Assembly Bill A8341

                                BILL NUMBER:A8341A

TITLE  OF  BILL:    An  act  to  amend the education law, in relation to
computing approved operating expenses for school districts

PURPOSE OR GENERAL IDEA OF BILL: This bill would adjust the formula used
to compute approved operating expenses (AOE) for city  school  districts
of  cities which have populations in excess of 125,000 but less than one
million. Previously, districts receiving categorical aid had the  option
of  accounting  for these funds separately from their general operations
account. Funds accounted for in this way were not included in the calcu-
lation of AOE. A district's AOE is used to calculate  both  the  charter
school  tuition  rate  and  the  amount that the district must spend per
student before triggering eligibility for high cost excess cost aid  for
that  student.  This  bill  would  allow school districts to continue to
account for those funds in the same way that they did in  2006-07,  thus
maintaining  charter school tuition payments at a methodology consistent
with previous years, and allowing districts to receive the state aid  to
which they have been previously entitled.

SUMMARY  OF SPECIFIC PROVISIONS: Section 1. Paragraph t of subdivision 1
of section 3602 of the education law is amended.

JUSTIFICATION:  When the state aid formula was revised in 2007-08, cate-
gorical grant programs such as class size reduction, magnet schools  and
teacher support were merged with operating aid into a new Foundation Aid
              

formula.  While  this  approach  has  resulted in greater simplicity and
equity in education financing, it has had the unintended consequence  of
artificially inflating some district's approved operating expense (AOE).
At a time when state aid has been frozen, and many districts have had to
reduce  programs and layoff staff to balance their budgets, this must be
corrected. The consolidation of  categorical  grant  programs  into  the
Approved Operating Expense (AOE) has had a significant impact on the Big
4 School Districts.

Without  this  revision, Buffalo Public Schools will spend $472 more per
charter school student or $3.1 million more on  charter  school  tuition
payments. The inflated AOE will also cause the district to lose an esti-
mated  $1  million in High Cost Excess Cost Aid next year. The per pupil
difference for the Rochester City School District is $405 per  pupil  or
an  additional  $650,000  in charter school tuition payments.  Rochester
will lose $400,000 in High Cost  Excess  Cost  Aid.  The  Syracuse  City
School  District's  per  pupil  difference is $541 per pupil or an addi-
tional $500,000 in charter school payments.  Syracuse's High Cost Excess
Cost Aid is reduced by $400,000 next year. The Yonkers  Public  School's
per pupil difference is $1,833 or approximately $500,000 more on charter
school  tuition  payments.   Yonkers is slated to lose an estimated $1.1
million in High Cost Aid next year.

PRIOR LEGISLATIVE HISTORY: New bill.

FISCAL IMPLICATIONS: To be determined.

EFFECTIVE DATE: July 1, 2009