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For Release — Monday, March 29, 2004

COMPARISON OF ZARB COMMISSION RECOMMENDATIONS WITH CFE PROPOSALS

ALBANY—The Public Policy Institute has developed the following side-by-side comparison of the education reform and financing proposals advanced by the Campaign for Fiscal Equity, and by Governor Pataki's Commission on Education Reform.

The Campaign for Fiscal Equity — the plaintiff in the case in which the Court of Appeals found that the state has failed to provide a sound, basic education for children in New York City — has released some of its proposals in a series of news releases and news conferences in recent weeks; more are expected shortly.

Further details may be found on its website, www.cfequity.org. The Governor's commission, chaired by Frank G. Zarb, released its final report today, accompanied by a spending analysis prepared by Standard & Poor's.

The comparison below was compiled by David Shaffer, president of The Public Policy Institute. He served on the Zarb Commission, and on CFE's Council on Costing Out. But the comparison is his work alone; it has not been reviewed or approved by other members of the Zarb Commission, nor by CFE.

In its June 2003 decision, the Court of Appeals ruled that by this July 30, the state must:

The Zarb Commission, at the directive of the Governor, and CFE, by choice, have both addressed their recommendations to the school system of the entire state, not just New York City.

OVERALL SPENDING RECOMMENDATIONS
Zarb Commission
CFE
  • Recommends additional school spending in a range of $2.5 billion to $5.6 billion a year, in current dollar terms. It appears the state could pay about 75 percent of the increased cost at the low end of the range within existing anticipated revenues; whatever share the state pays, the remainder would come from local and federal funds.
  • The commission deferred to elected officials to make a judgment as exactly how much new money to supply. The differing numbers derive from differing definitions of "successful" school districts, and the decision turns on in substantial part on what level of current performance equates to providing the constitutionally required "opportunity."
  • The state aid increase would be phased in over five years. The first year's increase would be targeted at helping districts prepare plans for making effective use of the rest.
  • Per-pupil spending statewide would increase from the current level of approximately $11,000 a year to somewhere between $12,659 and $13,755 (in 2004 dollars).
  • Recommends additional school spending of $7.2 billion, in 2001-02 dollars.
  • Revised to 2004-05 dollars and put through a revised school-aid formula, this would result in $10.99 billion additional annual spending, by school year 2007-08.
  • State's share of that increase would be $9.56 billion (on top of school year 2003-03 aid of $13.44 billion).
  • Localities would have to add another $1.44 billion (on top of $16.55 billion projected for 2004-05). New York City's share of the required local increase would be $1.28 billion.
  • State's aid increase would be phased in over four years, beginning with a $2.39 billion increase for the 2004-05 school year (which begins this September).
  • In current-dollar terms, total school spending statewide would increase about 20 percent.
  • Per-pupil spending would average $14,539 a year statewide, and $15,452 in New York City by 2007-08.
  • These numbers do not include any changes in building and transportation aid, on which CFE plans to report later.
  • New York City schools would get between 74 percent and 87 percent of the state-local increase, depending on the standards used and the point in the range that is picked. (In general, the higher the overall number, the higher the city's percentage.)
  • Under the minimum scenario, per-pupil spending in the city's schools would increase about $1,800, or more than $35,000 per classroom.
  • The bulk of the remainder of the new money would flow to other urban and rural districts with concentrations of poverty.
  • All told, about 200 districts would be classified as needing more money.
  • New York City schools would get $4.73 billion (or 49 percent) of the proposed $9.56 billion state aid increase — almost doubling current state aid.
  • New York City would need 62 percent of the overall spending increase ($4.46 billion of $7.2 billion, in 2001-02 dollars).
  • Per-pupil spending in the city would hit $15,452 by 2007-08, an increase of over $4,500, or over $90,000 per classroom.
  • The other Big Four urban districts (Yonkers, Buffalo, Rochester and Syracuse) would get an additional $834 million in state aid, or an increase averaging about 90 percent.
  • Other “high needs” urban, rural and suburban districts would share a total increase in state aid of $2.04 billion, or 82 percent.
  • All told, about 520 districts would get more.
NOTE: New York's current statewide average spending per pupil is the highest of the 50 states, and is about 35 percent above the national average. That national average, in turn, is about 25 percent above spending in Japan, and 63 percent above Germany and the United Kingdom. Among the nation's large urban school systems, Atlanta, Boston, the District of Columbia, Minneapolis and St. Paul generally spend more than does New York City.

 

METHOD USED TO DETERMINE ‘ACTUAL COST’ OF SOUND BASIC EDUCATION
Zarb Commission
CFE

A “successful schools” model.

