tabling SALT

Here’s how the Republican tax plan could threaten New York’s education funding

PHOTO: Kevin P. Coughlin-Office of the Governor/Flickr
Mayor Bill de Blasio and Gov. Andrew Cuomo at a press conference in 2014.

Republican lawmakers in Washington appear poised to approve sweeping tax legislation, which New York Governor Andrew Cuomo has dubbed an “economic death blow” to the state.

That blow, advocates say, could punch a hole in school budgets.

Schools across New York are already shortchanged billions of dollars, according to school-funding advocates, even as the state faces a $4.4 billion budget gap. The tax plan, if approved, has the potential to divert even more state and local funding from schools.

“I’ve been dealing with the state budget for more than 30 years and this is as volatile and uncertain as anything I can recall,” said Bob Lowry, deputy director of the New York State Council of School Superintendents.

The House and Senate must still combine their tax bills and pass a final version. Below is a guide to some of the worst-case scenarios for New York schools if that happens.

“Downward pressure” on local taxes

A provision of the tax plan would sharply reduce state and local tax (often called SALT) deductions a proposal that would hit high-tax states like New York hardest. The average SALT deduction in New York is $22,169, according to a report form the Governor Finance Officers Association, using data from 2015.

Advocates worry that voters whose tax burdens rise without the deductions will be less inclined to sign off on increases to their local school board budgets, which voters approve in most parts of the state. In New York City, school funding may be more insulated because residents do not vote on a budget.

However, the city could feel pressure to offset the lost SALT deductions by lowering local income taxes — a move that could shrink budgets across city agencies, including the education department.

“It stands to reason that there will be downward pressure for us to reduce our local taxes, which in turn would create less revenue for city services,” said New York City spokeswoman Freddi Goldstein in an email.

Flight of the super taxpayers

A small number of super-wealthy New Yorkers help keep the state and city governments afloat.

In New York City, about 25,000 families contribute more than 40 percent of the city’s personal income-tax revenue, according to the most recent figures analyzed by the city’s Independent Budget Office.

Their tax burdens could balloon without the SALT deductions, spurring a rush to lower-tax locales. While some experts said a mass exodus is highly unlikely, in a district where approximately 57 percent of school funding comes from the city budget, any significant loss of tax revenue could strike a serious blow to school funding.

“People who live on Park Avenue are not going to move to Alabama to pay lower taxes,” said Michael Borges, executive director of the New York State Association of School Business Officials. “But they may move to Scarsdale because they don’t have to pay a city income tax.”

A three-way “tidal wave of disaster”

Lost local revenue isn’t the only way school budgets could take a hit. In fact, it could be part of a triple whammy.

The tax plan would leave the federal government with a gaping $1.4 trillion deficit. Experts expect lawmakers may eventually plug the hole by slashing spending on healthcare and possibly other programs like education.

“It may result in lower federal funding for everything,” said George Sweeting, deputy director at the city’s Independent Budget Office. “If that happens, that would have an impact on federal funding for New York City.”

Still, school districts only get a fraction of their funding from the federal government. In New York City, federal money accounts for just 6 percent of school spending. (By contrast, 37 percent of the city’s education funds come from the state.)

However, federal spending cuts could have an indirect impact on New York’s education funding. If Washington provides less healthcare funding, for instance, New York could have to pick up the tab — creating a ripple effect, where it would have less to spend on schools.

The federal pressure would come at the same time New York is already facing a $4.4 billion budget deficit. Officials from Governor Andrew Cuomo’s office say the tax plan would be a blow to New York — but they also insist that Cuomo is committed to funding education.

Still, schools are staring at a “loss of federal aid, a loss of state aid, and a loss of local revenue,” Borges said. “It’s like a tidal wave of disaster.”

An under-the-radar change would cause “significant harm”

Finally, a little-noticed bond issue in the tax plan could cause New York schools pain.

