CAN’T GET THERE FROM HERE

2nd Annual Survey of New York State School Superintendents on Financial Matters
November 2012

Budgeting challenges call for new directions in state policy to help schools raise student achievement
1

The survey:
• Between August 16 and September 3, 2012, the NYS Council of School Superintendents conducted an online survey of superintendents on budgeting concerns for their districts.

• A total of 249 superintendents submitted complete responses, a response rate of 40.4%. Incomplete submissions from 47 superintendents were also included in the results.
• Superintendents serving the Big 5 Cities (New York, Buffalo, Rochester, Yonkers, and Syracuse) and Boards of Cooperative Educational Services were not included in the survey because their systems’ budgets are not subject to voter approval and consequently do not report some of the financial data available for small city, rural and suburban districts. • The Council conducted a similar survey in 2011.

2

The report:
• Introduction • Overall Fiscal Condition

• Budgeting Choices
• Impact of 2012-13 Budgeting Decisions • Adapting to the Tax Cap

• Implementing New Evaluation Procedures
• Looking Ahead
– Which is the greater concern – state aid or the tax cap?

– Priorities for mandate relief
– Priorities if new funding becomes available

3

Introduction

(pages 3-6 in the report)

4

Concern about the future is widespread Why?
1. Districts have already endured several tough budgeting cycles: • Average spending increase over the last 4 years = 1.7%. • 83% of districts are receiving less state aid 4 years ago (2008-09) 2. Some hard to control costs have been surging (e.g., pensions and health insurance): • New TRS rate increase – like requiring districts to absorb a cost equivalent to giving employees

3.6-4.6% raises, whether or not they receive any actual raises. • Statewide cost of TRS increase likely to approach or exceed benefit of a 3-3.5% state aid increase.
3. Districts have relied on reserves to avoid more damaging program reductions or tax increases:

• SED estimates unrestricted fund balances have shrunk from $2.76 billion in 2009-10, to $1.21

billion this year. • Without appropriated fund balance, districts would have needed to raise taxes by 7% more than they did this year (9.2%, instead of 2.2%); poorest 10% of districts would have needed 21% more in local taxes.
4. Other than Tier VI, no significant mandate relief has been enacted so far. Relief through Tier VI

will happen only over the long-term. Meanwhile, new mandates have been added.
5. 92% of total school revenues (local taxes & state aid) are now subject to limits. Federal aid (most

of the remainder) is now at risk too.

5

Even prior to tax cap, schools were holding down tax increases
Districts have responded to voters – have been holding down spending and taxes
% Change in proposed tax levy % Change in proposed school spending

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 10%

9%
Percent change over prior year
8% 7% 6% 5% 4% 3% 2%

8.2%

8.7% 7.5% 6.9% 6.6% 6.3% 6.1% 6.1%

4.8%

5.3%
4.3% 3.7% 3.2% 3.4% 2.2% 1.4% 1.3% 1.7%

2.3%
2.1%

1%
0%
SOURCE: Council analysis of NYSED Property Tax Report Card data ; Big 5 Cities not included

6

Districts have been using reserves to spare students and taxpayers from more dramatic changes – but reserves run out
Districts grouped by property wealth per pupil
Change in Unrestricted Fund Balance from 2011-12 to 2012-13 Additional tax increase which would be necessary without use of fund balance (i.e., Appropriated Fund Balance as % of Tax Levy)

-40%
1 (Proorest 10%) 2 3 4 5 6 7 8 9 10 NYS

-30%
-31%

-20%

-10%

0%

10%

20%
21%

30%

-23% -9% -18% -22% -10% -9% -12% -7% -14% -4% 3% 3% 7% 5% 6% 11% 10% 11% 8%

17%

SOURCE: Council analysis of NYSED Property Tax Report Card data

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Overall fiscal condition and outlook
(pages 7-12 in the report)