Researchers obtained performance data on the state's school districts and compared their performance against four progressively more demanding standards to define "successful" districts. Spending data were then obtained on each district deemed successful by any of the criteria. Researchers then:

  • Determined base spending amounts by successful districts at each of those four levels of performance.
  • Adjusted those with the state Board of Regent's “cost effectiveness” factor to exclude atypically high-spending districts.
  • Applied adjustments to account for the extra resources needed by students with disabilities, economically disadvantaged students and students with limited English proficiency in each district.
  • Applied each of two alternative adjustments for regional cost differences.
  • And finally calculated how large a spending gap there was between what each district in the state “needs” according to each definition of standards and of regional costs, and what the district is now spending.

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.

A “professional judgment” model.

Teams of educators worked to define the staffing, material and other resources they felt were needed to educate students of different types (well-off, poor, limited English proficiency, etc.) in different types of schools (elementary, secondary, rural, urban, suburban).

Meanwhile, econometric modeling was used to put dollar values on each specified resource — for example, the cost of supplying one well-qualified elementary school teacher. These values were adjusted for regional cost differences, cost variances by size and type of school, etc.

Finally, the dollar values were put together with the perceived resource-needs characteristics of each school district in the state. If, for example, the panels felt that there should be 14 students in each elementary classroom in a district with 80 percent high-poverty students, but that a class size of 18 would be acceptable in a low-needs district, the formula would accept those differences in calculating a necessary level of spending for each district. In addition to this calculation of classroom resource needs and costs, the project generally assumed current levels of spending on buildings and operations, administration, and transportation.

CFE attempted to select the professional judgment panelists from the staffs of successful schools, on the premise that people from such schools would have the best understanding of the resources actually needed. However, panelists reported after the process was completed that they had generally recommended resources well beyond those actually available in their own schools, even if they considered their own schools successful without them.

Study was conducted by the School Evaluation Services unit of Standard & Poors.

The model was based on successful school "districts" and did not use data from any school in New York City because although there are successful schools in the city system, the system as a whole is not. Had New York City schools been used this would likely have driven down the calculated spending "gaps" and consequent estimates of money needed (since New York City schools spend below state average yet have higher than average need pupils).

Study was designed and conducted by two firms, the American Institutes for Research and Management Analysis and Planning, Inc., in consultation with a Council on Costing Out representing various parties interested in education.
Did not identify how many districts might be spending more than needed. Study concluded that 517 districts are currently spending below the “adequate” level; 163 are at or above.
Commentary: Defenders of high levels of educational spending tend to favor the use of the professional judgment methodology, and it almost always (as in this case) has resulted in far higher levels of recommended spending. Critics, however, disparage it as a method based on “educators making wish-lists,” unchecked by valid research into whether the resources recommended actually make a difference in the real world. Advocates of spending restraint, on the other hand, tend to look favorably upon a successful-schools model; it can be hoped that it will identify successful schools that are, by the nature of things, spending at current levels — thereby demonstrating that huge increases in spending are not necessarily required for success. Critics of this approach, however, counter that the number of entirely successful schools serving high-needs students is so small as not to be statistically significant — and/or, that low-cost but highly successful schools depend upon unusually charismatic leadership, special local conditions, or other characteristics that cannot readily be duplicated. The debate remains unresolved, in part because there are no demonstrated instances of school-financing reforms crafted under either methodology that have ultimately resulted in major improvements in performance.

 

EDUCATIONAL PROGRAM DESIGN ASSUMED IN SPENDING PLAN
Zarb Commission
CFE

The Commission did not recommend any specific model of program design, class size, staffing ratios, etc.

The educational model in stressed schools would be designed through the school improvement planning process recommended in the accountability section of the report.

CFE's cost estimates were built upon a model program designed developed by the professional judgment panels, which includes:

  • Pre-kindergarten in all schools, with a half-day program for 3-year-olds and full-day schooling beginning at age 4.
  • Elementary class sizes of 14 in high-poverty schools, and 16 in average-need districts.
  • High-school class sizes of 18 in high-need districts, and 24 in average-need districts.
  • Most special education students would be placed in regular classrooms.
  • Additional teaching assistants, specialists and pupil support personnel, in ratios varying with the numbers of high-need students. Overall student-to-staff ratio in a high-needs elementary schools would be as high as 6.8 to 1.
  • The lowest staffing ratio recommended would be 13.1 to 1, for high schools serving low-poverty student bodies.
  • There would also be extended day and year programs provided for up to 60 percent of the students at many schools, depending upon poverty level.
The Commission would mandate a planning process (see the Accountability section, below) to require that each district develop its own plan and program design, to ensure that the new money is used effectively. It did not, however, suggest that the state impose a particular top-down model for educational program design. Despite the specificity used in developing the costing-out study, CFE has not recommended that the Legislature mandate that any districts use the additional funding in this particular way. A district could choose, for example, to pay higher salaries to fewer teachers, rather than to hire more teachers and reduce class size.

