Representatives from New York State school boards, superintendents and teachers warned State Senators that public education would be undermined unless school districts get relief from unfunded mandates before enacting a cap on local property taxes.
They were witnesses in a hearing, “The True Path to Reducing New York’s Real Property Tax Burden: Mandate Relief and Tax Caps,” co-hosted by New York State, Senator John Flanagan, chair of the Senate Standing Committee on Education, and Senator Jack M. Martins, chair of the Standing Committee on Local Government, held at the Nassau County Executive Building in Mineola, Thursday, Feb 17.
The two senators were joined by as many as five Senate colleagues plus an aide to Senate Majority Leader Dean Skelos (including three Democrats) – but only the two senators and the Skelos aide were on hand in the afternoon to hear the testimony from the school representatives.
The stated aim of the hearing was “protecting the quality of education throughout New York State.”
In fact, the question that should be raised is why a tax cap would be needed at all, if the State gives relief from unfunded mandates.
But the Senators seemed to be uninterested in anything but imposing the new mandate of a tax cap.
The witnesses said that capping school district revenues to 2% increases or the CPI (whichever is less) was a mathematical impossibility, given the trend in mandated increases in the three biggest areas: pension contributions, health insurance and special education.
These three categories are local government’s equivalent of the federal government’s quandary over Social Security, Medicare and Medicaid.
By while these issues are complex and entrenched, they offered a list of ways to significantly reduce the local property tax burden immediately – Great Neck Public Schools Superintendent Tom Dolan, who noted that unfunded mandates took up 13% of his district’s budget, even provided a list of an even dozen that could be put into effect almost immediately, without adversely impacting students.
There is wide agreement, for example, for the state to repeal the Wicks Law, something that school districts have sought for years. Wicks Law adds about 30 percent to the cost of every major capital project.
More difficult, perhaps, but widely supported by all the speakers during the day was an amendment to the Triborough Amendment to the Taylor Law, a 1982 law which allows an expired labor contract to continue with automatic step increases, until a new contract is agreed to, which, they say, provides a disincentive for public unions to negotiate.
On pension reform, the representatives for the schools urged a change that exempts employees from paying into the pension program after 10 years.
Mineola Schools Superintendent Michael Nagler said that if this provision were overturned, $900,000 of the $1 million increase in Mineola district’s mandated contribution to pension fund would be paid for, and the district would only have to find $100,000 more, “a manageable amount” he said.
Speakers, though, pointed to entrenched, structural reasons why the cost of funding public schools – which account for 60-65% of local property tax bills – rises every year, and particularly on Long Island, which is routinely shortchanged on state aid.
“Long Islanders are asked to carry an extraordinary and unfair local tax property tax burden,” Lorraine Deller, Executive Director of the Nassau-Suffolk School Boards Association, reminded the Senators.
New York State, she said, ranks among the lowest in the nation in percentage of state share of funding public education (countering Governor Cuomo’s claim that New Yor State spends the most on education but still ranks in the bottom third in outcomes – the disparity being in the numbers of students in the state). But even with this low share of state aid, Long Island doesn’t get a fair share.
“This year, Long Island’s state aid as a share of expenses may sink to an historic low, dropping from 32.2% in 1989-90 to a projected 21.0% in 2011-12. There are but a handful of Long Island school districts that have regained the percentage of expense aid they received in 1989-90. Over this 21-year span, property taxes and budget cuts, along with a brief infusion of federal funding, have backfilled that drop in state support.”
Long Island is also discriminated against because of the Regents’ Foundation Aid formula, which will add $1 billion to needy districts while taking away 60% of the so-called High Tax allocation to wealthy districts, reducing that funding from $200 million to $80 million.
“Boards of education recognize that decisions made to address this year’s economic reality will have a profound and long-term impact for their school districts and Long Island as a region. In this third year of frozen or decreased revenues, they are engaging in triage as they strive to fulfill their elected responsibility to protect both the fiscal and educational integrity of their communities’ schools. They are mindful that the public deserves every assurance that cost-cutting measures and/or tax increases are integral parts of sound economic preservation and recovery strategies,” Deller stated
“One would expect the same from a State government upon whom the New York State Constitution decrees responsibility to ‘provide for the maintenance and support of a system of free common schools wherein all the children of this state may be educated’.
“Thus far this shared responsibility seems to have eluded Governor Cuomo. With less than six weeks until the state budget deadline and eight weeks until school budgets must be finalized, what he has advanced thus far are exercises in misrepresentation and sound-bite solutions divorced from serious considerations of applicability and potential consequences.”
In fact, for the past three years, most school districts have struggled to keep budgets within that hypothetical cap.
