New York State Council of School Superintendents school finance survey

7/30/2019 New York State Council of School Superintendents school finance survey

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Cant Get There From Here

Budgeting challenges call for newdirections in state policy to helpschools raise student achievement

2nd Annual Survey of New York State School

Superintendents on Financial Matters

November 2012


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Cant Get There from Here: A survey on school fiscal matters November 2012

1

Table of Contents

PageHighlights 2

Introduction... 3

Overall Fiscal Condition..... 7

Budgeting Choices.... 13Personnel.... 14Instruction... 15Other direct student services..... 16Operations, maintenance and construction... 16Other actions.. 16

Impact of 2012-13 Budget Decisions... 17

Adapting to the Tax Levy Cap 21

Assessing the impact....... 21Tax levy cap impact on collective bargaining..... 22

Implementing Evaluation Reforms...... 24Anticipated cost impact.... 24Demands on administration........ 25

Looking Ahead.. 28Anticipated cost pressures..... 28Tax cap or state aid which is the greater concern?...................... 29Priorities for mandate relief.... 30Priorities for new funding.... 33

About the Survey:Between August 16 and September 3, 2012, the New York State Council of School Superintendents conducted anonline survey of its members who are superintendents on budgeting concerns for their districts. The survey wasconducted using the services of K12 Insight, a strategic partner of the Council.

A total of 249 superintendents submitted complete responses, a response rate of 40.4%. Incomplete submissionsfrom 47 superintendents were also included in the results.

Superintendents serving the Big 5 Cities (New York, Buffalo, Rochester, Yonkers, and Syracuse) and Boards ofCooperative Educational Services were not included in the survey because their systems budgets are not subject

to voter approval and consequently do not report some of the financial data available for small city, rural and

suburban districts.The Council conducted a similar survey in 2011, with a similar response rate. In some instances, we compareresults between the two years. However, the samples are different, since some of the superintendents respondedin one year and not the other.

Finally, K12 Insights survey tools permit extensive cross-tabulations and we do report some findings broken downby region or district character (i.e., urban, suburban, or rural). Particularly when examining regional results, it ispossible that the districts whose superintendents responded are not fully representative of their region. We dofind some regional results to be more positive than anecdotal exchanges with district officials would have causedus to antici ate.


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2

HIGHLIGHTS

The survey: The Council of School Superintendents conducted an online survey of its members on school fiscalmatters; 249 superintendents (40.4%) submitted complete responses. Partial responses from 47 superintendentswere also counted. Because their school budgets are not subject to voter approval, superintendents serving theBig 5 Cities and BOCES were not included in the survey. The Council conducted a similar survey in 2011.

Overall condition: 52% of superintendents say their districts financial condition is worse or significantly worsethan a year ago. In 2011, 75% of superintendents said their districts condition had worsened. The share of citysuperintendents reporting their districts financial condition is poor or very poor rose sharply, from 24% to 43%.

Reliance on reserves: 83% of superintendents are concerned or very concerned by their districts reliance on one-time resources (reserves) to fund recurring costs. Without the use of fund balance this year, districts would haveneeded to raise taxes by 7 percent more than they actually did, or make cuts of corresponding magnitude.

Financial insolvency: 9% of superintendents say that within two years, given current trends, their districts maybecome unable to ensure some financial obligations will ever be paid. This share would equate to roughly 60districts. Altogether 41% foresee reaching that condition within 4 years. North Country superintendents foreseethe most immediate threats.

Educational insolvency: 18% of superintendents say that within two years, given current trends, their districts maybecome unable to fund all state and federal mandates for instruction and student services. 77% foresee reachingthat condition, either within 4 years or beyond. Again, concern is most immediate in the North Country.

Job cuts: Districts reduced their workforce by an average of 3.9% this year, on top of 4.9% in 2011-12. Reductionswere generally steepest among city and rural districts and in non-teaching student support positions.

Salary and benefit concessions: 35% of superintendents report a cost saving agreement with their teacher unionthis year, the highest percentage in 3 years. 45% percent report agreeing to freeze their own salary or makeanother cost saving adjustment as in 2011, this is a higher share than for any other employee category.

Instructional cuts: 59% of districts increased class sizes this year, compared to 48% in 2011-12. 31% reducedsummer school. 31% reduced or deferred purchases of instructional technology at a time when technology isseen as a key to improving outcomes and reducing costs.

2012-13 budget impact: More than 40% of superintendents said their districts budget this year had a negativeimpact on core elementary school instruction, extra help for students who need it, operations and maintenance,extracurricular activities, athletics, and administration

Tax levy cap: 67% of superintendents said that the new property tax levy cap led their district to adopt a spendinglevel below what would have been done otherwise. 60% said the cap caused their adopted budget to have a morenegative impact on programs than would have otherwise occurred. 59% said the cap makes it more likely thatthey will be able to negotiate cost savings with their teacher union or that it had already had that impact.

Teacher/Principal Evaluations: 70% of superintendents said new requirements for teacher and principalevaluations will require their districts to spend significantly more than under prior practices. Professionaldevelopment (training) needs are seen as the biggest cost-driver followed by new student assessment costs. 40%of superintendents say teacher evaluations will now consume more than 40% of a typical principals time, raisingconcerns about how to balance other responsibilities.

Tax cap or state aid which is a greater concern?: Asked which is the greater financial concern for their districts the tax levy cap or possible future state aid levels 44% picked state aid (up from 23% in 2011), 13% chose the taxcap (down from 25%), and 43% said they are of equal concern. In poorer upstate regions away from the HudsonRiver, only 5% of superintendents now pick the tax levy cap as the greater concern.

Priorities for mandate relief: Superintendents top mandate relief priority is to amend the Triborough lawsguarantee ofstep increases after a collective bargaining agreement has expired. Actions to reduce health carecosts and stop unfunded mandates were other leading priorities.

Priorities for new spending: As in 2011, providing more extra help for students who need it emerged as the toppriority should new funding become available.


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3

Introduction

This is a report chiefly about the financing of

education. But the real business of schools is

learning, preparing young people to thrive in life

beyond school.

The surveys we summarize in this report explain

the financial obstacles that school leaders foresee in

their efforts to deliver that result for all the children

and young people they serve.

The challenge and the mission

New York is a hugely diverse state, in ways that

can inspire or discourage. Those disparities appear in

schools, as well as other aspects of our state.

We are home to some of the nations absolute best

public schools. Perennially, we dominate the Intel

Science Talent Search. We rank second among thestates in percentage of high school graduates earning

a three or better on Advanced Placement exams.

At the same time, by one measure, we rank 44th in

high school completion rate for African-American

students, and 45th for Hispanic students.

We usually lead the nation in per pupil spending,

along with our neighbors in the northeast. Yet we

also have among the widest gaps in spending between

high and low poverty school districts, exceeding all

our neighbors.1

Now the long quest to lift all students to high

school completion by has been joined by a new goal

not just in our state, but across all states: to

guarantee every graduate finishes school prepared to

succeed in college, a career, or both.

That goal ought to be a common sense propo-

sition: if a son or daughter meets the expectations

schools and the State of New York have set for

earning a high school diploma, that achievement

should attest he or she is prepared to succeed in the

next steps toward adult life.

The goal also matches the promise of the state

constitution a system of free common schools,

wherein all the children of this state may be

1 Education Law Center, Is School Funding Fair? ANational Report Card. June 2012.

educated. Courts have interpreted the promise to

mean schooling that prepares students for the adult

responsibilities of competitive employment and civic

participation, voting and jury service.

High rates of remedial class-taking in college

provide one piece of evidence that we have work to doto guarantee real readiness for adult challenges.2 It is

true that if this shortfall could be fixed in an instant,

colleges would strain to adapt. Also,Americas

generosity with second chances is a national strength.

But the demands that an aging population will pose

on public resources in years to come require all our

public enterprises to become more efficient.

There is another practical imperative. Middle skill

jobs have been disappearing, consigning workers to a

choice of extremes and contributing to a widening in

income inequality.3 More than ever, a future worthaspiring to demands educating for higher skills.

Our surveys illustrate one set of obstacles in our

path to that destination.

