charge-150x150-5310306If wishes were horses, the news conference held in Albany yesterday by the New York State Educational Conference Board could be re-staged as the Charge of the Light Brigade

The Conference Board—an umbrella group of school boards, administrators, parent-teachers associations and the New York State United Teachers (NYSUT)—said New York’s school districts would need a minimum state aid boost of $1.2 billion next year to maintain current services. 

On top of that, the Conference Board said schools needed $700 million “to move forward on critical initiatives.” That would bring the total school aid hike to $1.9 billion, or nearly 9 percent more than the $22.2 billion in state aid budgeted for the 2014-15 school year.

Governor Cuomo’s latest financial plan for the 2016 state fiscal year forecasts an aid increase of 3.9 percent, or $864 million for the 2015-16 school year. It would take an extra $336 million to finance the Conference Board’s minimum aid increase, and upwards of $1 billion to hit the group’s $1.9 billion target.

The Conference Board doesn’t think it should be too hard to find the money. After all, the group said in a paper backing up its aid proposal, “New York’s fiscal outlook has improved substantially” and “state budget surpluses are projected through 2018.”

But this is actually a pretty serious misreading of the budget situation. Based on current-law spending trends (including the $864 million 2015-16 aid hike the Conference Board regards as insufficient), the state financial plan currently incorporates budgets gaps for every year from 2016 through 2018. “Surpluses” will materialize only if Cuomo sticks to his repeatedly reiterated goal of holding spending to 2 percent a year.

In state fiscal year 2016 alone, to hit a 2 percent spending growth target without touching school aid (which is 24 percent of the state operating funds budget), Cuomo will need to reduce projected spending on everything else by nearly $1.8 billion. Meeting the governor’s spending target will get harder in future years, thanks to a newly projected $1.6 billion increase in pension costs between 2017 and 2019.

Unsurprisingly, as another source of cash, school officials also made it clear they are eyeing the unprecedented $5.1 billion windfall the state has collected from major New York-based banks that have admitted to engaging in illegal foreign transactions. Fortunately, that notion drew a quick and categorical rejoinder from the governor’s office. As reported in the Albany Times Union:

… Cuomo spokeswoman Melissa DeRosa made it clear that bank settlement money for operating expenses in schools is a non-starter.

“The Governor is committed to utilizing the settlement money in a fiscally responsible way, including one-time allocations to replace aging infrastructure, rebuild upstate cities and help local governments cut costs and lower property taxes,” she said in a prepared statement. 

“What we won’t do is use this one-shot funding to satisfy unsustainable and short-sighted special interest demands now with no plan to pay for it in future years.”

What drives the schools’ $$$ needs?

The Conference Board based its number on cost factors including a projected average salary increase of 3 percent for school employees. It said this was “consistent with projections of 2015 salary growth for all workers, nationwide, by leading authorities such as the consulting firm Mercer LLC and the Society for Human Resource Management.”

Based on its employer survey, Mercer actually projects that salary increases in the northeast region will be 2.9 percent. Mercer’s forecast also includes two findings not highlighted by the Conference Board:

  • “The vast majority of participating organizations (83%) have incentive plans for at least one segment of their employee population.”
  • “Organizations are continuing to differentiate pay for performance. More than half of organizations (56%) differentiate performance using a five level rating system; 19% use a four level rating system and 14% use a three level system.”

Likewise, the Society for Human Resource Management said respondents to the WorldatWork Salary Budget Survey were focusing on “variable pay” and “increased differentiation based on performance.”

Needless to say, variable pay, financial incentives and pay-for-performance plans are virtually unheard of in public education salary schemes—and are positively anathema to NYSUT.  Keep that in mind the next time a public school official near you tries to palm off a comparison of school district and private-sector salaries.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

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