07/2006.

Introduction


School aid refers to public investment for K-12 education. Each state runs a different school funding system as defined by its constitution. Education funding in New York State is a combination of local and state monies with a small amount of federal dollars. At the state level, the Department of Education, governed by the Board of Regents, writes its annual budget proposal.ii The Governor’s Office creates the Executive Budget Recommendation, which includes education funding, and submits it to the Legislature annually. Once the Legislature receives the Executive Budget in January, it has six weeks to amend the proposed budget before it becomes law. After the passage of the state aid budget, local school districts propose and pass their own budgets by late May. Local school budgets are dependent on state education appropriations and local property tax.  


Regents Proposal on State Aid   


July to December

o

State Education Department (SED) Budget Preparation:  

Regents’ proposal provides the guidelines for the school aid budget

Regents Working Group, led by Deputy Commissioner for K-12 Education, holds informal meetings inviting education stakeholders (e.g., district superintendents, school board members, and representatives of the New York City Department of Education)

Office of Operation and Management Services prepares the SED budget proposal through the school aid formula, which calculates state funds to local districts based on district and pupil characteristics

Subcommittee on State Aid under Board of Regents Office prepares legislative budget proposal for school aid

January

o

The Board of Regents publishes its School Aid Proposal for the upcoming fiscal year


Executive Budget


November to January

o

Governor and Division of Budget staffs formulate the final Executive Budget recommendations including the school aid budget, which is based on revenue and spending estimates - not exact figures

o

Within the education budget, there is a tradition of maintaining the funding levels of the previous year: this policy is known as “hold harmless.”  As a result of this policy no school district is allocated less state aid than they received in the previous year.iiii While this is not a formal law, the executive budget proposal uses the funding level of the previous fiscal year as a starting point (or base level) and the proposed budget usually increases the level of funding

o

The Executive Office often conducts a series of informal briefings with the Legislature and advocacy groups to explain new initiatives and/or significant changes in the budget

o

Governor submits Executive Budget to the Legislature in the third week of January or by February 1st if it is the first year of a new termiiiiii

o

The budget is the only piece of legislation the Governor can introduce to the Legislature without a legislative sponsor, therefore, the Executive Budget often includes new policy initiatives along with its proposed appropriation of funds

February and March

o

Governor has until 30 days after the submission to the Legislature to amend the budget

During this period, the Governor receives requests to change the proposed budget  

The Governor rarely makes significant changes during this period, however, the budget is not final until the end of the 30-day period is over


Legislative Action


The Legislature has six weeks from the submission of the final Executive Budget until April 1st (the start of the next fiscal year) to amend the budget

The Senate and the Assemblyiviv separately review the Executive Budget Recommendations and propose changes. Each house develops a list of priorities and makes their priorities public

o

Traditionally increases education funding over the Governor’s budget, often at a level above the Senate’s proposed change

In response to calls for a transparent budget process, the Legislature has set up a series of conferences by joint committees to discuss the two Houses’ proposed changes to the Executive Budget Recommendations

o

Agency heads are asked to testify and explain the agency’s proposed budget at a joint public hearing on the budgetvv

The two Houses, in conjunction with the Executive, try to reach an agreement on available revenue: this number is often higher than the amount included in the proposed executive budget, because it is based on additional data not available at the time the Executive submits a budget (they have access to the fourth quarter tax receipts)

The final education budget traditionally falls in between the Assembly’s appropriation and the Senate’s funding proposals—both of which are usually larger than the Governor’s budget that is determined by the hold harmless principle

The appropriation bills, except for those items which are added by the Legislature and the appropriations for the Legislature and Judiciary, become law without further action by the Governor

The Governor must approve all or parts of the appropriation bills covering the Legislature and Judiciary and may use the line item veto to move items added by the Legislature while approving the remainder of the bill

After the initial budget is passed, the Legislature then determines categorical education funding areas. This determination is their way of adjusting the education budget through additional state monies



