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Regents Proposal on State Aid to School Districts for 2006-07

January 2006

The Regents proposal for State Aid to school districts for school year 2006-07 represents the third year in a five-year proposal aimed at helping school districts close the gap in preparing all students to meet State learning standards. It includes: 

• A proposed increase for school year 2006-07 of $1.5 billion over 2005-06 aid. This amount has been updated to reflect the latest data available from school districts. 

• A new Foundation Aid program to support general education instruction, consolidating 29 aids into a single aid that: 

  • Is based on expenses of school districts that were successful in meeting State learning standards

  • Is adjusted for pupil need and regional cost

  • Includes an expected local contribution as a fair share from school districts

  • Includes a minimum increase of two percent and a maximum increase of from 10.5 to 11.25 percent 
     

• A $96 million increase for pre-kindergarten programs in a new grant program based on the Foundation Aid amount for each pupil. 

• A funding plan for financing full-day kindergarten with planning grants of $2.8 million in 2006-07.
   

• A simplified formula to help districts with the excess costs of educating students with disabilities, based on costs in successful school districts.  

• Authority for the Large City school districts of Yonkers, Rochester, Syracuse and Buffalo to contract with BOCES for certain services. 

• A simplified cost allowance for State Building Aid for school construction. 

The following tables and charts illustrate the impact of the proposal.  Exhibit A shows the dollar amounts the Regents propose in specific areas.  Exhibit B shows that the Regents recommend that 80 percent of the proposed increase go to high need school districts around the State.  Exhibits C and D show the distribution of the proposed increase to groups of school districts in the 2006-07 school year and at full implementation.  Exhibit E shows that computerized State Aid per enrolled pupil increases for each group of districts, with the greatest increases going to high need school districts.  The Technical Supplement describes the technical features of the proposal.

¹  The base year estimate for Limited English Proficiency reflects the fact that LEA Aid was consolidated into FLEX aid.

 ² The Regents proposal includes funding for targeted prekindergarten grants and prior year adjustments which were funded outside of General Support for Public Schools in 2005-06.  They are included in the 2005-06 estimates for comparability.

Exhibit B

Exhibit B

Exhibit C

Exhibit D

Exhibit E

CONCEPTUAL PROPOSAL

The Regents State Aid proposal for 2006-07 will request the resources and funding system needed to provide adequate resources through a State and local partnership so that all students have the opportunity to achieve State learning standards.  This is the third year of a multi-year proposal recommending transition to a foundation program based on the costs of successful educational programs.   

Statement of Need 

This proposal pursues two Regents goals: to close the gap between actual and desired student achievement; and to ensure that public education resources are adequate and used by school districts effectively and efficiently.

The Regents Annual Report to the Legislature and Governor on the Educational Status of the State’s Schools (Chapter 655 Report) cites numerous examples of improvement in student achievement since 1996 when the Regents began to raise standards for all grade levels and imposed graduation requirements aligned with the new standards.  For example, the report notes that there is progress to report:

• More eighth-graders are demonstrating that they have achieved the standards in mathematics.

• Between 1999 and 2003, the percentage of eighth-graders meeting the mathematics standard increased from 38 to 58 percent, in public schools statewide, and the percentage of Black students increased from 13 to 33 percent. The percentage of Hispanic students increased from 15 to 36 percent.

• The percentage of Black and Hispanic fourth-graders demonstrating proficiency increased by about 20 percentage points in both mathematics and English.

• The percentage of graduates earning Regents diplomas increased from 42 to 57 percent.

• Even in large urban districts that serve the largest percentages of poor and minority students, more students are earning Regents diplomas.

• Between 1996–97 and 2003–04, the number of students scoring 55 or higher on the Regents English exam increased from 113,000 to 171,000.

(The Chapter 655 Report.  A Report to the Governor and the Legislature on the Educational Status of the State's Schools, New York State Education Department, Albany, NY, July 2005.)

While there have been many positive changes in the last 17 years since the Regents have reported on the educational progress of the State’s schools, one disturbing aspect of the report has remained the same.  The report continues to document a pattern of high student need, limited resources, and poor performance in many districts. Generally, these districts can be described as having high student needs relative to their capacity to raise revenues.  These high-need districts include the Big 5, 46 smaller districts with many of the characteristics of the Big 5, and 156 rural districts. Large gaps in performance exist between these high-need districts and low-need districts, those which both serve children from more affluent families and have generous local resources to draw on. 

