Funding Quality Education in New York
By Michael A. Rebell and Joseph J. Wardenski
Setting Standards for an Adequate Education
After decades of bureaucratic mistreatment, New York State's education funding system is gradually being straightened out through the unlikely mechanism of litigation. A coalition of related interests-including some school districts-sued New York State, claiming that the school funding methodology is unconstitutional. The State Supreme Court justice hearing the initial case agreed, and in a landmark decision chastised the state for its flawed system and laid out the criteria that a reformed system should meet.
The Court of Appeals' decision is forthcoming. In the meantime, similar lawsuits in other jurisdictions may show other ways of reaching the same ends-namely, quality education, however defined, for all students.
Last October, a New York State appeals court heard the appeal in Campaign for Fiscal Equity, Inc. v. State of New York, a lawsuit that will have major impact on the future of education funding in New York. In 1993, the Campaign for Fiscal Equity (CFE)-a coalition of parents, advocacy groups, and school districts-challenged the constitutionality of the state's school finance formula. The plaintiffs argued that the current system fails to provide sufficient funding to ensure an adequate education to public school students in New York City and other impoverished school districts in the state. The Appellate Division's decision is expected early this year.
CFE won a major victory in the first round of the case when Justice Leland DeGrasse of the State Supreme Court ruled the state's education finance system unconstitutional. In his decision, Justice DeGrasse held that "the education provided New York City students is so deficient that it falls below the constitutional floor set by the Education Article of the New York State Constitution" and that "the State's actions are a substantial cause of this constitutional violation." In short, the flawed state education funding formula was found to be the prime factor denying children throughout the state their right to a sound basic education.
As well as marking a major milestone for education reform in New York, CFE is part of a broader national movement of using education finance litigation to increase aid to traditionally underfunded, low-performing school districts. Over the past several decades, lawsuits challenging state methods of funding public schools have been brought in 43 states. While these efforts have met with mixed results, a trend toward increasing plaintiff successes over the past decade-including CFE-has fueled a renewed optimism about the potential of education finance litigation to bring about meaningful education reform. As the movement has evolved, new legal approaches and broad-based coalition-building efforts have strengthened these reform efforts.
History of CFE
In 1993, parent groups, New York City community school boards, and education advocates formed a coalition, CFE, to challenge New York State's education finance system on behalf of New York City public school children. CFE filed suit against the state, charging that its school aid formula did not meet the requirements of the state constitution to provide every child the opportunity for a sound basic education. It claimed that decades of underfunding in many school districts-particularly in New York City-were to blame. Despite a previous decision by New York State's highest court, the Court of Appeals, declining to entertain education finance equity claims, CFE developed a new legal strategy aimed at overturning a complex, politicized funding system that even its proponents were increasingly acknowledging as archaic.
In 1995, the Court of Appeals allowed CFE to pursue its case and interpreted the education clause of the state constitution as guaranteeing "the opportunity for a sound basic education" to all students in the state. In January 2001, Justice DeGrasse issued his landmark decision ruling the state's education finance system unconstitutional. Justice DeGrasse ordered the state to develop a new, fairer funding system by September 15, 2001. The state appealed the ruling, and in so doing obtained an automatic stay that has postponed the implementation of the remedial order. After the Appellate Division issues its decision in early 2002, the case will likely go to the Court of Appeals.
Formula for Failure
The current education finance system is unpopular, even among state officials who defend its existence. Few can comprehend the funding formula: Even the state education commissioner acknowledged during the trial that he did not understand the complex web of formulas and political deals that determine how much money school districts receive.
Not only does the system create the potential for inequity, DeGrasse held, the state funding formula is to blame for the real, clearly defined inequities that have plagued public schools in New York City and other high-needs districts for at least two decades. The first step in real reform, DeGrasse ruled, is to replace the old system with a new formula that is clear, straightforward, and at its heart takes the needs of students into account.
New York State school districts receive funding from three sources: 54% comes from local revenues, 42% from the state, and 4% from other sources, mainly the federal government. This mix of revenues fluctuates; in general, the percentage of local revenues is higher in affluent districts.
On its face, the state aid distribution system is complex because it purports to distribute state education aid based on nearly 50 individual formulas and grant categories. In reality, however, the final outcome is predetermined by a deal among the state's political leaders according to a regional shares agreement. Under this agreement, New York City has long received a fixed percentage of the annual increase in state aid. Because the system is not comprehensible to the average citizen, there is no accountability for whether it works.
