COVID-19 and the Squeeze on State Education Budgets: Equity Implications for New York State

With the economic halt precipitated by the COVID-19 virus, states are starting to prepare for and beginning to address the budgetary squeeze that is sure to come absent of massive federal stimulus dollars. At the end of March, New York State was the first state to come out with a post–COVID-19 state budget.

AIR examined New York’s post–COVID-19 Enacted Budget and compared it to the Executive Budget, released in January, to understand the effect of COVID-19 on state aid received by districts, with a focus on how differences between the two budgets related to district poverty levels.

Next, AIR conducted longitudinal analysis looking at education revenue per pupil over time in New York State by district poverty rates to understand what might occur during the current budgetary crisis if the state enacts cuts similarly to those that occurred during the Great Recession.

Findings: Budget Analysis

The analyses of New York budgets indicate that New York State’s highest poverty districts are most affected by the COVID-19 crisis. Even with funding from the CARES Act, the differences between the two budgets are largest for high-poverty school districts. Including funds from the CARES Act, high-poverty districts will receive $230 less per student, on average, than what they would have received under the Executive Budget. For low-poverty districts, the difference is only approximately $30 to $40 per student, on average.

Without CARES Act funding, the highest poverty districts will receive approximately $800 per student less in state aid, on average, in the Enacted Budget than in the Executive Budget. In contrast, the magnitude of the difference between budgets for the lowest poverty districts was less than $100, on average.

Findings: Longitudinal Analysis

A longitudinal analysis of revenues raised by districts during the Great Recession suggests that the lowest poverty districts have traditionally been better equipped to weather a recession due to their ability to raise more local revenue, which was not drastically affected during the Great Recession. During the Great Recession, the lowest poverty districts were able to fully offset the minimal cuts to their state revenue with increases to local revenue and did not face a single year of declining revenue during the Great Recession. In contrast, the highest poverty districts faced steep cuts to state revenue and the increases in local revenue experienced by high-poverty districts were not large enough to offset the cuts to state revenue.