Two surveys, a common theme: alarm for the future

A year ago, the New York State Council of School

Superintendents published results from our first-ever

comprehensive survey of our members about their

districts budgeting choices and financial prospects.

Stressing that districts had already been through two

difficult years before the survey, the report noted,Concern over the accumulating impact of past

budget choices is compounded by what lies on the

horizon for schools rising expectations combined

with diminished revenues. The report found near

universal alarm about future prospects.

THE COUNCIL conducted a second finance survey

just before the start of this school year. We conclude

that the level of alarm over the future has not

diminished, although the pace of deterioration in

school finances may have slowed.

2 For example, see Testimony of Drew Matonak,president of Hudson Valley Community College, New NYEducation Reform Commission, July 10, 2012.

3 Federal Reserve Bank of New York, Regional EconomicPress Briefing on Job Polarization and Rising Inequality(May 30, 2012).


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Last year vs. this year

Comparing results on questions posed in both

years, a reader might conclude that, since smaller

percentages of superintendents gave negative

responses this year, conditions are improving. A key

point, however, is that negative impacts accumulate,

making future budgeting challenges greater.

For example, for 2011-12, superintendents

reported eliminating an average of 4.9 percent of

school positions. For 2012-13, that figure declined to

3.9 percent. But the implication is that districts have

eliminated an average of 9 percent of their positions

over the past two years, and would face more painful

personnel choices if future budgets demand more

cuts.

Insolvency

New questions asked in the 2012 survey draw into

focus the financial threats school leaders anticipate.

In recent years, warnings that school districts and

municipalities are threatened by insolvency have

swelled. We asked superintendents, Do you foresee

a point at which your district would be unable to

ensure that some of its financial obligations will ever

be paid?

Statewide, 9 percent of superintendents anticipate

their districts could reach that position within two

years. That share would equate to roughly 60districts. Altogether, 41 percent of superintendents

foresee facing that definition of insolvency within

four years.

Retaining the capacity to give all students a

meaningful education is an even wider concern than

just preserving financial solvency.

Statewide, 18 percent of superintendents foresee

their districts reaching a point within two years

where funding all state and federal instructional and

student service mandates will no longer be possible.Half of all superintendents anticipate their districts

will fall into that state within four years.

Insolvency fears are especially acute in the North

Country, for example. Within two years, 25 percent

of North Country superintendents see their districts

facing financial insolvency, and 50 percent anticipate

educational insolvency.

Why?

Why do school district leaders look to the future

with such alarm? We see at least five reasons.

First, schools have already been through a

prolonged stretch of difficult budgeting. The low-

hanging fruit easier budget balancing options have already been implemented.

Most state aid was capped in 2009-10, then cut in

both 2010-11 and 2011-12. Districts typically did not

turn to local tax increases to offset the austerity in

state aid to the extent they did in prior periods.

Proposed tax increases during the recent span

averaged 2.9 percent more than five points below

the 8.2 percent average increases proposed in 2003,

the last time aid was cut.

Second, some large and hard to control costs

have been surging.

We estimated that pension and health insurance

costs alone would have driven up total school

spending an average of 2.5 percent in both 2010-11

and 2011-12, even if all other costs could have been

frozen. These are hard to control costs: schools

cannot reduce pension obligations except by cutting

jobs and, like all employers, they struggle with health

care costs. Actual overall school spending increases

proposed by districts averaged under 1.4 percent bothyears, indicating that districts cut other expenses to

absorb those costs.

Growth in pension costs slowed some for the

current year, but last month the State Teachers

Retirement System projected that employer

contribution rates will need to increase from 11.84

percent to between 15.5 and 16.5 percent in 2013-14.

8.2%8.7%

7.5%

6.1%

4.3%3.7%

2.1%

3.2% 3.4%

2.2%

4.8%

6.9% 6.6% 6.3%6.1%

5.3%

2.3%

1.4% 1.3%

1.7%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Percentchangeoverprioryear

Schools were holding down taxes and spendingbefore the tax cap

% Change in proposed tax levy % Change in p roposed school spending

SOURCE: Council analysis ofNYSED Property Tax Report Card

data ; Big 5 Cities not included


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The contribution rate is applied against the payroll

for employees in TRS, so the rate increase is equiva-

lent to mandating districts to absorb a cost equal to

giving all those employees 3.6 to 4.6 percent raises,

on top of any actual raises. Had the size of this

increase been known at the time of our survey,

results might have been even more pessimistic.

There are other costs to absorb. A rule of thumb is

that step increases in collective bargaining agree-

ments additional pay for an additional year of ser-

vice are commonly around 2 percent. With payroll

typically accounting for half of school spending, a 2

percent increase in salaries alone would translate into

a 1 percent increase in overall spending. The states

Triborough law guarantees payment of these

increases even after a collective bargaining agreement

expires. Superintendents see Triborough as anobstacle to negotiating both restraint on salary

growth and actions that could save on health

insurance. In the survey, superintendents identify

amending Triborough and prescribing minimum

employee contributions for health insurance as their

two top priorities for mandate relief.

Third, at least from a district-level perspective,

state governments appetite for mandates on schools

has not been satisfied.

The Board of Regents and State Legislature have

approved limited changes in special education man-

dates. District sharing opportunities through Boards

of Cooperative Educational Services and joint pur-

chasing have been expanded. But these are small

steps. Governor Cuomos Tier VI pension reform

proposal was enacted and will significantly shift the

balance of costs from districts toward employees, but

its near-term savings impact is limited.

At the same time, THE COUNCILs surveys find

schools straining under new mandates arising from

the Regents Reform Agenda and the states commit-ments under its federal Race to the Top grant.

In our 2011 survey, 77 percent of superintendents

said the cost of implementing Race to the Top items

would significantly exceed their funding from that

grant. This year, 70 percent said that new teacher

and principal evaluation requirements will require

significantly greater expenditures than past practices.

Beyond the monetary costs, the demands new

mandates create for school administration are

causing alarm too. Statewide, 73 percent of superin-

tendents predict that conducting teacher evaluations

will now require more than 30 percent of a typical

principals work week, raising concerns about their

availability to handle everyday student and family

issues. At the same time, our surveys indicate that

districts have cut their administrative staffs by an

average of 12 percent over the past two years.

Fourth, schools have been drawing from reserves

to avert actions that would have had even greater

negative impacts on students, local taxpayers, or

both. Barring a reversal in other financial trends,

that option will be exhausted.

The State Education Department has reported

that school district rainy day reserves shrank from$2.76 billion in 2009-10, to $1.21 billion in 2012-13.4

Without use of appropriated fund balance in their

budgets this year, districts would have needed to

raise taxes by 7 percent more than they proposed (by

9.2 percent, instead of 2.2 percent), or make cuts of

corresponding scale. Among the poorest 10 percent

of districts, tax increases averaging 21 percent would

be needed to replace these temporary resources. In

open-ended comments, several superintendents

warned that their districts financial condition will

deteriorate rapidly as reserves are eliminated.

Fifth, approximately 92 percent of school district

revenues local taxes and School Aid are now

subject to state imposed growth limits.5

The property tax levy cap makes it harder for

school districts to gain voter approval for local tax

increases, and imposes harsher consequences if voter

approval is not obtained districts are foreclosed

from any increase in tax levy.

As the chart on page 4 showed, school leaders

were holding down tax and spending increases evenbefore the cap became law. The cap has caused

4New York State Education Department, 2012 RegentsSchool Finance Symposium: Improving StudentLearning in Fiscally Challenging Times, September 11,2012.

5 New York State Education Department, ibid.


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further restraint, however. Responding to our survey,

67 percent of superintendents said the cap had led

their districts to adopt a lower budgeted spending

level than would have otherwise occurred.

The test of a budget is not only whether it attains a

numerical balance, but whether it advances largerpurposes as well. Statewide, 60 percent of

superintendents believe the tax levy cap caused their

districts to adopt budgets with a more negative

impact on programs and services than would have

happened without it.

Supporters have characterized the tax levy cap as

a blunt instrument that will ultimately force tighter

budgeting at the local level and action on mandate

relief at the state level. Fifty-nine percent of

superintendents do foresee the cap providing

leverage to negotiate savings agreements in collectivebargaining with their teacher unions.

