Without Transitional Aid, NYC Schools Lost Out on Billions of Dollars

By Mary McKillip

Education Law Center recently highlighted
that Governor Kathy Hochul’s proposed $300 million increase to New York City charter schools in the FY23 State Budget would consume nearly all of the proposed $345 million increase in Foundation Formula Aid for the City’s schools. Unlike every other district in the state, New York City is not eligible to receive state transitional aid to offset the cost of charter school growth. New York City’s ineligibility is the result of former Mayor Michael Bloomberg’s failure 15 years ago to include the City in this state aid program.

If this were not the case, the district would receive an additional estimated $258 million in FY23, almost enough to cover the charter school increase while ensuring district students benefit from the boost in Foundation Aid.

We estimate that the New York City school district has been deprived of $2.6 billion in transitional aid from 2011 to 2022. The lost aid is just one of multiple City expenses related to charter schools borne by district students, such as the cost of providing school facility space to charters only partially covered by state aid.

New York City’s Exclusion from Transitional Aid

New York State requires public school districts to pay tuition to charter schools for each student enrolled. Beginning in 2007-08, the New York Legislature appropriated in the State Budget a designated category of aid for districts where charter school populations were increasing to offset the related costs. Since the inception of transitional aid, $495.2 million has been distributed to districts statewide, with the exception of New York City.

A district is eligible to receive transitional aid if the number of students in charter schools is more than 2% of total district public school enrollment, or if total payments from the district to charters is more that 2% of the district’s general fund expenditure. Transitional aid is based on the year-to-year increase in charter school enrollment multiplied by a factor of the charter school per pupil tuition amount.

When transitional aid was initially proposed, New York City was explicitly excluded, and not because of a lack of charter growth. Rather, City schools were under the control of former Mayor Bloomberg, a staunch proponent of charter growth and expansion. The record suggests that to raise the cap on charter schools and add 50 new charters, Bloomberg agreed that New York City would forgo transitional aid.

Excerpt from the NYC Review of the proposed 2007-08 State Budget

Charter school enrollment in New York City grew from 13,504
students in the 2006-07 school year to 137,962 in the 2020-21 school year,
while total resident public school enrollment (including charter school
students) remained fairly steady at 1.01 million in 2006-07, and 1.02 million
in 2020-21.[1]
Charter school enrollment increased during that same period from 1.3% of total public school enrollment to 13.5%.

In the current school year, New York City is allocating an estimated $2.64 billion in general fund payments to charter schools, representing 9% of total expenditures and 11% of eligible[2] student enrollment, well above the 2% required to qualify for transitional aid.

The amount of transitional aid that would be owed to New York City is shown in Table 2. Three years of enrollment increases are considered, with the most recent year’s increase funded at 80%, then 60% and 40% for the previous years’ enrollment increases, respectively. These amounts are added together, resulting in an estimated $263 million in transitional aid from the State in 2021-2022.

$2.62 Billion Lost

We estimate that New York City would have received $2.62 billion in transitional aid from 2011 through 2022 to offset the cost of substantial charter school growth during that period. The chart below shows estimated transitional aid to New York City that would have been provided by year, along with total transitional aid distributed to other districts in the state.

Source: Transitional Aid calculated using New York City Charter data from NYSED SAMS State Aid Output Reports; State total transitional aid from NYSED State Aid Handbooks, total State Transitional Aid

Most public school students in New York City attend district schools, and those schools enroll far more English Learners, more students with severe disabilities, and more students in deep poverty than charter schools. For years, students in district schools have been twice shortchanged: by the State’s refusal to fully fund Foundation Aid and by the diversion of vital state aid away from New York City district schools to charters. More importantly, this loss of funding to charters has deprived students of the educational resources essential for a sound basic education, as required under the New York Constitution.

Extending transitional aid eligibility to New York City, as the State does with all other districts, would go a long way to remediating the loss of funding, resources, and opportunities due to charter school growth. As the proposed FY23 State Budget demonstrates, excluding the City from receipt of transitional aid again threatens to erase any benefit students would see from the State’s long-awaited commitment to fully fund the Foundation Aid formula. Ending the City’s exclusion from transitional aid would begin to correct the historic harm to City students. It’s time to stop subsidizing charter school growth in New York City with the funding appropriated to provide a constitutional sound basic education to students in district schools.

Mary McKillip is a Senior Researcher at Education Law Center

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Sharon Krengel
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973-624-1815, x 24

[1] Enrollment figures and funding data here and throughout are based on “Charter School Aids to Districts (CHART)” reports from NYSED SAMS State Aid Output Reports for New York City BEDS code 300000 and may not exactly match other enrollment and funding figures reported by the state for New York City public schools.

[2] The transitional aid charter school enrollment calculation excludes students enrolled in schools chartered by the board of education.

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Press Contact:
Sharon Krengel
Director of Policy, Strategic Partnerships and Communications
973-624-1815, x240