8

Alarm over the future:
Insolvency – financial & educational
Financial
9% foresee financial insolvency within 2 years 41% within 4 years 77% at some point
Do you foresee a point at which your district would be unable to ensure that some of its financial obligations will EVER be paid?
0%
Yes, we are currently unable Yes, within 1 year Yes, between 1 and 2 years Yes, between 2 and 4 years Yes, beyond 4 years 1% 2% 6% 32% 36% 15% 9%

Educational
19% foresee educational insolvency within 2 years 51% within 4 years 84% at some point
Do you foresee a point at which your district would be unable to fund all the instructional and other student service requirements established by laws or regulations approved by the state and federal governments?
0% 5% 10% 15% 20% 25% 30% 35%

10%

20%

30%

40%

No, I do not foresee that time Unsure

Yes, we are currently unable Yes, within 1 year Yes, between 1 and 2 years Yes, between 2 and 4 years Yes, beyond 4 years No, I do not foresee that time Unsure

5% 5% 9% 32% 33% 12%
4%

9

Insolvency – by region
Financial
% of districts foreseeing financial insolvency within 2 years
0% Total Long Island Lower Hudson Valley Mid-Hudson Valley Capital Region Mohawk Valley Central New York North Country Southern Tier
Finger Lakes Western New York

Educational
5% 10% 9% 0% 6% 0% 15% 7% 6% 25% 8% 6% 12% 15% 20% 25% 30%

% of districts foreseeing educational insolvency within 2 years
0% Total Long Island Lower Hudson … Mid-Hudson Valley Capital Region Mohawk Valley Central New York North Country
Southern Tier

10%

20% 19% 11% 17% 14% 22% 14% 12%

30%

40%

50%

60%

50%

8% 15% 21%

Finger Lakes Western New York

10

43% of small city superintendents now describe their districts’ financial condition as poor or very poor
How would you describe the current financial condition of your school district, in terms of its ability to fund services meeting the expectations of parents in your community?
% Responding Poor or Very Poor
2011 2012

0% City

10%

20%

30%
24%

40%

50%

43%
12%

Suburb

10%
20%

Rural

18%
17%

Total

17%

11

Reliance on reserves is a widespread concern
(83% of superintendents somewhat or very concerned)
To what extent, if at all, are you concerned that your district is drawing upon reserves to pay for recurring operating costs?
0% Very concerned 10% 20% 30% 40% 50% 60%

49%

Somewhat concerned

34%

Not concerned, our use of reserves is limited Our district is not drawing upon reserves to pay for recurring operating expenses

11%

6%

12

Other financial condition measures…
Various measures of fiscal condition, by region
Financial Financial Reserves Concerned condition condition less than about poor/very worse than adequately reliance on poor 1 year ago funded reserves 17% 2% 13% 7% 27% 18% 20% 39% 27% 6% 17% 52% 43% 34% 53% 59% 56% 35% 54% 65% 48% 64% 31% 21% 32% 33% 42% 30% 25% 39% 49% 13% 29% 82% 75% 77% 73% 81% 89% 70% 94% 87% 87% 88%

Region Total Long Island Lower Hudson Valley Mid-Hudson Valley Capital Region Mohawk Valley Central New York North Country Southern Tier Finger Lakes Western New York

13

Budgeting choices and impact
(pages 13-20)

14

Where school spending goes…
Where school spending goes -- by commodity

Salaries & wages, 54.5%

Employee benefits, 20.2%
Everything else, 25.2%

Source: Council analysis of 2009-10 NYSED School District Fiscal Profiles

Source: Council analysis of 2009-10 U.S. Census Bureau data

Implication: If 3/4ths of school spending goes for instruction or personnel, then about 3/4ths of cuts will come from those areas – especially since this is the third year of austerity and districts have already made “easier” cuts.