Local tax revenues provide the majority of school funding in New York State, and local communities can levy property taxes to raise funding as they see fit. This system is different in the state's largest districts. The "big five" school districts-New York City, Syracuse, Buffalo, Rochester, and Yonkers-are dependent districts that have no authority to levy property taxes. In effect, schools in these cities are competing with other city services for funding. The big five also have an above-average percentage of students living in poverty and possessing special needs. These and other poor school districts are often unable to raise comparable per-pupil revenue. While one might expect the state aid formula to address these disparities, in reality these considerations are not fully taken into account.
New York City provides a clear illustration of the critical need for reform. Although the city educates nearly 38% of the state's students, it annually receives only 35.5% of state education aid. Compounding this problem, New York City schools enroll 70% of all economically disadvantaged students in New York State, 51% of students with severe disabilities, and over 80% of English language learners. In addition, the costs of running schools in the New York City region are higher than elsewhere. The state funding formula, however, does not account for differing regional costs.
How the Formula Affects Public Schools
In CFE, Justice DeGrasse documented the deficiencies that prevent millions of public school children from receiving even a minimally adequate education. Specifically, he considered whether New York City's public schools had sufficient resources to provide students with qualified teachers, adequate school facilities, and other "instrumentalities of learning," from textbooks to classroom technology, that would provide students with the opportunity for a sound basic education.
In each of these three areas, Justice DeGrasse ruled that funding levels were insufficient to maintain even a basic level of adequacy. He concluded that teacher quality in New York City was on the whole inadequate, citing high levels of uncertified teachers, unsatisfactory professional development opportunities, and above-average failure rates on certification exams. He found that school facilities in New York City were often overcrowded, unsafe, and inadequate for modern technology, and that there is a "causal link" between poor facilities and low student performance. DeGrasse found that while city schools currently have adequate textbooks, they lack a formal funding mechanism for ensuring that in the future, and overall the system lacks adequate library books, instructional technology, and teacher training in technology use. Inadequate resources, coupled with disturbingly high dropout rates and low achievement test scores, led DeGrasse to conclude that, as a direct result of insufficient state funding, New York City public schools were failing to provide students the opportunity for an adequate education.
Seeking a Remedy
Advocates for education finance reform in New York, like their peers in other states, recognized many years ago that the state legislature could not be relied upon to reform a flawed system that it played a major role in sustaining. The inability of the legislature and governor to agree to an effective, fair system of funding has become increasingly pronounced. 2001 marked the seventeenth consecutive year in which the legislature passed its budget late. The governor and legislative leaders refused to even negotiate a budget; the bare-bones budget ultimately passed by the legislature included major cuts in school aid.
Reformers turned to the courts to seek a remedy to the state's school aid formula. In the first generation of education finance litigation in New York and a number of other states, advocates attacked the system of funding public schools primarily through local property taxes. Under this inherently inequitable system, wealthy suburbs have been able to fund local schools more easily than poorer districts, especially those in urban areas with weak tax bases. Whereas wealthy districts can sustain significant per-pupil expenditures at a relatively low tax rate, poor districts (often with high minority populations) can rarely come close to matching those spending levels, even at significantly higher tax rates. Reformers recognized that the core problem behind the lack of equal educational opportunities for many poor and minority students was an inequitable financing system. Consequently, the legal approach emphasized equity: bringing per-pupil spending up to levels comparable to the highest-spending districts.
These claims met with resistance from both the public and the courts. Many were based on the principle of "fiscal neutrality," which holds that the state has a constitutional obligation to equalize the value of the taxable wealth in each district, so that equal tax efforts will yield equal resources. This approach ignored the critical issue of educational need and did not address the complexities at the core of the issue: how to ensure an adequate level of education for all students, particularly those with special needs. Consequently, the courts tended to direct the state legislatures to eliminate the inequities of the old system, but provided little specific guidance toward a better system. Some state legislatures adopted district power-equalizing plans that guaranteed each local district a specific amount of revenue for a given local tax rate, sometimes by redistributing revenues from property-rich districts to property-poor ones.
Not only did these reforms fail to fundamentally consider the question of educational need in revamping education finance systems, they proved extremely unpopular politically and deepened rifts between property-rich and property-poor communities. In the early 1980s, courts were siding with the defendants in most cases because of the difficulty in devising solutions for funding inequities. Reformers saw the need for a new legal strategy.
