What I Learned Trying to Understand the Convoluted Debate over the “Education Mandate Relief Act”

I have been spending this week trying to understand the meaning and intent of two recent New York Post editorials, one written March 19 (Take-hike Back Stab) and the other March 23 (Scratch One Tax-hike). The topic had to do with education; more specifically with bills that would affect the school tax voting process and property tax changes. I had some initial serious concerns; (1) did our State legislators actually propose some additional tax burden on us which, in my judgment,would be unsustainable, (2) were any of our most important basic rights such as our voting outcomes, being threatened and, (3) how could the New York Post write such a vitriolic article, with minimum fact, maximum rhetoric; in sum, providing much more heat than light. Also, why is it that issues of such potential importance to taxpayers not made more transparent prior to being legislated. Why are our leaders so unable to think critically about these important issues; rather than having solutions in search of problems? Worse, why do they think primarily about being re-elected and continue to avoid or ignore defining problems in a much more sustainable way?

The entire debate about adding to our national debt affects multiple generations. Despite our “you deserve it society, we fail to balance the present and the future. We don’t do this at any level of government. We have become more and more a uncivil society, unable or unwilling to come to non-zero sum consensus on key issues. Too many of our elected officials are consumed with insufferable pride, lack focus, collegiality, and contribute, along with a 24 hour a day visible and often vitriolic media, to what we see daily in society in terms of violence, intolerance and plain stupidity. Sadly, even our so-called “transformational” president is not above making deals and selectively informing the public about these matters. Little wonder in New Rochelle you hear that terms limits are unnecessary and that people from one side of the city are perfectly capable of representing residents throughout the city. They are not! Of course, be assured that if the opposition party had the power, they would be equally in opposition to the loss of power. It is the nature of the political process and finds a comfortable home in our society these days.

I want to tell you what I learned although I warn you, it is a lot to absorb. To help, I have asked Bob Cox to attach a copy of a letter I sent on March 20 to Suzi Oppenheimer and Amy Paulin to this report. And, lest I neglect to do so, I want to mention that both representatives have been open and, in fact, Mr. Logan and Ms. McGowan from Senator Oppenheimer’s office have reached out to me and provided insight and information. I also profited from Senator Johnson’s website and printed media to get further insight into his thinking. None of these individuals have done anything to suggest that they deserve anything but respectful treatment and even praise for their approach on these issues I will shortly describe. In fact, Amy Paulin, in my opinion is the finest Assemblyman in New York State with an envious record that covers many of the issues we are all concerned with; veterans rights and benefits and protections against sexual predators just to mention two of many. In fact, just today, the New York Post highlighted her courage in opposing the Assembly budget bill; one of the few Democrats in Albany who did citing it was harmful to the overtaxed and burdened NYS taxpayer. Typically, the New York Post tried to take some credit for her actions; they actually know very little about some topics and they could learn a great deal about professionalism and political courage from her. With that said, let’s look at Senate Bills 5523, 5523A, and 6212. To begin, we need to look at the Editorial Page of the New York Post dated March 19 and consider Tax-Hike Back Stab.

Nice beginning and sure to grab your attention. They state right up front, “here comes a big, fat school-tax hike”. Well, not necessarily so, but perhaps it would turn out that way in some communities. But, what is far worse is the fact that what amounted to a subsidiary bill, S5523A, is the real bone of contention as in summary, it would invalidate any community voting results on a school tax request that would have lead to the substitution of a “contingency budget.” As you may know, if a community does not pass a school district’s tax request (which is validated by its budget), the district must resort to a “contingency budget” and that would invariably lead to deeper and more draconian cuts in that budget. As I understand S5523, it changes NYS Education Law to permit a district to overrule the will of the people this year and goes out of effect (self-destructs without further legislation) next year meaning the original statute is re-inserted. This is my understanding of Section 7 of S5523A; one of many I had to read up on in that bill, its parent bill S5523 and $6212, a very important piece of legislation in its own right that addresses property taxes. More on this later.