15

Two ways schools save on personnel costs:
(1) Spend less per employee; (2) Employ fewer people
PERSONNEL
Salary freeze or other cost reduction in salary or benefits for superintendent Cost-reduction concession in salaries or benefits for other central office administrators Cost-reduction concession in salaries or benefits for building level administrators Cost-reduction concession in salaries or benefits agreed to by teacher union Cost-reduction concession in salaries or benefits agreed to by any other union Reduction in central office administration positions Reduction in building-level administration positions Reduction in teaching positions Reduction in other instructional support or student services positions Reduction in other positions Other reduction in personnel costs At least once in last 2012-13 2011-12 2010-11 3 years

Percentage of positions eliminated by type, 2012-13
Layoffs Classroom teachers Other instructional or student support personnel Administrators Other Employees TOTAL 2.2% Attrition 1.4% Total Positions Eliminated 3.6%

45%

59%

34%

79%

36%

50%

22%

69%

3.9% 3.1% 1.7% 2.4%

2.0% 2.1% 1.0% 1.5%

5.9% 5.2% 2.7% 3.9%

35%

45%

20%

66%

35%

31%

15%

54%

30% 22% 18% 67% 56% 59% 38%

28% 25% 25% 72% 60% 60% 33%

13% 22% 20% 62% 46% 47% 27%

48% 47% 43% 87% 76% 79% 47%

16

Key point: Many budget actions are cumulative in impact Example: Position reductions
Percent reduction in positions by category, 2011-12 and 2012-13
2011-12 0% Teachers Other Student Support Administrators 2% 4% 2012-13 6% 8% 10% 12% 14%

4.3%

3.6% 8.0%
7.5%

5.9%
5.2%

Other Total

3.6% 4.9%

2.7% 3.9%

17

Position reductions by district type – this year vs. last year
This year…
Total positions eliminated, by category and type, 2012-13
City Teachers Other Student Support Administrators Other Total 4.8% 7.7% 4.0% 3.5% 5.2% Rural 4.2% 6.0% 6.1% 3.5% 4.4% Suburb 3.1% 5.4% 5.0% 2.1% 3.3% Total 3.6% 5.9% 5.2% 2.7% 3.9%

Last year…
Total position reductions, by category and district type, 2011-12 City Rural Suburb Teachers 6.1% 5.8% 3.4% Other Student Support 8.7% 10.8% 6.6% Administrators 9.3% 9.8% 6.0% Other 4.3% 4.9% 3.0% Total 6.4% 6.7% 3.9% Total 4.3% 8.0% 7.5% 3.6% 4.9%

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Actions affecting instruction
INSTRUCTION
Increased class size Reduced non-mandated art classes Reduced non-mandated music classes Reduced advanced or honors classes Reduced summer school Reduced extra help for students during the regular school day or year Reduced student enrollment in career and technical programs Reduced/deferred purchase of instructional technology Reduced/deferred purchase of textbooks Reduced/deferred purchase of library materials Eliminated prekindergarten Reduced prekindergarten Eliminated kindergarten Moved from full-day to half-day kindergarten Other reduction in kindergarten Combined grade two levels in a single classroom Other reduction in instruction At least once in last 2012-13 2011-12 2010-11 3 years 59% 16% 20% 17% 31% 22% 18% 31% 18% 17% 1% 5% 0% 0% 0% 4% 34% 48% 18% 19% 13% 27% 23% 12% 26% 13% 13% 0% 2% 0% 0% 1% 2% 23% 30% 11% 9% 7% 20% 14% 7% 20% 8% 9% 1% 1% 0% 0% 0% 1% 14% 67% 31% 33% 24% 44% 32% 23% 42% 21% 22% 3% 8% 1% 2% 3% 7% 38%

19

Survey also asked about actions affecting other direct student services, operations and maintenance, and other activities
Some highlights:
 34% of districts cut sports and other extracurricular activities this year;

over 50% cut them last year
 40% deferred maintenance; over half did last year  Over 40% of districts cut professional development for all employees – at

a time when the state is moving ahead with new standards, assessments, and evaluation requirements
 29% of districts with at least 5,000 students report closing a school in the

last three years

20

Impact of 2011-12 and 2012-13 district budgets on instruction Impact of 2011-12 and 2012-13 budgets on instruction
Severe negative impact Some negative impact
0%