The results of the middle-level mathematics assessment illustrate these performance gaps between high and low-need districts.  Test results for 2004 showed significant improvements in total public results and in results for each Need/Resource Capacity Category and racial/ethnic group. Nevertheless, the performance gap between low- and high-need districts, such as New York City, remains: 

• While the percentage of New York City students who are proficient in middle-level mathematics increased to 42 percent, almost twice as many students in low-need districts were proficient. 

We can relate this contrast to the resources available to schools in each group:

• Let’s look first at the percentage of middle-level mathematics teachers who are not appropriately certified.  In New York City, 18 percent of middle-level mathematics teachers are not appropriately certified, compared with 3 percent in the high-performing low-need districts.

• Besides having less qualified teachers than students in low-need districts, students in New York City attended school fewer days during the year:  161 compared with 172 days.

But the differences between New York City and the low-need districts do not stop there:  The average expenditure per pupil in New York City was over $2,000 less than that in low-need districts.

• $12,896 per pupil in New York City, compared with $15,076 on average in low-need districts in 2002-03.

• The median teacher salary in New York City was $54,476 compared with $66,638 in low-need districts.

Similar relationships among performance, resources, and student need can be seen in comparisons between the performance of White students and that of Black and Hispanic students.  White students were about twice as likely as Black or Hispanic students to be proficient in middle-level mathematics.

• 71 percent of White students met the middle-level mathematics standards.

• 33 percent of Black students and 37 percent of Hispanic students met those standards.

The majority of Black and Hispanic students attend high-minority schools; the majority of White students attend low-minority schools. One reason that students in low-minority schools are more successful is that they spend more time in school. 

In addition, high-minority schools had a:

• Higher teacher turnover rate (26 vs. 15 percent), and

• Less experienced teachers (10 years vs. 12 years). 

The significance of these gaps in performance and resources between high- and low-minority schools is heightened by the fact that, while overall public school enrollment decreased by nearly 3,000 students between Fall 1998 and Fall 2003, enrollment in high-minority schools increased by 47,000 students. 

Figure 1 shows that the State Aid increase school districts have experienced has had a relatively small impact on the share of total State Aid that each district category receives. Even big changes of redistribution in an increase are unlikely to have a major short-term influence on overall shares.  Thus, despite increases to high-need school districts, the relative share of education revenues received by high-need city school districts has increased by approximately one to three percentage points over the past eight years.  The relative share declined for high-need rural school districts (almost one percentage point), average need school districts (approximately three and a half percentage points), and for low-need school districts (about half a percentage point).  Figure 1

Four principles guide this Regents proposal. They include:

1. Adequacy—Effective distribution across all districts will ensure adequate resources for acceptable student achievement.

2. Equity—School funding will equalize differences in school districts’ fiscal capacity, pupil need and regional costs to maintain comparable levels of local effort in school districts across the State.

3. Accountability—The education system will measure outcomes and use those measures to ensure that financial resources are used effectively. As part of the Regents goal that education resources will be used or maintained in the public interest, the Regents employ a two-prong strategy. The Department will give greater flexibility to districts with acceptable student achievement and will work closely with districts not yet meeting State standards to ensure the most efficient and effective use of resources.

4. Balance—The State should balance stability in funding and targeting aid to close student achievement gaps. It should drive aid based on current needs, and use hold-harmless provisions to provide stability.

The Regents recommend changes in the following focus areas for their 2006-07 proposal.

Enact a Foundation Program

The proposed foundation aid would consolidate approximately 30 existing aid programs and adjust for regional cost differences and pupil needs. It would identify an expected local contribution for each school district, based on ability to pay. The foundation level is based on the cost of educating students in successful school districts.

The proposal for a foundation program represents a dramatic simplification over the current system. It would replace 29 different aid programs, each with many different components or aid drivers, with one formula with four moving parts.

The foundation formula is based on the cost of educating students in successful school districts, adjusted for regional cost differences and differences in each district’s concentration of needy pupils. An expected local contribution is calculated based on each district’s actual value per pupil, adjusted by income per pupil. State Aid is calculated as the foundation cost less the expected local contribution. The proposal would hold school districts harmless against loss for the group of aids combined into foundation aid and would be phased in over five years.