Let me state that the New York Post did not cite any legislation, outline its contents or give transparency and insight to the reader. Rather it:

• Indicated that the New York State Senate passed legislation by an astounding 56-2 margin a bill that gave local school boards the power to strong-arm through substantial property tax hike in districts whose voters have the temerity to reject improvident budgets. It never defines any terms such as what a substantial property tax hike is nor how the legislation (which it never identifies by bill citation) goes about doing this.
• The bill is titled Education Mandate Relief Act – its major senate sponsors are Suzi Oppenheimer of Westchester County and Craig Johnson of Nassau County. The Post says “the mandate being lifted is one limiting tax hikes when voters’ reject budgets. Yes and No — there is a very substantial part of S5523 which is directed at New York State itself that says that unpaid new mandates cannot be forced on districts. There are many unfunded mandates that negatively affect school budgets and eventually, school taxes so this is a good thing for the taxpayer. As stated above, mandating a change in voter outcome on school taxes (budgets) in May is clearly not a good thing.
• They insult Johnson by saying that his justification of the Education Mandate Relief Act; i.e. it is part of a global package of bills meant to ease mandates on schools, is “lame.” It is not although this is where some considerable improvement in constituent transparency and input is needed. There are a number of mandate measures – some good, some not so good, but he is right.
• The Post makes a factual error in saying that the “bill at hand dramatically raises this year’s cap, sending tax rates soaring.” Sheer hyperbole and outrageous language. What cap? You would have to look at what Klein and Johnson have proposed under S6212 to see that one of the major provisions of this important bill is the establishment of a school tax cap. It is not law at this point unless it somehow got by me. In fact, several years earlier, Tom Suozzi, then the Nassau County Executive headed up a committee reporting to the Governor on many issues including Property and School Taxes and this was a major recommendation. When we get to it, you will see that S 6212 contains a number of features designed to improve the lot of the NYS taxpayer.
• There is more, but you get the picture. In the editorial, the Post mentions a few more negative statements at people and then mentions that the bill was heading to Amy Paulin in the Assembly who was “pushing for the bill.” Then we hear about Sheldon Silver, etc… but you get the picture

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This led me to draft a letter to both Amy Paulin and Suzi Oppenheimer stating my views and concerns and perhaps will include that letter as part of this report.

Happily, the bill S5523 and S5523A was killed with the sure coup d’grace being that Amy Paulin stated she would not put through her Assembly bill for vote. Hopefully my intervention and likely that of others had some influence, but along comes the New York Post Editorial of March 23, titled Scratch One Tax Hike. Of course it was full of vitriol and again, somewhat neglectful of good journalist requisites which is to inform and clearly cite to the readers the facts of the matter. Once again, no identification of specific legislation – no bills cited, etc…. In brief:

• They repeated the script of the earlier editorial, this time, though they renamed the bill the Stealth Suburban School Tax Increase Act of 2010. While technically inaccurate, it still is a decent way to describe what a lack of transparency, buy-in, and focused problem solving can lead to — as you should know the issue around Property and School taxes are vast and require new ways of looking at these critical matters. You cannot, as the saying goes, “pour new wine into old bottles”. Property taxes as we know them and employ them to fund schools are both regressive and non-responsive to our 21st century political and social structure.
• The New York Post called all parties; Johnson apparently ran for the hills, Paulin, “backed off” once she understood the impact on the taxpayer, and Oppenheimer continued to defend the bill. My take is that Paulin or her staff did not read $5523A carefully enough if at all and was not at all intimidated by the scary wisdom of the NY Post Editors. Oppenheimer had the courage of her convictions and had she left off Section 7 of S5523 and changed the direction and focus of the shared services portion of the bill, it would have been a good bill. The direction and focus of shared services should have been set up by an professionally designed study and set of recommendations on the topic – what can be consolidated, who is involved in the process, how will we set it up and pay for it while getting buy-in from all parties; unions, parents, district professionals, etc… in sum, a well -funded study by a professional outside firm would have been enough at this point as the potential savings are considerable and shared services’ time has arrived at both the school districts levels and the county/city levels.

