New York’s annual state budget debates are dominated by the question of how much money state government should distribute to local school districts. State school aid supplements local school taxes (primarily school property taxes outside New York City) and in some cases provides the majority of school district funding.

Teachers’ unions pressure state lawmakers to boost school aid, standing to benefit in two ways: additional funding increases districts’ abilities to give raises to unionized teachers (union officials cite expected aid increases in negotiations to justify demands) and allows districts to hire more people, many of whom will pay union dues. Lawmakers—most of whom were elected with teachers’ union backing—frequently tout the level of school aid in a finalized state budget as a measurement of their worthiness for re-election.

Meanwhile, decades of litigation surrounding the state’s obligation to finance a “sound basic education” have complicated the issue, leading some to mistakenly believe minimum school aid levels have been dictated by the courts.

These incentives and dynamics have combined to fuel explosive growth in state aid, with lawmakers going so far as to press successfully for tax increases to fund further aid hikes.

Governor Hochul and state lawmakers in 2023 appropriated $33.4 billion (primarily from the state’s general fund but also including more than $4 billion from lottery and other gambling proceeds). The bulk of these funds were distributed under a 2007 “foundation aid” formula (using 2000 census data) that weighs poverty, population density, regional cost differences and other factors.

Hochul in January proposed increasing school aid 4.3 percent to $34.9 billion for the fiscal year beginning April 1 while making modest changes to the foundation aid formula. These included ending a hold-harmless provision that props up aid for districts with declining enrollment.

Eighty-one percent of districts outside New York City have fewer students today than they did in 2018-19. Since peaking in 1999-2000 at 2.9 million, New York’s enrollment (including charter schools) has fallen below 2.4 million to a level not seen since the early 1950s. This will likely continue for the foreseeable future: kindergarten enrollment has dipped since the pandemic and the state’s birth rate is still dropping.

The combination of faster-than-inflation school aid increases coupled with declining enrollment caused state aid per pupil to double between school year 2011-12 and school year 2023-24, from $7,264 per student to $14,304—almost triple the rate of inflation (figure 1).

Figure 1.

Source: NYS DOB, NYSED, Empire Center calculations; school aid measured on school year basis to align with enrollment. Assumes no enrollment decline in future years.

State lawmakers balked at the governor’s proposed changes, with Assembly and Senate Democrats instead calling for a minimum 3 percent aid increase for every district.

This is an appropriate time for New York to re-evaluate the return state taxpayers receive for seemingly unquestioning support for increased spending on its public school system. A review of the most recent federal data reveals the following:

• New York has the highest per-pupil spending of any state; its costs are furthest from national norms with respect to instruction-related pay and employee benefits.
• New York City has the highest per-pupil spending among the nation’s 50 largest school districts.
• New York teachers have the highest average pay and the pupil-teacher ratio is among the lowest; despite this, New York was outperformed by Connecticut, Massachusetts, New Jersey and Vermont in all four categories of the 2022 National Assessment of Educational Progress, and Ohio and Illinois tied or beat New York in every category.

Already On Top

The National Center for Education Statistics each year collects spending and enrollment figures from public school systems across the nation, allowing the highest quality comparisons between states and their districts.

New York during school year 2008-09 displaced New Jersey as the state with the highest per-pupil elementary and secondary school spending. In every analysis conducted since, New York has clinched the top spot as the highest-spending state (figure 2).

Figure 2.

Source: NCES

In the most recent data, examining school year 2020-21, New York spent $26,571 per student, 85 percent above the national average of $14,347.

Data for school year 2021-22 are not expected until May 2024. However, in this case, these lagged figures offer a useful look at how high New York school spending already was before the governor and state lawmakers began significantly increasing school aid in early 2021.

Every New York school district spent more than the national average in the most recent 50-state analysis (table 1). The vast majority of New York districts were ranked in the top quintile, and most (361 out of 677) were in the top 10 percent for spending. A quarter of New York districts (185) were in the top 5 percent nationally for spending, with per-pupil outlays of more than $28,364.

Table 1.

Most (572) of the 677 districts three years ago already spent at least $20,000 per pupil (figure 3).

Figure 3.

Source: NCES

New York City

New York City has the largest enrollment of any United States school district. Its per-pupil spending is also exceptional: New York City’s $29,931 outlay per student was close to double that of Los Angeles ($18,179) or Chicago ($18,216), the two next-largest districts and nearly triple some of the nation’s other largest districts such as Orange County, CA ($10,984) and Clark County, NV ($10,118) (figure 4).

