School aid: Is a 'fiscal cliff' on the horizon? Some Long Island educators are wary
Fourth- and fifth-graders in a class at Medford Elementary School in April. Some educators are concerned about the future of fiscal aid allotted to schools, particularly at the federal level. Credit: Danielle Silverman
As principal of Medford Elementary School, Sharon Deland was elated by a recent state notice that her school is among eight in the Patchogue-Medford district to win a boost in academic status.
But there is a catch: Because the 450-student Medford school is now rated in good academic standing, it no longer qualifies for the annual $225,000 state improvement grant that helped it achieve success in the first place, Deland said.
Deland's boss, Donna Jones, the district's superintendent, said she hopes promised increases in other forms of state financial aid will help fill the gap. But juggling funds could get tricky, Jones added, because federal pandemic-relief money for schools is due to dry up in three years.
"I'm looking at a fiscal cliff," Jones said.
The "cliff" analogy is heard often in education circles these days. The issue is getting statewide attention as districts seek public support for annual spending and tax proposals scheduled for a vote Tuesday.
"Comptroller warns of funding cliff for schools," the New York State School Boards Association headlined a recent edition of its On Board newspaper. The reference is to the state Comptroller's Office, which serves as a fiscal watchdog.
Still, some analysts question whether "cliff" really applies to the current situation.
At the state level, New York lawmakers have boosted aid to local schools at record rates since 2021-22, following years of more modest increases. And while federal authorities have advised that their pandemic relief money for schools will expire in 2025-26, much of that funding loss will be offset by increases in state assistance.
Details of these complex trends in federal and state school funding are spelled out in a report issued in March by the state Comptroller's Office. The report, which focuses on the state's 2023-24 executive budget, also provides actual or projected school-aid figures covering a five-year period from 2022-23 to 2026-27. Figures are for state fiscal years, which start April 1.
Some key points:
State-aid funding for schools is due to rise each year, starting with $30,38 billion already allocated for 2022-23, then growing gradually to $38,09 billion by 2026-27, , Meanwhile, federal funding for schools in the state would decline from about $9,27 billion in 2022-23 to $3,86 billion in 2025-26 and 2026-27, The bulk of that loss would come from the expiration of temporary COVID-19 pandemic relief aid, , The net effect of these swings in state and federal assistance: A combined total of $42,15 billion in 2023-24 would decline to $40,48 billion in 2025-26 but bounce back to $41,95 billion in 2026-27, .
State authorities have warned, and many local school officials agree, that districts have to be careful in budgeting their remaining pandemic-relief money to avoid commitments that they will no longer be able to afford when federal money runs out. Some districts have taken the precaution of hiring retired teachers to serve as temporary tutors rather than investing relief money in permanent staff.
On a broader level, state Comptroller Thomas P. DiNapoli has declared that schools face "significant headwinds" including inflation that make careful budget planning a must.
Reports recently issued by the comptroller's office have not actually used the "fiscal cliff" term in describing statewide financial conditions. However, agency officials said the term would be appropriate in cases where districts have to scramble to find alternative funding when federal dollars run out.
Some independent fiscal analysts questioned the "cliff" comparison, noting that relief dollars were temporary and meant from the beginning to cope with an emergency situation.
"Fiscal cliff? Who are they kidding?" said Martin Cantor, director of the Long Island Center for Socioeconomic Policy, a private consulting agency based in Melville.
"This money was meant to be spent on tutors and other temporary school staff who could bring students up to speed when they fall behind," Cantor added. "Money was also meant to be spent on school building improvements such as air conditioning and filtering that would provide health safety. It was never meant to become part of the permanent budget."
Cantor is a CPA and consultant to businesses and government agencies.
Still, some threats of funding "cliffs" have come true in the past. A stock market crash in 2008 was followed by a deep recession, two consecutive years of state school-aid cuts, and thousands of teacher layoffs statewide. As a result, many veteran educators wonder if current state-aid boosts can be maintained.
"That's what frightens me most — the sustainability," said Richard Loeschner, superintendent of the Brentwood district, the Island's largest with about 18,000 students.
Current growth in state school aid is driven by higher income taxes on the rich, adopted by lawmakers in 2021. Those rates, which are among the highest for any state, include 9.65% for households with yearly earnings of $2 million or more, 10.3% for $5 million or more and 10.9% for $25 million or more.
Under law, those rates would sunset in 2027, though experts noted that taxation levels often have a way of living on beyond their original expiration date. Meanwhile, the income-tax debate grinds on.
Representatives of the Empire Center for Public Policy, a fiscally conservative think tank in Albany, have called for phasing out the higher tax rates, starting in 2024. The center's founder, Edmund J. McMahon, contends that income taxes are driving many high earners out of the state and creating a situation that is "both unstable and unsustainable."
Meanwhile, another Albany-area think tank, the Fiscal Policy Institute, has been pushing to make the higher tax rates permanent. The institute is supported by labor unions, including a major teacher group. Nathan Gusdorf, the institute's executive director, said that the state's failure to make rates permanent so far could be "leading to future fiscal cliffs."
As principal of Medford Elementary School, Sharon Deland was elated by a recent state notice that her school is among eight in the Patchogue-Medford district to win a boost in academic status.
But there is a catch: Because the 450-student Medford school is now rated in good academic standing, it no longer qualifies for the annual $225,000 state improvement grant that helped it achieve success in the first place, Deland said.