Less known is that the other major school revenue

source state aid is also subject to a cap now. Tied

to yearly changes in the total personal income of state

taxpayers, the cap provided for a 4.1 percent ($805

million) increase in School Aid this year and is

expected to allow for a lesser increase in 2013-14.

Below is a chart comparing the per pupil increases

in general purpose state aid in the 2012-13 state

budget and the Gap Elimination Adjustment cut tooverall aid in the 2011-12 state budget. Districts are

sorted by property wealth per pupil. Three points

are worth noting:

The 2011-12 aid reductions were regressive,generally imposing larger per pupil cuts on poorer

districts.

The 2012-13 increases are more progressive. This years restorations are critical, but remain

small in comparison to what districts lost. Despite

the increase, 83 percent of districts are stillreceiving less state aid than they did in 2008-09.

It should also be recalled that this years state aid

increase was partly offset by the end of the federal

Education Jobs Fund.

Our survey a year ago revealed striking differences

across regions over which revenue item was the

greater concern. More affluent regions picked the tax

levy cap, while poorer areas cited future state aid

levels. Some districts, we said, were capped by

circum-stances before they were capped by law so

property poor that no plausible local tax increase

could offset the combined impact of state aid cuts and

employee benefit increases.

Source: Council analysis of NYSED School Aid data

Our 2012 survey shows roughly a 20 point shift in

the direction of state aid as the greater revenue

concern across nearly all regions. As we speculated a

year ago, the tax levy cap raises the stakes over the

distribution of state aid for all districts.

Finally, the remaining 8 percent of schoolrevenues federal aid is not capped by state law.

But it is more likely to shrink than grow as Congress

and the President wrestle to construct long-term

deficit reduction plans.

Conclusion

This report illustrates profound concerns super-

intendents share over the finances of the school

systems they lead. But they have larger challenges as

well preparing new generations for the demands

adult life will present them in the decades ahead.

Whatever the prospects school leaders and voters

might have for balancing district finances, meeting

their greater goal at the same time will require help

from state leaders changes in rules so that schools

produce more learning for their students with the

resources their taxpayers provide, and more consis-

tent financial support from the state, especially for

those serving the poorest children and communities.

-$978

-$1,472

-$1,487

-$1,298

-$1,185

-$812

-$1,096

-$1,070

-$805

-$536

-$400

-$944

$318

$342

$292

$250

$186

$195

$147

$160

$113

$54

$21

$189

-$1,500 -$1,000 -$500 $0 $500

(Poorest 10%) 1

2

3

4

5

NYC

6

7

8

9

10

NYS

Per pupil change in aid

Per pupil change in major School Aid elementsDistricts grouped by property wealth per pupil

2011-12 Gap Elimination Adjustment 2012-13 General purpose aid restorations


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7

Overall Fiscal Condition

THE COUNCILs survey asked superintendents

several questions related to the overall fiscal

condition of their district. Some questions were

repeated from the 2011 survey, to allow analysis of

year-to-year change.

New questions posed this year add to the wave of

warnings about insolvency threatening schools and

municipalities. For example, more than 75 percent

of superintendents can foresee a time when their

districts could be unable to ensure that some of their

financial obligations would ever be paid.

Writing of our 2011 findings, we said, The survey

reveals widespread alarm about the financial outlook

for the states public schools. Questions repeated in

the 2012 survey give continuing cause for alarm, withonly a few faint signs of improvement from last years

survey.

Insolvency

About three years ago, school district leaders

began warning of possible financial insolvency and

asked whether it is possible for a district to declare

bankruptcy.6 More recently, leaders have begun to

speak of educational insolvency envisioning

schools reaching a point where they would be unable

to provide students an adequate education. This

years survey explores both concerns.

To learn about fears of financial insolvency, we

asked,

Given current revenue and expenditure trends,

and current reserve levels for your district, do

you foresee a point at which your district

would be unable to ensure that some of its

financial obligations will EVER be paid?

Statewide, 9 percent of superintendents said they

anticipate their districts could face insolvency under

that definition within two years. That may appear to

6 The short answer is no, there is no legal mechanismfor a school district in New York State to declarebankruptcy.

be a low share, but the figure would translate into

roughly 60 school districts.7

Alarmingly, 41 percent of superintendents believe

their districts may face financial insolvency within

four years, and another 36 percent fear it could come

at some point beyond four years. Only 15 percent of

superintendents said they did not foresee theirdistricts threatened by insolvency.

Superintendents of rural districts were most likely

to anticipate possible financial insolvency for their

school systems within the next two years.

7 A recent report by the New York State Association ofSchool Business Officials (A Tale of Two Insolvencies,September 6, 2012) found that 215 lower wealthdistricts are on track to begin to exhaust all savings by2015. District leaders will attempt to avert or delayactual insolvency, however.

1%

2%

6%

32%

36%

15%

9%

0% 10% 20% 30% 40%

Yes, we are currently unabl e

Yes, within 1 y ear

Yes, between 1 and 2 year s

Yes, between 2 a nd 4 ye ars

Yes, beyond 4 year s

No, I do not foresee that time

Unsure

Do you foresee a point at which your district would beunable to ensure that some of its financial obligations willEVER be paid?

9%

7%

4%

11%

0% 2% 4% 6% 8% 10% 12%

Total

City

Suburb

Rural

% of districts foreseeing financialinsolvency within 2 years


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8

By a wide margin, superintendents in the North

Country region8 were most likely to foresee the

possibility of financial insolvency in their districts

nearer-term future.

8 The regions used in this report are defined as follows:

Long Island: Nassau and Suffolk Counties

New York City

Lower Hudson Valley: Putnam, Rockland, Westchester

Mid-Hudson Valley: Dutchess, Orange, Sullivan, Ulster

Capital Region: Albany, Columbia, Greene, Rensselaer,Saratoga, Schenectady, Warren, Washington

Mohawk Valley: Fulton, Herkimer, Montgomery,Oneida, Schoharie

Central New York: Cayuga, Cortland, Madison,Onondaga, Oswego, Tompkins

North Country: Clinton, Essex, Franklin, Hamilton,Jefferson, Lewis, St. Lawrence

Southern Tier: Broome, Chemung, Chenango,Delaware, Otsego, Schuyler, Steuben, Tioga

Finger Lakes: Genesee, Livingston, Monroe, Ontario,Orleans, Seneca, Wayne, Wyoming, Yates

Western New York: Allegany, Cattaraugus,Chautauqua, Erie, Niagara

Educational Insolvency

Inability to fund the components of a basic

education is a more immediate threat for districts

than financial insolvency.

The survey defined educational insolvency in

terms of ability to fund state and federalrequirements and asked,

Given current revenue and expenditure trends

and current reserve levels for your district, do

you foresee a point at which your district

would be unable to fund all the instructional

and other student service requirements

established by laws or regulations approved

by the state and federal governments?

Statewide, 5 percent of districts reported they are

already unable to fund mandated instructional andother student services. A total of 19 percent of

districts anticipate falling into this state of

educational insolvency within two years, and 51

percent of superintendents believe their districts

could reach that state within four years.

Consistent with other indicators of overall finan-

cial outlook, concern about educational insolvency

was greatest in the North Country. In that region, 50

percent of superintendents said they foresee their

districts becoming unable to meet state and federal

student service requirements within two years, and

18 percent say their districts are currently unable todo so.

9%

0%

6%

0%

15%

7%

6%

25%

8%

6%

12%

0% 5% 10% 15% 20% 25% 30%

Total

Long Island

Lower Hudson Valley

Mid-Hudson Valley

Capital Region

Mohawk Valley

Central New York

North Country

Southern Tier

Finger Lakes

Western New York

% of districts foreseeing financialinsolvency within 2 years

5%

5%9%

32%

33%

12%

4%

0% 5% 10% 15% 20% 25% 30% 35%

Yes, we are currently una ble

Yes, within 1 yearYes, between 1 and 2 years

Yes, between 2 and 4 ye ars

Yes, beyond 4 years

No, I do not foresee that time

Unsure

Do you foresee a point at which your district would beunable to fund all the instructional and other studentservice requirements established by laws or regulationsapproved by the state and federal governments?