I think this provides a good frame of reference for you and I want you to reflect on just how broken he NYS government process is. Both Republicans and Democrats overwhelmingly supported something they likely didn’t really read. Sounds something like the Health Care documentation. And, as a footnote, get a copy of the March 26 copy of the New York Post and see for yourself the political courage of Amy Paulin and another legislator, Sandy Galif who have often demonstrated independent thinking on issues. Let me briefly summarize each of the bills

S5523
This is the “parent bill” sponsored by Oppenheimer and Johnson. It is called the Education Mandate Relief Act. Its major provision is to prohibit the imposition of new mandates on districts after the passage of school budgets. This is a very good thing! It also goes into great length on allowing for increased shared services through BOCES and perhaps in other ways. This is potentially a good thing; at this point it is a dog’s breakfast of curricula, student bodies, school services, and so forth — surely to be challenged by parents, unions, and others in part and strongly in need of a critical, professional study to focus on what is attractive, cost effective, community acceptable, and simply, manageable.

S5523A
This is the “child” of S5523 and clearly put in play because, unlike S5223, it would have had an immediate financial impact on school district taxes and budgets in 2010. If you look at it carefully, it substance is Section 7 and this has been abstracted out and somewhat mis-characterized by the New York Post. But, the truth of the matter is that is bad law; ill conceived, not in tune with the economic realities of 2010 and dangerous in terms of the erosion of individual rights. It almost mirrors the concerns that many people are having with the Obama administration’s approach to some legislation in terms of overriding individual rights – I see a parallel between this and the pending enforcement through the IRS of individuals requiring to possess Health Insurance. Like with funding school districts with its archaic employment of regressive property tax based school taxes and its over-reliance on federal and state funding, both the need for universal health insurance and school district strength and solvency are paramount to a strong and vibrant society. However, I would submit that there are more thoughtful and effective ways of getting to these values; ways that employ critical thinking designed to focus both on current state and future state. Our deficits are enormous, we have already reached a tipping point on SSI revenue and expenditure (we are in the red) and we cannot afford a school tax structure that relies on an eroding payment base, an incremental entitlement scheme from the federal and state governments and bulging bureaucratic unfunded mandates as well as indefensible staff/union salaries and benefits.

I say this with the hope and expectation that there are people of good will and strong purpose who will work to change these sad facts. It won’t be easy. We are a consumer nation and not accustomed to sacrifice and that partially explains the pain and disruption we experience daily in society. It also explains to me why Oppenheimer and Johnson would have proposed an approach to assist the districts during these tough times. Perfectly understandable and they should not be harshly criticized without due cause and I don’t see any at this point. It again, mirrors Washington; the bailouts, the deals, instead of too big to fail, we have districts and kids who are too important to fail. And, frankly they are! The only problem to me is that we fail them, contribute to our eroding academic standing in the world, and the lessening of our moral influence by not demonstrating as a community, as a country, the right way to define a problem and work towards a solution consistent with our values and our abilities to pay. And, in a nutshell I think that is what S5523A is all about; decent people who wanted to help districts survive and to do so in a thoroughly broken system called New York State. At least I choose to think this is correct. And, while I am at it, I find the performance of Sara Richmond and her new team to be heartening and I look forward to progress in the district that turns around the lamentable facts of a 66% graduation rate as an example. What I had to realize and what I think you all need to realize is that oversight of this district is a monumental job. Sara should, I think, plow new ground by forcing a formal arrangement on key issues with the City Administration. “It’s for the kids” is fine but take it even further — it would be tantamount to failing the taxpayer not to see and act on the interrelationships between a city committed to growth and expansion and a district being seen as a critical variable in achieving this end. This is not the case now. If I had one common criticism of Noam Bramson and Sara Richmond is that they have not forged a partnership we can all see and as part of this, reached out to bring in people from all parts of the City into this exchange.