The foundation formula approach has several advantages. It sets aid independent of any decisions by districts on how much to spend. It also provides certainty to districts regarding how much funding they will receive. And, most significantly, it explicitly links school funding to the cost of educating children and drives dollars where they are most needed.

Special Education Funding

The Regents explored options for improving the funding of special education in a series of meetings around the State with educators and the public. Participants considered how funding can best support program goals of improved student achievement and education of students with disabilities in the least restrictive environment. Three options were discussed that provide special education funding separate from the foundation program and respond to policy concerns voiced at public forums on special education funding.

Understanding a proposal requires understanding the existing system that is to be changed. Current laws provide school districts State Aid to help meet the excess costs of educating students with disabilities--that is, districts receive operating aid for each student including those with disabilities, and, in addition, excess cost aid for those costs that are above and beyond the costs of a non-disabled student. In addition, the laws provide:

• That excess cost aid be wealth-equalized but require a substantial local contribution;

• That excess cost aid be based on the average spending on all students in the district but provide more aid for higher levels of service to students with disabilities;

• A substantial minimum aid, regardless of wealth;

• Extra aid for high-cost students and students integrated with their nondisabled peers; and

• Aid for students with disabilities placed in approved nonpublic special education schools.

The proposed approach maintains a separate special education funding stream based on a count of students with disabilities. It aligns that funding with the Regents proposal for foundation aid for general education instruction.

The general direction of the proposal is this: Calculate the foundation amount for general education students (e.g., General Education Foundation Cost x Pupil Needs Index x Regional Cost Index). This would be divided into an expected local contribution and State Aid in order to provide support for general education instruction, as it was proposed in the 2004-05 and 2005-06 Regents State Aid proposals.

For Public Excess Cost Aid, that same foundation amount would be multiplied by a single weighting for all classified students with disabilities to determine an expense upon which to base excess cost aid per pupil. Thus, each student with a disability would generate operating aid based on a portion of the general education foundation amount and, separately, excess cost aid based on a portion of the special education weighted general education foundation amount. The excess cost aid would be tied to the cost of education in successful districts by basing it on the foundation amount from our original successful schools study. High-cost aid and private excess cost aid could be continued separately and the Regents proposal for a current-year aid for new high-cost students with disabilities would be carried forward.

The following is an example of this proposal in a hypothetical school district. The amounts used are made up and are intended to illustrate how the formula might work and not its specific details.

Calculate the foundation amount for general education students (e.g., $1,000 x Pupil Needs Index x Regional Cost Index or by example a district with moderate pupil needs and moderate costs, $1,000 x 1.5 x 1.2 = $1,800/pupil). Divide this into State Aid and an expected local contribution to provide State support for general education instruction. For this hypothetical school district, assume the expected local contribution was $1,000 per pupil and State Aid was $800 per pupil.

Take the same foundation amount ($1,800/pupil) multiplied by a single weighting for all classified students with disabilities to determine excess cost expense per pupil. (For example, $1,800 x 1.1 = $1,980 of excess cost expense per special education pupil.) A State and local share of this expense can then be calculated. Thus, each student with a disability would generate foundation aid and excess cost aid.

Strengthen Accountability for the Use of Funds

The Regents have examined ways to strengthen the education system to be able to answer the question: How do we know if resources are well spent? They recommend continued support for state-of-the-art systems for processing State Aid and gathering and reporting information on students and resources. They recommend a strengthened State Education Department capacity to provide technical assistance to school districts in fiscal or programmatic crisis and to audit school districts. They have reviewed statutory and/or regulatory barriers to improving student achievement and have made recommendations for removing them in a separate legislative proposal on streamlining school district planning and reporting.

Legislative action for 2005-06 has enacted two bills related to fiscal accountability of school districts. One requires six hours of training for all newly elected or appointed school board members in the fundamentals of school district fiscal oversight, audit committees for school boards, and all school districts to conduct a risk assessment and put in place internal controls as part of an internal audit review. The other provides the State Comptroller with funds to audit all school districts over a five-year period. The Regents applaud these actions to strengthen the fiscal accountability of school districts. The following recommendations address other key aspects of the financial accountability of school districts.

Specific recommendations are as follows:

Improve Data and Information Systems

1. Financial Condition Indicator System. The State must also improve data and information systems to support school improvement. The State needs a school district financial indicator system (“FCIS”) that would ensure proper stewardship of dollars that pay for public education. The FCIS would include an early warning system for school districts to prevent financial distress; fiscal benchmarks and best financial practices; a public reporting tool providing information about the management of public funds to achieve educational goals; and a long-range financial planning tool for school districts.

