School & District Management

N.Y. System of State Aid Thrown Out

By Bess Keller — January 17, 2001 6 min read

In another demonstration that courts are focusing on the results of education spending rather than the bottom line alone, a state judge ruled last week that the way New York doles out money to its public schools is illegal and must be fixed by this coming fall.

Justice Leland DeGrasse concluded in his Jan. 10 decision that the Empire State’s method of financing schools hobbles the 1.1-million New York City district’s capacity to give its students the opportunity for “a sound basic education” as guaranteed by the state constitution.

He found, too, that the financing system violates federal civil rights law because it disproportionately harms minority students. New York City, the nation’s largest school system, enrolls almost three-quarters of the state’s minority students.

The judge gave the legislature until Sept. 15 to overhaul the state’s entire finance system or face judicial intervention. State officials had not indicated as of late last week whether they would appeal the ruling handed down in a trial-level court in New York City.

Tough Choices

Justice DeGrasse’s ruling adds New York to the nearly 20 states that have been forced by courts in the past decade to find more money to assure children in poor districts a constitutionally adequate education. The task typically poses monumental problems because school aid takes up the largest share of most state budgets. The choices facing state leaders often come down to siphoning money from some districts to provide for others, cutting other parts of the budget, or raising taxes.

In New York state, some school leaders estimate that it could take another $3 billion annually—an amount roughly equal to the state’s record aid increase to schools over the past four years—to satisfy the ruling without reducing existing state payments to school districts.

The week before the ruling, Gov. George E. Pataki called for revamping the state funding system, which is notoriously complex, and the ruling puts more pressure on the governor for such a change. But Mr. Pataki, a Republican who is positioning himself to run for a third term in 2002, could have more to lose than gain politically from trying to accommodate the aid increases ordered by the judge.

Last week’s ruling came in a closely watched case brought by a coalition of New York City parents and advocacy groups represented by the Campaign for Fiscal Equity. Michael A. Rebell, the executive director of the CFE, called the decision “a resounding victory for the schoolchildren of the state of New York.”

Mr. Rebell added, “At last they will have a state aid system that will provide what they need rather than the politically manipulated system we have now.”

The coalition argued in the trial that ended last year that while parts of the state finance formula were designed to direct more money to the districts with the least means and the greatest needs, the effects of those provisions were undermined by political deal-cutting at the highest level. (“School Finance Case Draws to Close in N.Y.,” Aug. 2, 2000.)

Standards a Factor

Experts in school finance viewed the decision as riding a wave of court interest in ensuring that children receive an adequate education rather than in equalizing the amount spent per pupil from district to district.

In recent years, the “adequacy” argument has been bolstered by the national movement to set state standards aimed at specifying what students should take from their years in school.

In the New York decision, Justice DeGrasse used the state’s 5-year-old learning standards as a guideline to the knowledge and skills that students should derive from an adequate education, even as he rejected those standards as the sole measure of what constitutes such an education. He also took into account performance on standards-based tests in determining the quality of education available to students in New York City.

“Many, many courts are using standards as a way to assess whether the finance system is up to the task of providing sufficient money,” said Allan Odden, a school finance expert at the University of Wisconsin-Madison.

One implication of that approach, apparent in the New York decision as well as ones in North Carolina and New Jersey, is that the opportunity for an adequate education may require additional help for the children most at risk of school failure.

Experts also cited the New York court’s finding that the state had violated federal law by discriminating against minority children. But whether the decision would help open up any new avenues of argument was unclear.

“My fear is that the New York court will be perceived as a rogue liberal court overstepping their bounds,” said Bruce D. Baker, a school finance expert at the University of Kansas, in Lawrence, who is pushing for a new funding system in that state.

Long History

The lawsuit that led to last week’s decision was first filed by the New York City-based fiscal-equity coalition in 1993. Two years later, the group lost its initial claim that the finance system was constitutionally inequitable.

On appeal, however, the state’s highest court left the door open for another try by recognizing two of the group’s arguments: The state constitution implies the right to a “sound basic education,” and federal civil rights law bars states from spending money in a way that has a discriminatory impact.

The new trial opened in October 1999 and continued for seven months, generating volumes of testimony from top education experts. Emotions were so high during the closing arguments that the New York City schools chancellor, Harold O. Levy, at one point stormed out of the courtroom.

While the coalition argued that the state had shortchanged the New York City schools, state officials contended that the city and the school district had managed to offer an adequate education despite squandering large sums of money. Lawyers for the state argued that the city spent more per pupil than most other urban school systems in the nation, and that its students’ scores on some standardized tests approached the national average.

In the end, Justice DeGrasse disagreed that the education offered by the city schools passed constitutional muster. He defined a “sound, basic” education as one that would equip a student to be a productive citizen and worker.

His 190-page decision paints a picture of a school system in crisis, struggling with by far the state’s largest number of poor and foreign-born children and worn down by “chronic defunding over the last 20 years.”

Too little money from the state had contributed significantly to the overall poor quality of New York City teachers, to crowded and antiquated school buildings, to large class sizes, and ultimately to high dropout rates and low test scores, the judge found.

The ruling alludes to some of the resources needed for an adequate education—such as better teachers and buildings. But the judge left it to the legislature to complete the list and to reform the finance system so that the components of an adequate education are assured. Still, he warned that “the court will not hesitate to intervene” if legislators and the governor fail to act.

Despite the difficulty of such an overhaul, some observers suggest that the combination of the ruling, interest from Gov. Pataki, and a relatively robust economy could allow lawmakers to move quickly.

“It’s a very short time frame, and there are very sticky problems we’ll have to face,” said Assemblyman Steven Sanders, the chairman of the education committee in the legislature’s lower house. Mr. Sanders, who represents part of New York City, said the issue would take center stage in this year’s budget discussions.

But Mr. Sanders’ counterpart on the Senate education committee, Republican Sen. John R. Kuhl Jr., said his recommendation to the governor would be to appeal the ruling. Such a move could provide a reprieve from Justice DeGrasse’s deadline.

“I think the decision should be made at the highest level,” said Mr. Kuhl, who represents a legislative district in the Finger Lakes region of upstate New York. “You can’t take money from the other districts and throw it at [New York City]. The city hasn’t been all that productive with what we’ve already sent them.”

A version of this article appeared in the January 17, 2001 edition of Education Week as N.Y. System of State Aid Thrown Out

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