 

PROPOSED RESOURCES FOR FINANCING SPENDING INCREASE
Zarb Commission
CFE

The Governor and the Legislature would create a guaranteed, dedicated fund to pay for the recommended funding changes.

One source of revenue for this guaranteed funding would be the receipts from Video Lottery Terminal. Revenue from this source is projected to reach $1.2 billion a year within five years under existing law, or over $2 billion a year if the Legislature approves an expansion recommended by the Governor.

Funding for the aid increase would not be limited to whatever the VLT receipts turn out to be, however. The Commission said that "regardless of the source ... the Governor and the Legislature must provide sufficient revenue to support the fund."

CFE has as yet made no specific financing recommendations.

CFE said the state spending increase needed under its costing-out calculation would be at least $7 billion in current dollar terms. Based on revenue projections in the 2004-05 Executive Budget, that alone would represent an across-the-board state tax increase of approximately 23 percent. (The eventual state spending increase of $9.6 billion recommended by CFE is adjusted for inflation through 2008, plus “save-harmless” provisions to ensure that no district loses money, and various other additions to the formula.)

The Manhattan Institute has done calculations of potential increases in specific state tax rates to raise $7 billion, those can be viewed here.

Maintenance-of-effort requirements currently in place for New York City would be continued, and extended to Buffalo, Rochester, Syracuse and Yonkers. Also, any locality with one or more poor-performing schools would be required to provide such schools with the minimum per-pupil spending needed to provide a sound basic education — but there would be no district-wide minimum local tax effort.

Local taxpayer contribution to the schools would be required to increase by $1.44 billion, or 10.5 percent.

All localities would be required to raise at least as much local tax money as specified in the CFE formula.

 

DEFINITION OF EDUCATIONAL STANDARD THE NEW SYSTEM MUST ACHIEVE
Zarb Commission
CFE
Financing recommendations were based on the assumption that the current Regents learning standards would continue to be used. Costing-out was based on meeting the current Regents learning standards.
Asks the Board of Regents to review current testing requirements to ensure that they match the learning standards; to consider additional alternative assessments, for example career and technical education certification; and to consider “multiple pathways” through which students might demonstrate that they have achieved the standards. Notes that the Court of Appeals decision does not enshrine the current Regents standards as the constitutional definition of a “sound basic education,” in part in the recognition that those standards may be updated from time to time.

 

PROPOSALS FOR PLANNING, ACCOUNTABILITY AND SANCTIONS
Zarb Commission
CFE

Every school district would be required to adopt and maintain a three-year comprehensive school improvement plan. This plan would replace numerous other plans and reports now required by the state, and it would put the focus of the planning process on improvement. The plan would be developed in cooperation with all members of the school community, including representatives of teachers and administrators.

Basic improvement plans would be required of all districts. There would be a more demanding process for any school district that has one or more poor-performing schools.* This process would build on the Schools Under Registration Review (SURR) process that the state now implements for a limited number of particularly troubled schools — but cover far more schools.

The improvement plan for a district with one or more low-performing schools would have to include a description of the problems causing poor performance, the specific actions to be taken to remedy these problems, and a timeline and budget for implementation. The state Education Department would provide technical assistance in developing and implementing these plans.

Second, the implementation of these improvement plans for low-performing schools would be overseen by a new Office of Educational Accountability. The director of the office would be appointed by the Board of Regents, with the approval of the Governor, for a term of six years. Its oversight functions (which would encompass districts currently under registration review, as well as all other districts with poor-performing schools) would include monitoring progress, ensuring that the public is informed and involved, making site visits, and implementing sanctions if necessary.

If a low-performing school fails to meet performance expectations after implementation of the three-year improvement plan, the Director of the Office of Educational Accountability would be empowered to close the school and reconfigure it into a new school — or close the school and use its funding to convert the school into a charter school, upon a vote of a majority of the parents whose children were attending the closed school.

If a school fails to meet performance targets after closure, reconfiguration and/or conversion, the Director could appoint a special master to run the school and order the district to fund needed improvements. The special master would have full powers to hire a principal and staff and to ensure that improvements are made.

 

CFE is working with the Education Commission of the States and with a consulting firm called BearingPoint to develop a proposal for a planning and accountability system.

A draft CFE accountability plan has been shared with a number of interested groups but is not expected to be released publicly until late March.

 

PROPOSED REVISIONS TO STATE SCHOOL-AID FORMULA
Zarb Commission
CFE

Some 21 existing state aid categories would be combined into a single formula for "basic operating aid"; three others would be combined into a new "supplemental high-needs aid" to drive additional dollars to high-needs districts.