So, Section 7 of the S5223A bill is likely the “hole in the proverbial doughnut. It reads in part, “amends the education law in relation to the calculation of contingency budget percentage increases in total spending for the prior year and provides the repeal of such provisions,” etal (next year’s budget). This is the reason for the New York Post’s diatribe. It is important for me to mention that I dig an exhaustive search of Senator Oppenheimer’s legislative efforts as head of the Education Committee in the NYS Senate and she has been a strong chair in many ways especially in the job she has done in establishing protections against mandates and other intrusions on district funding.

S6212
This is potentially the legislation property tax holders in New York have been needing and expecting and largely comes out of the Suozzi Report. It provides some strong protections for property tax and school tax payers. But, bear in mind that unless new ways of approaching and managing school district spending are found, these will not solve the budget and funding issues faced by districts. That will be a product of clearly focusing on goals, capital expense financing, partnerships with the cities, changes in board composition and skills base, performance based outcomes and most important, both a new paradigm for solving the regressive property tax system in effect and the need to bring some fiscal sanity to the union contract situations — they are too rich, too non-participative in paying their fair share, too many opportunities for additional compensation (steps, tiers, etc. at taxpayer expense, tenure, non-alignment to student performance, too few hours worked, and, well the list goes on. Most heinous is the effects that union contributions have on politicians who prosper inordinately from their largesse as well as the “emotional entanglement” of parents to schools — it must be the right thing to do to support this budget and these programs, it’s for the kids and we are worth it!

Well so is the childless parent, the senior citizen, the already burdened taxpayer. While waiting for some politician of vision and courage to support a new paradigm based on other than owning property, S6212 is very helpful although passage through the broken State of New York is highly problematic.

Jeff Klein, Craig Johnson and others have sponsored this bill in the Senate. Klein is not one of my favored guys — his member funds for distribution are well into 6 figures (highest in the State I believe) and he is the proponent of a plan to solicit funds from unions and others ($50,000 to $25,000) I think for some form of vague representation. He calls it “fund raising” and likely was creatively influenced by the recent Supreme Court decision on corporate funding. At this point it doesn’t matter as much to me as the major ingredients of S6212 does.

• The bill reintroduces the fall STAR Rebate.
• Introduces a Cap on School Taxes.
• Introduces a Circuit Breaker on Property Taxes.

I find it helpful to look at this as a middle class tax relief program. What it would do is to amend the Real Property law and the Tax Laws regarding STAR. The School Tax Cap is interesting and potentially important also for improving school budget management. What is says is that districts taxing limits would increase by the lesser of 4% or 120% of the annual increase in the CPI. If districts chose to opt higher – 5% or 150% of the CPI, 55% of the district electorate would have to agree to this.

The Circuit Breaker is a concept based on income levels and how they affect property taxes. They affect incomes under $250,001 per year. Let me give you one example.

If your household income is $120,000 or less your net property taxes paid in excess of 6% of said income can receive a personal income tax credit of 70% of the overage (excess of 6%). Similar rules apply to $120,001 – $175,000 and $175001 to $250,000.

As I said, this is being held hostage by the broken legislature and governance of New York State and we shall see. But, it certainly seems like something that will come to fruition in the foreseeable future.

SUMMARY

I warned you it would have to be long, yet I have not gone into as much depth as I would have liked. My hopes are: (1) for more civil and community based dialogue, (2) more selfless, less selfish behavior and attitudes on the part of people, (3) adoption of critical thinking on problem solving, (4) new paradigms for school funding and performance, (5) new roles, relationships and responsibilities that both obligate a closer union between city and school district around common cause, (6) much more transparency, (7) a more responsible media, (8) a lessening of the negative effects in special interests, union political power, and overly rich contracts, (9) a broadening of the participative base in the New Rochelle community to hear all voices, and (10) a Happy 2010 to all.