No Strings Attached? Ensuring that "CFE" Funds are Spent Effectively

The 2003 New York State Court of Appeals ruling in the Campaign for Fiscal Equity case has created a historic opportunity to reform New York City's troubled schools. This opening was created because the court not only required changing the state aid formula to ensure a —sound basic education—for all New York City pupils, it also ordered that city schools be accountable for actually producing results.

Unfortunately, as the deadline approached for presenting the trial judge with a plan to rectify the situation, state officials seemed focused on increasing funding statewide (estimates for the state's share alone range from $2 billion to $8.5 billion a year over the next four to five years) without mandating change in how the city manages its schools.

Twenty years of evidence shows that increasing school aid without structural reforms will not improve city schools. Between 1982-83 and 2001-02, total revenues for public education in New York nearly tripled — and the state's share of education funding grew even faster in New York City than elsewhere. Counting all sources of revenue (local, state and federal), total public school funding in New York City rose during this period from $3.8 billion to $11.3 billion, while per pupil spending went from $4,165 to $10,842.

What did increased funding buy? More staff and higher salaries, mainly. Nonetheless, city schools did not improve, according to key pupil performance measures. Barely half of city high school students graduate on time; the percentage of students receiving a Regents Diploma in 2001-02 (32 percent) is actually lower than it was in 1982-83 (36 percent); the gap on state test scores between city students and the rest of the state stayed the same or increased; and the number of city students attending failing schools increased dramatically.

The data point to the city's real problem: poor management. The teachers contract prevents administrators and principals from effectively using the increased number of teachers to significantly reduce class size. Contractual restrictions and budget allocation policies in the New York City school system help to ensure that the least experienced, lowest paid teachers are assigned to poorly performing schools.

If the CFE Court's mandate is to be met, the state's plan should have two components:

• Create a special Sound Basic Education (SBE) fund in the state budget targeted initially at schools in New York City, which is all the CFE ruling requires.
• Stipulate that no aid will be released from the SBE fund until New York City teachers and administrators agree on more flexible staff assignment and compensation policies, including pay incentives to attract higher quality teachers to the students who need them most.

The Court should refuse to adopt any remedy that does not address these issues now, rather than later — when additional damage has been done.

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