Currently no such system exists. The Department’s Office of Audit Services collects data to assess the short-run financial condition of school districts, but this does not assess long-term financial condition and cannot be used as a tool for long-range planning by school districts. Only limited information on school district finances is readily available so the public lacks the necessary knowledge to analyze and interpret school districts’ fiscal data.

2. Student Data Information System. A statewide student data system must be implemented to assess if reform is taking root. SED has already begun to build such a system, which will create greater capacity to track students, measure their progress, and thus raise the achievement of all students in New York. These efforts could be accelerated with additional funds. The current system can only analyze information for entire groups of students, but the tracking of individual students over time will allow us to follow individual students through the system and analyze the effectiveness of State strategies and programs. For example, we will be able to measure the benefit of using smaller class sizes with certain groups of students. Such programs often involve the allocation of billions of education dollars without reliable data on their impact on student achievement. An individual record system will also help us to better meet many federal reporting requirements, including those of NCLB.
    

3. State Aid and Grants Management Systems. The Regents are implementing a unified State Aid management system to address the shortcomings of the current system. This improved system would provide a single point of access to all State Aid data, and be capable of analyzing districts’ fiscal needs. It would enable SED to more effectively collect information from school districts across the State, and would streamline the method for distributing to districts State and federal funds. The proposed system would provide timely feedback to users in school districts and SED and would facilitate modeling of State Aid formulae for the Legislature and Executive Branch. The current system is a mix of older systems that are not efficient, flexible or as exacting as the proposed system.

An improved data system would include two final components: an update of the web-based system to improve the efficiency of the grant awards process and provide improved reporting capability, and the elimination of redundant State reporting requirements, freeing districts to engage in more comprehensive planning and reporting. Streamlining plans, applications and reports that school districts submit to SED will reduce administrative burden and increase the focus of planning and reporting to support real gains in student achievement.

Enhance Audit Capacity

A uniform system of State accountability must use accurate, consistent and trustworthy data on local finances, demographic information and indicators of student performance that can be validly compared across districts of the State. Such a system contributes to equal educational opportunity for all by ensuring that policy decisions are data-driven and equitably applied.

Approximately $16 billion in State Aid is devoted to public schools in New York State, and that sum is primarily allocated on the basis of information provided by the districts themselves. If aid is to be distributed appropriately, that information must be accurate and verifiable. In order to ensure this, the State Education Department staff must implement a rigorous data quality assurance program.

The Regents Plan calls for enhanced State oversight of school district fiscal transactions to ensure the integrity of district finances. SED would significantly expand its current audit capacity to: focus more resources on districts with indications of poor student performance, fiscal stress, or inadequate management controls; conduct more frequent audits of school districts and review of school district financial statements; and conduct more random audits of districts that have no known problems or issues. State Education Department audits would complement those provided by the State Comptroller.

Regional Services for the Big Five City School Districts

This proposal recommends that the existing practice of excluding large city school districts from accessing BOCES services be discontinued. It recommends that the large four city school districts (Yonkers, Rochester, Syracuse and Buffalo) be given the authority to contract with neighboring BOCES for services in critical service areas that are strong in BOCES and weak in the city district.

A program should be established authorizing the Big Four city school districts to participate in BOCES and purchase services from BOCES. A corresponding increase in aid should be provided to the New York City school district to allow it to fund similar programs within the city district. Such regional services can include:

• Arts and cultural programs for students;

• Career and technical programs for students;

• Alternative education for students, including those who are in secure and non-secure detention centers within the city boundaries;

• Staff development as part of a district-required professional development plan and annual professional performance review;

• Technology services provided through BOCES;

• Regional teacher certification; and

• For the 2006-07 school year, planning and development activities necessary to implement these programs in the following school year.

TECHNICAL SUPPLEMENT

Need/Resource Capacity Definitions
High Need School Districts for 2005-06 School Year
Aids and Grants to be Consolidated Under the Regents Proposal
Formula Components
Regional Cost Adjustment Based on Professional Salaries
Summary of Aids and Grants as Requested in the 2006-07 Regents State Aid Proposal
Analysis of Aid Changes Under the 2006-07 Regents State Aid Proposal

Need/Resource Capacity Category Definitions

The need/resource capacity index, a measure of a district's ability to meet the needs of its students with local resources, is the ratio of the estimated poverty percentage (expressed in standard score form) to the Combined Wealth Ratio (expressed in standard score form).  A district with both estimated poverty and Combined Wealth Ratio equal to the State average would have a need/resource capacity index of 1.0.  Need/Resource Capacity (N/RC) categories are determined from this index using the definitions in the table below.

