Cuomo backs off on 20% aid cuts
State promises full payment for September school funding while districts cut programs, staffing
Gov. Andrew M. Cuomo’s administration said Wednesday it will disperse September school aid payments — walking back a policy of withholding 20 percent of payments to localities and school districts that was meant to pressure the federal government to deliver a stimulus bill that would ease the state’s fiscal crisis.
The decision was announced after the New York State United Teachers filed a lawsuit over the state’s aid reductions, and urban school districts — including Albany and Schenectady — had already slashed programs and moved to lay off hundreds of employees in anticipation of the cuts.
But a significant portion of the $2.5 billion in education aid set to be disbursed on Sept. 30 will be diverted to the Teachers Retirement System, according to Brian Fessler, director of governmental relations at the New York State School Boards Association, noting that it is unknown whether public schools or the retirement fund would have absorbed the 20 percent cut.
“It’s not dollars that are automatically going to
school districts, but if that withholding is applied to the TRS intercepts, that leads to a complicated situation,” Fessler said. “It’s unclear that if the withholdings would have applied to the TRS intercept (or) whether that obligation would fall on school districts or TRS. Both of those situations would be problematic by themselves.”
The bulk of aid payments made by the state in October and November are also intercepted by the teacher’s retirement fund, Fessler said.
NYSUT, which filed the suit in state Supreme Court in Albany on Wednesday, is seeking the release of money withheld from schools in July, August, and September and an injunction against future delayed or withheld school funding payments. The suit challenges the constitutionality of the unilateral executive budgetary powers provided for the state Division of Budget as part of this year’s state budget process.
The state may have been responding to pressure from the teacher’s union, as well as public pressure as community members have demonstrated outside the state Capitol in recent days highlighting the fact that flat, statewide aid reductions disproportionately hit low-income communities.
Budget officials — who argue that school cuts to staff and programs are “premature” — have indicated that if a second federal stimulus package fails to materialize, the administration will work with the state Legislature to produce a more complex aid reduction plan that takes into account district need levels.
“Until we have clarity on the amount of federal assistance, it is premature to make any permanent spending reductions, at which point all options would be considered to limit the impacts of a federal failure to act and offset the state’s $62 billion, four-year revenue loss,” Division of Budget spokesman Freeman Klopott said.
The reductions made so far in the Capital Region include $789,000 of Albany’s $116.9 million budget; $803,000 of Schenectady’s $132.9 million, and $199,000 of Lansingburgh’s $32.3 million budget.
State budget officials say that is less than 1 percent of any of the district’s total budgets. School administrators acknowledge that number, but say the larger state aid payments typically come later in the school year.
News that the September payment would be kept whole was welcome to school officials in Albany, which is due to receive a $13.6 million payment at the end of the month in addition to the TRS contributions. A 20 percent reduction would have reduced that payment by roughly $2.7 million.
The district has already laid off more than 200 teachers, eliminated inperson learning for older grades and restructured programs for immigrant students and at-risk teens due to cuts in July and August payments. The state had indicated the aid cuts could continue throughout the year.
“We do not know how long this is going to last,” Albany Schools Superintendent Kaweeda Adams said. “In the event that we do get the funding and there are no reductions, we would look at how do we then rebuild, in a very systematic way, those programs back in and we would make adjustments to our schedules accordingly.”
Albany schools spokesman Ron Lesko also noted that the only information the district has received is from media reports.
According to the last official correspondence from the Division of Budget, dated Aug. 20, Albany schools could still potentially lose 20 percent of its aid for the 20202021 fiscal year — even if the September payment remained whole, he said.
Before the school aid reductions were announced, the district had anticipated it would receive $117 million in payments for the 2020-21 school year.
In the lawsuit, NYSUT points to the state’s ability to draw upon approximately $7 billion in reserves and settlement funds to avoid cuts. The union also has advocated for other solutions to help fund public education, including taxes on the ultrawealthy and additional federal stimulus funding.
The suit points to the fact that some school districts have no more local resources to tap and are dependent on state funding. In such districts, a 20-percent cut “could be catastrophic, and certainly would lead to a ‘gross and glaring inadequacy.’”
“Time is up,” NYSUT President Andy Pallotta said in a statement. “With the loss of state funding driving cuts at the local level in districts around the state, we can’t just keep waiting for action at the federal level to fund our schools. At this point, a lawsuit unfortunately is the necessary next step to compel our leaders to do what’s right: Fund our future and stop these cuts.”
New York’s Budget Director Robert Mujica on Thursday shot down the idea of raising taxes on millionaires and billionaires as New Jersey announced that it would pass a similar wealth tax. Mujica cited the tax rate in New York City where most of the state’s top earners live.
“The combined state and city income tax rate is already 12.6 percent — which is higher than New Jersey’s new top rate or a proposed 12 percent ‘billionaire/millionaire tax rate,’” he said.