School Funding Cases in New York

in New York Litigation

Historical Background

In 1978, a group of property-poor school districts, joined by the five large urban New York districts, filed Levittown v. Nyquist , to challenge the state’s education finance system. In its 1982 decision, 439 N.E.2d 359, the Court of Appeals– New York State ‘s highest court–ruled that while substantial inequities in funding did exist, the state constitution does not require equal funding for education. However, the court also held that the state constitution guarantees students the right to the opportunity for a “sound basic education.”

This right was at the center of the CFE v. State complaint filed in 1993 which asserted that New York State was failing in its constitutional duty to provide the opportunity for a sound basic education to hundreds of thousands of its schoolchildren. In a landmark 1995 decision, the Court of Appeals distinguished its Levittown ruling and remanded the case for trial. After a seven-month trial, Justice Leland DeGrasse rendered his decision, 719 NYS 2d 475, on January 10, 2001 in favor of plaintiffs and ordered the State to ensure that all public schools provide the opportunity for a sound basic education to their students. This decision also ordered a costing-out study as the threshold task in developing a new school funding system.

In June 2002, the intermediate-level appeals court overturned the trial-court ruling and claimed that an eighth-grade education was all the New York State Constitution required. Plaintiffs appealed, and the Court of Appeals issued its decision (CFE II ) in favor of plaintiffs on June 26, 2003. See 100 N.Y.2d 893. The court considered school funding court rulings in other states during oral argument and its court order in favor of plaintiffs gave the State until July 30, 2004 to:

determine the cost of providing a sound basic education fund those costs in each school, and establish an “accountability” system to ensure that the reforms actually provide the opportunity for a sound basic education.

When the July 30, 2004 deadline passed without state action, the case went back to Justice DeGrasse who appointed a panel of three special masters to hold hearings on the matter and make recommendations to the court. On November 30, 2004, the panel issued its Report and Recommendations and, in sum, urged the court to order the state to enact legislation within 90 days that would:

provide an additional $5.63 billion for annual operating aid, phased in over a four-year period;
undertake a new cost study every four years to determine the cost of a sound basic education;
provide an additional $9.2 billion, phased in over a five-year period, for building, renovating, and leasing facilities, in accordance with plaintiffs’ BRICKS Plan.

These recommendations were limited by the CFE II decision to New York City, but the panel concurred with all parties in their agreement that the legislature would be well-advised to extent similar benefits to high need districts throughout the state.

In March 2005, the trial court confirmed the special masters’ report and recommendations and ordered the state to comply within 90 days. The state appealed.

In March 2006, the intermediate appeals court ordered the state to increase New York City schools’ annual operating funds by at least $4.7 billion per year, to be phased in over four years, and provide an infusion of at least $9.2 billion in facilities funding, to be accomplished within five years. The court set an April 1 deadline, and on April 1 the legislature enacted facilities funding that met the court’s requirement and will increase such funding for other school districts across the state. The state did not comply with the operational funding order.

In November 2006, the Court of Appeals reaffirmed its 2003 landmark decision but held that $1.93 billion was the “constitutional floor” for additional operating funds, although the legislature could provide the full amount recommended by the Special Masters and the lower courts. In January 2007, the newly-elected Governor, Eliot Spitzer, recommended an increase in funding for New York City public schools of $5.4 billion (of which the City would be responsible for $2.2 billion) and $4 billion for the rest of the state. He also proposed a range of education finance and accountability reforms. The legislature largely accepted the Governor’s proposals.

The new accountability requirements direct school districts receiving increases of 10% or $15 million in state aid ( including New York City) to develop “Contracts for Excellence,” detailing their plans for using the additional funding. Under the legislation, the new funding must be devoted to programs related to “class size reduction, programs that increase student time on task, teacher and principal quality initiatives, middle school and high school restructuring, and full-day kindergarten or prekindergarten.” Districts are required to direct the new funding and these programs to students with the greatest educational needs. New York City is also required to develop a five-year plan for reducing class sizes.