Estimated Poverty Percentage: A weighted average of the 2000-01 and 2001-02 kindergarten through grade 6 free-and-reduced-price-lunch percentage and the 2000 Census poverty percentage. (An average was used to mitigate errors in each measure.) The result is a measure that approximates the percentage of children eligible for free- or reduced-price lunches.

Combined Wealth Ratio: The ratio of district wealth per pupil to State average wealth per pupil, used for 2000-01 aid.

Aids and Grants to be Consolidated and Other Aids Under the 2006-07 Regents Proposal

2006-07 Regents Proposal Formula Components

Foundation Aid 

Foundation:  Foundation Operating Aid is the greater of $500 or Formula Foundation Aid multiplied by Selected Total Aidable Pupil Units (TAPU).  The Foundation Aid is the product of $4,731, the Regional Cost Index (see explanation following) and a Pupil Need Index, less the Expected Local Contribution.  The Pupil Needs Index, which ranges from 1.0 to 2.0, is the sum of 1.0 plus the product of the Extraordinary Needs percent (changed to exclude a Limited English Proficiency count) multiplied by the concentration factor.  The concentration factor (maximum of 0.855) is 0.4275 + (0.4275 x [(EN percent - 10 percent)/70 percent]).  The Expected Local Contribution is the product of 0.015 multiplied by the Alternate Pupil Wealth Ratio multiplied by the Selected Actual Value (AV) per 2003-04 TWPU.  Selected AV is the lesser of the 2003 AV or the average of 2002 AV and 2003 AV.  Selected TAPU, Total Wealth Pupil Units (TWPU), and TAPU for Expense have been changed to be based on average daily membership (instead of average daily attendance), eliminate the 0.25 additional weightings for Pupils with Special Educational Needs and secondary pupils and continue the 0.12 weighting for summer school pupils (in TAPU).  TWPU excludes weightings for students with disabilities.  TAPU for Expense applies a single 1.32 weighting for students with disabilities.  Aid for New York City is on a citywide basis.  Resident Weighted Average Daily Attendance (RWADA) is used only for Building Aid. 

The following aids and grants are eliminated, as well as four aids and grants that do not appear on the computerized aid estimates, Tuition Adjustment Aid, Urban-Suburban Transfer Aid, County Vocational Education Extension Board (CVEEB) and Shared Services Savings Incentive: 

          Flex Aid
          Comprehensive Operating
          Operating Aid
          Transition Adjustment
          Sound Basic Education
          Tax Effort
          Tax Equalization
          Tax Limitation
          Gifted & Talented
          Minor Maintenance and Repair
          Operating Standards
          Extraordinary Needs
          Summer School
          Early Grade Class Size Reduction
          Educationally Related Support Services
          Computer Hardware
          Operating Growth
          Operating Reorganization Incentive
          Full Day Kindergarten Conversion
          Teacher Support
          Small Cities
          Improving Pupil Performance
          Categorical Reading
          Magnet Schools
          Fort Drum    

Transition Adjustment: The base includes the 2005-06 aids listed above which appear in the computerized aid estimates.  All districts are guaranteed a 2 percent increase over their 2005-06 consolidated base aids.  A district's Foundation Aid is capped at a need-adjusted 10.50 percent over 2005-06 aids.  The cap is: 0.1050 x (Need/Resource Index, but not less than 1.0) with a minimum of 0.1050 and a maximum of 0.1125.  The Need/Resource Index is the district’s Extraordinary Needs Ratio (i.e., district Extraordinary Needs percent divided by the State average of 52.6 percent) divided by its Combined Wealth Ratio (CWR).  

Support for Extra Time and Help 

Limited English Proficiency: Aid is based on the 2005-06 LEP pupils multiplied by Foundation Operating Aid per pupil multiplied by 0.152. 

