The Smart Schools Bond Act (herein referred to as the “Bond Act”) authorizes the issuance of general obligation bonds up to $2 billion to fund the purchase of educational technology equipment such as interactive whiteboards, tablets, computers, and high-speed broadband or wireless Internet connectivity for both schools and communities.¹ Other non-technology investments would also be eligible to receive bond proceeds, including the construction and enhancement of pre-kindergarten facilities and permanent instructional spaces to replace transportable classroom units (TCUs), portable classroom trailers used mainly to alleviate crowding in New York City schools, and the installation of high-tech security in schools.²

Governor Andrew Cuomo first proposed the Bond Act in the fiscal year 2014-15 Executive Budget, following a recommendation of the New NY Education Reform Commission in January 2014, and the Legislature adopted it with minor modifications.³ Funding would begin with $1 billion in fiscal year 2015-16, followed by $350 million in each of fiscal years 2016-17 and 2017-18, and $300 million in fiscal year 2018-19.⁴ The bond repayment period would range from eight years for “classroom technology projects” and school security projects to 30 years for the construction of pre-kindergarten classrooms and the replacement of TCUs. Debt service on the bonds is estimated to be $126 million in fiscal year 2016-17 and $156 million in fiscal year 2017-18, the last year available in the current financial plan.⁵

The allocation formula for the Bond Act funds is set to each school district’s sharing ratio for general State school aid for school year 2013-14. Average per-pupil funding would be about $745 but would range from about $90 per student in Rye and Scarsdale to $1,450 in Rochester because the State aid sharing ratio varies with district need and ability to pay.⁶ New York City would receive $750 per pupil. Before receiving funds each district would be required to submit a Smart Schools Investment Plan to the Smart Schools Review Board comprised of the Education Commissioner, the State Budget Director, and the Chancellor of the State University of New York.⁷ Eric Schmidt, the Executive Chairman and former CEO of Google; Geoffrey Canada, the President and CEO for Harlem Children’s Zone; and Constance Evelyn, the Superintendent of the Auburn School District in Cayuga County have been asked to join a Smart Schools Commission to assist districts in crafting plans.⁸ Guidelines and timelines for submission of Smart Schools Investment Plans have not yet been issued.

The New York State Constitution requires voter approval for all general obligation (GO) bonds backed by the full faith and credit of the State. However, voter bond referendums occur infrequently. The most recent GO debt authorization, The Rebuild and Renew Transportation Bond Act, appeared on the ballot in 2005.  It authorized $2.9 billion in debt and was approved by 55 percent of voters.⁹

The referendum for the Smart Schools Bond Act, which will appear on the ballot on November 4, reads as follows:

Mixed evidence from previous technology programs
The promise of technology to transform education is not new. In the early 2000s schools across the country experimented with one-to-one laptop programs; each student was given a laptop for use at school and at home. Results from many evaluations of these programs do not point to a clear-cut conclusion about the benefits of these initiatives.¹⁰ A meta-analysis of 84 studies on the impact of technology programs on reading outcomes found supplementary digital instruction programs boost achievement by about one-tenth of a standard deviation, a statistically significant but practically meaningless effect.¹¹ The analysis found gains were more than twice as large for integrated literacy programs that use computer-assisted curriculum along with non-computer exercises. Another meta-analysis of the impact of digital technology on academic achievement over the last 40 years similarly noted while technology programs had consistent, yet small, positive impacts, the improvements were lower than those achieved by other documented educational interventions, such as tutoring programs.¹² The authors further found numerous confounding variables in the technology evaluations, such as variations in student and teacher characteristics and constant changes in technology equipment and software, precluding establishment of a causal relationship between technology interventions and educational improvement.

Moreover, no evidence shows the small improvements in achievement that may be attributable to technology equipment generate sufficient benefits to warrant the level of investment.  In 2013 the Center for American Progress conducted a review of many of the school districts around the country that have implemented technology programs and found none had conducted return on investment studies.¹³

Successful technology programs require ongoing, costly operational support
One definitive finding in the research is implementation matters. The type of technology matters less than how well it is integrated into the curriculum.¹⁴ Teachers must know how to use new technology to transform their pedagogical methods. This requires time and commitment from principals and teachers. A study of three high schools with mature (more than five-years-old) science computing programs found school culture and adequate time for teacher training and collaboration were the most important determinants of success.¹⁵ Without adequate training, teachers may use new technology as mere supplements to old classroom methods rather than as transformational tools.¹⁶