Since 1989, plaintiffs have won about two-thirds of the recent cases. This is largely due to a new strategy that concentrates on equal funding concepts and complex property tax reforms. Plaintiffs have based their claims on the concept of educational adequacy, under which courts can focus on the concrete issues of which resources are needed to provide all students the opportunity for an adequate education and the extent to which these resources are actually being provided.
The CFE decision emphasized the educational adequacy approach and took the position that New York State is compelled by its constitution to ensure that each school district has the funds necessary to provide students with an adequate education. Under this leveling-up approach, wealthier districts are free to spend however much they see fit and set property tax rates without restriction. This approach does, however, require the state to ensure a base level of funding for property-poor districts. The adequacy argument is based on the premise that the pie needs to be expanded-not redistributed-to provide sufficient aid to districts that cannot, on their own, provide a minimally adequate education.
Under this approach, the challenge for both reformers and the courts is to determine what constitutes an adequate education. In New York and other states, the courts have begun a dialogue with state legislatures and state education departments. The results have been reinvigorated claims for increased resources for students in underfunded school districts as well as a new focus on the states' obligation to ensure that students develop the skills necessary to succeed in the workplace and society. As states have developed and implemented more rigorous standards for teaching and learning, they have created a useful set of benchmarks for judging the quality of education delivered by public schools.
The willingness since 1989 of state courts to reconsider education finance cases under adequacy claims is largely due to plaintiffs' efforts to couple these cases with the growing standards-based reform movement. This movement, dating to a widespread concern about public education in the 1980s, provided the tools that the courts needed to deal with complex educational issues. The new effort to define rigorous academic goals for public schools has provided a consistent framework for measuring the effectiveness of court-mandated reforms.
Standards-based reform is built around substantive content standards in English, mathematics, social studies, and other major subject areas. The standards are based on the assumption that virtually all students, given sufficient opportunities and resources, can meet these high expectations. Once the content standards have been established, every other aspect of the education system-including teacher training, teacher certification, curriculum frameworks, textbooks and other instructional materials, and student assessments-can be revamped to conform to these standards. The aim is to create a seamless web of teacher preparation, curricula implementation, and student testing to create a coherent system that will significantly improve the achievement of all students.
The attractiveness of the standards-based reform movement is clear. Previously, adequate education had been a vague concept that could ostensibly be used to describe any state education system. The standards-based reform movement gave the notion of adequacy teeth. Reformers-including the CFE plaintiffs-could now address concrete inadequacies and focus on achieving remedies that met the state's own standards.
Costing Out a Sound Basic Education
In CFE, the trial court, under remand directions from the Court of Appeals to gather evidence on the meaning of the constitutional right to "the opportunity for a sound basic education," analyzed the extensive set of learning standards that the Board of Regents had issued over the course of the seven-month trial. Although the court indicated that a constitutional standard cannot be synonymous with a specific set of state regulations, it nevertheless held that the core high cognitive skills at the heart of the Regents' standards were an important component of a sound basic education.
In his remedial order, Justice DeGrasse outlined a set of parameters under which the state should base its reformed formula. The following seven critical resources would constitute "a sound basic education":
Justice DeGrasse ordered the state to determine the actual costs of these resources and described the steps the state should then take to develop a constitutionally acceptable school aid formula. First, Justice DeGrasse advised, the state must ensure that every school district has the resources necessary for a sound basic education. Next, it must consider variations in local costs. To clarify the needlessly complex funding process, the reformed aid system should provide sustained and stable funding in order to promote long-term planning. The revised formula should also be transparent and easily understandable by the public. Finally, the state must ensure a system of accountability to measure whether the reforms implemented by the legislature actually provide the opportunity for a sound basic education and remedy the disparate impact of the current finance system.
Justice DeGrasse left it up to New York State to develop a specific plan to carry out these principles. Pending the appeal, however, no progress has been made in moving forward with these reforms.
Perhaps the most striking element of Justice DeGrasse's decision was its profound simplicity. The grandest reform he called for was a province of sound common sense: Develop an aid formula based on the cost of educating a child. This basic premise-education aid based on school and student need-has long been absent from the complex equation that distributes education dollars. Thankfully, this is a remedy that can easily be put into practice. New York State can learn from the experiences of several other states in costing out an adequate education and quickly, effectively develop a funding system that is fair to all students in New York public schools. Justice DeGrasse's decision is as a statement of faith that all students can learn and a blueprint for ensuring that they all do.
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