tabling SALT

Here’s how the Republican tax plan could threaten New York’s education funding

PHOTO: Kevin P. Coughlin-Office of the Governor/Flickr
Mayor Bill de Blasio and Gov. Andrew Cuomo at a press conference in 2014.

Republican lawmakers in Washington appear poised to approve sweeping tax legislation, which New York Governor Andrew Cuomo has dubbed an “economic death blow” to the state.

That blow, advocates say, could punch a hole in school budgets.

Schools across New York are already shortchanged billions of dollars, according to school-funding advocates, even as the state faces a $4.4 billion budget gap. The tax plan, if approved, has the potential to divert even more state and local funding from schools.

“I’ve been dealing with the state budget for more than 30 years and this is as volatile and uncertain as anything I can recall,” said Bob Lowry, deputy director of the New York State Council of School Superintendents.

The House and Senate must still combine their tax bills and pass a final version. Below is a guide to some of the worst-case scenarios for New York schools if that happens.

“Downward pressure” on local taxes

A provision of the tax plan would sharply reduce state and local tax (often called SALT) deductions a proposal that would hit high-tax states like New York hardest. The average SALT deduction in New York is $22,169, according to a report form the Governor Finance Officers Association, using data from 2015.

Advocates worry that voters whose tax burdens rise without the deductions will be less inclined to sign off on increases to their local school board budgets, which voters approve in most parts of the state. In New York City, school funding may be more insulated because residents do not vote on a budget.

However, the city could feel pressure to offset the lost SALT deductions by lowering local income taxes — a move that could shrink budgets across city agencies, including the education department.

“It stands to reason that there will be downward pressure for us to reduce our local taxes, which in turn would create less revenue for city services,” said New York City spokeswoman Freddi Goldstein in an email.

Flight of the super taxpayers

A small number of super-wealthy New Yorkers help keep the state and city governments afloat.

In New York City, about 25,000 families contribute more than 40 percent of the city’s personal income-tax revenue, according to the most recent figures analyzed by the city’s Independent Budget Office.

Their tax burdens could balloon without the SALT deductions, spurring a rush to lower-tax locales. While some experts said a mass exodus is highly unlikely, in a district where approximately 57 percent of school funding comes from the city budget, any significant loss of tax revenue could strike a serious blow to school funding.

“People who live on Park Avenue are not going to move to Alabama to pay lower taxes,” said Michael Borges, executive director of the New York State Association of School Business Officials. “But they may move to Scarsdale because they don’t have to pay a city income tax.”

A three-way “tidal wave of disaster”

Lost local revenue isn’t the only way school budgets could take a hit. In fact, it could be part of a triple whammy.

The tax plan would leave the federal government with a gaping $1.4 trillion deficit. Experts expect lawmakers may eventually plug the hole by slashing spending on healthcare and possibly other programs like education.

“It may result in lower federal funding for everything,” said George Sweeting, deputy director at the city’s Independent Budget Office. “If that happens, that would have an impact on federal funding for New York City.”

Still, school districts only get a fraction of their funding from the federal government. In New York City, federal money accounts for just 6 percent of school spending. (By contrast, 37 percent of the city’s education funds come from the state.)

However, federal spending cuts could have an indirect impact on New York’s education funding. If Washington provides less healthcare funding, for instance, New York could have to pick up the tab — creating a ripple effect, where it would have less to spend on schools.

The federal pressure would come at the same time New York is already facing a $4.4 billion budget deficit. Officials from Governor Andrew Cuomo’s office say the tax plan would be a blow to New York — but they also insist that Cuomo is committed to funding education.

Still, schools are staring at a “loss of federal aid, a loss of state aid, and a loss of local revenue,” Borges said. “It’s like a tidal wave of disaster.”

An under-the-radar change would cause “significant harm”

Finally, a little-noticed bond issue in the tax plan could cause New York schools pain.

Congressional Republicans would remove provisions that help schools borrow money for school construction projects, according to a letter signed by Board of Regents Chancellor Betty Rosa and State Education Commissioner MaryEllen Elia. The loss would “significantly harm districts’ finances,” it reads.

This measure would have a devastating impact on schools, school districts, local taxpayers and, most significantly, our students,” the letter continues. “That impact would be felt most dramatically by districts in poverty; in other words, the districts that would be hurt most are those that can least afford it.”

$1 billion

The tension between CPS enrollment declines and new schools

PHOTO: Tim Boyle/Getty Images
The West Loop neighborhood on the Near West Side is booming with new residents and corporate headquarters.

Chicago plans on opening a handful of schools in the next several years. But for whom?

Chicago Public Schools faces a critical decline in enrollment and is closing or phasing out four more schools on the city’s South Side as a result.