Deland's boss, Donna Jones, the district's superintendent, said she hopes promised increases in other forms of state financial aid will help fill the gap. But juggling funds could get tricky, Jones added, because federal pandemic-relief money for schools is due to dry up in three years.
"I'm looking at a fiscal cliff," Jones said.
WHAT TO KNOW
- Many education leaders on Long Island and statewide warn of an upcoming "fiscal cliff," when federal pandemic relief funds for schools are due to expire.
- Some independent analysts question use of the "cliff" term, noting that federal relief money was always meant to be temporary.
- Cuts in federal aid will be partly offset by continuing increases in state aid, according to projections by the state Comptroller's Office.
The "cliff" analogy is heard often in education circles these days. The issue is getting statewide attention as districts seek public support for annual spending and tax proposals scheduled for a vote Tuesday.
"Comptroller warns of funding cliff for schools," the New York State School Boards Association headlined a recent edition of its On Board newspaper. The reference is to the state Comptroller's Office, which serves as a fiscal watchdog.
Patchogue-Medford schools Superintendent Donna Jones has concerns about the fiscal forecast for schools. Credit: Danielle Silverman
Still, some analysts question whether "cliff" really applies to the current situation.
At the state level, New York lawmakers have boosted aid to local schools at record rates since 2021-22, following years of more modest increases. And while federal authorities have advised that their pandemic relief money for schools will expire in 2025-26, much of that funding loss will be offset by increases in state assistance.
'Significant headwinds'
Details of these complex trends in federal and state school funding are spelled out in a report issued in March by the state Comptroller's Office. The report, which focuses on the state's 2023-24 executive budget, also provides actual or projected school-aid figures covering a five-year period from 2022-23 to 2026-27. Figures are for state fiscal years, which start April 1.
Some key points:
- State-aid funding for schools is due to rise each year, starting with $30.38 billion already allocated for 2022-23, then growing gradually to $38.09 billion by 2026-27.
- Meanwhile, federal funding for schools in the state would decline from about $9.27 billion in 2022-23 to $3.86 billion in 2025-26 and 2026-27. The bulk of that loss would come from the expiration of temporary COVID-19 pandemic relief aid.
- The net effect of these swings in state and federal assistance: A combined total of $42.15 billion in 2023-24 would decline to $40.48 billion in 2025-26 but bounce back to $41.95 billion in 2026-27.
State authorities have warned, and many local school officials agree, that districts have to be careful in budgeting their remaining pandemic-relief money to avoid commitments that they will no longer be able to afford when federal money runs out. Some districts have taken the precaution of hiring retired teachers to serve as temporary tutors rather than investing relief money in permanent staff.
On a broader level, state Comptroller Thomas P. DiNapoli has declared that schools face "significant headwinds" including inflation that make careful budget planning a must.
Reports recently issued by the comptroller's office have not actually used the "fiscal cliff" term in describing statewide financial conditions. However, agency officials said the term would be appropriate in cases where districts have to scramble to find alternative funding when federal dollars run out.
Questioning the 'cliff' analogy
Some independent fiscal analysts questioned the "cliff" comparison, noting that relief dollars were temporary and meant from the beginning to cope with an emergency situation.
"Fiscal cliff? Who are they kidding?" said Martin Cantor, director of the Long Island Center for Socioeconomic Policy, a private consulting agency based in Melville.
"This money was meant to be spent on tutors and other temporary school staff who could bring students up to speed when they fall behind," Cantor added. "Money was also meant to be spent on school building improvements such as air conditioning and filtering that would provide health safety. It was never meant to become part of the permanent budget."
Cantor is a CPA and consultant to businesses and government agencies.
Still, some threats of funding "cliffs" have come true in the past. A stock market crash in 2008 was followed by a deep recession, two consecutive years of state school-aid cuts, and thousands of teacher layoffs statewide. As a result, many veteran educators wonder if current state-aid boosts can be maintained.
"That's what frightens me most — the sustainability," said Richard Loeschner, superintendent of the Brentwood district, the Island's largest with about 18,000 students.
Brentwood schools Superintendent Richard Loeschner worries about the sustainability of financial aid. Credit: Newsday/Steve Pfost
Current growth in state school aid is driven by higher income taxes on the rich, adopted by lawmakers in 2021. Those rates, which are among the highest for any state, include 9.65% for households with yearly earnings of $2 million or more, 10.3% for $5 million or more and 10.9% for $25 million or more.
Under law, those rates would sunset in 2027, though experts noted that taxation levels often have a way of living on beyond their original expiration date. Meanwhile, the income-tax debate grinds on.
Representatives of the Empire Center for Public Policy, a fiscally conservative think tank in Albany, have called for phasing out the higher tax rates, starting in 2024. The center's founder, Edmund J. McMahon, contends that income taxes are driving many high earners out of the state and creating a situation that is "both unstable and unsustainable."
Meanwhile, another Albany-area think tank, the Fiscal Policy Institute, has been pushing to make the higher tax rates permanent. The institute is supported by labor unions, including a major teacher group. Nathan Gusdorf, the institute's executive director, said that the state's failure to make rates permanent so far could be "leading to future fiscal cliffs."
John Hildebrand is Newsday's senior education writer and has covered school news and policy issues affecting Long Island for more than 40 years.
