Welcome to: NYS School Finance and 2010-11 Executive Budget Highlights

Welcome to: NYS School Finance and 2010-11 Executive Budget Highlights Charles A. Szuberla, Executive Director School Operations and Management Services New York State Education Department Online Presentation February 3 and 4, 2010 1

2010-11Executive Budget Highlights of Budget Recommendations for Public Schools Executive Budget proposes 20.5 billion in General Support for Public Schools (GSPS). GSPS reduction of 1.09 billion (or 5%) from 2009-10. GSPS is being supplemented by federal American Recovery and Reinvestment Act (ARRA) funds. All existing formulas (including those frozen in 2010-11) are continued. Budget extends existing freeze of Foundation Aid until 2011-12. Foundation Aid phase-in resumes in 2012-13 and will be fully implemented in 2016-17. 2

Schedule of Proposed Foundation Aid Phase-In Foundation Aid freeze expires in 2011-12. Full implementation deferred until 2016-17. Currently phase-in frozen at 37.5% of fully implemented increase. School Year Phase-In Foundation Increase Factor Annual Progress Toward Full Implementation 2011-12 37.5% 2012-13 43.5% 6.0% 2013-14 53.5% 10.0% 2014-15 66.5% 13.0% 2015-16 81.5% 15.0% 2016-17 100.0% 18.5% 3

Gap Elimination Adjustment in 2010-11 2.1 billion Gap Elimination Adjustment computed by formula recognizing districts’ pupil need, fiscal capacity, tax effort and administrative efficiency. Range of district reductions is 8%-21% (excludes Building Aid and UPK grant). Impact on high-need districts limited to 5% of total general fund expenditures and additional mitigating limit of 3.6% for qualifying districts (based on level of administrative expenditures and concentration of high need pupils). Reduction partially offset by 725.9 million in federal ARRA funds. Net Gap Elimination Adjustment (with addition of federal ARRA funds) is 1.4 billion reduction. 4

Formula Aids and Grants Frozen at 2008-09 Levels through 2011-12 Foundation Aid 14.9 billion High Tax Aid 204.8 million Supplemental Public Excess Cost Aid 4.3 million Academic Enhancement Aid and Grants 26.1 million Universal Prekindergarten Program (UPK)* grant 399.7 million *UPK capped at currently funded levels for existing programs. Executive Budget proposes UPK to be fully phased in 2016-17. 5

Support for Students with Disabilities Changes from 2009-10 to 2010-11 Provisions for apportioning both Public High Cost Excess Cost Aid and Private Excess Cost Aid are unchanged. Public High Cost Excess Cost Aid increase from 443.9 million to 454.1 million (growth rate of 2.3%). Private Excess Cost Aid increase from 314.9 million to 329.0 million (growth rate of 4.5%). 6

Career and Technical Education Changes from 2009-10 to 2010-11 Continues existing provisions for Career and Technical Education Aid categories. BOCES aid estimated to increase from 698.9 million to 731.9 million (increase of 4.7%). Special Services Aid (provides aid to Big Five and other districts that are not components of BOCES for career education activities, administrative computer services and academic programs) estimated to decrease from 206.4 million to 199.7 million (decrease of 3.2%) 7

Building Aid Changes from 2009-10 to 2010-11 Building Aid and Building Reorganization Incentive Aid estimated to increase from 2,263.9 million to 2,485.7 million (increase of 9.8%). Executive budget also provides 168.9 million to pay debt service on bonds issued to provide EXCEL grants for capital construction. This represents an increase from 154.0 million to 168.9 million (increase of 9.7%) 127.0 million attributable to projects funded in NYC 41.9 million attributable to other eligible projects 8

Transportation Aid Changes from 2009-10 to 2010-11 Transportation Aid operating expenses calculated under the existing formula. Transportation Aid and Summer Transportation Aid estimated to increase from 1,546.9 million to 1,646.7 million (an increase of 6.4%). 9

Instructional Materials Aid Changes from 2009-10 to 2010-11 Continues preexisting Instructional Materials Aid allocation formula for : Textbook Aid Library Materials Aid Computer Software Aid Computer Hardware Aid 10

Charter School Transitional Aid Changes from 2009-10 to 2010-11 Continuation of Charter School Transitional Aid to provide State aid to districts significantly impacted by concentration of charter schools. Increase from 18.7 million to 21.8 million ( an increase of 17.0%). 11

Reduction in GSPS Grant Funds All existing grant programs funded at current levels, except two grants that received ARRA support in 2009-10 and funding would not be provided for this purpose in 2010-11. These are: Roosevelt--decrease from 12 million to 6 million. Teachers Centers--decrease from 35 million to 0. 12

