Three questions that define school ‘Foundation Aid’

A legal case filed two decades ago and a complicated funding formula help make public school funding one of the most contentious issues in New York state politics to this day.

The main source of state funding for public schools comes from what is called “Foundation Aid,” which was created following a 2006 state court decision in the case of Campaign for Fiscal Equity v State of New York. This landmark court case centered on whether or not the state was funding schools at a level that ensured all students received a “sound basic education,” as required by the state constitution. The New York State Court of Appeals held the state was effectively violating the rights of children by failing to provide an education that would give them the “basic literacy, calculating, and verbal skills.” In order to address that, state lawmakers had to increase public school funding. 

Conflicting interpretations of the CFE ruling continue to divide Gov. Andrew Cuomo and state lawmakers, which in turn continues to affect funding levels for 2.6 million students across more than 700 school districts.

Funding levels shift from year-to-year, but the proportion of contributions from local, state and federal governments remain fairly steady. The state government pays about 40% – around two-thirds of which come through Foundation Aid. Local governments use property taxes to help fund about 60% or so, and the federal government chips in a few percent of overall spending each year through specific programs such as those targeting low-income students or students with special needs.

Unpacking the political, legal and fiscal implications of the state share comes down to three questions that can serve as a guide for grasping the arcane world of school funding. 

How did a 13-year legal saga transform public school funding?

Cuomo has said the CFE case represents “ghosts from the past,” but its legacy is very much alive in affecting the current politics surrounding school funding. The case began in 1993 when a group of New York City parents – including now-state Sen. Robert Jackson, who was a lead plaintiff in the case – argued that the state was not funding education enough to provide a “sound basic education” for all students. The case took 13 years to litigate until the New York State Court of Appeals ruled in the plaintiffs’ favor in 2006. The court found that by providing more funding for schools – the court agreed with a state assessment this would cost a minimum of $1.93 billion in additional annual funding – the state could address subpar school completion rates and test results, as well as recruit and retain the teachers necessary to meet those goals. 

Following that ruling, state lawmakers decided to consolidate more than two dozen different state school funding formulas into what would become Foundation Aid, which was first implemented statewide in the 2007-2008 school year. For the next two years, education activists credit the state with fully funding the Foundation Aid formula. This includes a surge of additional funding in those first years to make up for the past. However, once the stock market crashed in late 2008 and the economy slid into recession, state tax revenues declined and lawmakers stopped increasing state education funding for the subsequent three years. Though state spending on Foundation Aid began to rise again after that, the State Education Department, activists and some lawmakers say the state has still not fully funded the program in the most recent 10 years. An October, 2019 report by AQE argues that the state owes $4 billion in retroactive funding to make up the gap between what the state has allocated and what the formula would dictate. 

Cuomo has argued that he is not bound to Gov. Eliot Spitzer’s goal to increase Foundation Aid by about $5.5 billion over four years, beginning in 2007. The administration and supporters also dispute that there is any discrepancy between what the law requires and the levels of state funding that have been allocated to education in the past decade. 

While activists, the department and elected officials like Jackson continue to argue that the state has failed to fully fund Foundation Aid, they have turned to the political process – rather than the court system – to address their demands.

So how does the Foundation Aid funding formula work?

The state funded about $18.4 billion in Foundation Aid for the 2019-2020 school year, out of a total of $27.6 bill in general support for public schools.

There are four factors that go into determining how much Foundation Aid each school district gets each year. In a greatly simplified form, they are: 

1. The cost of educating a student
2. Differing levels of student needs
3. Different costs of living across the state
4. The varying funding capacities of different districts. 

Each of these factors is determined by complicated equations, which can be found in the 2019-20 State Aid Handbook by the department. While the formula aims to make funding equitable for students across the state, the state has not funded Foundation Aid evenly for districts. A key reason appears to be political, with the districts represented by the party in power doing the best when it comes to securing funding increases. In the most recent state budget – the first passed since Democrats won control of both chambers of the Legislature last year – spending on Foundation Aid rose by 3.5% compared to the previous year. In Democrat-dominated New York City, it went up by 4.4%. In Republican areas of Western New York, it went up by less than 1%, according to The Buffalo News, after receiving much higher increases the year before when the GOP still controlled the state Senate.

One criticism of the formula has focused on the use of outdated metrics. While some government funding formulas require periodic updates to the data used in them, the Foundation Aid formula continues to use poverty data from the 2000 U.S. Census, according to the handbook. This means that districts whose economic outlook has improved in the past two decades are getting more aid than they would with updated data, while areas where poverty has gone up since 2000 are doing worse. The formula also uses increasingly unreliable regional distinctions, like grouping together the Lower Hudson Valley and Upper Hudson Valley despite an influx of wealthier commuters who are making the former much more expensive than the latter. Cuomo unsuccessfully pushed a controversial proposal to change the formula in 2017, which would decrease the amount that the state would allocate in Foundation Aid.

He also said two years later that Foundation Aid is a “scam” because it directs funding to districts rather than individual schools, which leaves district officials in charge of deciding which of their schools deserve any funding increases. This leaves poorer and underperforming schools within district at the mercy of district leaders who might favor better performing schools, according to Cuomo.

So how do politics get in the way?

The give-and-take of state politics has also created what’s been called the “shares agreement” – a gentleman’s agreement among lawmakers since at least the mid-1980s – whereby New York City gets 38.86% and Long Island gets 12.96%, with the remaining share going to upstate and New York City’s northern suburbs. New York City has about 42% and Long Island about 14.5% of the state’s 19.3 million people. 

A second practice of state politics ensures that a school district receives at least the same amount of money as it did before, a practice known as “save-harmless.” A 2016 Citizens Budget Committee report found that 40% of districts receive more Foundation Aid than they should because of the “save-harmless” practice. 

While school officials and state lawmakers have at times criticized both the formula and its implementation, nobody wants to see funding levels go down for their own school districts, a dynamic that will complicate any efforts to change the formula without securing additional funding through new taxes or other revenue streams. The Democrats may have passed a litany of progressive legislation since taking over the Senate following the 2018 elections, but they have yet to resolve once and for all outstanding issues with Foundation Aid and the legacy of the CFE lawsuit.