Yet the district just unveiled a new $1 billion capital plan that adds schools: an open-enrollment high school on the Near West Side and an elementary school in the Belmont Cragin community on the Northwest Side. That’s in addition to repurposing two old buildings to open classical schools in Bronzeville on the Near South Side and West Eldson on the Southwest Side.

CPS is soliciting feedback about the plan this Thursday ahead of next week’s board of education vote, but community organizers say the proposal shows a bias toward investments in or near high-growth, gentrifying areas of the city. Some complain the new schools will siphon enrollment and resources from current neighborhood options, and worry the schools are an election-year ploy that will exacerbate or enable gentrification. Others contend that the district’s spending still prioritizes white and mixed communities near downtown and on the North Side as opposed to majority black and Latino communities on the South and West sides.

Despite the criticism, and despite declines in city population and enrollment, CPS said it is taking a neighborhood-by-neighborhood approach to to creating new schools and academic opportunities. In a statement to Chalkbeat Chicago, CPS defended its decision to open new schools, despite enrollment declines, by citing community demand. And CPS CEO Janice Jackson told a room of business and nonprofit executives at the City Club of Chicago on Monday, “we can’t do great work without investing” — and not just in school staff, but in buildings themselves.

At a budget hearing later in the day, Chicago Board of Education President Frank Clark stressed the money was being allocated “with a great deal of focus on local schools that in the past had legitimate reason to feel that they were not prioritized as they should (be).”

The problem, still, is fewer and fewer families are enrolling their students at CPS.

Enrollment is declining at Chicago Public Schools.

The roughly 371,000 students enrolled at CPS this year is a 15 percent decrease compared with the year 2000, when enrollment topped 435,000, according to CPS data. And there’s no sign the numbers will trend upward soon:  The district projects about 20,000 fewer students to enroll in the next three years. The trends mirror population drops in Chicago, which has about 182,000 fewer residents than it did 18 years ago, according to Census data. More than 220,000 black residents have left since the year 2000.

One expert on neighborhood change in Chicago, Alden Loury of the Metropolitan Planning Council, said building new schools shouldn’t be part of a broad policy given the city’s population declines. However, he said new schools may make sense in certain areas.

“You may see pockets within the city where there’s a very clear difference happening,” he said.

Demographer Rob Paral, who publishes Chicago demographic data on his website, said while the city’s population might be down, some parts of the city that have grown, especially areas that are gentrifying and former white ethnic enclaves transformed by Latinos and immigrants.

“Chicago has got these microclimates when it comes to neighborhood change,” Paral said.

You’ll see what he’s saying in Belmont Cragin, a community just west of one of Chicago’s most popular gentrifying communities, where the population has ballooned as the overall city population has dropped.

A new elementary school for Belmont Cragin

Belmont Cragin is a quiet, working-class neighborhood full of single-family brick bungalows and two-flat apartments. Taquerias, Mexican boutiques, hair salons and auto bodies dominate commercial corridors that used to serve more Polish residents, who are concentrated on the northern end of the community.  Since 1990, Belmont Cragin’s population has increased 40 percent to 80,000 and changed from two-thirds white to 80 percent Latino. Paral said Latinos have moved from communities like Logan Square to the east, where gentrification pushed them out, and replaced aging white populations. Latinos have similarly transformed former enclaves for European immigrants on the Southwest Side, like West Eldson and Gage Park.

CPS said in its statement that community groups and leaders in Belmont Cragin advocated for the elementary school, and that CPS “shares these communities’ vision of expanding high-quality educational opportunities to children of all backgrounds.”

CPS wouldn’t say who in the Belmont Cragin community had asked for a new school. It wasn’t Rosa Reyes or Mariana Reyes (no relation). They said their children’s school, Burbank Elementary, is losing students and needing improvements to its roof, heating and cooling systems. The district labels Burbank, like most schools in Belmont Cragin, as efficiently using its space and not yet suffering  from under-enrollment — yet. Still, its student body is shrinking. Latino enrollment at CPS seems to be falling, too. Experts note that immigrants are coming to the city at much lower rates than in the past when they offset black population loss, and that birth rates have declined across the board. 

The mothers said CPS allowed a Noble Charter Network to open in 2014 that exacerbated enrollment declines at Steinmetz High School, and that the same happened to Burbank in 2013, when an UNO charter elementary opened a few blocks west of the school.

Steadily losing students costs Burbank funding, doled out per-pupil. That’s why they the parents don’t support CPS’ new school proposal.

“It will be taking from the local schools,” Rosa Reyes said.

A push for a Near West Side high school

Drive west from Chicago’s central business district and you’ll pass through the Near West Side, one of the city’s 77 official community areas. However, those official boundaries also contain a racially and economically diverse mix of neighborhoods. East of Ashland, you’ll see the West Loop, home to mostly white and affluent residents, pricy condos, trendy restaurants, and a booming business community that includes corporate headquarters for Google and McDonalds.