APPR Penalty Case

In a lawsuit in February, 2013, nine New York City parents and their children challenged the constitutionality of a state statute that required the revocation of $290 million in state aid to New York City because the city failed to reach agreement with the teachers union on a teacher evaluation plan by January 17, 2013, a deadline established by the governor. The plaintiffs allege that the students are innocent victims of a negotiating impasse between the city and the union for which they had no responsibility. The complaint charges the State of New York, Governor Andrew Cuomo, and Education Commissioner John King with depriving New York City kids of their right to a sound basic education. Aristy-Farer v. State of New York.

New York City was only six school districts out of about 700 in the state that did not meet the deadline for implementing a new system for annual professional performance reviews (APPR), its public schools educate over one million students. The complaint does not take a position on the teacher evaluation plan or on who was at fault for the impasse in the negotiations, but grounds its challenge on the claim that:

imposing a penalty in the form of reduced funding and reduced educational services on public school students…violates the constitutional right of plaintiff students and the approximately one million other students attending the New York City public schools to a meaningful opportunity for a sound basic education and to due process and equal protection of the laws.

The city’s department of education indicated that it would need to implement a hiring freeze that would increase class sizes, reduce school aide time, professional development, anti-bullying programs, pre-kindergarten special education, extracurricular activities, after-school and other programs as a result of the loss of these funds. State Supreme Court Justice Manuel Mendez promptly issued preliminary injunctions to prohibit the state from withholding the funds and the city from making the planned mid-term reductions in state services. The $290 million was, however, withheld at the end of the school year, and will affect school services for the 2013-2014 school year.

New York State Supreme Court Justice Manuel Mendez denied the state’s motion to dismiss the case, Aristy-Farer v. State of New York in April 2014. In September, 2016, the Appellate Division, First Department affirmed his decision. Judge Mendez has now consolidated this case with New Yorkers for Students’ Educational Rights v. State of New York, and the appellate division also affirmed the consolidation.

 

New Yorkers for Students’ Educational Rights v State of New York

Fifteen parents from throughout New York State, along with a coalition of statewide education groups, filed a lawsuit in February 2014 on behalf of the state’s public school students, charging that the state is neglecting its constitutional obligation to ensure that every school has sufficient funding to provide all students a meaningful educational opportunity. The suit is being led by Michael A. Rebell, who successfully litigated the Campaign for Fiscal Equity (CFE) v. the State of New York case.

The suit alleges that, in many schools around the state, schools are unable to provide students with the full range of resources that are constitutionally required because of limited budgets.

Basic state aid for school operations is now almost $4 billion below the amount that the legislature declared in 2007 was necessary to provide students the opportunity for a sound basic education in the CFE case. Following CFE, in 2007, the state legislature enacted reforms to the state aid system that promised students, not only in New York City, but throughout the state, billions of dollars in increased funding and a more equitable distribution of state aid. Since the recession of 2008, however, the state has not lived up to these commitments.

The lawsuit asks the court to invalidate several caps and funding adjustments that the plaintiffs claim are unconstitutional on their face, and also proposes a series of structural reforms that would ensure that now and for the future every school is provided adequate funding and is able provide all students a meaningful educational opportunity.

Defendants filed a motion to dismiss, which was denied by Manuel Mendez, Justice of the state Supreme Court in November, 2014. His decision was affirmed by the Appellate Division, First Department in September, 2016. Holding that the NYSER complaint has “adequately alleged systematic deficiencies” in the services currently being provided to many students, the Court agreed that the case should proceed. Although the CFE litigation had been brought solely on behalf of students in New York City, the current NYSER case explicitly seeks statewide relief. Defendants argued that to prevail, plaintiffs must prove that there are currently educational deficiencies in every one of the state’s 690 school districts. The Court rejected that position, holding that proof of systemic deficiencies in at least one or two large districts would be sufficient, since the state’s educational funding system is “an interconnected web in which a complex formula is used to calculate funding for all districts.”

