school in Watervliet to unveil her “back to basics” reading program in January.

Gov. Kathy Hochul visits a school in Watervliet to unveil her “back to basics” reading program in January. Darren McGee/Office of Gov. Kathy Hochul

This session, state legislative leaders have been consumed with a fight over education funding after proposed funding cuts to some districts in Gov. Kathy Hochul’s state budget proposal worried superintendents, educators, parents, students and lawmakers alike. But school districts have even more financial issues to deal with than just the latest from Albany. Schools are required to finalize their budgets by mid-May according to state law, and they are contending with the sunsetting of federal COVID-19 relief funding as well as uncertainty about the governor’s proposal.

New York received over $14 billion in federal aid in three rounds during the pandemic, and the funding allowed many districts to pursue COVID-related programs to help students, like enrichment programs and mental health initiatives. However, the influx of money left the door open for poor planning in some schools. After budgeting as if the funds would remain on its ledger, the Berlin School District in the Capitol Region planned staff layoffs to compensate. Berlin Central School District Superintendent Maureen Long wasn’t immediately available for comment. The predicament isn’t uncommon. 

Bob Lowry, deputy director for advocacy, research and communications at the state Council of School Superintendents, said that schools received large infusions of federal cash, and wealthier districts could put it toward one-time costs like infrastructure upgrades. 

“Poor districts typically receive more,” said Lowry. “There’s a priority in federal money to address so-called learning loss and wellbeing concerns, and particularly if you're receiving a large sum of money, it's hard to spend that entirely on non-recurring costs like improving ventilation.”

Some districts, he said, put the money toward staff but were cautious, hiring candidates close to retirement age who would go off their budgets around the same time aid expired. But others, he said, didn’t have the option to be judicious with federal aid spending, and now the continuation of some programs is in question. 

“We did a survey in the fall on your level of concern, and certainly, a strong majority were concerned about that – being able to sustain improvements made with grant funding,” said Lowry. “At the same time, the state had committed to fully funding Foundation Aid.”

Hochul’s executive budget proposed $35.3 billion for education, a 2.4% increase from the year before. However, her budget also proposed changing the Foundation Aid formula, one of the primary delivery vehicles for state funding. By calculating Foundation Aid for districts based on a 10-year average of the consumer price index with the first and last year removed, rather than using the prior year, nearly half the school districts in the state would get less funding than expected. Additionally, she proposed eliminating “save harmless,” a provision that ensured schools never received less money than the year before. 

“Governor Hochul’s Executive Budget makes record-setting investments in New York’s future while ensuring the state remains on a stable long-term fiscal trajectory, and she will work with the Legislature to craft a final budget that achieves these goals,” said a Hochul spokesperson.

Hochul and her office have maintained that the changes weren’t cuts due to the overall increase in aid, also citing a $207 million transition fund for impacted districts. They also argue that getting rid of “hold harmless” will allow the state to redirect funds to schools with higher enrollment. Still, many were caught off guard. 

Dave Little, executive director of the Rural Schools Association of New York State, said school leaders already knew the federal money was running out but were more troubled by changes to Foundation Aid.  “It's catastrophic, as is,” he added. “Schools knew all along,” said Little of the federal COVID-19 funds. “It had finite purposes and a finite time and in which to spend it for those purposes. The Foundation Aid discussion is much more fundamental because it would decrease Foundation Aid for half of the school districts in the state.”

Leaders in the state Senate and Assembly have signaled they intend to push back on the proposal during current budget negotiations, and both their one-house budgets reversed the cuts. 

Property taxes have also complicated school districts’ finances. They make up a large share of a district’s funding, and economic conditions from the pandemic affected their rate of increase. Under state law, school taxes can only be increased by 2% or by the rate of inflation, which skyrocketed due to the pandemic. Some districts were hesitant to increase tax levies to the full cap with that in mind or didn’t call for an overriding vote letting them raise taxes higher than 2%. 

The Carmel School District in the Hudson Valley either didn’t or marginally raised taxes in recent years. Now it has to consider cutting programs from kindergarten to sports to reign in a budget deficit that ballooned to nearly $6 million. That figure assumes they raise taxes to the maximum allowable levels to compensate. Carmel School District Interim Superintendent Joseph McGrath said it was kind of a perfect storm that hit the community’s schools. With a low tax levy, pandemic funds nearly gone and aid cuts proposed, he said they don’t have many options. 

“We have two options: to raise taxes, we can lower services or we can use a combination; there’s not really a lot of options, other than have more money or have fewer costs,” said McGrath. “That's where we're at, and it's not that we didn't see this coming, I think a lot of people, we've seen for years that there's this disparity between rising costs and lower revenue coming in.”

He said that the district’s situation was only made worse by hearing what was coming down the pipeline from the state. Though just a proposal for now, changes to school aid are being finalized as districts begin to present budgets to the public to be voted on in May, and McGrath said the whole thing came as a shock.

“The state played a huge role in this, and the state has been notoriously silent,” he said. “We know they're aware of our situation, but there has been no outreach from the state at all in terms of ‘here’s how we get out.’”

According to McGrath, budgeting with uncertainty over Foundation Aid also means that the districts’ careful preparation for the sunsetting of federal pandemic aid could be worthless. He added, “That’s where we’re kind of caught.”

“People hired originally under COVID aid, money was moved over to the general budget, and state aid picked it up, no problem,” McGrath said. “But state aid is gone, what do you do?” 

A common thread among education advocates and school leaders was wondering why there wasn’t more planning done before making such a major change to education policy, especially if one facet of their budget was leaving for good. State Senate Education Chair Shelley Mayer said, “Well that’s a fair point.” 

Mayer is one of the lawmakers leading the charge against the proposed cuts. She said predicaments like Berlin’s or Carmel’s were part of the reason lawmakers called for the Foundation Aid formula to be studied last session, since they knew the loss of federal aid could leave some districts desperate. Sometimes, they didn’t start off great to begin with.

“They weren't doing fine,” Mayer said of schools’ situations pre-COVID. “They did get a lot of money from the federal bailout fund, they had two years to spend it, but they were not doing fine. They got brought back to where they should be.”

She said she visited 11 districts around the state and said the number of English language learners, special needs students and less well-off families is higher than the proposed changes to the formula reflect. 

“Are we paying a lot of money? Yes. Do we need to be thoughtful about how we determine need? Yes,” Mayer said. “But many schools are suffering.”

Mayer and lawmakers of all stripes in the state Legislature are backing a restoration of Hochul’s proposed cuts in what has proven to be one of the biggest, if not the biggest, points of contention of this year’s state budget negotiations. Fully aware of the level of need many districts have, lawmakers from across the state have argued that changes to the formula would cripple some schools. State Senate Majority Leader Andrea Stewart-Cousins told reporters Wednesday that budget negotiations were in “the middle of the middle.” For Mayer, that means that there is still time to prevent the proposals Little called “catastrophic.” 

“We're not done,” Mayer said. “The budget’s not done.”