General Fund Support New General Fund Aid to Localities Reimburse school districts for costs associated with Metro Commuter Transportation Mobility Tax 60 million Smart Scholars Early College High School Program 6 million Increased General Fund Support School Lunch and Breakfast Program .6 million Preschool Special Education Program 91.1 million 13

Budget Recommends Reducing or Eliminating General and Special Revenue Fund Support Including Mid-Year Reductions, Where Appropriate Programs: Adult Literacy Education (- 2.6 million) Aid to Independent Colleges and Universities (- 2.6 million) Aid to Public Libraries (- 6.6 million) Prevention of Instructor Turnover (- 2.0 million) Schools Under Registration Review (- 1.8 million) SUNY Center for Autism (- .5 million) Transferring Success (- .3 million) Workplace Literacy (- 1.0 million) Nonpublic Mandated Services Aid (- 1.5 million) Summer School Special Education Program (- 48.2 million) Private Schools for the Blind and the Deaf (4201) (- 5.8 million) Extended Day/School Violence (- 3.5 million) Charter School Development (- .7 million) Liberty Partnership Program (- 1.0 million) HEOP (- 3.0 million) STEP (- 0.5 million) CSTEP (- 0.2 million) 14

Contracts for Excellence Continued in 2010-11 Each district that was required to file a Contract for Excellence (C4E) in 2009-10 and does not have all of its schools in good standing must maintain support for C4E. The funding requirement that must be maintained will be reduced in proportion to the impact that the Net Gap Elimination Adjustment has on the district. 15

Other Executive Budget Recommendations Eliminate aid increases resulting from data submissions following Executive Budget. Aid limited to amount generated by data used for district estimates accompanying Executive budget. Subsequent data submissions would not increase aid. Continue support for Private Schools for the Blind and Deaf. 10.0 million --Federal IDEA funding Limit growth of county costs for Preschool Special Education by making districts responsible for any year-to-year growth in county costs exceeding 2%. Consider wealth as a factor in reimbursing districts for Summer School Special Education Program costs. Limit payments with 2010-11 appropriation for Summer School Special Education Program for obligations prior to the 2009-10 school year to 50.0 million. Continue the 2009-10 Mid-Year DRP reductions Apply same requirements for regulatory adoption procedures to NYSED that apply to other state agencies, including local impact, cost-benefit analysis and identify funding source for any new regulations 16

ARRA Funding in 2010-11 NYSED has appropriation authority for the following: * Competitive PROGRAM ARRA APPROPRIATION Support of Elementary and Secondary Education 843,000,000 Preschool Special Education Program 194,000,000 Math and Science High Schools 1,382,000 Teacher Mentor Intern Program 2,000,000 Say Yes to Education Program 350,000 Race to the Top* 750,000,000 Teacher Incentive Fund* 20,000,000 Statewide Data Systems Grant* 10,000,000 Title I Part A Grants to School Districts 454,000,000 Title I School Improvement Grants 135,000,000 Homeless 1,700,000 Title II-D Technology 28,000,000 IDEA 398,000,000 Vocational Rehabilitation 15,000,000 Educational TV and Radio 5,587,000 TOTAL 2,858,019,000 17

ARRA Provisions for Current School Year 2009-10 The State Budget adopted in April 2009 included a Deficit Reduction Assessment (DRA) for 2009-10. The DRA was offset with federal funds, known as a Deficit Reduction Assessment Restoration (DRAR). In December 2009, Chapters 502 and 503 of the Laws of 2009 were adopted and included a Supplemental Deficit Reduction Assessment (SDRA). This was a second, i.e. supplemental DRA (the initial DRA was adopted in the April budget). The SDRA is being offset with 391 million in federal ARRA funds. 18

2009-10 SDRAR and General Aid The Supplemental Deficit Reduction Assessment Restoration (SDRAR) is an offset that restores the December 2009 Supplemental Deficit Reduction Assessment (SDRA). This supplemental (federal) funding restores mid-year state reductions for 2009-10 and does not represent additional funds to districts. SDRAR is being funded with ARRA funds. Although ARRA Education Stabilization Funds (ESF) are being used to offset reductions in State Aid, they are administered as federal grants and federal requirements apply. District amounts of Total General Aid and SDRAR amounts can be viewed on the General Aid output report via SAMS online at http://stateaid.nysed.gov. 19

Supplemental Deficit Reduction Assessment Restoration Application and ARRA Reporting Section 1512 of the American Recovery and Reinvestment Act (ARRA) requires fund recipients to report quarterly. Recipients, including school districts, have reported on the quarters that ended September 30, 2009 and December 31, 2009. Districts will report on the additional ARRA funds, used to offset the Supplemental Deficit Reduction Assessment Restoration (SDRAR), resulting from Chapters 502 and 503 of the Laws of December 2009, for the quarter ending March 31, 2010. NYSED will provide a supplemental Education Stabilization Fund (ESF) application for districts to complete in early 2010. 20