But west of Ashland, as you approach the United Center where the Chicago Bulls play, you’ll find more low-income residents, public housing, and African-American residents. Like Belmont Cragin, the Near West Side has witnessed immense population growth in recent decades. White people have flocked to the area, especially the affluent West Loop, while the black population has plummeted. In 1990, about 66 percent of Near West Side residents were black and 19 percent were white. Nearly 20,000 new residents have moved in since then. Today, the Near West Side is 30 percent black and 42 percent white. An analysis by the Metropolitan Planning Council found that most African-Americans leaving Chicago are under 25, and low-income. Alden Loury, the council’s research director, said the city is struggling to retain young black people who might eventually establish families, and that many black Chicagoans have left seeking better job markets, more affordable housing, and higher quality schools.

CPS hasn’t announced where on the Near West Side it will put its proposed $70 million high school – but the community groups calling loudest for it are pro-business groups and neighborhood organizations led by mostly white professionals. The community group Connecting4Communities and the West Loop business organization the West Central Association have advocated for a new high school and see the mayor’s proposal as responsive to the growing community.

“Most of the high schools that people are comfortable sending their children to, the good ones, are selective enrollment,” said Executive Director Dennis O’Neill of Connecting4Communities.

He said that parents whose children don’t test into those schools—Jones College Prep, Whitney M. Young Academic Center, and Walter Payton College Prep —lack an acceptable option.

“Our neighborhood school, Wells, which is nowhere near our neighborhood, is so under-enrolled, and is not [a school] that people feel comfortable sending their children to,” he said. “When people see a school is so woefully under-enrolled, they just don’t have confidence in it.”

Wells Community Academy High School, which sits near the intersection of Ashland and Chicago avenues, also is mostly black and Latino, and mostly low income.

But O’Neill emphasized that high school request isn’t an effort to exclude any groups. He said the groups have a proposal for a new high school that draws on eight feeder schools, including a school serving a public housing development, to ensure the student body reflects the diversity of Chicago.

Loury of the planning council said it makes sense that as the Near West Side grows there’s a desire to satisfy that growing population. However, he found the idea of low enrollment at a predominately black and Latino school amid a boom in white population to be problematic. Parents might avoid sending their children to certain schools for various reasons, but a new building nearby furthers disinvestment in schools struggling to fill seats.

“It’s a pretty classic story in terms of Chicago and the struggles of integration and segregation,” he said.

A classical debate in Bronzeville

When it comes to CPS’ new school plans, line items don’t always mean new buildings, as evidenced by the two classical schools opening in existing structures in West Eldson on the Southwest Side and in Bronzeville on the South Side.  

Bronzeville Classical will open this fall as a citywide elementary selective enrollment school. Classical schools offer a rigorous liberal-arts curriculum to students who must test in. Last year, more than 1,000 students who qualified were turned away for lack of space, according to CPS, which is spending $40 million to expand three existing classical programs elsewhere.

“The district is meeting a growing demand for classical programs by establishing programs in parts of the city that do not have classical schools, like Bronzeville – making this high-quality programming more accessible to students in historically underserved neighborhoods,” the CPS statement read.

A spokeswoman for Alderman Pat Dowell, in whose ward the school is opening, responded to requests to interview the alderman with an emailed statement supporting the new Bronzeville school.

“It provides another quality educational option for families in Bronzeville and other nearby communities,” read the statement. “No longer will children from near south neighborhoods seeking a classical school education have to travel to the far southside, westside or northside for enrollment.”

However, some South Side residents see the classical school as problematic.

Natasha Erskine lives in Washington Heights on the Far South Side, but is Local School Council member at King College Preparatory High School in the Kenwood community near Bronzeville. She has a daughter enrolled at King, a selective enrollment high school. Before that, her daughter was in a gifted program at a nearby elementary school. Erskine supports neighborhood schools, but struggled finding schools that offered the kind of field trips and world language instruction many selective enrollment schools offer.

“I see the disparity, because it’s one we participate in it whether I like it or not,” she said.

Bronzeville is a culturally rich neighborhood known as Chicago’s “Black Metropolis,” where black migrants from the South forged a vibrant community during the Great Migration, building their own banks, businesses and cultural institutions.

And it retains a resilient core of committed black residents, but has suffered some decline and lost population like other black neighborhoods.  The community area that contains Bronzeville and Douglas has lost about half of its black population since 1990.

But Bronzeville is adjacent to the gentrified South Loop, which is grown increasingly white in recent years. And it’s a short drive  from Woodlawn, where the Obama Presidential Center is slated to be built. Paral, like other observers, predicts the Bronzeville is one of the areas between the South Loop and the Obama Library that will be further gentrified in coming years.