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9

Superintendents of rural districts were most likely

to predict educational insolvency within two years.

Other measures of overall fiscal conditionOne of the most striking findings in the 2011

survey was the near universal worry about reliance on

reserves: 89 percent of superintendents said they

were somewhat or very concernedby their districts

use of reserves to pay recurring costs. For 2012, a

similar share of superintendents expressed concern

(83 percent), but the proportion saying they are very

concerneddeclined from 66 percent to 43 percent.

Statewide, 52 percent of superintendents describe

their districts financial condition as somewhat or

significantly worse than a year ago, down from lastyears 75 percent figure.

Despite grave worries for the future, few superin-

tendents were willing to characterize their districts

currentfiscal condition as poor or very poor, either

last year or this year.

Comments volunteered in response to open-ended

questions suggest superintendents focused on the

immediate financial condition of their districts in

their answers. For example, one downstate suburban

superintendent wrote, Our current strong financial

health is simply current - I will not be able to describe

us as strong in a year or two.

Comparing regions and types of communities

As in 2011, there were variations across types of

districts and across regions in the assessment of

overall fiscal condition and trajectory.

In both years, urban superintendents were more

likely toview their districts financial condition as

poor. The share of city superintendents assessing

their districts financial condition as either poor or

very poor jumped sharply from 24 percent to 43

percent.

19%

11%

17%

14%

22%

14%

12%

50%

8%

15%

21%

0% 10% 20% 30% 40% 50% 60%

Total

Long Island

Lower Hudson

Mid-Hudson Valley

Capital Region

Mohawk Valley

Central New York

North Country

Southern Tier

Finger Lakes

Western New York

% of districts foreseeing educationalinsolvency within 2 years

19%

14%

18%

21%

0% 5% 10% 15% 20% 25%

Total

City

Suburb

Rural

% of districts foreseeing educationalinsolvency within 2 years

66%

23%

6%

5%

49%

34%

11%

6%

0% 10% 20% 30% 40% 50% 60% 70%

Very concerned

Somewhat concerned

Not concerned, our use of reserves islimited

Our district is not drawing uponreserves to pay for recurring operating

expenses

To what extent, if at all, are you concerned that your district isdrawing upon reserves to pay for recurring operating costs?

2011 2012

1%

6%

41%

42%

10%

1%

2%

23%

53%

22%

0% 10% 20% 30% 40% 50% 60%

Significantly better

Somewhat better

About the same

Somewhat worse

Significantly worse

Compared to one year ago, how has the financial conditionof your district changed, in terms of its ability to fund

services meeting expectations of parents in the community?

2011 2012


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10

Superintendents leading urban districts were also

more likely to say their districts financial conditionhad worsened from a year ago, and to express

concern about reliance on reserves. Ninety-five

percent of city superintendents said they were

somewhat or very concerned by their districts use of

reserves to fund continuing costs, compared to 83

percent for suburban superintendents and 82 percent

for rural superintendents.

Looking across regions of the state, results are

mixed. Generally, superintendents in the North

Country and Southern Tier appear to have the

greatest concerns about overall financial conditionand outlook.

Digging into reserves

The practice seems to have diminished, but for a

time it was popular for elected officials and news

sources to condemn schools for excessive reserves

and call on them to drain those accounts to avert

layoffs or property tax increases. There have always

been at least three problems with this strategy.

First, schools are more limited by law in the

reserves they are allowed to maintain than other

public entities in New York State.

School districts are permitted to maintain an

unrestricted fund balance equal to up to 4 percent of

their budget. Municipalities have no percentage limit

and the Government Finance Officers Association

recommends maintaining an unreserved fund

balance of between 5 and 15 percent of general fund

revenues, or up to two months expenses. So what

New York school districts are permitted to maintain

as a maximum rainy day fund is less than what

experts deem adequate as a minimum.

Second, reserves run out. Eventually, a district

must either permanently reduce expenditures to align

them with its reliably recurring revenues, or raise

taxes to match revenues with spending. The deeper

the reliance on reserves, the more painful the day of

reckoning when they run out.

As noted in the introduction, the State EducationDepartment has reported that school district rainy

day reserves shrank from $2.76 billion in 2009-10,

to $1.21 billion in 2012-13.

Third, year-in and year-out, schools already use

reserves to manage turbulence in their financial

operations, some of which arises from swings in the

states fiscal posture.

For example, in the Property Tax Report Cards

filed for their May 2012 budget votes, school districts

reported using assigned fund balances totaling over$1.2 billion. Without these funds appropriated out of

existing reserves or current year operating surpluses,

districts would have had to raise taxes or cut

spending by an equivalent sum.

To put that figure in perspective, to match what

they used from fund balances in their 2012-13

budgets, districts would have had to raise local taxes

24%

12%

20%

17%

43%

10%

18%

17%

0% 10% 20% 30% 40% 50%

City

Suburb

Rural

Total

% Responding Poor or Very Poor

How would you describe the current f inancial condition ofyour school district, in terms of its ability to fund servicesmeeting the e xpectations of parents in your community?

2011 2012

Various measures of fiscal condition, by region

Region

Financial

condition

poor/very

poor

Financial

condition

worse than

1 year ago

Reserves

less than

adequately

funded

Concerned

about

reliance on

reserves

Total 17% 52% 31% 82%

Long Island 2% 43% 21% 75%

Lower Hudson Valley 13% 34% 32% 77%

Mid-Hudson Valley 7% 53% 33% 73%

Capital Region 27% 59% 42% 81%

Mohawk Valley 18% 56% 30% 89%

Central New York 20% 35% 25% 70%North Country 39% 54% 39% 94%

Southern Tier 27% 65% 49% 87%

Finger Lakes 6% 48% 13% 87%

Western New York 17% 64% 29% 88%


12/36


11

by 6.8 percent more than they actually proposed (9

percent, rather than 2.2 percent). Or they would have

had to cut spending by an average of 4.1 percent from

what they actually budgeted.

By these measures, poor districts depended on

reserves the most in putting together their 2012-13school budgets. Without what they appropriated

from fund balance, the poorest 20 percent of districts

(measured by property wealth per pupil) would have

had to raise taxes byan additional 21 percent.

The mandated low percentage limit on

unrestricted reserves for school districts may have

made sense when school revenues were more stable

and predictable from year-to-year. But as state

government became increasingly dependent on

receipts from Wall Street-related activities, School

Aid entered an era of boom and bust cycles,increasing financial uncertainties for all districts, and

especially for poor, heavily aid dependent school

systems.

SOURCE: Council analysis of NYSED Property Tax Report Card data

-14%

-31%

-23%

-9%

-18%

-22%

-10%

-9%

-12%

-4%

-7%

7%

21%

17%

11%

10%

11%

8%

6%

5%

3%

3%

-35% -25% -15% -5% 5% 15% 25%

Total State

1 (Proorest 10%)

2

3

4

5

6

7

8

9

10

What happens when reserves run dry?Districts grouped by property wealth per pupil

Change in unrestricted fund balance from 2011-12 to 2012-13

Additional tax increase which would be needed without use of fund balance (i.e.,appropriated fund balance as % of tax levy)


13/36


12

In their own words: Overall Fiscal Condition

We are at our breaking point. Classrooms are full, 27 -30 students in most 7-12 classrooms and 19-24

students in elementary classrooms. We have cut all thelow hanging fruit, and climbed the tree for the rest. Ournext step is to start cutting off branches, which meanswe will be cutting off chunks of the learning we yield asan institution.~ Upstate rural superintendent

No matter how much we have in reserves, TRS/ERS,health insurance, and Triborough along with meagerNYS aid, makes the financial model unsustainable.~ Upstate suburban superintendent

Our district is not able to offer the level of interventionservices that our students need academically. We aregetting by through under-spending our budget, being

lean administratively and unfortunately not offering thedepth of intervention serves our students need.~ Upstate city superintendent

We have developed a plan to burn reserves over thenext three years and making significant cuts in each ofthose years to arrive at a point where we will stabilize.The reserves that we do have will provide us with thetime make those cuts until we stop burning our fundbalance. However, we will have to significantly reduceour ability to meet the educational needs of ourcommunity because of diminishing resources.~ Downstate city superintendent

We are currently using a significant amount of reservesas recurring revenue. The reserves are soon to expire. Ihave no good plan as to how we will replace this lostrevenue stream. We have already eliminated 17% of our

faculty and staff. People are complaining about classsize now. Class size will only increase in years to come.Programs will be eliminated and down-sized.~ Upstate suburban superintendent

The fluctuating unknown costs of Special Educationmake it almost impossible to create a sound budget in a

small, rural school district.~ Upstate rural superintendent

We are not meeting the state and federal requirementsfor academic intervention services now, particularly atthe high school level. We are straining to provide thenecessary resources for our elementary and middle

school children, because we know that in the long termchildren will not be successful without emphasis on

early literacy. We have consciously chosen to forestallfiscal disaster by cutting everything possible and beingout of compliance with older children.~ Upstate rural superintendent

We have cut about 15% of staff in the last four years.