Additional Information on Supplemental Education Stabilization Funds The supplemental ESF application will require districts to detail their proposed purposes and budgets for the supplemental funds. Allowable and non-allowable expenses for the SDRAR will be the same as for other Education Stabilization Funds. Information can be found at: http://usny.nysed.gov/arra/webinars/reportingqa.html#General NYSED will review and approve supplemental ESF applications and districts will be authorized to spend funds between July 1, 2009 –June 30, 2010. Districts must account for supplemental funds separately and follow administrative requirements of the Office of Management and Budget Circular (OMB Circular A-87) and Federal Education Department General Administrative Regulations (EDGAR). More information at http://www.oms.nysed.gov/cafe. 21

Prepared* Questions and Answers *Questions That Submitted, and Answers Developed, Prior to Online Presentation 1Q. Will the funds that are being used to offset a portion of the Gap Elimination Adjustment in 20102011, affect the amounts that have been appropriated for 2010/2011 for ARRA IDEA and Title I? 1A. No, you will still receive the ARRA IDEA and Title 1 funds for school year 2010/2011. 2Q. Will the ARRA funds for IDEA continue in 2010-2011 at the same amount as was allocated in 2009/2010? Yes, you will receive in 2010/2011 an amount equal to your allocation for 2009/2010 (unless you opted to receive the 2 year amount not split evenly between the two years). 2A. 3Q. Our question pertains to the Executive Budget proposal. We are a Contract for Excellence district. We have found minimal information regarding the impact of the Executive Budget proposal other than the reduction will be in the corresponding percentage reduction. Which percentage? Change in Total Aid? Also, does the percentage apply to the 08-09 C4E contract? the 2007-08 MOE amount or the total 3-year C4E Contract amount, including 07-08 and 08-09 MOE? 3A. The Contract Amount from 09-10 (which was a maintenance amount from the prior years) would be reduced by the Gap Elimination Adjustment This calculation takes into consideration a district’s wealth, student need, administrative efficiency, and residential property tax burden. It can be computed by dividing the GEA plus Federal restoration amount by the total Formula amount; i.e. Rochester’s GEA Fed. Restoration is 19,106,791. / 427,869,587. (formula total) 4.46. (GEA) percentage of total on the State-aid run (ex.--for Rochester is -4.46%). 22

ARRA Audit Questions* and Answers *Questions That Submitted, and Answers Developed, Prior to Online Presentation 1Q. Do the federal time and effort requirements (of OMB Circular A-87) apply to ARRA funds? 1A. OMB Circular A-87 requires salaries of employees who are charged to federal grants be supported by periodic certifications or personnel activity reports. This requirement applies to all federal grants including ARRA related, but does not apply to ARRA – Stabilization Fund. However, if an employee’s salary is supported by multiple cost objectives, one of which is a federal grant other than ARRA-Stabilization Fund, the requirement for personnel activity reports applies. 2Q. Are LEAs required to track ARRA funds separately, including the Stabilization Fund? 2A. Yes. ARRA requires that recipients of all funds made available under the Act separately account for, and report on, how those funds are spent. ARRA-Title I and ARRA-IDEA should be accounted for separately from the regular Title I and IDEA. Although the Stabilization Fund is recorded in the General Fund, separate account/budget codes should be assigned to the revenue and appropriation accounts to be able to track it separately from the rest of General Fund accounts. 3Q. What federal requirements related to cash management of federal grants have been emphasized as a result of ARRA? 3A. LEAs are required to have a process in place that would: Minimize time elapsing between receipt and disbursement of funds; and, Allow for remittance of interest earned on federal funds in excess of 100 annually. 4Q. What amounts can an LEA include on the FS-25 claim for ARRA-Stabilization Fund? 4A. The amount of funds requested at any one time through the FS-25 claim may only include actual expenditures to date. No anticipated expenditures for the following month is allowed for ARRA-Stabilization Fund. However, districts are allowed to claim an amount for anticipated expenditures for the following month for ARRA-Title I and ARRA-IDEA grants. 5Q. What type of expenditures would be disallowed in an audit? 5A. Expenditures that are expressly prohibited by ARRA would be disallowed. In addition, costs that were not included in the approved budget will also be disallowed. 23

Questions and Answers From Online Presentation The majority of the questions that were submitted during the February 3 and 4, 2010 online sessions on School Finance and Budget Matters were responded to verbally during the session. The Educational Management Services staff are collating the questions that were submitted, and developing written responses, and will incorporate into this presentation as soon as possible. If you have additional questions about the content of this presentation, or related issues, please email the office at [email protected] or phone us at 518-474-6541. Thank you. 24