Recognizing that almost a decade has now passed since the state undertook a comprehensive cost analysis and adopted the foundation formula, plaintiffs are also asking the Court to require the state to take stock of current conditions and ensure that on an on-going, basis, all schools have sufficient resources to meet students’ constitutional needs. The Appellate Division upheld plaintiffs’ right to challenge the adequacy of the State’s education funding accountability mechanisms.

Plaintiffs filed a motion for summary judgment in 2015; Justice Mendez denied the motion, but without prejudice to renew it after sufficient discovery had been undertaken.

More details about this case, including all court decisions and litigation papers, can be found at www.nyser.org.

Maisto v. the State of New York

After largely complying with the funding increases required by CFE-inspired 2007 budget bill for the first, two years of the scheduled four year phase-in, the state legislature froze further payments scheduled for 2009-10, and reduced allocations to New York City and other high need districts throughout the state in 2010-2011 and 2011-2012; they also enacted legislation delaying full funding of the scheduled increases, now until the 20015-2016 year. These issues are discussed in more detail in Michael A. Rebell,  Safeguarding the Right to a Sound Basic Education In Times of Fiscal Constraint.

In 2009, a number of small city school districts filed an adequacy challenge to the state’s education funding system before the reductions in education funding were enacted, but later added allegations related to the cuts to their complaint, in a case then-captioned Hussein v. State of New York, Index No. 8997-08 ( S.Ct, Alb Co.). In June 2012, the Court of Appeals rejected a motion to dismiss filed by the state by a 6-1 vote and, through two concurring opinions, re-affirmed the substantive right to the opportunity for a sound basic education that it had articulated in CFE v. State of New York.

The case was later renamed Maisto v State of New York. A trial was held in the spring of 2016. In September, 2016, the trial judge issued a decision that rejected plaintiffs’ claims and dismissed the case. Maisto v. State of New York. The judge essentially ignored all of the evidence of inadequate educational inputs and below par educational outcomes that had been presented by the plaintiffs during the months-long trial; instead, she ruled as a matter of law that the state need not provide the level of aid that its own foundation aid formula had determined to be necessary to provide students the opportunity for a sound basic education.

The judge wrote that the fundamental question is:

whether the State can alter or adjust the education reform plan that was put into place by changing the levels of funding for each school district based  upon the fluctuation of the State’s fiscal condition, the needs of the school districts, the level of local contribution and federal funding for the school districts, and other competing issues that are considered in the development of the New York State budget, and still deliver on its obligation to ensure that school children are provided the opportunity for a sound basic education. The answer to that question is yes.

The Court agreed that “[t]he performance of many of the students is not acceptable, and the educators, administrators, State actors and other employees of the school districts have a responsibility ….[to]improve the results for their students. But, she said “the action that is required is not in the form of a specific dollar amount, but is instead a blend of funding, oversight, and proper allocation of resources by the districts.”

In other words, the Court appears to be saying that the state may reduce the amount of funding it had originally found to be necessary to provide all students the opportunity for a sound basic education if it adopts accountability and monitoring procedures that can mandate or guide school districts to meet student needs through better, more cost efficient programs. The judge did not find or indicate that the state had even offered evidence that it had, in fact, adopted any such accountability procedures or that constitutionally-appropriate services were being provided in these districts at a lower cost.

Plaintiffs have stated that they will appeal this decision.

New York State United Teachers v. the State of New York

In September 2014, the state teachers union and other plaintiffs challenging a state property tax cap enacted in 2011 by Governor Cuomo and the New York state legislature suffered a set-back when a state supreme court judge granted the state’s motion to dismiss the action.

New York State United Teachers (“NYSUT”), along with eight individual plaintiffs, had sought to have the New York state tax cap declared unconstitutional as applied to school districts.  The so-called tax cap, formally Education Law §2023(a), was enacted in 2011 to, in the words of Governor Cuomo’s spokesperson, “restore fiscal sanity to the state.” Accordingly, the tax cap requires localities seeking to raise real property taxes in excess of 2% or the increase in inflation in the base year, whichever is lower, to first obtain a 60% supermajority approval of voters or elected board members.  Plaintiffs attacked the tax cap on numerous constitutional grounds, including violation of the state constitution’s Education Article and Equal Protection Clause, among other claims.