“Mineola is excellent example of achieving self-imposed 2% tax cap – but even through these efforts, we would not be able to reach 2% cap without cutting programs,” Dr. Nagler noted,
But while local governments – villages, towns, counties and cities – have ways to raise revenue – through imposing fees, violations, licenses, permits and sales tax (which accounts for 40% of Nassau County’s revenue) – to compensate for a cap on property taxes, public schools are entirely dependent on property taxes and state and federal aid.
Some Long Island districts are even more disproportionately dependent on property taxes. While New York City gets half of its school budget paid for from state funding (as a result, its property tax rates are a fraction of Nassau County, even when adding in the city’s income tax), and Long Island in total gets 21% of its school budgets from the state, Great Neck gets less than 4% of its funding from the state, and must raise 95 percent of its school budget from property taxes.
Deller challenged the property tax cap, saying that it was incompatible with the goal that the Senators claimed, of protecting the quality of public education. She also challenged the Senators to consider the impact on the regional economy if school districts are forced to lay off workers
Public education represents 9.2% of Long Island’s gross domestic product, employing 76,000 people.
Indeed, she noted, overturning the Wicks Law, which adds about 30 percent to the cost of projects, would unleash pent-up demand for construction.
“If we are looking at creating private sector jobs as part of the recovery, one of those areas would be construction – not just schools, but other levels of government, because of pent-up demand. Right now is the most beneficial time for construction jobs to move forward from government – costs are less, projects come in on time. But you cannot get the public to support school construction bond at this point; it is almost impossible. You make it absolutely impossible if that price is inflated by over 30 percent. It is counter-productive not only to taxpayers but construction workers.”
She also challenged the property tax cap and declared “undemocratic” the requirement for a supermajority to override, saying “The right of a community to determine its educational priorities through its locally elected board of education must be respected.” Nassau-Suffolk School Boards Association opposes restrictions on the right of a community to determine the educational opportunities it provides for its student and legislation that “undermines democracy by enabling the minority to control budget votes through a super majority requirement.”
“For the present, it remains the elected school boards’ fiduciary responsibility to preserve the fiscal and educational integrity of the communities’ schools,” she stated. “The Cuomo/Senate tax cap would still leave boards with the accountability, but strip them of the ability to fulfill that responsibility.
“In imposing its super-majority requirement, the Cuomo/Senate tax cap would wrest local decision making from the community’s voters and turn it over to minority dissidents. In a slap at democracy and in direct contradiction to the spirit of the Voting Rights Act, the Cuomo/Senate tax cap would assign greater or lesser value to each individual’s vote. A supporter of increasing school support beyond the State’s imposed limit would be assigned a vote worth two-thirds. An opponent of increasing school support would be assigned a vote worth full-value.
“When pollsters measure support for a cap on property taxes, it should come as no surprise that a majority voice support. However, when asked whether caps should result in cuts to education, the tide turns.
“Last May, Long Islanders took part in the most official of polls – the annual school budget vote. May 2010 saw an increase in voter turnout of nearly 5000. The options put before them were clear. They were provided with the ability to turn down their school budgets and opt for what was the equivalent of the current Cuomo/Senate Tax Cap….120% of the CPI which last year was zero. Voters faced the reality of your tax cap and rejected it overwhelmingly. It is significant that in these toughest of economic times and for the first time in recent memory, not a single Long Island school district is operating under a contingency budget. While the average budget increase was 2.38%, the average tax levy increase was 3.56%. If the Cuomo/Senate Tax Cap had been in effect last May, only 9 districts would have escaped the requirement for a super-majority approval.
“Whether it be in Year 1 of the cap or in ensuing years, staff layoffs are inevitable. They are occurring now and were part of school budgets last year. Given the small piece of discretionary spending left to boards, cuts in personnel will be sole option in many districts.
“While the uninformed may view massive public sector layoffs as a worthwhile tradeoff for lowering taxes, the answer is not that simple.
“School districts comprise one of the largest industries on Long island. They represent 9.2 percent of Long Island’s Gross Regional product. School districts employ approximately 78,000 persons. The ripple effect in spending in the local economy from these workers’ salaries is a reported $17 billion. In turn, these public sector jobs support an additional 53,000 jobs.
“In Year 1, the Cuomo/Senate Tax Cap, coupled with stagnant revenues, could easily result in the elimination of 3000 jobs and an indirect loss of an additional 2600 support jobs.
“School workers and related additional jobs pay federal and state taxes of $5.7 billion. Sales taxes paid to both counties in 2009 were $345.9 million.
“It does not take an economist to comprehend the negative impact massive reductions in employment will have on local businesses, real property values, sales and income tax revenues and the still fragile Long Island economy.
“If we leave with just one impression from today’s hearings, it should be that Long Island and its future are in jeopardy if short-sighted decisions made in Albany are allowed to destroy the educational systems our communities have struggled to build and sustain.”
