Governor Kathy Hochul’s proposal to cut school funding for New York districts experiencing declining enrollment has caused waves across the state. The idea of reducing state aid for schools losing students initially raised concerns about its impact on already struggling districts. However, in a recent turn of events, Governor Hochul has backed off from the proposed cuts, pledging not to eliminate a provision that guarantees school districts funding even as their student populations shrink.
The debate centres around the “hold harmless” provision, which ensures districts receive at least as much funding as the year before, regardless of student enrolment changes. This article explores the implications of Hochul’s policy shift, the state’s school funding system, and the potential impact on New York’s education system.
The Controversy Over Hold Harmless and School Aid Cuts
Last year, Governor Hochul proposed to eliminate the hold harmless provision, a policy that guarantees stable funding for New York school districts despite fluctuations in enrolment. The rationale behind this proposal was that it would save the state money and allow funds to be more effectively distributed to districts with growing populations or greater needs.
- The Proposal: Hochul’s plan aimed to cut funding to districts losing students by eliminating the hold harmless provision. This would have meant that districts with shrinking enrolments could receive less funding, despite the fact that their financial needs remained the same.
- The Response: Both the New York Senate and Assembly quickly rejected the proposal, with lawmakers arguing that eliminating the hold harmless provision would hurt schools in rural areas and small towns, where enrolment decline is more common.
Instead of implementing cuts, the compromise reached last year was to conduct a study on how the state could better allocate school aid in light of the changing demographic trends. The results of that study, released this week, suggested that New York should gradually phase out the hold harmless provision over the next five years. However, Hochul’s recent comments indicate that she is stepping back from endorsing the recommendation.
Governor Hochul’s Retreat: What Does It Mean for School Funding?
Governor Hochul has distanced herself from the study’s recommendation, stating that she wants to avoid proposals that could negatively affect school budgets. In her statement, the governor made it clear that her Executive Budget proposal for the upcoming year would not include the removal of the hold harmless provision.
- Hochul’s Statement: The Governor’s office released a statement affirming that “the Governor believes we should avoid proposals that would negatively impact school budgets, such as eliminating the save-harmless provision of the Foundation Aid formula.”
- Political Fallout: This reversal has significant political ramifications. Governor Hochul, facing a potential challenge in the 2026 elections, is under increasing pressure from both Democratic and Republican challengers. The shift also comes at a time when mayors across New York, including the Adams administration in New York City, are resisting similar cuts to school funding in their regions.
While Hochul is not seeking re-election until 2026, her pivot on this policy signals a change in approach towards school funding. It’s a sign that the governor is sensitive to the political and public response to proposals that might harm school districts.
The Rockefeller Institute’s Findings: A Mixed Response
The Rockefeller Institute of Government, the Albany-based think tank commissioned to study the issue, recommended phasing out the hold harmless provision gradually. Their report found that 88% of school districts in New York have lost enrolment in the past decade. Some of these districts, which were already well-funded before state aid increased, were receiving a disproportionate share of funding through the hold harmless policy.
- Phase-Out Recommendation: The Rockefeller Institute suggested that New York could gradually phase out the hold harmless provision over five years, which would allow districts to adjust to the changes.
- Income and Wealth Thresholds: The report also recommended setting income and property wealth thresholds to ensure that wealthier districts no longer receive extra funding. These recommendations are aimed at directing funds more efficiently to high-need districts.
Despite the study’s findings, there has been considerable resistance to the proposal. Groups like the Citizens Budget Commission, which supports the phase-out, warn that selective adoption of the study’s suggestions could lead to higher spending without adequately addressing the underlying needs.
The Impact on New York’s School Districts: Will Funding Cuts Hurt?
At the heart of this debate lies the question of how to allocate state funds fairly. New York’s education system is one of the largest in the nation, with nearly $40 billion allocated annually. In recent years, as enrolment in many districts has declined, questions about funding equity have come to the forefront.
- Rural vs. Urban Districts: Rural school districts, many of which have seen significant declines in enrolment, would be most affected by the elimination of the hold harmless provision. These districts often rely on state aid to maintain basic operations, and cuts could have a severe impact on their ability to provide quality education.
- Wealthier Districts: On the other hand, wealthier districts with stable or increasing populations are seen as benefiting disproportionately from the hold harmless policy. These districts often receive more funding than they need, even as their enrolment numbers remain steady.
The Governor’s recent decision not to pursue cuts could be seen as a move to avoid angering local communities and educators, who could see such cuts as detrimental to the quality of education provided to students in these districts.
Citizens Budget Commission’s View: A Call for Restraint in Education Spending
The Citizens Budget Commission (CBC), a fiscal watchdog group, has been vocal in supporting the phase-out of the hold harmless policy. CBC’s president, Andrew Rein, argued that New York must restrain its education spending, which is currently near $40 billion annually. According to Rein, the state’s budget needs to be more targeted toward high-need districts rather than funneling extra money into wealthier ones.
- Funding Efficiency: Rein believes that by eliminating the hold harmless provision for districts that no longer need it, New York could redirect those resources to support districts with higher needs, including those facing enrolment declines or socioeconomic challenges.
- Long-Term Savings: The CBC’s stance is rooted in fiscal responsibility, advocating for a more efficient allocation of funds that ensures resources are focused where they are needed most.
Conclusion: What’s Next for New York’s School Funding?
As Governor Hochul prepares to unveil her Executive Budget in the coming weeks, the debate over school funding is far from over. While the Governor has distanced herself from the proposal to eliminate the hold harmless provision, discussions about the future of New York’s education funding system will continue.
For now, Hochul’s decision to back off the proposed cuts is likely to ease some concerns from districts facing declining enrolment. However, the ongoing push for a more equitable allocation of funds will continue to be a major issue in the state’s education policy.