No change from prior year
20% 40% 60%

Positive impact
80% 100%

2011 Instruction in English, mathematics, science, and soc. studies

2012 Core instruction in elementary grades 2012 Middle level instruction in English, math, science, and soc. studies 2012 High school instruction in English, math, science, and soc. studies

2011 Extra help for students who need it 2012 Extra help for students who need it

2011 Advanced or enrichment classes 2012 Advanced or enrichment classes

21

Some or severe negative impacts anticipated on specific services by district type
Percentage of superintendents anticipating some or severe negative impact from 2012-13 budget decisions on various school operations -- by district type:
Core instruction in elementary grades Instruction in English, math, science, and social studies in the middle level grades Instruction in English, math, science, and social studies in high school Extra help for students who need it -- any level Instruction in art -- any level Student transportation Advanced or enrichment classes Special education Athletics Other extracurricular activities Instruction in music -- any level Other student services Operations and maintenance Administration Other district operations and services Total 41% 33% 37% 48% 27% 33% 35% 20% 44% 48% 26% 34% 49% 46% 43% City 33% 33% 40% 73% 23% 57% 50% 14% 43% 62% 23% 15% 80% 69% 57% Rural Suburb 43% 39% 36% 42% 52% 27% 34% 39% 23% 47% 53% 32% 39% 48% 40% 43% 29% 28% 37% 26% 27% 28% 15% 40% 39% 19% 31% 46% 49% 43%

22

Adapting to the tax cap
(pages 20-23)

23

Tax Cap:
Impact on spending levels & programs

Impact of tax cap on budgeted spending levels
Somewhat lower Significantly lower

Impact of tax cap on programs and services
Somewhat negative Significantly negative

0% Total

20%
50%

40%

60%
17%

80%

0%

10%

20%
50%

30%

40%

50%
10%

60%

70%

Total
City
15%
36%

City
Suburb Rural

47%

13%

14%

57%

Suburb Rural

49%

6%

45%

19%

52%

11%

24

Tax Cap: Higher need districts more cautious with tax increases
2012-13 Tax levy decisions by SED Need/Resource Category Proposed Tax % Attempting Proposed Levy as % of Tax Cap Need/Resource Capacity Category Tax Increase Levy Limit Over-Rides High Need Small Cities and Suburbs High Need Rural Average Need Low Need TOTAL STATE 2.2% 1.8% 2.1% 2.4% 2.2% 99.4% 97.9% 99.4% 99.7% 99.4% 6.5% 5.8% 8.6% 7.5% 7.6%

SOURCE: Council analysis of NYSED Property Tax Report Card and budget vote data

1) They raise fewer dollars with same % tax increase as wealthier districts (over 20% of districts raise less than $50,000 with a 1% tax increase). 2) Anecdotally, rural superintendents seem more likely to say residents see “2%” as a benchmark to be followed.

25

Tax Cap: Possible impact on collective bargaining
Perceived impact of tax cap on chances of negotiating cost-savings with teacher union
0% 10% 20% 30% 40% 50% Already contributed to negotiating savings Significantly more likely Somewhat more likely Negotiating savings not a priority now No impact 10% 15%

5%
40%

31%

26

Implementing evaluation reforms
(pages 24-27)

27

98% of superintendents say new evaluation requirements will require additional spending
To what extent did complying with the new APPR requirements require your district to increase what it expects to spend on teacher and principal evaluationbeyond what it would have traditionally spent?
0% 20% 40% 60% 80%

Significantly increase spending

70%

Staff training and new student assessments are seen as the primary costdrivers

Somewhat increase spending

28%

No signicant effect

2%

Reduce spending

0%

28

Requirements will pose significant demands on principals
Approximately what percentage of a typical principal or other administrator's timedo you anticipate will be spent on conducting teacher evaluations in compliance with the new APPR requirements?
0% Under 10% 0% 10% 20% 30% 40% 50%

More than 10%, up to 20%

8%

41% of superintendents believe new teacher evaluation requirements will demand more than 40% of a principal’s time.
Proportion might be appropriate – but districts have been cutting administrators and the state has been adding responsibilities (e.g., preventing/ stopping bullying).