But Senator Martins did not seem moved. “We all are well aware of current fiscal state- multi billion deficit… Here on Long Island, we are grossly and unfairly taxed, property taxes among the highest in the country.”
The State Senators were not really interested in debating the property tax cap, though they acknowledge that the form it may take may be very different once it goes through the Assembly.
So the focus of this hearing was on addressing unfunded mandates:
“If the Senate believes that the true path to reducing New York’s property tax burden is ‘mandate relief’, then get to work. You’ve asked what needs to be done. This is the year to do it.
“Perhaps the blunt instrument of the tax cap you support should be accompanied by an equally blunt instrument that attacks the state’s cost-driving mandates, often indiscriminately passed by the Legislature, that drive up local costs.”
She offered a list of proposals for mandate relief the Legislature could act on (see list)
Unless the three largest areas of the school budget are capped, she said, they will grow exponentially, and very rapidly swamp spending for instruction.
“School districts during state aid cut backs were literally reducing budgets, but communities were still seeing 6-9% tax increases, entirely due to growth in the mandated programs, and the biggest growth was special education costs, driven mainly by federal and then state mandates that went beyond the federal mandates.”
But she added that on balance, spending money on special education pays back dividends. “The benefits for NYS’s contribution to offer special education to students who never would have experienced it decades ago, has paid off, and resulted in far less cost to government at all levels as these youngsters are able to move into society, have fulfilling jobs and careers, and many go on to Regents diplomas – so here you have a juxtaposition of an unfunded mandate, but one that would be hard to pull back from.”
It is within this kind of construct – that the legislators seem incapable of fathoming- that there are short-term costs and long-term gains, that investment for example in early childhood education, academic intervention services could actually reduce costs to districts and society in the future.
She noted, however, that the federal government, when it instituted IDEA – the law that governs special education – the federal government promised to “fully fund” it at 40 percent. “It never reached 20%.. so it will be left to state and local taxpayers to fund this ever growing portion of a capped school budget. School budgets have literally been capped for last 3 years.
Martins responded, “We are in a unique position in our history,” and was unconvinced that cuts to school budgets would impact educational outcomes.
“Money is not the sole barometer of success in the educational system. Certainly at some point we reach a plateau where not just adding money into system, but have to evaluate how we are spending money,” he added, using the rhetoric of the Heritage Foundation and other rightwing groups.
Deller noted that the issue is not that there is so much money going into instruction with diminishing returns, but that school districts do not have discretion where to spend money, at all.
School budgets are the most reflective and responsive to the community – they are, in fact, the only municipal budgets that are submitted to voters for a vote, but that school board members – who are unpaid volunteers elected to serve their communities – have less and less discretion over spending because of unfunded mandates.
“On Long Island, our great quality school systems are the result of a very demanding public, a public that has stepped up and been supportive the last 3-4 years, but increasingly finding itself incapable of supporting the cost increases that go along with this. You can’t move forward with a property tax cap unless there is this balance.”
She added that when Massachusetts – which is ballyhooed as the model for New York’s as opposed to California and Colorado, where tax caps decimated public education – instituted its property tax cap, the state gave a “massive contribution of funding… If any relative success is still within that program, it is as the result of the commitment that made it palatable for those initial first years. We aren’t in the position this year for the state to do that, so it has to find some equivalent, or else we are going to have to be dealing with the impacts that you will be getting in letters.”
She also challenged the charge that Long Island teachers get paid disproportionately, once regional cost differences are taken into account. But in the last few years, the weak economy has prevented senior teachers at the highest pay scale from retiring, so layoffs have to be extracted from teachers at the bottom of the income scale, “so the average teacher salary is a blip, in three years, will see a lowering. Also will experience the results of decreased expectations by employee bargaining units because of these tough economic times.”
Superintendents Challenge ‘Fuzzy Math’ Behind Tax Cap
School district superintendents were even more emphatic that the property tax cap is unworkable without mandate relief.
“We can work within the property tax cap if enacted after legislative reform, after mandate relief, and after cap only addresses operational expenses- can’t if pension and health care costs pierces the cap… may move mountains through negotiations and still be unable to meet the property tax cap.
Great Neck Public Schools Superintendent Tom Dolan was even more specific in actually going over the 2007-8 budget of $171 million to determine how much of it represented unfunded mandates: $22.3 million, or 13%.
Big chunks of these mandates are regulatory and could not be waived without adversely impacting children – for example, special education. And even the state lifted a requirement on Academic Intervention Services, most Nassau schools still provided it (and Great Neck has offered such assistance before the state mandated it).
