ASBO Releases Report on Challenges Facing Small City School Districts

ALBANY, NY (11/15/2018) (readMedia)-- Many of New York's 57 small city school districts face significant challenges ranging from large percentages of students in poverty and eligibility for free and reduced-price lunches, to limited tax bases and inadequate state funding. Small city school districts are defined by state law as any district including territory within the boundary of a small city, which is classified as a municipality with a population of less than 125,000.

The report analyzes student need, student achievement, and school district finances, which documents a persistent resource and achievement gap. School districts with the highest levels of student need have lower levels of fiscal capacity and student achievement.

The state's inability to fully fund its Foundation Aid formula significantly impacts high-need small city school districts, which have $2,619 per student in Foundation Aid still due to them based on the formula enacted in 2007 and still in effect. More than a third of high-need small city school districts receive less than 80 percent of their Foundation Aid. High-need small city school districts currently spend $21,337 per pupil, well below the $25,722 per pupil spent in non-city school districts. Fully funding Foundation Aid would significantly narrow this gap and provide much needed resources to support student learning.

ASBO recommends the state commit to a full phase-in of the Foundation Aid formula that prioritizes high-need districts that are furthest away from their calculated aid.

The report also analyzes the different rules small city school districts encounter when calculating their debt limits, which impacts their ability to borrow or bond for capital projects like renovations or new construction. A combination of constitutional and statutory policies results in a median small city school district debt limit of $18,736 per pupil, while the median non-city school district debt limit is $159,036 per pupil.

In order to exceed these artificially low debt limits, small city school districts need to obtain voter approval with a super majority (60%), as well as approval of the Commissioner of Education and State Comptroller. Small city school business officials tell us these requirements make it harder to do capital projects and place them at a disadvantage compared to neighboring districts.

The greatest factor explaining this disparity in debt limits is that non-city school districts are allowed to reduce the overall cost of the project by the amount of state building aid they receive for the project, thereby reducing the amount that is borrowed or bonded. Whereas small city school districts borrowing limit is based on the total cost of the project without reductions for the state aid they receive.

To level the playing field, ASBO recommends that small city school districts be treated the same as other districts and have their borrowing limit based on capital project costs minus state aid.

"Small city school districts, especially high need small city school districts, have two clear problems: inadequate state funding and an unfair debt limit," said Michael Borges, ASBO New York's Executive Director. "Children will continue to be denied the opportunities they need for success unless the state fully funds Foundation Aid and corrects the unfairness in debt limit requirements," he concluded.

A copy of the report can be found on ASBO New York's website here: https://cdn.ymaws.com/www.asbonewyork.org/resource/resmgr/reports/Small_City_School_Districts.pdf