A basic cost amount for all districts would be calculated based on the commission's "costing out" process, with adjustments for differences in regional costs and geographic sparsity. The state's share of that cost would be based on district need as measured by property wealth, income and high-needs students. There would be additional weighted state funding for students with disabilities. And all districts would be guaranteed at least as much funding per pupil as they received in the previous year.

Districts qualifying for Supplemental Needs Aid would have an additional state-aid weighting based on students living in poverty and students with limited English proficiency. This increased funding would be paid as a special grant, requiring that each such district prepare a plan showing how it would be used for the needs of these students and accounting for these funds separately from the rest of their general fund.

State aid for a given school year would be defined in the year before school budgets are prepared — by the end of 2005, for example, for school year 2006-07. This would be intended to eliminate the uncertainty that the Legislature's annual budget deliberations impose on the crafting of local school budgets.

Current formulas for textbooks, computer software, library materials and computer hardware would be combined into a single aid for instructional materials, in two tiers matching the operating aid. Tier 1 would get the current per-pupil amount for these items; Tier 2 would get additional aid weighted for high-needs pupils.

The current transportation aid formula would be continued. Building aid would be simplified to enhance flexibility and would be financed at roughly current levels overall.

Most state school aid to each district would be provided under a single “foundation formula,” replacing 38 of some 50 current aid programs and formulas. (But some aids, such as transportation aid and debt service, would remain separate.)

For each district, there would be a specified “sound basic education foundation amount,” derived from the CFE's costing-out study. This would be statewide average foundation amount per pupil, adjusted for each district by (a) a geographic cost index and (b) by a needs index reflecting poverty, disability levels, numbers of English language learners, plus a small-schools adjustment.

A calculation would determine how much of that adjusted spending amount should be raised from local taxpayers — based on the district's property wealth compared to the state average, its personal income compared to state average, and its percentage of high-poverty students compared to the state average.

Local taxpayers would be required to provide the amount thus calculated as their share — and the state, in turn, would be required to provide the remainder (that is, the difference between the total spending deemed to be needed, and the amount local taxpayers would be required to pay). Districts could spend more than the foundation amount if they raise more than the minimum required amount from local taxpayers. The new state aid formula would be, in effect:

state aid = needed spending minus required local share

CFE says that statewide, its formula would have the state pay 56 percent of school district costs, up from 49 percent now.

As with the recommendations of the Zarb commission, CFE would also require that state aid for a given school year would be defined in the year before school budgets are prepared, to make planning less uncertain.

  One unusual twist in CFE's aid formula is that both sides of the equation — the calculation of how much a district needs to spend per pupil, and the calculation of what the district can afford to raise from its own tax base — are weighted by student need. In effect this “doubles up” the extra aid weighting given for high-needs pupils.
Both the Zarb Commission and CFE recommend that the Legislature adopt each year's state school aid plan a year in advance, so districts have time to plan effectively, and to end the fiscal uncertainty associated with late state budgets.

 

OTHER ISSUES
Zarb Commission
CFE

In keeping with the broad mandate given to it by the Governor, the Zarb Commission made recommendations in a number of areas that have not been specifically addressed by CFE:

  • Teacher quality. The state should expand teacher training and other staff development programs, especially for low-performing schools. It should expand recruitment, career-ladder programs and incentives to attract and retain more teachers (especially in hard-to-place locations and subjects) and to reward performance.
  • Teacher accountability. The tenured teacher discipline process should be reformed for cases of incompetence. Districts would first be encouraged to help underperforming teachers, but the tenured teacher discipline process would be reformed to expedite hearings.
  • School leadership. School districts should be permitted to adopt three-year renewable contracts with principals and administrators, in lieu of tenure, and to negotiate pay-for-performance plans. Principals should be expected to receive 175 hours of professional development every five years, as is now the case with teachers.
  • Student tracking and parental involvement. To address the problem of students who now slip between the tracks, the state would track each student with a unique identifier; require academic and counseling programs to attract dropouts back to school; and develop programs to assist parents in getting their children off to a good start, and in keeping their children in school.
  • Mandate relief. Schools would be exempted from the Wicks Law governing construction contracts for the next 10 years; after eight years the Board of Regents would quantify and report on the savings achieved. Numerous planning, reporting and accounting requirements imposed on the school districts by the state would be consolidated and simplified.
  • School governance. The mayors of Buffalo, Rochester, Syracuse and Yonkers would be given the power to appoint school superintendents and a majority of the members of their school boards — as was done in 2002 with respect to the other one of the state's "Big Five," New York City.
  • School recognition. The state would create a Governor's Award for School Improvement to highlight the successes of schools that each year show the most improvement.

* “Poorly performing schools" for purpose of this requirement would be defined as “schools that have less than half of their students meeting standards on State assessments and have a significant percentage of students with serious academic deficiencies.” The Public Policy Institute estimates that some 800 schools in New York State would meet this definition.