But Dolan identified a second category of an even dozen regulations that could be eliminated immediately, with no adverse impact, among them:
Transportation: districts are required to reserve seat on the bus for every student eligible to ride, whether they use the bus or now. “We are frequently assailed why we drive largely empty school buses. Were we permitted to schedule based on actual use, there could be tens of thousands of dollars saved for each district.” (see the rest of the list)
“These items alone represent hundreds of thousands of dollars in my budget. We need relief as well as on the Taylor Law, Wicks Law and pension reform. We need relief from the onerous requirements that take us away from our mission.”
Consolidation is also a theme among legislators to squeeze out any kind of efficiency. But communities often reject such proposals.
But Mineola Schools Superintendent Michael Negler demonstrated to the two remaining senators and an aide to Majority Leader Dean Skelos (who were probably upset at missing Sarah Palin’s luncheon talk to the Long Island Association) why consolidation and cost-cutting that seems so straightforward is actually harder to effect.
With its budget squeezed, Mineola attempted to close some buildings, which was projected to save $42 million over 10 years, and even generate $300,000 a year in rental for a building..
“Closing any school is heart wrenching, pitting different segments of community against each other –and we were losing neighborhood schools because we can’t afford them,” Negler said
The referendum was defeated 4 to 1 in one of the largest voter turnouts in last decade.
“It is not always about money,” he said.
“But even with closing the schools, we couldn’t achieve 2% cap without significant cuts in what provide students, and that is just wrong.
“Schools are not organized to make a profit or take sponsors. We deliver a service. As expenses go up, we have only have two alternatives: cut services or increase taxes. We do not control big portions of the budget– pensions, salaries. So what to do?
“Now we have to find $4.5 million increase – to meet a 2% cap we could only increase the budget $1.5 million – that would mean a $3 million shortfall – add to that $700,000 decrease in state aid – where does that money come from?
“It is an unfair image that districts can simply adjust budgets to reach these numbers- the likelihood of replenishing reserves once spent is unlikely – and a one-shot solution that would work for one or possibly two budget cycles.
“The money generated by savings doesn’t equal uncontrollable increases – even if we lay off.
“What is the harm in allowing majority of voters pass a budget? School districts are the only form of government with an elected board and a public vote – you don’t have that on national, state or county government,” Negler said.
Andrew Palotta, Executive Vice President of New York State United Teachers, was even more emphatic in describing the impact of a tax cap coupled with cuts in state funding.
“It would be devastating, triggering massive cuts on public education, the worst in a generation, couple in that with several millions in state education cuts and you have a recipe for financial disaster…. If enacted, it will hollow out the quality of public education for years to come.
“If property taxes are too high, a tax cap won’t help. It is a gimmick, and will have a chilling effect on the ability to operate schools.
Had the property tax cap been in effect this year, he said, there would have been a $600 million revenue loss statewide, which would have caused 13,000 job cuts, on top of 10,000 jobs lost last year.
“An arbitrary cap that fails to take into consideration rising costs that are out of control of the school district is a blunt instrument. Evidence from other states, shows that poorer districts have harder time mustering votes to override the cap, widening the education gap further.”
Instead of a property tax cap, he proposed a circuit breaker, which takes into consideration income, such as for a senior on fixed income. Actually, such income-based exemptions are already in place at the state and local level.
Sen. Martins, dismissed consideration of a circuit breaker, saying that it would just shift more of a burden onto others.
And he seemed unconvinced about the claims that forced cuts to the budget will the quality of public education.
He seemed unmoved by the appeals that there has to be relief from unfunded mandates before there can be a property tax cap. In response to questions asking for specific response to the points that public education representatives made, he issued this statement:
“As I have stated since the tax cap was passed with bi-partisan support in the Senate, it is an important first stepin reducing the tax burden but it has to be tied directly to mandate relief. With the implementation of the tax cap being a strong possibility, our local governments and school districts must be given the ability to meet the cap and thus provide our taxpayers real relief.”
He did not respond to a series of questions which asked, if localities get mandate relief and are able to lower property taxes, why a cap would even be necessary.
But here, in New York State and Long Island, as in Wisconsin, the goal of state lawmakers has less to do with plugging budget holes or lowering taxes, but taking power away from local governments and public workers.
“A crisis is a terrible thing to waste,” Senator Carl L. Marcellino (R-5th) said during the hearing. We are in crisis – an economic crisis that is affecting every state, every village, every town. Everywhere you go, people are concerned about economy and economic well being. New York State has one of highest taxes – we are driving businesses, people away, we are driving our children away from us. They live in other states where tax burden is less and their dollars go further. I don’t want to drive to New Jersey to see my grandchildren.”
Except that New Jersey pays higher property taxes than New York State, sir, as a percentage of income and housing value.
Radical ideas for property tax relief
A guide to reducing local property taxes – without imposing a cap
It’s spring, when thoughts turn to…..Taxes
–Karen Rubin, Long Island Populist Examiner
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