Universal Pre-Kindergarten:  The grant per pupil for unserved four-year olds is based on 0.50 multiplied by the 2006-07 Foundation Operating Aid per pupil.  The unserved count is phased-in at the product of the unserved four-year olds multiplied by 67 percent.  If the resulting count is at least 1.0, the district receives aid.  No district receives less than the sum of its 2005-06 Universal Pre-kindergarten grant and the 2005-06 allocations for Targeted Pre-Kindergarten (including summer). 

Support for Students with Disabilities 

Excess Cost - Public: Basic Public Excess Cost Aid equals the foundation operating aid per pupil multiplied by weighted students with disabilities.  A single 1.32 weighting is provided for pupils who require special services or programs, consistent with an Individualized Education Program (IEP), for: 60 percent or more of the school day; at least 20 percent of the school week but less than 60 percent of the school day; and, direct or indirect consultant services at least 2 hours per week.  Pupils are aided by district of attendance.  Declassification Aid is included based on 50 percent of the basic Public Excess Cost Aid per pupil. All districts are guaranteed a 2 percent increase over their 2005-06 aid per pupil, excluding high cost aid.  A district's basic and declassification aids are capped at a need-adjusted 10.50 percent over 2005-06 aid per pupil, excluding high cost aid.  Aidable high cost expense per pupil must exceed 2.32 times the greater of district 2004-05 Approved Operating Expense/TAPU for Expense or the foundation expense per pupil.  Tier 1 high cost aid per pupil is the product of: (a) tier 1 ratio (i.e., district foundation aid per pupil divided by district foundation expense per pupil) and (b) tier 1 expense (i.e., the lesser of district aidable high cost expense per pupil or the State average aidable high cost expense per pupil).  Tier 2 high cost aid per pupil is the product of: (a) aidable high cost expense per pupil in excess of tier 1 expense per pupil and (b) tier 2 ratio, with a minimum of .25 and maximum of .90 (i.e., [1 + (aidable high cost expense per pupil/State average aidable high cost expense per pupil)] x tier 1 ratio).  High Cost Aid is the sum of tier 1 and tier 2 high cost aids per pupil.  No additional aid is provided for students in integrated settings (i.e., pupils who receive special education services or programs by qualified personnel, consistent with an IEP, for 60 percent or more of the school day in a general education classroom with non-disabled students). 

The calculation of the additional 1.32 weighting for students with disabilities used in the Excess Cost Aid formula is based on the set of 316 districts meeting the Regents criteria for successful school districts identified in the Regents state aid proposal for 2004-05. That proposal established a foundation amount based on the average cost per pupil for general education among those 316 districts. For the 2006-07 proposal, the ratio of special education expenditure per pupil to general education expenditure per pupil for these 316 districts was calculated, yielding an additional 1.32 weighting per student receiving special education services.  That is, a pupil with a disability will be counted as 1.0 for Foundation Aid and 1.32 for Excess Cost Aid, resulting in a total pupil count for aid purposes equal to 2.32. 

Excess Cost - Private:  Aid is for public school students attending private schools for students with disabilities.  Net tuition expense is multiplied by the Aid Ratio (1 - (.15 * CWR), with a .5 minimum).  

BOCES/Career and Technical Education 

BOCES:  BOCES Aid is included for administrative, shared services, rental and capital expenses.  Save-harmless is continued.  Approved expense for BOCES Administrative and Shared Services Aids is based on a salary limit of $30,000.  Aid is based on approved 2005-06 administrative and service expenses and the higher of the millage ratio or the AV/2004-05 TWPU Aid Ratio:  (1 - (.51 * Pupil Wealth Ratio)) with a .36 minimum and .90 maximum.  The millage ratio factor remains 8 mills.  Rent and Capital Aids are based on 2006-07 expenses multiplied by the AV/2004-05 TWPU Aid Ratio with a .00 minimum and a .90 maximum.  Payable aid is the sum of these aids. 

Special Services Computer Administration: Computer Administration Aid equals the higher of the millage ratio or the AV/2004-05 TWPU Aid Ratio (1 - (.51 * Pupil Wealth Ratio)) with a .36 minimum multiplied by approved expenses not to exceed the maximum of $67.30 multiplied by the Fall 2005 public school enrollment with half-day kindergarten weighted at 1.0. 

Special Services Career Education: Career Education Aid equals the higher of the millage ratio or the Aid Ratio (1 - (.51 * PWR)) with a .36 minimum multiplied by $4,731, multiplied by the 2005-06 Career Education pupils including the pupils in business and marketing sequences weighted at 0.16.