Congressional Republicans would remove provisions that help schools borrow money for school construction projects, according to a letter signed by Board of Regents Chancellor Betty Rosa and State Education Commissioner MaryEllen Elia. The loss would “significantly harm districts’ finances,” it reads.

This measure would have a devastating impact on schools, school districts, local taxpayers and, most significantly, our students,” the letter continues. “That impact would be felt most dramatically by districts in poverty; in other words, the districts that would be hurt most are those that can least afford it.”

IPS School Board Race 2018

Indiana teachers union spends big on Indianapolis Public Schools in election

PHOTO: Dylan Peers McCoy/Chalkbeat
IPS board candidate signs

The political arm of Indiana’s largest teachers union is spending big on the Indianapolis Public Schools board. The group donated $68,400 to three candidates vying for seats on the board this November, according to pre-election campaign finance disclosures released Friday.

The three candidates — Susan Collins, Michele Lorbieski, and Taria Slack — have all expressed criticism of the current board and the leadership of Superintendent Lewis Ferebee. Although that criticism touches on many issues, one particular bone of contention is the district’s embrace of innovation schools, independent campuses that are run by charter or nonprofit operators but remain under the district’s umbrella. Teachers at those schools are employed by the school operators, so they cannot join the union.

The trio was also endorsed by the IPS Community Coalition, a local group that has received funding from a national teachers union.

It’s not unusual for teachers unions to spend on school board elections. In 2016, the union contributed $15,000 to an unsuccessful at-large candidate for the Indianapolis Public Schools board. But $68,400 dwarfs that contribution. Those disclosures do not capture the full spending on the election. The three candidates endorsed by Stand for Children Indiana — Mary Ann Sullivan, Dorene Rodríguez Hoops, and Evan Hawkins — are likely getting significant unreported benefits.

Stand for Children, which supports innovation schools, typically sends mailers and hires campaign workers to support the candidates it endorses. But it is not required to disclose all of its political activity because it is an independent expenditure committee, also known as a 501(c)(4), for the tax code section that covers it. The group did not immediately respond to a request for information on how much it is spending on this race.

The candidates’ fundraising varied widely in the reporting period, which covered the period from April 14 to Oct. 12, with Taria Slack bringing in $28,950 and Joanna Krumel raising $200. In recent years, candidates have been raising significantly more money than had been common. But one recent candidate managed to win on a shoestring: Elizabeth Gore won an at-large seat in 2016 after raising about $1,200.

Read more: See candidates’ answers to a Chalkbeat survey

One part of Stand for Children’s spending became visible this year when it gave directly to tax campaigns. The group contributed $188,842 to the campaign for two tax referendums to raise money for Indianapolis Public Schools. That includes a $100,000 donation that was announced in August and about $88,842 worth of in-kind contributions such as mailers. The group has a team of campaign workers who have been going door-to-door for months.

The district is seeking to persuade voters to support two tax increases. One would raise $220 million for operating funds, such as teacher salaries, over eight years. A second measure would raise $52 million for building improvements. Donations from Stand for Children largely power the Vote Yes for IPS campaign, which raised a total of $201,717. The Indiana teachers union also contributed $5,000.

Here are the details on how much each candidate has raised and some of the notable contributions:

At large

Incumbent Mary Ann Sullivan, a former Democrat state lawmaker, raised $7,054. Her largest contribution came from the Indy Chamber Business Advocacy Committee, which donated $4,670. She also received $1,000 from Steel House, a metal warehouse run by businessman Reid Litwack. She also received several donations of $250 or less.

Retired Indianapolis Public Schools teacher Susan Collins, who is one of the candidates supported by the union, raised $16,422. The Indiana Political Action Committee for Education contributed $15,000. She also received several donations of $200 or less.

Ceramics studio owner and Indianapolis Public Schools parent Joanna Krumel raised $200. Her largest contribution, $100, came from James W. Hill.