Before dismissing each of plaintiffs’ claims, the trial court ruled that the plaintiffs had standing to pursue their action. This ruling was important because of its implications on future challenges brought by these or other plaintiffs.  As plaintiffs argued, dismissal on such grounds would have “effectively insulated” an important constitutional issue from judicial review.  On the merits, the court emphasized that legislative enactments in New York “enjoy a strong presumption of constitutionality,” and that facial challenges may only succeed by establishing “that the law is unconstitutional in all of its applications.”

The court interpreted both Board of Education Levittown Union Free School District v. Nyquist, 57 NY2d 27 (1982), and Campaign for Fiscal Equity v. State, 87 NY2d 307 (1995), to allow “disparities in educational funding among school districts arising from the State’s financing scheme [which are] rationally based upon and reasonably related to a legitimate State interest, the preservation and promotion of local control of education.”  According to the court, plaintiffs’ claims were a recasting of the rejected arguments in Levittown by “property-poor” districts that were unable to raise as much local tax revenue as “property-rich” districts, resulting in funding inequities.

The plaintiffs are appealing that decision.

Recent Events

In June 2015, New York State Supreme Court Justice Donna M. Siwek denied a motion to dismiss and allowed a lawsuit to move forward that challenges the way the state distributes educational aid to charter schools. Brown v. State of New York. The case was filed by charter school parents in Buffalo and Rochester. Their complaint alleges that the state’s failure to provide facilities funding for their schools denies them the opportunity for a sound and basic education. According to the plaintiffs, charter schools receive 25% less funding than public schools across the state, and almost 40% less in Western New York. Plaintiffs also argue that charter schools lack essential facilities such as “sufficient classrooms, gymnasiums, libraries, science labs, computer labs, cafeterias, common rooms, employee offices, and athletic fields.”

Other Litigations

Two additional cases, Paynter v. State and NYCLU v. State, were filed in 1998 and 2001, respectively, and alleged denial of the opportunity for a sound basic education. In 1998, the NYCLU also filed a case in federal court, Ceasar v. Pataki, alleging violation of students’ rights under Title VI.

In 2002, the federal district court for the Southern District of New York dismissed Ceaser v. Pataki; and the state court dismissed the NYCLU v. State case. On June 26, 2003, the New York Court of Appeals dismissed the Paynter case.

Costing Out

Before the Court of Appeals issued its June 2003 order requiring a costing-out study, CFE and the New York State School Boards Association announced Costing Out: A New York Adequacy Study, which was undertaken by leading national experts and included public engagement across the state. The research team used both the professional judgment and successful schools methodologies and also performed certain economic analyses. In early September 2003 the governor announced formation of the “Commission on Education Reform,” which retained Standard and Poors to conduct a separate cost study. Both of these studies were released in the spring of 2004. In early 2004, the New York State Board of Regents also released a cost study as part of its annual school funding proposal. We provide summaries of all three studies in New York Fact Sheets.

The three cost studies recommended increases in annual funding between $2.5 billion and $9.0 billion in pre-K–12 education spending–as much as a 26.5 percent increase. All three developed similar recommendations for changes in the policies and practices of the state’s school funding system and urged the state to:

match school resources to student needs;
adopt a foundation-based approach;
provide “state aid” based on enrollment, instead of attendance;
apply regional-cost adjustments;
direct most of the increased funding, between 62% and 88%, to the New York City School District and most of the remainder to other districts educating high-need students; and
simplify the funding system by combining many of the almost 50 separate state aid formulas into one “operating aid” foundation formula.

As most cost studies do, all three studies excluded the capital costs of school facilities.

Useful Resources

Judge Smith’s dissent in Paynter, which interprets the state Constitution’s Education Article (PDF).

 

 Last updated: September 2016

Previous post:

Next post: