Rising inflation adds $800M to cost of fully funding New York’s main school aid formula

The exterior of the New York State Capitol with a pond in the foreground.
The New York State Capitol. Inflation has added millions to the cost of fully funding New York’s main school aid formula. (Barry Winiker / Getty Images)

New York school funding advocates have been looking forward to next year, when Gov. Kathy Hochul and the legislature are supposed to finish fully funding the state’s 15-year-old school funding formula, resulting in billions of more dollars for school districts statewide.

But a new problem might put the money in jeopardy: Because of inflation, the increase is expected to be nearly $1 billion more than expected, state officials said. 

Advocates said they don’t yet expect that lawmakers will renege their promise of fully funding Foundation Aid, which sends more money to school districts with students who have higher needs. 

Regardless, they are already on the offensive ahead of the next legislative session, which begins Jan. 4. They said they’ll still be pressing state leaders on the issue, in light of what happened when the formula was first implemented in 2007, right before the Great Recession. 

“We got two years of full funding before there was a financial crisis, and then they froze the funding and started to regress and cut some schools,” said Jasmine Gripper, executive director of Alliance for Quality Education. “And we’ve fought for schools ever since.”

Last year, state lawmakers agreed to fully fund the Foundation Aid formula over three years, with the final phase-in scheduled in time for the 2023-24 school year. Since the Foundation Aid formula accounts for inflation, state officials expect that the final increase this year will cost $2.7 billion — about $800 million more than what the state’s Board of Regents had previously projected.

With that increase, schools across the state would receive a total of $24 billion in Foundation Aid next year. 

The increased cost is because this final phase-in of money “happens to occur in a year with the highest inflation rate since the formula began,” according to a spokesperson for the state education department. 

Advocates hope that the rising cost won’t deter lawmakers or Hochul from carrying out their promise to fully fund the formula, which she agreed to do as part of a legal settlement last year.

“As long as the state’s finances hold up, it seems as though it’s actually manageable,” said Bob Lowry, deputy director of policy and advocacy with the state’s Council of School Superintendents. “But if we got evidence that a recession is taking hold or revenues from the financial sector are coming in much lower, that could create an obstacle to achieving full funding in the next budget.”  

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The state’s financial picture is mixed. Through September of this year, the state had collected $3.1 billion more in personal income taxes and other revenue than was expected earlier this year, but there are still budget gaps expected for the next three fiscal years, according to the state budget division’s midyear report. Budget officials wrote that the national economy and the “elevated risk of a recession” could mean a gloomier budget in New York down the road. 

State Sen. John Liu, a Queens Democrat who oversees the Senate’s New York City education committee, said cost increases and inflation are going to impact various parts of the budget, and it’s hard to say if better-than-expected tax revenues are enough to help. 

Still, Liu said there is a “very high level of commitment” from the legislature to fully fund Foundation Aid.

“There is not enough money for everything everyone wants, but education is our biggest promise, from the state constitution and from the budget agreements over the last couple of years and from the settlement of the lawsuit from the governor’s promise,” Liu said. “I fully expect this final increase in Foundation Aid should be part of the coming budget.”

The governor’s office declined to say whether they’re still committed to fully funding the final projected increase for Foundation Aid. In a statement, spokesperson Katy Zielinski said details about the governor’s budget proposal will be released early next year. 

Reema Amin is a reporter covering New York City schools with a focus on state policy and English language learners. Contact Reema at ramin@chalkbeat.org.

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