District 3

Marian University Executive Director of Facilities and Procurement and Indianapolis Public Schools parent Evan Hawkins raised $22,037. His largest contributions from individuals were from businessmen Allan Hubbard, who donated $5,000, and Litwack, who donated $2,500. The Indy Chamber Business Advocacy Committee contributed $4,670 and web design valued at $330. He also received several donations of $1,000 or less. His donors included IPS board member Venita Moore, retiring IPS board member Kelly Bentley’s campaign, and the CEO of The Mind Trust, Brandon Brown.

Frost Brown Todd trial attorney and Indianapolis Public Schools parent Michele Lorbieski, who is one of the candidates supported by the union, raised $27,345. The Indiana Political Action Committee for Education contributed $24,900. She also received several contributions of $250 or less.

Pike Township schools Director of Information Services Sherry Shelton raised $1,763, primarily from money she contributed. David Green contributed $116.

District 5

Incumbent Dorene Rodríguez Hoops, an Indianapolis Public Schools parent, raised $16,006. Her largest contributors include Hubbard, who donated $5,000; the Indy Chamber Business Advocacy Committee, which gave $4,670 and web design valued at $330; and the MIBOR PAC, which contributed $1,000. She also received several contributions of $500 or less, including from Bentley.

Federal employee and Indianapolis Public Schools parent Taria Slack, who is one of the candidates supported by the union, raised $28,950. The Indiana Political Action Committee for Education contributed $28,500.

Innovation zone

Two more Denver schools win additional freedom from district rules

PHOTO: J. Zubrzycki/Chalkbeat
Alex Magaña, then principal at Grant Beacon Middle School, greeted students as they moved between classes in 2015.

Two more Denver schools this week won more flexibility in how they spend their money and time. The schools will create a new “innovation zone,” bringing the district’s number of quasi-autonomous zones to three.

The Denver school board on Thursday unanimously approved the schools’ application to operate more independently from district rules, starting in January.

The new zone will include Grant Beacon Middle School in south Denver and Kepner Beacon Middle School in southwest Denver. The two schools are high-performing by the district’s standards and follow a model that allows students to learn at their own pace.

With just two schools, the zone will be the district’s smallest, though Beacon leaders have signaled their intent to compete to open a third school in the growing Stapleton neighborhood, where the district has said it will need more capacity. The district’s other two innovation zones have four and five schools each.

Schools in zones are still district schools, but they can opt out of paying for certain district services and instead spend that money on things that meet their specific needs, such as additional teachers or aides. Zones can also form nonprofit organizations with their own boards of directors that provide academic and operational oversight, and help raise extra dollars to support the schools.

The new zone, called the Beacon Schools Network Innovation Zone, will have a five-member board of directors that includes one current parent, two former parents, and two community members whose professional work is related to education.

The zone will also have a teacher council and a parent council that will provide feedback to its board but whose members won’t be able to vote on decisions.

Some Denver school board members questioned the makeup of the zone’s board.

“I’m wondering about what kinds of steps you’re going to take to ensure there is a greater representation of people who live and reside in southwest Denver,” where Kepner Beacon is located, asked school board member Angela Cobián, who represents the region. She also asked about a greater representation of current parents on the board.

Alex Magaña, who serves as executive principal over the Beacon schools and will lead the new zone, said he expects the board to expand to seven members within a year. He also said the parent council will play a key role even if its members can’t vote.

“The parent council is a strong influence,” he said. “If the parent council is not happy, that’s going to be impacting both of the schools. I don’t want to undersell that.”

Other Denver school board members questioned the zone’s finances and how dependent it would be on fundraising. A district summary of the zone’s application notes that the zone’s budget relies on $1.68 million in foundation revenue over the next 5½ years.

Magaña said the zone would eventually seek to expand to four schools, which would make it more financially stable. As for philanthropic dollars, he said the zone would work to ensure any loss of revenue doesn’t hurt the schools’ unique programs or enrichment.

“I can’t emphasize enough that it won’t impact the schools,” he said.

Ultimately, Denver school board members said they have confidence in the Beacon model and look forward to seeing what its leaders do with their increased autonomy.