Instructional Materials Aids 

Textbook:  Aid is based on 2005-06 approved textbook expenses up to the product of $57.30 multiplied by the 2005-06 resident public and nonpublic enrollment. 

Computer Software:  Aid is based on 2005-06 approved computer software expenses up to the product of $14.98 multiplied by the 2005-06 public and nonpublic enrollment. 

Library Materials:  Aid is based on 2005-06 approved library materials expenses up to the product of $6.00 multiplied by the 2005-06 public and nonpublic enrollment. 

Expensed-Based Aids 

Building:  Aid is equal to the product of the estimated approved building expenses multiplied by the highest of the 1981-82 through the 2003-04 AV/RWADA Aid Ratios or the Current AV/RWADA Aid Ratio.  For projects approved by voters on or after July 1, 2000, expenses are multiplied by the higher of the Building Aid Ratio used for 1999-00 aid less .10 or the Current AV/RWADA Aid Ratio.  Up to 10 percent of additional building aid is provided for projects approved by voters on or after July 1, 1998.  Building expenses include certain capital outlay expenses, lease expenses, and an assumed debt service payment based on the useful life of the project and a statewide average interest rate.  The low income aid ratio option is discontinued, however the high need supplemental building aid ratio option is continued.  Aid is not estimated for those prospective and deferred projects that had not fully met all eligibility requirements as of the fall 2005 database. 

Simplified Building Aid Calculations: The Regents propose to simplify the calculation of the maximum cost allowance that is used to determine Building Aid.  The changes described below will allow school administrators to accurately predict Building Aid prior to building design. The new formula would be: 

Maximum Cost Allowance = Projected Enrollment X Allowed Square Feet per Student X Allowed Cost per Square Foot x Regional Cost Factor 

1. The projected enrollment would continue to be the enrollment projected five years out for grades PreK-6, seven years for grades 7-9 and ten years for high school. 

2. The “allowed per square feet per pupil” is based on the median values of New York State school buildings constructed in the last five years.  The values are:

• Grades PreK-6 = 130 square feet per pupil

• Grades 7-9 = 160 square feet per pupil

• Grades 7-12 = 180 square feet per pupil  

3. The “allowed cost per square foot” is set at a level to ensure reasonable construction costs for instructional facilities will be fully covered – the average maximum cost allowance for new buildings will not change under the new simplified formula. The values are:

• Grades PreK-6 = $138 per square foot

• Grades 7-9 = $145 per square foot

• Grades 7-12 = $151 per square foot 

The allowed cost per square foot would be adjusted monthly by the change in the construction cost index. The construction cost index can be found at: http://www.nysed.gov/fmis/facplan/projects/costind.htm. 

4. The current regional cost factor methodology would remain unchanged. The construction cost regional cost factors can be found at: http://www.p12.nysed.gov/facplan/articles/rci03-04.html.  

Recognition of Extraordinary Construction Costs: the formula would include adjustments to recognize the increased costs of building in extremely dense urban areas.  Extraordinary costs related to multi-story construction, site security, increased costs due to constricted traffic flows and limited staging areas, and the site acquisition and environmental remediation of sites in high-density urban areas will be eligible for aid even when such costs are in excess of the maximum cost allowance. 

Building Reorganization Incentive:  Building Reorganization Incentive Aid on capital outlay, lease and debt service is subjected to the same requirements as regular Building Aid.  Aid is provided for reorganization projects that have been approved by voters within five years of district consolidation and where the project is contained in the five-year capital reorganization plan. 

Transportation:  Non-capital aid is based upon estimated approved transportation operating expense plus capital expenses multiplied by the selected Transportation Aid Ratio with a .9 maximum and a .065 minimum.  Aid for capital expenses (regular and summer) is computed as above but based on the assumed amortization of purchase, lease and equipment costs over five years, at a statewide average interest rate.  The selected Aid Ratio is the highest of 1.263 multiplied by the State Sharing Ratio or 1.01 - (.46 * Pupil Wealth Ratio) or 1.01 – (.46 * Enrollment Wealth Ratio), plus a sparsity adjustment.  The sparsity adjustment is the positive result of 21 minus the district’s 2004-05 enrollment per square mile, divided by 317.88.  The State Sharing Ratio is the greater of: 1.33 – (1.085 * Combined Wealth Ratio) or .915 – (0.56 * Combined Wealth Ratio) or 0.53 – (0.238 * Combined Wealth Ratio), with a maximum of 1.00. 

