Over the weekend the State Division of the Budget released the financial plan report accompanying the enacted fiscal year 2014 budget. The financial plan includes details of the budget for the current fiscal year and its implications for the next three fiscal years through March 31, 2017. The report tells a troubling story.

On February 12th the Spending and Government Efficiency Commission, or “SAGE” Commission, submitted its final report to Governor Andrew Cuomo. With most state leaders and observers focused on budget negotiations, this comprehensive report on streamlining and modernizing State government was largely overlooked. But it deserves attention, and its many worthwhile recommendations should be implemented.

The allocation of school aid in New York State’s recently adopted budget for fiscal year 2013-14 has two key features:

• It exceeds the “cap” tied to personal income growth set for school aid in the last two budgets; aid may grow 5.3%
• It distributes the funds in a poorly targeted manner, giving increases to wealthy districts as well as needier communities.

Last night the state aid allocations for school districts were released just in time for the State Senate to vote on the budget. The final agreement allocates $20.8 billion, approximately $7,700 per student, in formula-based school aid for school year 2014. This represents an increase of $937 million, or 4.7%, over school year 2013.

New York is on track to pass an on-time budget that appears to limit state-funded spending to 2% growth for the 3rd consecutive year. That is good news for New Yorkers. However, while the details are still emerging, one proposal is particularly disappointing.

Competitive grants are an important element in Governor Andrew Cuomo’s approach to state aid for education. The new approach began on a small scale last year, and a review of the experience in the first year suggests the proposed expansion may be premature.

On February 13th, lawmakers in the New York State Assembly had a busy day: they introduced eight bills enhancing the pension benefits of public employees and retirees. These bills would add at least $1.35 billion in costs to State and local employers.

On Tuesday January 22 Governor Cuomo submitted his fiscal year 2013-14 Executive Budget to the legislature. It included proposals for the distribution of school aid to New York’s 677 school districts.

Over the last two years New York State has successfully tackled serious budget issues – curbing rapidly rising public employee pension costs, negotiating reasonable contracts for the state workforce, and implementing significant reforms in Medicaid. These actions helped improve the State’s fiscal condition to the extent that the projected budget gap in fiscal year 2013-14 is a historically low $982 million but important work remains to be done. Four important challenges face state leaders as they prepare the next budget:

School districts in New York spent $1,100 per pupil on average on transportation in 2010, more than any other state and 140 percent above the U.S. average of $459. Transportation spending by New York City is $1,033 per pupil, while spending in the rest of the state averages a higher $1,141 per pupil – fully 149 percent above the national average. The next highest spending state, New Jersey, spends $908 per pupil.