However, we are using 400% more fund balance andreserves than in 2008. It is not sustainable and I fearthat within two years we will be financially insolvent.~ Upstate rural superintendent

We are in "ok" shape for now. No doubt many, manyothers are not. It's a slippery slope. Even if results show

some districts like ours are "ok" - that will change beforewe know it. And what does that say for others who arealready decimated.~ Downstate suburban superintendent

While we are solvent now, the tax cap will erode away atour fiscal stability. Uncontrollable expenses such asincreases in retirement contributions, health care costs,unfunded mandates, fuel, etc. are eating away at ourability to deliver program.~ Upstate rural superintendent

We are a Special Act School District and are rate based.BUT, funding remains an issue as our rate has notincreased in 5 years and we are not allowed by law tocarry a fund balance.~ Upstate rural superintendent

If the gap elimination adjustment remains unaltered, wewill not be able to accomplish our educational missionin the 2013-14 school year.~ Upstate rural superintendent

The local community cannot support additionalcontributions to funding the educational programsoffered their children, yet each child in New York State

should have opportunity and access to a soundeducational program. We have been operating by not

filling positions due to attrition for the last 10 yearsOffering two languages was given up over 8 years ago.Three elementary buildings with a total of 600 students

share 1 art teacher - that happened 5 years ago - wecan't meet the mandates for PE at the elementary level.The HS offers 3 AP classes - the list goes on, but when

someone retires, the position wasn't filled. Right nowwe are waiting for a retirement in the guidance staff, orwe will have another reduction of a person.~ Upstate rural superintendent


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13

Budgeting Choices

The core ofTHE COUNCILs survey is an exploration

of the budgeting choices schools have made over the

past three years.

General observations about school budgets

As in last years report, we stress three points

before presenting the surveys findings on the specific

actions districts took in putting together budgets.

First, You cant cut what you dont have. Poor

districts are less likely to report that they eliminated

advanced classes because they are less likely to have

them in the first place. A district conducting all

classes in a single building will not report that it

closed a school, unless it takes the extreme step of

tuitioning out all its students to a neighbor.

Related, You cannot cut what you have already

decimated. In last years survey, for every specific

budget action we identified, the proportion of

superintendents saying their district had used it

increased every year. That is not true this year;

smaller percentages of districts exercised some

options this year than in the year before. This could

happen if a districts financial condition has improve-

ed. But another explanation could be that a district

has already cut the function as much as prudent, or as

much as permitted by law our next point.

Second, some items cannot be cut because they

are mandated by Albany or Washington. For

example, the operation of special education services

is heavily prescribed by state and federal mandates

and over multiple years, special education is seen as

less negatively affected by budget decisions than any

other service. In the same vein, the demands of the

states new teacher evaluation requirements have

raised concerns about maintaining the administrative

capacity necessary to comply.

Third, understanding where schools can cutrequires recognizing where their spending goes to

start.

One way to break down school spending is by the

commodities it buys; another is by the purposes it

serves. Personnel salaries and benefits comprises

about three quarters of school spending by

commodity. Instruction consumes a comparable

share by purpose.

Source: Council analysis of NYSED School District Fiscal Profile data(2009-10); Big 5 Cities not included

Source: Council analysis of US Census Bureau data (2009-10); Big 5Cities not included

Personnel

As noted, 70 to 80 percent of spending in a typical

district is devoted to personnel. That means 70 to 80

percent of any cuts needed to achieve a balanced

budget are likely to come from personnel. Although

the impulse of school leaders and voters may be to

cut things before people, that becomes harder and

harder after a series of lean years exhausts less

painful options.

There are two ways to reduce personnel costs:

employ fewer people, or spend less per employee.Like it or not, districts have more latitude to exercise

the former option than the latter salaries and many

benefits are locked-in by contracts, and pension

contributions are prescribed by state law and retire-

ment system calculations. Nonetheless, THE

COUNCILs survey found districts using both

approaches.

Instruction,

74.1%

Operations &maintenance,

6.5%

Debt service,

6.6%

Other, 5.4%

Transportation

, 5.1%Central

Office, 2.3%

Where school spending goes -- by purpose

Salaries &wages, 54.5%

Employeebenefits,

20.2%

Everythingelse, 25.2%

Where school spending goes --by commodity


15/36


14

Teacher compensation is the largest single item in

virtually every districts budget and reducing teaching

positions was the most commonly reported personnel

cost reduction. Statewide, 67 percent of superintend-

dents said their districts reduced teaching positions

this year, down from 72 percent in 2011-12.

We estimate that districts reduced their teaching

staffs by an average of 3.6 percent, this year, downfrom 4.3 percent in 2011-12.

Fewer districts also report cutting administrative

positions this year there are fewer to eliminate.9

But districts continued to cut these positions more

steeply than teaching jobs, eliminating an average of

5.2 percent of their administrative positions.

9 By law, districts are required to report compensationfor all administrative positions carrying the titlesuperintendent, or deputy/associate/assistantsuperintendent, or any other certified administrativeposition (e.g., principal) paying more than $123,000.For 2012-13, 301 districts 44 percent of the total report only one position meeting the criteria theirsuperintendent. Some may have other central officepositions bearing different titles and paying below thereporting threshold, but this measure does give someindication of how administratively lean many districtsare.

Position reductions are down across all categories

compared to 2011-12. But it is essential to recognize

that the impact is cumulative this years 3.9 percent

reduction in total positions comes on top of last years

estimated 4.9 percent cut. Further, data compiled by

the Gannett News Service Capitol Bureau10 shows

that districts outside the Big 5 cities reduced total

staffing by another 3.9 percent in the two preceding

years (2009-10 and 2010-11). Compounding all these

figures suggests that school districts have eliminated

roughly 12 percent of their positions since 2008-09.

As in 2011-12, job cuts tended to be deeper in city

and rural districts than in suburbs. City districts

reported cutting total positions by an average of 5.2

percent, compared to 4.4 percent in rural districtsand 3.3 percent in suburbs.

10School enrollment, staff continue to decline,Rochester Democrat and Chronicle, August 20, 2012.