Summer School Transportation:  Transportation Aid for summer school programs is based on estimated approved transportation operating expense multiplied by the selected Transportation Aid Ratio with a .9 maximum and a .065 minimum.  Aid is no longer prorated to remain within a $5.0 million appropriation.  This proposal combines summer school and regular transportation aid.  Aid is shown separately in a subsequent table for the purpose of comparison to the base year.

Regional Cost Adjustment Based on Professional Salaries

A regional cost index was generated using an approach first developed by education finance researchers in the state of Oregon.  Their method recognized that school districts are often the dominant purchasers of college-educated labor in a community. As such, they exercise unusual market influence over the price they pay for such services, so that differences in cost may be the result of choices school districts make.  For this reason, teacher salaries were specifically excluded from the construction of the index, and selected professional salaries used as a proxy for the purpose of determining regional cost differentials.     

The index includes 63 titles for which employment at the entry level typically requires a bachelor’s degree, and excludes teachers and categories that tend to be restricted to federal and state government.  The wage data are provided by the Bureau of Labor Statistics and are drawn from the 2001 Occupational Employment Statistics (OES) Survey. The OES survey is an establishment survey and according to U.S. Department of Labor analysts, “wages and earnings tend to be more accurately reported in establishment surveys as they are based upon administrative records rather than recall by respondents.”  (“Inter-area Comparisons of Compensation and Prices,” Report on the American Workforce, 1997, p. 73.)  Additionally, the survey is administered on a three-year cycle where each year one third of the establishments are surveyed and wage data are aggregated using a technique known as wage updating.  Thus, the approximations of wages become increasingly accurate and are most precise in the third year. Unchanged from the 2004-05 Regents proposal, the RCI calculations are based on the third and most accurate data-year in the cycle. The triennial nature of the data means that the RCI need only be updated in those years in which the most accurate data in the cycle are available.  (For a detailed discussion of regional cost and the construction of the Regents Cost Index see, Recognizing High Cost Factors in the Financing of Public Education: A Discussion Paper and Update Prepared for the New York State Board of Regents SA (D) 1.1 (Sept., 2000) and the technical supplement entitled Recognizing High Cost Factors in the Financing of Public Education: The Calculation of a Regional Cost Index (Nov., 2000). Copies can be obtained by contacting the Fiscal Analysis and Research Unit at (518) 474-5213 or visiting their web site at http://www.oms.nysed.gov/faru/articles.html.)  The next scheduled update of the data would occur in 2006.

Method of Calculation 

The index was calculated as the weighted median annual wage for a given labor force region divided by the weighted median annual wage for New York State ($65,189). The index was truncated to three decimal places then divided by the North Country value of .731.  Index values range from 1.000 for the North Country to 1.496 for the Long Island/New York City Region.  The accompanying table lists the counties included in each labor force region.  The weighted median wage for New York State and for each labor force region was calculated as follows:

Weighted Median Hourly Wage = The sum of: (Title Weight * Median Annual Wage) for all 63 titles making up the index.  

1. Title Weight = the number of employees in a given title statewide divided by the number of employees in the 63 titles statewide.  Applying title weights to each labor force region prevents the index from being skewed by variations in occupational mix across regions.   

2. Median Annual Wage = median annual wage rate reported for each title in each labor force region and statewide. 

A separate index was created for each labor force region based on a subset of 46 of the 63 titles.  These 46 occupations represent those titles for which there were no missing data in any of the labor force regions.  This index was then used to estimate the median annual wage of titles with missing data in any given labor force region.  This was done by multiplying the statewide median annual wage for the title with missing data by the 46-title index for the specific labor force region for which the salary data was missing.   

For the purpose of index construction, the New York City and Long Island labor force regions were treated as a single labor force region.  The New York City/Long Island weighted median wage was calculated as follows:  

NYC/LI Weighted Median Wage = The sum of (Title Weight * NYC/LI Median Annual Wage) for all 63 titles making up the index

1. Title Weight = same as above. 

2. NYC/LI Median Annual Wage = for each title:  

[(# of emp LI * LI median annual wage)+(# of emp NYC * NYC median annual wage)] / (# of employees in LI + # of employees in NYC)

Regional Cost Index - Counties in Labor Force Regions

01/25/2006