Local School Funding


A large proportion of education funding is provided by individual municipalities. Every year local districts or boards of education must individually determine how much they need to run their school district

Most school districts must submit their proposed budget to the public and the public votes on the budget. The state’s largest school districts (New York City, Buffalo, Rochester, Syracuse, and Yonkers) are called “fiscally dependent school districts.” Their local funds come directly from their city governments and they are not allowed to tax separately for public schools

April

o

The school board of education must hold a public hearing to present to the voters the budget for the upcoming school year

May

o

Annual meeting and election must be held on the third Tuesday in May. At that time there is a public vote on the proposed budget

o

The board of education may submit its budget and/or budget proposition(s) to the voters no more than two times

o

If the proposed budget is defeated twice, then board must adopt a contingency budget. The board also has the option of going directly to a contingency budget immediately after the first budget defeat. Under a contingency budget, the district may not increase spending by more than 120 percent of the Consumer Price Index or 4 percent, whichever one is lower. Under a contingency budget, the percentage of the budget devoted to administrative costs cannot increase from what it was in the prior year's budget or the last defeated budget, whichever is lower. Once a contingency budget is established, community residents are no longer allowed to petition boards of education to put additional items up for a separate vote

August-September

o

When a budget is passed requiring a separate school tax, municipalities begin revenue collection on or before September 1


CURRENT SCHOOL BUDGET VOTE TIMELINE

Event or Activity

Deadline

Publication of legal notice of school Budget vote, board elections, special propositions and date of public hearing

No later than 45 days prior to budget vote date

Deadline for submission of petitions for nominations of Board of Education candidates

30 days prior to budget vote date (20 days for small cities)

Board of education adopts proposed budget

Not specified, however, the board must authorize some form of a budget at least 25 days prior to the vote date in order to meet the Property Tax Report Card requirement

Property Tax Report Card submitted to SED and local newspaper

At least 24 days prior to the budget vote date

Proposed budget available, upon request

At least 7 days prior to the public hearing

Public hearing on the budget

At least 7 days but no later than 14 days prior to the budget vote date

School budget notice mailed to all qualified voters

After the public hearing but no later than 6 days before the budget vote date

List of residents given absentee ballots must be available for public inspection

5 days prior to budget vote date

Budget vote date

Third Tuesday in May



 Judiciary

The Judiciary has no formal role in the budget process, however, there have been a series of court cases that have questioned the overall budget process

o

The Campaign for Fiscal Equity v. The State of New York has the potential to significantly change the school funding system


Comptroller

o

Certifies the budget


Attorney General

Has no formal role in the budget process



References


Consultations with Regina Eaton on April 20, 2006, June 1, 2006, and June 5, 2006 .

Division of Budget (2005) Citizen’s Guide: The Budget Process. Available online: http://www.budget.state.ny.us/citizen/process/process.html

Division of Budget (2005) State Agency Guide: New York State Budget Request Manual. Available online: http://www.budget.state.ny.us/brm/

Office of Operation and Management Service, New York State Department of Education (2005) Budget Coordination: Policies, Procedures and Guidelines. Available online: http://www.oms.nysed.gov/budget/


Endnotes

ii The State Education Department also submits a separate request for its own agency budget to the Governor’s Office annually.   

iiii This practice does not pertain to funds for transportation and capital expenditures because that would constitute re-imbursements for the prior year’s expenses.

iiiiii 2007 will be a new term with a new governor

iviv The Assembly is the term used in New York State to refer to the lower chamber of the Legislature

vv These hearing are co-chaired by the heads of the two legislative fiscal committees and each individual hearing is often co-chaired by the heads of the appropriate standing committee:  i.e. the hearing on the education budget would have four co-chairs. Therefore, the chairs of both fiscal committees in conjunction with the chairs of both education committees run the hearing jointly. Members of the four standing committee attend the hearing and ask questions.