PERSONNEL 2012-13 2011-12 2010-11

At least

once in last

3 years

Salary freeze or other cost reduction

in salary or benefits for

superintendent 45% 59% 34% 79%

Cost-reduction concession in salaries

or benefits for other central office

administrators 36% 50% 22% 69%


or benefits for building level

administrators 35% 45% 20% 66%


or benefits agreed to by teacher

union 35% 31% 15% 54%


or benefits agreed to by any other

union 30% 28% 13% 48%

Reduction in central office

administration positions 22% 25% 22% 47%

Reduction in building-level

administration positions 18% 25% 20% 43%

Reduction in teaching positions 67% 72% 62% 87%

Reduction in other instructional

support or student services positions 56% 60% 46% 76%

Reduction in other positions 59% 60% 47% 79%

Other reduction in personnel costs 38% 33% 27% 47%

Layoffs Attrition

Total

Positions

Eliminated

Classroom teachers 2.2% 1.4% 3.6%

Other instructional orstudent support

personnel 3.9% 2.0% 5.9%

Administrators 3.1% 2.1% 5.2%

Other Employees 1.7% 1.0% 2.7%

TOTAL 2.4% 1.5% 3.9%

Percentage of positions eliminated by category,

2012-13

4.3%

8.0%

7.5%

3.6%

4.9%

3.6%

5.9%

5.2%

2.7%

3.9%

0% 2% 4% 6% 8%

Teachers

Other Student Support

Administrators

Other

Total

Percent reduction in positions by category,2011-12 and 2012-13

201 1-12 201 2-1 3


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15

INSTRUCTION 2012-13 2011-12 2010-11

At least

once in last

3 years

Increased class size 59% 48% 30% 67%

Reduced non-mandated art classes 16% 18% 11% 31%Reduced non-mandated music

classes 20% 19% 9% 33%

Reduced advanced or honors classes 17% 13% 7% 24%

Reduced summer school 31% 27% 20% 44%

Reduced extra help for students

during the regular school day or year 22% 23% 14% 32%

Reduced student enrollment in career

and technical programs 18% 12% 7% 23%

Reduced/deferred purchase of

instructional technology 31% 26% 20% 42%

Reduced/deferred purchase of

textbooks 18% 13% 8% 21%

Reduced/deferred purchase of library

materials 17% 13% 9% 22%

Eliminated prekindergarten 1% 0% 1% 3%

Reduced prekindergarten 5% 2% 1% 8%

Eliminated kindergarten 0% 0% 0% 1%

Moved from full-day to half-day

kindergarten 0% 0% 0% 2%

Other reduction in kindergarten 0% 1% 0% 3%

Combined grade two leve ls in a single

classroom 4% 2% 1% 7%

Other reduction in instruction 34% 23% 14% 38%

Superintendents led other categories of employees

in accepting salary freezes or agreeing to other

compensation changes to save money for their

districts: 49 percent of superintendents report taking

such steps in 2012-13, and 79 percent said they had

done so at least once in the past three years.11

Cost-saving concessions have been less common

among unionized employees. Nonetheless, the per-

centages have grown. For example, 35 percent of

superintendents report a cost-reduction agreed to bytheir teacher union in 2012-13, up from 15 percent

two years ago (2010-11). As discussed below, the

property tax levy cap may have an impact on

collective bargaining in some districts.

Instruction

While personnel is the largest area of school

spending measured by commodity, instruction is the

greatest expense area measured by purpose,

accounting for 74.7 percent of total spending

according to the State Education Departments

School District Fiscal Profiles. Accordingly, when

cuts are necessary, it is hard for schools to spare

either of these large areas.

By a wide margin, the most common cost reduc-

tion in instruction this year has been to increase class

sizes, reported by 59 percent of districts, up from 48

percent in 2011-12. Next most common were reduc-

ing summer school and reducing or deferring the

purchase of instructional technology, each reported

by 31 percent of superintendents. Then came reduc-

11 According to administrative compensation datareported to the State Education Department, thestatewide average superintendent salary has beenroughly flat for the past three years $165,577 in 2010-11,$165,464 in 2011-12, and $165,953 in 2013-13. Inaddition, in each of the past two years, over half thestates districts report paying their superintendent the

same or less compared to the prior year.

ing extra help for students during the regular school

day or year. As explained elsewhere in this report,

assuring extra help for students emerges as a top

concern for many superintendents.

This years survey added questions asking

specifically about actions affecting early childhoodeducation kindergarten and prekindergarten.

Although there have been warnings that some

districts are forced to consider cutting kindergarten,

it appears few have done so yet.

One superintendent reported that his or her

district eliminated kindergarten in 2010-11. In each

of the three years asked about, one superintendent

reported a district scaling back from full-day, to half-

day kindergarten. This suggests that over the past

three years, a total of 2 percent of districts have made

that reduction in kindergarten services.

For the current year, 5 percent of superintendents

reported reducing prekindergarten, and 1 percent

reported eliminating the service altogether. Not all

districts offer pre-K, however, so the prevalence of

cuts would be higher if counted against districts

which actually had a program to cut.

Total positions eliminated, by category and type, 2012-13

City Rural Suburb Total

Teachers 4.8% 4.2% 3.1% 3.6%

Other Student Support 7.7% 6.0% 5.4% 5.9%

Administrators 4.0% 6.1% 5.0% 5.2%

Other 3.5% 3.5% 2.1% 2.7%

Total 5.2% 4.4% 3.3% 3.9%


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16

Other direct student services

THE COUNCIL survey finds that districts have

continued to make cuts to other student services. The

proportions of superintendents saying their districts

reduced sports or other extracurricular activities

declined from 2011-12, after sharp jumps in reported

cuts to those areas last year. The share saying they

had reduced special education rose. In all of these

areas, over half of superintendents said their districts

had made cuts at least once in the last three years.

Operations, maintenance and construction

Operations and maintenance costs comprise only

6.5 percent of total school spending on average, but

in striving to cut things rather than people, districts

have continued to be aggressive in seeking savings

from this area.

Of all the budget actions across all areas,

implementing some form of energy conservation (57

percent) was the third most common, behind the

connected actions of cutting teachers (67 percent)

and increasing class sizes (59 percent). The share of

superintendents reporting their districts have

deferred maintenance is rising, from 26 percent in

2010-11, to 40 percent this year.

An apparently small proportion of districts

anticipates deferring a capital project this year (16

percent). But not all districts need to take on a

capital project in any given year.

Other actions

Our survey also allowed superintendents to check-

off an assortment of miscellaneous budget cutting

strategies.

At least 40 percent of superintendents reported

reducing funding for staff travel and professional

development, reducing participation in BOCES

services, making other shared service arrangements

outside of BOCES, and reducing reserves.

Some of the districts which reported reducing use

of BOCES services said they had also increased their

use of these services. From past anecdotal

information gathering efforts, we have found districts

scaling back participation in BOCES special educa-

tion programs, choosing to serve students with

disabilities in-house instead. At the same time,districts also reported making more aggressive use of

BOCES administrative services, including cooperative

purchasing, shared business offices, and energy

management, for example.

The survey also shows steady growth in shared

service arrangements outside of BOCES, reaching 40

percent in 2012-13.

Statewide, 14 percent of superintendents report

that their districts closed a school building at least

once in the past threeyears. As observed above, you

cant cut what you dont have. Small districts

operate fewer schools, so, not surprisingly, only 2

percent of districts with fewer than 500 students

closed a building. But 29 percent of those with over

5,000 students report having done so.

OTHER DIRECT STUDENT

SERVICES 2012-13 2011-12 2010-11

At least

once in last

3 years

Reduced interscholastic sports 34% 41% 27% 57%

Reduced other extracurricular

activities (other t han interscholastic

sports) 34% 39% 22% 55%

Changes in special education which

reduced costs 41% 37% 22% 52%

Reduced other direct student services 27% 22% 12% 32%

Reduced pupil transportation 28% 28% 12% 42%

Other reduction in student services

costs 21% 16% 11% 24%

OPERATIONS,

MAINTENANCE AND

CONSTRUCTION 2012-13 2011-12 2010-11

At least

once in last

3 years

Deferred maintenance 40% 36% 26% 47%

Any form of energy conservation 57% 48% 33% 66%

Delayed a capital project 16% 14% 10% 24%

Outsourced custodial/ maintenancework 2% 2% 2% 4%

Reducing or deferring purchases of

supplies, other than those related t o

instruction 41% 36% 26% 48%

Other reduction in operation,

maintenance or construction costs 39% 32% 22% 45%


18/36


17

Impact of 2011-12 budget decisions

Our survey also asked superintendents to assess

the impact of their districts 2012-13 budget upon

various functions. More than 40 percent of superin-

tendents anticipated that the adopted budget would

have a negative impact on these functions:

operations and maintenance (50 percent), extracurricular activities (49 percent), extra help for students who need it (48 percent), administration (46 percent), athletics (45 percent), and core instruction in elementary grades (41 percent).

Percentages of superintendents anticipating that

their districts 2012-13 budget would have a negative

impact were down modestly across all service

categories. Few superintendents anticipate positive

impacts, however.

Extra help for students who need it drew the

highest share of superintendents foreseeing a severe

negative impact from the district budget, with 9

percent.

Budget impacts by district type

Rural superintendents were more likely to

anticipate negative effects on basic instruction from

their districts adopted budgets than were their city

and suburban counterparts.