Figure 4.

Source: NCES

New York City had the highest per-pupil spending of any of the 50 largest school districts. With the exception of Boston City Schools (#96, $31,397), none of the nation’s other 865 districts with enrollments over 10,000 students came close to matching New York City’s spending.

A Class of Its Own

The related Annual Survey of School System Finances by the U.S. Census Bureau examines spending in different major categories, chiefly within “instruction” and “support.”

New York’s per-pupil instruction costs in 2020-21 were $18,402, 111 percent above the national average and 34 percent more than the next highest state (Connecticut) (Table 2). In fact, New York’s instruction spending that year exceeded the total systemwide spending per-pupil of 44 states, including Rhode Island ($18,366), Illinois ($18,316) and Maryland ($16,417).

Table 2.

Source: U.S. Census Bureau

Besides being the nation’s highest level in dollars spent, instruction also made up a larger share (69 percent) of per-pupil expenditures than any other state.

Support costs, including school and general administration, were 149 percent of the national average (figure 5). This is noteworthy because New York’s school spending levels (and school property tax burdens) are often attributed to the number of school districts or size of district management teams.

Figure 5.

Source: U.S. Census Bureau; Empire Center calculations

New York’s per-pupil support spending ($7,713), while high, was less than levels in four states (Vermont, Alaska, New Jersey and Connecticut) and the District of Columbia.

Turning back to instructional costs, New York in 2020-21 had the highest average teacher pay at $87,738, followed by Massachusetts ($86,315). Nationwide teacher pay averaged $65,090.

These figures do not reflect the value of employee benefits such as health insurance, defined-benefit pensions or retiree health coverage—the cost of which pushed New York’s instructional employee benefit spending above double the national average.

New York also had among the lowest student-teacher ratios at 11.8 pupils per teacher, placing it between Massachusetts (12.1) and New Jersey (11.7) (table 3). The national average was 15.4.

Table 3.

Getting Less for More

With teacher pay already the nation’s highest and student-teacher ratios among the lowest, New York three years ago had hit the objectives generally cited by education advocates to justify demands for more funding.

As a jobs program for unionized teachers and support staff, New York’s public school system functions magnificently. But outcomes for students, ostensibly the focus of the public school system, do not reflect the state’s highest-in-the-nation “investment.”

Data from the 2022 National Assessment of Educational Progress, also known as “The Nation’s Report Card,” allow comparisons between states in four key areas: the performance of 4^th and 8^th graders in both math and reading.

Four of New York’s lower-spending neighbors—Vermont ($23,586), Connecticut ($22,769), New Jersey ($22,160) and Massachusetts ($20,376)—outperformed New York in all four categories, as measured by average scores. Pennsylvania ($17,884) topped New York in two and tied in a third.

Among other large states, Ohio ($14,613) and Illinois ($18,316) tied or exceeded New York’s averages across the four categories. New York fourth-graders scored below the national average in both math and reading.

Treating funding, rather than oversight, as the Legislature’s primary role in public education has allowed issues to persist and worsen in matters ranging from student assessments to teacher discipline to collective-bargaining rules.

Looking at schools only as a financial matter, New York’s high benefit costs risk crowding out other parts of school district operations. New York City teachers, for example, do not contribute toward their health insurance and state law limits the extent to which a district’s retirees can be required to contribute toward their health coverage. That’s left school districts absorbing the bulk (or entirety) of increases in coverage costs.

The vast majority of school district employees participate in a defined-benefit pension plan for which benefit levels are guaranteed by the state Constitution. In 2020-21, public employers paid an average of 9.53 percent of payroll into the state Teachers’ Retirement System, which covers teachers and other professionals in districts outside New York City. State law prevents school districts from offering more modern, portable (and less costly) retirement plans, such as those offered to SUNY faculty and to political appointees in state and local government.

Meanwhile, many lawmakers are openly antagonistic toward charter schools, independently run, publicly funded outfits which give students an alternative to their geographically assigned school (and routinely operate at a lower per-pupil cost than district-run schools).

Rather than increasing state aid, Governor Hochul and lawmakers should be aiming to rightsize New York’s costs, with the goal of matching both the superior outcomes and lower per-pupil spending levels of higher-performing peer states.