Wednesday, July 17

How Hochul’s Budget Plan Could Affect Rural Schools in New York

Though it has just 215 students, in kindergarten through 12th grade, Franklin Central School is the heart of its northern Catskills community.

The three Main Street restaurants in the village of Franklin, N.Y., rely on the business of students, staff and their families to stay afloat, and nearly every community event — from the annual senior luncheon to the farmers’ market — is run with the help of student volunteers.

“The village and school just kind of mesh together,” said Amanda Groff, 44, who has three children enrolled in the district. “I can’t imagine one without the other.”

But the future of the school is uncertain, its superintendent, Bryan Ayres, said in an interview. A new budget plan announced by Gov. Kathy Hochul earlier this year could slash Franklin’s state aid by nearly $1.3 million — more than 12 percent of its entire budget. Mr. Ayres worries he would have to lay off high school teaching staff and send older students to schools in neighboring districts if the cuts are approved.

About half of New York’s school districts would see reductions in funding under the plan, according to the state’s projections. Some are wealthy, suburban districts in places like Westchester County and Long Island, but many are low-income, rural districts that are less able to fill budget gaps with property taxes.

Rural district leaders from across the state said the new plan would mean that many rural students would end up with fewer opportunities than their suburban or urban counterparts, as schools are forced to cut staff members, after-school programming, course offerings and fine arts programs.

The cuts were included in the $233 billion spending plan that Ms. Hochul unveiled in January, which would alter the Foundation Aid formula, the complex method New York uses to determine how much state aid is distributed to individual school districts. The plan requires the approval of the State Legislature before it goes into effect.

The updated formula would change the way the state considers an area’s cost of living. Currently, the state allocates aid based in part on what it cost to live in a given area in the past year. Ms. Hochul has proposed using the average cost of living over the past 10 years, which would result in all districts receiving less aid than previously anticipated.

The new plan would also end a decades-old practice known as “hold harmless,” which guarantees that school districts receive at least as much aid each year as they did the year before, even when enrollment declines. Ms. Hochul has said the policy is illogical.

“Why are we funding a program for kids who aren’t there?” she said during a news conference in February.

There are hundreds of school districts in New York state, and state officials say that only a small fraction are rural districts that are set to have their budgets cut significantly.

Officials note that many districts, including small districts in the New York City suburbs that serve large minority populations, for example, stand to benefit from the changes as more funds are directed their way. Many of the districts — including some in rural areas — have seen enrollment skyrocket in recent years and are considered “high-needs” based on the number of students who come from low-income households, are English language learners or have disabilities.

Ms. Hochul’s budget plan also includes $100 million in supplementary funds for school districts in the coming year. The governor and state legislative leaders will negotiate how that money will be disbursed before the Legislature votes on the proposed budget plan later this year.

A spokesman for the governor, Avi Small, said that school aid had increased statewide since Ms. Hochul took office, and that “her budget proposal continues these record increases while right-sizing funding for districts that have seen significant population loss over two decades.”

Many of New York’s rural districts have experienced significant drops in enrollment over the past several years — a trend experts said has also been seen nationally. Several district leaders said they had long anticipated that their state aid would eventually begin to reflect those losses.

But the severity of Ms. Hochul’s proposed cuts shocked them, they said.

Kathleen Bressler, the superintendent of Sullivan West School District in Sullivan County, said that learning her district could lose nearly $2 million all at once left her feeling physically ill, and that it would be nearly impossible to decide where to cut back.

“Whatever we decide to do reduces opportunities for kids,” Ms. Bressler said, adding, “nothing is off the table with a $2 million cut.”

Determining how to distribute education aid is complex, and has prompted debates in numerous states over how to equitably fund rural schools, where there are typically fewer students and the costs per student can be higher than in urban and suburban districts.

In rural areas, schools are often both community hubs and among the largest employers, experts and district leaders said. Rural schools also often provide physical and mental health care in areas where access to those resources might be limited.

The extracurricular activities offered at Marion Central School District, about 40 minutes outside Rochester, are some of the only social opportunities available to families locally, said its superintendent, Ellen Lloyd.

If the state implements the updated formula, Marion Central would lose $1.2 million in state funding, Ms. Lloyd said, and would need to cut much of its nonacademic programming.

“I feel like we do so much work to make sure our kids get an equitable experience,” she said. “This just, in my opinion, is going to be less equitable.”

Foundation Aid is based on numerous factors, including the number of students enrolled in a particular district, its level of need and the area’s overall wealth. The formula also uses, in part, a district’s income tax base to estimate its ability to generate local revenue.

Rural district leaders are particularly worried about this last piece of the formula if the “hold harmless” policy ends. The average income has shot up in some rural communities where wealthy New Yorkers sought refuge during the pandemic. But district leaders say that they cannot necessarily translate that additional wealth into more money for schools.

That is because the state’s property tax cap law restricts districts from raising annual tax rates by more than 2 percent or by more than the rate of inflation, whichever is lower. Districts would need a supermajority of local voters to approve raising property taxes above the tax cap, an unlikely scenario.

Several district leaders said the tax cap would prevent them from generating more than $100,000 to $300,000 to offset cuts to their budgets.

Any increases in wealth would have to be particularly extreme to significantly affect state aid, said Blake Washington, the state’s budget director.

In Franklin, which is in Delaware County, they have been. In recent years, more than half of students have qualified for free or reduced-price lunch, a federal measure of poverty. But the total income in the district tripled between 2020 and 2021, rising from $49 million to nearly $150 million, according to Mr. Ayres.

The cuts might seem harsh, Ms. Hochul said when she unveiled her budget, but they are crucial to addressing the state’s $4.3 billion budget gap and maintaining the state’s fiscal health amid skyrocketing Medicaid enrollment and a migrant crisis. New York significantly increased school aid in recent years at rates that were not sustainable, she said.

“As much as we may want to, we are not going to be able to replicate the massive increases of the last two years,” Ms. Hochul said in January.

Many districts also have far more money in reserve than is legally required, Ms. Hochul has said. Several rural district leaders said they would draw on reserves, but said most of those funds were allocated for specific purposes like workers’ compensation, capital projects or busing.

The cuts are coming at a difficult time, district leaders and experts said. Pandemic-era federal education aid is scheduled to end this fall. Schools are trying to address pandemic learning loss and also tackle state initiatives, including overhauling their reading instruction.

Karen Hawley Miles, the chief executive of the nonprofit Education Resource Strategies, said all of the financial challenges school districts were facing added up to “a once in a multi-generation moment.”

“Putting this change into effect right now and in this moment is really, really tough,” she said. She said many states had been moving in the opposite direction, directing more money to schools.

Mr. Washington, the budget director, said the governor was “acutely aware” of the financial challenges faced by school districts and by rural districts in particular. The plan’s goal was to start a conversation about how districts could be more fiscally responsible, he said, adding that Ms. Hochul was open to changes.

“We know this is a disruptive proposal. It’s intentionally so,” he said, adding that the budget was not set in stone. “We look forward to working with the Legislature to smooth out the rough edges.”

In Franklin, Mr. Ayres said he feared the cuts could trigger additional enrollment decline and funding cuts. In the worst case scenario, enrollment and state aid would spiral until the school was eventually forced to close.

Meg Shivers, 52, whose son attends Franklin and whose daughter graduated last year, grew up in the nearby hamlet of Treadwell and saw how it changed after its elementary school closed.

“You don’t see school kids riding their bikes along the sidewalks. You don’t hear kids playing,” said Ms. Shivers. “There’s nothing left.