In my previous post about the property tax cap proposed for New York State, I neglected to mention a new report by the New York State School Boards Association.?It is short, but offers a fair summary of?the kinds of?financial?challenges states throughout the country are facing.
NYSSBA estimates that New York's 668 school districts with independent taxing authority (apparently about 30 districts don't have such authority) ??face a potential shortfall? of $815 million per year if a property tax cap of 2 percent were instituted. ?And this is just personnel expenses (which represent about 70 percent of all school expenditures), ?assuming,? says the report press release, ?no layoffs or personnel changes.?
Though tax cap proposals may include rates of inflation and ?circuit breaker? clauses and enough?fine print to make the mind melt ? not to mention the?problem of the?ceiling becoming?a floor ???such ideas at least?offer education policy?wonks another lense through which to view the money pit.? NYSSBA, for instance,?says that the shortfall created by the tax cap is the equivalent of 13,446 teaching and administrative positions. (That is based on the average salary of active members of the state's Teachers' Retirement System, $66,488, which is an interesting number.) ?While there may be a good argument to be made for losing that?many positions,?there is surely no guarantee, given last-hired-first-fired labor contracts, that the budget knife would be cutting fat instead of bone.
NYSSBA suggests seven alternatives to the cap, including a temporary freeze on salaries, implementing a statewide salary schedule for teachers, an increase in employee contributions to health insurance, but it offers?no equivalent cost-savings estimates with them.
Still, it is a serious organization making substantive suggestions.?Though the bottom line is that such organizations?will always seek revenue stream fixes before fiddling with expenditure hijinks, NYSSBA's claims of fiscal helplessness about costs may, as Brian Backstrom suggested, be somewhat justified, especially in super regulated New York. ?Contrary to popular belief,? says the report, ?cost-conscious school boards actually have little discretion when it comes to managing the personnel costs of providing a high-quality education, since so many of these costs are mandated by the federal and state governments, or subject to collective bargaining agreements that were negotiated by predecessors.?
Though I am skeptical of the assumption that school boards know how to create or manage a ?high-quality? school system even if they had unlimited amounts of money, NYSSBA makes a good case for the hands-tied problem.? State law, for instance, determines the rates of district contributions to the Teachers Retirement System ? contributions which increased from 0.36 percent of total teacher payroll in 2002 to 8.6 percent today.? And the state set the employer contribution rates at 16.3 percent ? an increase of 37 percent in just one year.
School districts may be ?at the breaking point,? as NYSSBA suggests.? The question is, Could that be a good thing?
?Peter Meyer, Bernard Lee Schwartz Policy Fellow