More than 20%, up to 30%

19%

More than 30%, up to 40%

32%

More than 40%

41%

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Looking ahead
(pages 22-24)

30

Which is of more concern – the tax cap or possible state aid levels
There has been about a 20 point shift toward state aid since last year’s survey
Tax Cap Equal Concern
0% Total 2011 Total 2012 20% 25% 13% 43%

State Aid
40% 52% 44% 60% 80% 23% 100%

Downstate 2011 Downstate 2012

54%

39%

7%

37%

53%

11%

Mid-Hudson Valley/Capital Region 2011 Mid-Hudson Valley/Capital Region 2011

23% 12% 49%

60% 39%

18%

"Upper Upstate" 2011

16% 37%

54% 58%

31%

"Upper Upstate" 2012 5%

31

Priorities for state help on mandate relief/ cost containment/ productivity (top 12 of 25 listed options)
Looking at the list below, what would be your top five priorities for actions the state could take to help your district reduce or control costs, or gain more impact from its spending?
Rank Weighted % Citing as Options 1 2 3 4 5 Score a Prioriity 1 Amend the Triborough law to eliminate automatic salary 107 30 20 9 14 747 73% increments if a collective bargaining agreement has expired 2 Establish mandatory minimum employee and retiree contributions 48 69 20 13 7 609 64% for health insurance 3 No new unfunded mandates 30 22 22 19 43 385 55% 4 Reduce the role of seniority in layoff decisions (i.e., modify "last in, 9 27 19 17 12 256 34% first out") 5 Require all public employees in a region to belong to a single 11 22 20 3 3 212 24% health insurance program 6 Authorize the State Education Department to order school district 9 5 15 10 9 139 20% mergers, without voter approval, based on considerations including local financial capacity and inability to maintain comprehensive educational services, following a review with local input 7 Revise middle school requirements 3 5 11 18 13 117 20% 8 Authorize regional high schools to serve students from multiple 6 8 10 8 5 113 15% school districts 9 Other change in health insurance 2 6 14 8 8 100 15% 10 Revise special education class size requirements 4 3 12 10 11 99 16% 11 Streamline procedures for tenured teacher hearings ("3020a 1 6 12 12 8 97 16% reform") 12 Reduce reliance on "seat time" requirements in high school by 0 7 6 13 21 93 19% allowing students to earn credit by demonstrating proficiency in a subject instead

32

Priorities if new funding became available – 2011 vs. 2012
If your district were to receive an increase in funding beyond what would be needed to fund state mandates and your current level of services, what would be your top three priorities for the use of that funding? % of superintendents choosing as a priority 2011 Increase extra help for struggling students Reduce property tax levy Increase enrichment/advanced classes Reduce class sizes Increase funding of reserves Expand professional development Increase other student support services Strengthen administration (district or building level) Purchase technology Improve maintenance Purchase other instruction-related materials Expand extracurricular activities or athletics Other Purchase other equipment 64% 57% 23% 30% 29% 28% 24% 9% 12% 10% 10% 3% 2% 0% 2012 66% 38% 37% 26% 27% 28% 21% 17% 16% 8% 7% 5% 3% 2%

Extra help for students #1 both years. Reducing property tax levy declined, increasing advanced classes rose.

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NEW YORK STATE COUNCIL OF SCHOOL SUPERINTENDENTS 7 Elk Street, 3rd Floor Albany, NY 12207 (518)449-1063

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