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March 29, 2004

Zarb Commission urges additional spending and accountability reforms for schools

Governor Pataki's Commission on Education Reform said today that the state's schools need additional spending of somewhere between $2.5 billion and $5.6 billion, phased in over the next five years, if they are to meet the needs of students in high-poverty and other stressed school systems.

The state would pay some unspecified portion of the added cost directly, with the rest coming from local and federal funds. Current fiscal projections indicate that at least the low end of the proposed spending range could be implemented without an increase in state taxes. Most of the new money would flow only after schools had plans in place to spend it effectively.

The commission, chaired by Frank G. Zarb, the former chief executive of NASDAQ, was appointed last September to recommend how to comply with a decision by the state's highest court declaring that the state was failing to deliver "the opportunity for a sound, basic education" in New York City schools. Governor Pataki directed that the commission make recommendations for the whole school system statewide, not just New York City. David Shaffer, president of The Business Council's Public Policy Institute, served as one of the commission's 22 members.

The plaintiffs in the court case, the Campaign for Fiscal Equity, had earlier put forth a plan demanding an additional $10.9 billion in funding for the schools, of which $9.6 billion would come from the state. New York's school system currently spends $39 billion a year, an average of about $11,000 per pupil statewide.

In addition to the new money, the Zarb Commission recommended that the state adopt a series of management, planning, and accountability reforms to ensure that higher spending on the schools produces the desired results.

The ruling by the Court of Appeals had demanded that the state have a plan for financial and management reforms in place by July 30 of this year. The case has been remanded to Manhattan state Supreme Court Justice Leland Degrasse, who has already begun hearings to establish a process for reviewing the state's compliance.

The $10.9 billion CFE plan would send new money to at least 517 of the state's 683 school systems; about half of it would go to New York City. The Zarb Commission's plan would put between 74 percent and 87 percent of the new money into New York City. The precise percentage would depend on the standards used and the overall size of the increase. Zarb proposed that the funds be delivered through a new, simplified state aid formula that would combine 21 existing formulas into a single "basic operating aid," and replace three others with a new "supplemental needs aid" for high-needs districts.

For a table developed by the Public Policy Institute comparing the Zarb and CFE plans

Under the Zarb proposal, any district that had a single failing school would have to develop a three-year improvement plan for each such school, identifying what isn't working, detailing what will be done with new resources, and showing that its proposed solutions are based on programs that have worked elsewhere. If the school failed to improve after three years, it could closed and reopened with new staff, or replaced by a charter school; if it failed to improve after another three years, the state could take it over directly. This process, to be overseen by a new independent Office of Educational Accountability, is similar to the state's existing SURR ("schools under registration review") process, but it would apply to several hundred schools as opposed to the few dozen now impacted by it.

In districts that do not now have a failing school, the commission recommended that the state replace numerous reports now required of school districts with a new "school improvement plan" to be submitted by each district to the state Education Department.

The commission also recommended mandate relief, including reform of the Wicks law and the teacher tenure process, to help school districts perform more cost-effectively. It suggested broadening entry points to the teacher profession, and giving principals more autonomy and responsibility. And it recommended mayoral control of school boards in the "Big Four" cities (Yonkers, Buffalo, Rochester and Syracuse) similar to that now in place in New York City.

The Zarb Commission based its funding recommendations on a sophisticated analysis developed by the School Evaluation Services unit of Standard & Poor's.

The commission asked S&P to identify how much money would be needed to ensure that every school in the state had basic resources equivalent to those available to schools that are already successful. The commission identified three different, progressively more ambitious definitions of a "successful" school to be used in the analysis; S&P later added a fourth, even more exacting definition. S&P's analysts then:

This yielded eight possible calculations of the spending "gap" statewide -- given that there were four possible definitions of "success" used, times two different factors for regional cost differences. The gaps ranged between $2.45 billion and $5.57 billion. Statewide, when fully implemented, this would boost per-pupil spending from about $11,000 now to somewhere between $12,659 and $13,755. Even at the low end of the cost estimate, the plan would increase per-pupil spending in New York City by about $1,800, or more than $35,000 per classroom.

The Zarb Commission deferred the decision on the precise spending number to be picked to the judgment of elected officials. That decision hinges largely what average level of a school's performance can be taken as a sign that every student in the school has an opportunity for a sound basic education.