Jitu Brown, a longtime Chicago education organizer and community leader who heads the Journey for Justice Alliance, believes that the investments are an attempt to attract more white families to areas at a time when low-income people and African-Americans are being priced out and leaving the city. Brown added that creating more selective-enrollment schools is a different type of segregation: “You’re segregating talent.”

On Thursday, the district will solicit feedback about the spending plan via simultaneous public hearings at three different sites, Malcolm X College, Kennedy-King College, and Truman College. Here are the details.

School Finance

IPS board votes to ask taxpayers for $315 million, reject the chamber’s plan

PHOTO: Dylan Peers McCoy

Indianapolis Public Schools officials voted Tuesday to ask taxpayers for $315 million over eight years to help close its budget gap — an amount that’s less than half the district’s initial proposal but is still high enough to draw skepticism from a local business group.

The school board pledged to continue discussions in the next week with the Indy Chamber, which released an alternative proposal last week calling for massive spending cuts and a significantly smaller tax increase. The school board rejected the proposal as unrealistic and instead voted to add a much larger tax measure to the November ballot.

If the school board and the chamber come to a different agreement before the July 24 meeting, the board can change the request for more taxpayer money before it goes to voters. Some board members, however, were dubious that they would be able to find common ground.

“While I appreciate the fact that we want to continue to negotiate, I’m pretty sure that I’m at rock bottom now,” said school board member Kelly Bentley. “That initial proposal by the chamber is, unfortunately in my mind, it’s insulting. It’s insulting to our children, and to our neighborhoods, and to our families.”

Chamber leaders, whose support is considered important to the referendum passing, were skeptical about the dollar amount. In a press release, the group said the district was “taking another step towards seeking a double-digit tax increase.”

“We’re concerned that our numbers are so divergent,” said chamber president and CEO Michael Huber in the statement. “We need to study the assumptions behind the $318 million request; clearly the tax impact is significant and the task of winning voter support will be challenging.”

During the board meeting, which lasted more than two hours, district leaders discussed why schools need more money and why the chamber report is unrealistic. They also took comments from community members who were largely supportive of the tax increase.

Joe Ignatius, who mentors students through 100 Black Men of Indianapolis, said that he has seen the benefits of more funding from referendums in other communities.

“This should be a no brainer, to invest in our future for the students,” Ignatius said. “Don’t think about the immediate impact of the dollars that may come out of your pocket but more the long-term impact.”

If the district goes forward with its plan, and voters approve the tax increase, the school system would get as much as $39.4 million more per year for eight years. A family with a home at the district’s median value — $75,300 — would pay about $3.90 more per month in property taxes. (Since the initial proposal, the district reduced the median home value used in calculations on the advice of a consultant.)

The district plan comes on the heels of months of uncertainty. After the school board abandoned its initial plan to seek nearly $1 billion for operating expenses and construction, district officials spent weeks working with the Indy Chamber to craft a less costly proposal. Last month, the board approved a separate referendum to ask taxpayers for about $52 million for school renovations, particularly school safety features.

But the groups came to different conclusions about how much money the district needs for operating expenses.

The chamber released an analysis last week that called for $477 million in cuts, including eliminating busing for high school students, reducing the number of teachers, closing schools, and cutting central office staff. The recommendation also included a $100 million tax increase to fund 16 percent raises for teachers.

District officials, however, say the cuts proposed by the chamber are too aggressive and cannot be accomplished as quickly as the group wants. The administration and board members spent nearly an hour of the meeting Tuesday discussing the chamber plan, why they believe it’s methodology is wrong, and the devastating consequences they say it would have on schools.

Even if the $315 million plan proposed by the district passes, it will come with some sacrifices compared to the initial plan. Those cuts could include: reduced transportation for magnet schools, field trips, and after school activities; school closings; increased benefits costs for employees; and smaller pay increases for teachers and employees.

The district did not make a specific commitment to how much teacher pay would increase if the amount asked for in the referendum is approved, but Superintendent Lewis Ferebee said the funds would pay for consistent raises.

“We would be at least addressing inflationary increases and cost of living, but we hope that we can be higher than that,” said Ferebee. “It would depend a lot on what we are able to realize in savings.”

The school board’s decision to rebuff the chamber’s recommendation puts the district in a difficult position. The chamber has no official role in determining the amount of the referendum, but it could be a politically powerful ally.

Last week, Al Hubbard, an influential philanthropist and businessman who provided major funding for the chamber analysis, said that if the district seeks more money than the group recommended, he would oppose the referendum.

The total tax increase would vary for each homeowner within district boundaries. The operating increase would raise taxes by up to $0.28 for every $100 of assessed property value, while the construction increase would raise taxes by up to $0.03 per $100 of assessed property value.