City superintendents exhibited widespread

concern about extra help for students who need it, as

well as operations and maintenance, administration,

and extracurricular activities, with over 60 percent

foreseeing negative effects in each area.

Among rural superintendents, extracurricular

activities (53 percent) and extra help (52 percent)

were most commonly seen as negatively affected.

Impact on administration was the most common

concern among suburban superintendents (49percent), followed by operations and maintenance

(46 percent).

Conversely, between 10 and 15 percent of

suburban superintendents anticipate their districts

2012-13 budgets will have positive effects on core

elementary, middle or secondary instruction.

OTHER ACTIONS 2012-13 2011-12 2010-11

At least

once in last

3 years

Closed a school building 5% 7% 3% 14%

Change in school schedule for the

purpose of reducing costs (e.g.,

discontinuing block scheduling) 14% 10% 4% 23%

Reduced funding for staff trave l 52% 48% 35% 61%Reduced participation in professional

development by administrators 44% 41% 28% 54%

Reduced participation in professional

development by teachers 42% 40% 26% 51%

Reduced participation in professional

development by other staff (other

than teachers a nd administrators) 32% 30% 20% 38%

Reduced participation in BOCES

services 42% 36% 23% 51%

Increased participation in BOCES

services 25% 21% 9% 31%

Increased participation in other

shared services arrangements (not

through BOCES) 40% 25% 13% 43%

Reduced or eliminated undesignated

reserves 52% 43% 26% 58%

Reduced or eliminated designated

reserves 47% 41% 22% 53%

Changed purchasing practices 36% 28% 16% 42%

Other 8% 7% 4% 11%


19/36


18

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2011 Instruction in English, mat hematics, science, and soc. studies

2012 Core instruction in elementary grades

2012 Middle level instruction in English, math, science, and soc. studies2012 High school instruction in English, math, science, and soc. studies

2011 Extra help for students who need it

2012 Extra help for students who need it

2011 Advanced or enrichment classes

2012 Advanced or enrichment classes

2011 Instruction in art

2012 Instruction in art

2011 Instruction in music

2012 Instruction in music

2011 Special education

2012 Special education

2011 Athletics

2012 Athletics

2011 O ther extracurricular activities

2012 Other extracurricular activities

2011 Student transportation

2012 Student transportation

2011 Other student services

2012 Other student services

2011 O perations and maintenance

2012 Operations and m aintenance

2011 Administration

2012 Administration

2011 O ther district operations and services

2012 Other district operations and services

Impact of 2011-12 and 2012-13 budgets on selected school operationsSevere negative impact Some negative i mpact No change from prior year Positive impact


20/36


19

Budget impacts by region

Long Island and the Lower Hudson Valley are the

states most affluent regions, measured by property

wealth or resident income per pupil. Superinten-

dents in those regions were less likely to anticipate

negative consequences from 2012-13 school budgets

than their colleagues in other regions. Yet Central

New York is one of the poorest regions and its

superintendents were also more optimistic on

average than colleagues elsewhere.

Superintendents in the North Country, Western

New York, and the Mohawk Valley were more likely

to foresee negative impacts from their district

budgets. Seventy-four percent of North Country

superintendents believe extra help for students who

need it will be negatively affected by their school

budget, the highest negative share for any service inany region.

Once again, you cant cut what you dont have

or what you have only in minimal quantity. This may

explain the low negative impact anticipated for

advanced classes in the Southern Tier, or art and

music in the North Country.

Total City Rural Suburb

Core instruction in elementary

grades

41% 33% 43% 39%

Instruction in English, math,

science, and social studies in the

middle level grades

33% 33% 36% 29%

Instruction in English, math,

science, and social studies in

high school

37% 40% 42% 28%

Extra help for students who need

it -- any level

48% 73% 52% 37%

Instruction in art -- any level 27% 23% 27% 26%

Student transportation 33% 57% 34% 27%

Advanced or enrichment classes 35% 50% 39% 28%

Special education 20% 14% 23% 15%

Athletics 44% 43% 47% 40%Other extracurricular activities 48% 62% 53% 39%

Instruction in music -- any level 26% 23% 32% 19%

Other student services 34% 15% 39% 31%

Operations and maintenance 49% 80% 48% 46%

Administration 46% 69% 40% 49%

Other district operations and

services

43% 57% 43% 43%

Percentage of superintendents anticipating some or

severe negative impact from 2012-13 budget decisions on

various school operations -- by district type:


21/36


20

In their own words: Budgeting Choices

We were forced to take drastic budget measures in the2010-2011 school year. During that year, we reducedour staff (all areas) by 10%+. We continue to operate ata skeleton level of services for our students. As a rural

school district, we already offer a many fewer program-matic opportunities than our wealthier colleagues. Any

further reductions in programs and/or services wouldseverely limit the educational prospects of our students.~ Upstate rural superintendent

We have been routinely reducing administration (25%over three years) and were forced to go deeper atcentral office this year to avoid further reductions in thebuildings. Set minimum class sizes at HS and allowedclass sized to be larger than previous years in acceler-ated and advanced courses. Reduced the heck out of Oand M [operations and maintenenance]. Outsourced

leadership for O and M.~ Upstate suburban superintendent

Because of the reduction in administration at the centraloffice level a few years ago, we are all doing more with

fewer personnel, including sharing secretaries. We havenot had much impact on serving our AIS students be-cause the board has been adamant re no cuts. We also

support kids via federal grants. Our class sizes in HSand MS are nearing 30 so we could have smaller class

sizes in the elementary grades, i.e., 22-24/class. Wehave cut all the non-instructional we can. We reallydon't know where we can cut yet again, it will be the fifth

year in a row.~ Downstate suburban superintendent

We had little to cut since major cuts were undertakenbefore the 2010-11 school year.~ Upstate rural superintendent

We are struggling with the reductions to this point butwill make it through the year. However, without support

from the state even for low need schools we will beforced to continue to challenge the cap or eviscerateprogram components as operational components can

no longer be cut and maintain the district operations.~ Upstate suburban superintendent

The lack of cuts to administration is not because ofexcess administrators, it is because we have onePrincipal in the elementary school, a middle schoolPrincipal that is also the CSE (committee on specialeducation) chair and one HS Principal. There are noother central office administrators besides the

superintendent, so there is no place to cut. With theincreased requirements under 3012-c (teacher/

principal evaluations), it will be difficult at best tocomplete the new requirements.~ Upstate suburban superintendent

Because of the massive layoffs required to pass the2011-12 budget, the board decided to exceed the taxlevy limit in our first budget vote. We did not pass. Wereduced to the tax levy limit, and passed on the secondvote. The entire process was contentious funding reduc-tions and somewhat divisive. We need some sort of"consideration" from our teachers unit, but have yet toreceive it. This is harming our ability to gain community

support for our budget. As a superintendent, my salaryhas been frozen for the fourth year, I am paying more

for my health insurance, I have a smaller administra-tive team with which to work, and I am having a hardtime keeping people motivated and positive partic-ularly given the rapid pace of change in regulations

from NYSED. As a small rural district, we do not have thecapacity that other districts do, and our effectiveness is

slowly being eroded as a result of funding reductions.~ Upstate rural superintendent

In my opinion we are out of magic. We have eliminatedover 51 positions through attrition over the past three

years. We have closed 2 schools. We have doubled ourappropriated fund balance and will be under the 4%allowable amount. We have squeezed all that can be

squeezed. We do not spend anywhere what we need for

technology. We are postponing capital projects. Wehave kept spending under 1% and the levy increaseunder 2% for each of the three past years. My salary hasbeen frozen twice and the administrators have made

serious concessions. However, CSEA and NYSUTemployee costs ---and they are 90% of our work force---continue to increase well in excess of 2% per year.~ Upstate rural superintendent

We are experiencing an increase in enrollment but areconstrained in the addition of teaching and student sup-

port positions because of the tax cap and the currenteconomic situation. Our classes and our programs areat capacity and I am really concerned because myhonest assessment is that we are stretching people and

programs too far.~ Upstate suburban superintendent


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Adapting to the tax levy capDistricts developed and adopted their budgets

under the states new property tax levy cap law for the

first time this past spring.

Actual proposed budget figures and our survey

responses point to the same conclusion: the cap led

districts to propose lower spending and tax increases

than would have occurred under the old rules.

In the first round of voting, districts proposed

budgets with spending increases averaging 1.7

percent and tax increases averaging 2.2 percent.

Budget vote day brought the second highest known

approval rate 96.5 percent12, including 99 percent

of districts proposing increases within their levy limit.

Almost two-thirds of the districts attempting to

over-ride their levy limit were successful in obtainingthe 60 percent of voters needed for approval.

Ultimately, only two districts were required to

adopt a contingency budget, with no increase in tax

levy over the prior year, as required by the new law.

Assessing the impact

For the state as a whole, 67 percent of

superintendents said that the tax levy cap had led

their districts to adopt budgets with spending levels

below what would have been done without the cap.

Included in that share were 17 percent ofsuperintendents who described their districts

adopted spending level as significantly lower.

Asked to appraise how the tax levy cap affected

programs and services, 60 percent said it caused their

adopted budget to have either a somewhat more

negative impact (50 percent), or significantly more

negative impact (10 percent) than would have

occurred without the cap.

Impact by region

Looking at the perceived impact of the tax levy cap

by region, it is hard to identify patterns. With some

reflection, however, it becomes apparent that there

are multiple considerations which might interact to

affect how the cap would influence budget impact.

12 The highest pass rate was 97.3 percent in 2009; theState Education Department has figures going back to1969.

Poorer districts tend to be more heavily

dependent on state aid for two reasons. First, state

aid does have progressive elements which direct

greater revenue per pupil to poorer districts. Second,

they have less property wealth to tax with identical

tax rates, a poor district will raise less local revenue

than a wealthy district.

So local taxes typically comprise a larger share of

total revenues for wealthy districts, suggesting they

would be more likely to ascribe budget impacts to the

tax levy cap. But even with a tax increase within the

levy limit, a wealthier district will raise more revenue

than a poor district levying at the same rate.

Further, rich or poor, local political considerations

also affect judgments about how large a tax increase

taxpayers might support. Last, while exemptions

from the cap might allow districts a higher tax levylimit, many local leaders ruled out seeking increases

greater than 2 percent, believing their voters would

apply that widely cited number as a benchmark.

Among regions, superintendents in the Lower

Hudson Valley, with the greatest property wealth per

pupil, ascribed the least impact on spending levels to

the cap. Perhaps their ability to raise relatively

larger sums at any given tax rate cushioned the

impact of the tax levy cap.

On the other hand, the North Country, with manylow wealth districts, had a high rate of perceived

impact on spending. This may reflect the limited

sums many of these districts can raise at any tax rate.

There were similar results for these two regions on

the questions about how the tax levy cap affected

programs and services.

0% 20% 40% 60% 80% 100%

Total

Long Island

Lower Hudson Valley

Mid-Hudson Valley

Capital Region

Mohawk ValleyCentral New York

North Country

Southern Tier

Finger Lakes

Western New York

Impact of tax cap on bu dgeted spending levels

Somewhat lower Significantly lower


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0% 20% 40% 60% 80% 100%

Total

Long Island

Lower Hudson ValleyMid-Hudson Valley

Capital RegionMohawk Valley

Central New York

North Country

Southern Tier

Finger LakesWestern New York

Impact of tax cap on programs and services

Somewhat negative Significantly negative

Though often cited as a model, Massachusettss

tax levy cap is more generous to local governments

and schools than New Yorks version. Massachusetts

communities may increase their tax levy by up to 2.5

percent without seeking voter approval, and may

over-ride that cap with a simple majority of voters.

New Yorks lawforbids schools any increase in taxlevy without approval by at least a simple majority of

voters, and requires 60 percent of voters to over-ride.

Yet although Massachusettss law is more

favorable to local governments, one study13 concluded

it had more adversely affected poor communities

they were less likely to attempt over-rides and less

likely to succeed when they did try. THE COUNCILs

analysis of past school district budget votes suggests

similar risks high need small city and suburban

districts seem likely to have the greatest difficulty

winning over-ride votes. But with so few unsuc-

cessful votes this year, it is not yet possible to draw

reliable conclusions about future over-ride prospects.

As a group, high need rural districts proposed the

lowest tax increases, made the least use of exemp-

tions, and were least likely to attempt over-rides.

13 "Hidden consequences: Lessons from Massachusettsfor states considering a property tax cap." Center onBudget and Policy Priorities, 25 May 2010. Web. 27Sept. 2012.

Tax levy cap impact on collective bargaining

Some tax levy cap proponents described it as a

blunt instrument which would force state officials

to get serious about enacting mandate relief, and

compel local leaders to manage more efficiently and

negotiate more aggressively with employee unions.

Our survey asked superintendents for their

impression of how the tax levy cap might affect

collective bargaining with their local teacher union.

We singled out teacher unions and did not inquire

about other employee categories in order to limit the

overall length of the survey, and because teacher

compensation is the largest expense in virtually every

district budget.

Statewide, 59 percent of superintendents said that

they thought that the tax levy cap increased the

likelihood that their district would be able to

negotiate a cost saving concession with their teacher

union, or that it had already contributed to achieving

savings. Thirty-one percent thought the cap would

not affect the prospects for negotiating cost savings,

while 10 percent said doing so was not a priority. A

superintendent might give the latter answer if the

district had previously negotiated savings, or if it is

believed that its teacher compensation is not

competitive.

In response to our invitation for open-ended

comments, a couple superintendents said that the tax

cap had had a negative impact on bargaining

prospects.

2012-13 Tax levy decisions by SED Need/Resource Category

Need/Resource Capacity Category

Proposed

Tax Increase

Proposed Tax

Levy as % of

Levy Limit

% Attempting

Tax Cap

Over-Rides

High Need Small Cities and Suburbs 2.2% 99.4% 6.5%

High Need Rural 1.8% 97.9% 5.8%

Average Need 2.1% 99.4% 8.6%

Low Need 2.4% 99.7% 7.5%

TOTAL STATE 2.2% 99.4% 7.6%

SOURCE: Council analysis of NYSED Property Tax Report Card and budget vote data

31%

10%

40%

5%

15%

0% 1 0% 20% 30% 40% 50%

No impact

Negotiating savings nota priority now

Somewhat more like ly

Significantly more likely

Alr eady contributed tonegotiating savings

Perceived impact of tax cap onchances of negotiating cost-savingswith teacher union


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In their own words: Contemplating the Tax CapWe may be able to go on for three more years onlywithout additional funding. A two percent increase

yearly only nets us a little over 40 thousand dollars.~ Upstate rural superintendent

The impact of the tax cap was softened this year by thesavings from a significant number of teacher retire-ments in response to an incentive. We expect to face anongoing imbalance in expenses vs. revenue after this

year.~ Upstate suburban superintendent

Significant fund balance and reserves were used to getto the 2% tax levy increase. We chose to stay at 2% eventhough our allowable increase was 3.8%. The feedbackwe were getting was that anything over 2% wouldn't

pass due to the large amount of publicity of the 2% andmisunderstandings around this idea.~ Upstate city superintendent

The tax cap has achieved its intended result - which wasto curtail the salaries and benefits to employees. Longterm consequences of this have yet to be determined.Class sizes are "creeping up" - while still manageable,may be a problem within two or three years ~ Downstate suburban superintendent

Poor rural districts could never balance a budget ormake up for lost state aid through an increase of thelocal tax levy. We have been near or under 2% for years.

~ Upstate rural superintendent

Community assumption - no more than 2% tax levyincrease. We feared a defeated budget if we raised it toour limit, about 8%.~ Upstate rural superintendent

This year, the tax cap was near our traditional offeringto the public. At $33,000 per 1% of the levy, the tax caphas minimal impact with a passed budget under the caplevel. We do have concerns if a budget goes tocontingency...~ Upstate rural superintendent

We are entering a second year without a teachers' andadministrators' contact and the tax cap is notrecognized at the table as a concern on their part.~ Downstate suburban superintendent

Our teachers union does not want to hear anythingabout the tax levy limit- they believe that either we

sho

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New York State Council of School Superintendents school finance survey

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