Apart from the kind of support needed to fully harness the power of technology in the classroom, school technology programs also require ongoing funding for more mundane but necessary software updates, repair, replacement, and technical support.¹⁷ Meeting these new needs may require additional full-time or part-time staff.¹⁸ Over the past decade, experiments with school laptop programs often ended after costs for support and maintenance exceeded expectations.¹⁹ In 2012, education and technology expert Lee Wilson estimated the cost of software updates, training, and network improvements increases the cost of an Apple iPad by 65 percent from $43 per student per class to $72 per student per class.²⁰

Short useful lives of technology
Many projects eligible for Smart Schools Bond Act funds, such as the purchase of whiteboards, computers and tablets, quickly become obsolete, and would likely require replacement well before the eight-year period permitted to repay the bonds. These short-term assets are better maintained through a regular replacement cycle in which a percentage of the old stock is replaced every year. Districts that wait to replace obsolete equipment on the capital cycle will be disadvantaged.

Other technology challenges
An additional implementation concern for some school districts in New York is the availability and speed of broadband. For students and teachers to successfully use technology to stream a video, for example, schools need adequate broadband capacity. Without sufficient broadband, hardware is essentially useless. Although New York’s statewide ranking in a 2012 TechNet analysis was 10^th among the 50 states for broadband adoption, network quality, and economic structure, parts of the state, including New York City, are poorly equipped.²¹ Available data from a joint survey of the Federal Communications Commission and the National Telecommunications and Information Administration show the need for investment in broadband is concentrated in certain counties.²² One of New York’s stated goals is broadband speeds of at least 100 Megabytes per second (Mbps) for downloads; fewer than half of New York’s schools meet this target.²³ In New York City only 1 to 2 percent of schools within each borough have access to download speeds greater than 50 Mbps.²⁴ While Smart Schools Bond Act funds may be used for investments in broadband, there is no requirement that they be used for this purpose. For example, New York City plans to use its entire $783 million allocation to increase pre-kindergarten capacity and fund a $490-million “Class Size Reduction Program” to construct 4,900 new seats.²⁵

A needs assessment is an essential first step in the development of a capital plan. Before $2 billion is committed to a series of capital projects in school districts, a statewide needs assessment should be conducted. In its most recent State Aid proposal, the State Board of Regents requested only $1 million in additional annual aid for education technology purposes.²⁶ Benchmarks should be established for the overall amount of technology aid needed, prioritization of investments, and progress metrics. State aid formulas and availability of local resources should also be examined because the State already supports school technology programs through multiple school aid formulas.

For the 2014-15 school year, at least $123 million in state aid for school districts is dedicated to technology; the State has not reviewed the formulas to determine whether the available funding sources are insufficient.²⁷

The following is a partial list of state funding available for school technology:

• $38.6 million for Instructional Computer Hardware and Technology Equipment Aid;²⁸ 
• $46.5 million for Computer Software Purchases Aid;²⁹ 
• $37.9 million for computer administration in the “Big Five” city school districts, as well as those not participating in a board of cooperative education services (BOCES);³⁰
• Building Aid for capital expenditures related to technology;³¹ and 
• BOCES Aid for two or more component districts of a BOCES that make technology-related expenditures that are more cost effective than they would be without the involvement of a BOCES.³²

Districts are also free to use general state or local funds to finance technology expenditures. Average per-pupil spending in New York in school year 2012 was $19,552, the highest of any state and fully 84 percent above the national average.³³ Although a dedicated funding stream may make district leaders more conscientious about purchasing technology, nothing now bars a district from purchasing technology to transform operations if that is how district leaders, and the voters charged with approving the school  budget, choose to use the funds.

Statewide needs assessments have been conducted for other capital needs; in 2013, the State issued a 10-Year Capital Plan for 48 state agencies and authorities through fiscal year 2022-23.³⁴ The plan identified $174 billion in capital needs; more than two-thirds is for state of good repair (SOGR) projects, that is, projects needed to keep infrastructure in a sufficient operating state rather than expansion projects.³⁵ The Plan allocates $43.4 billion and $39.1 billion in SOGR projects for the Metropolitan Transportation Authority (MTA) and the Department of Transportation (DOT), respectively.

Other needs assessments in recent years highlight New York’s infrastructure deficiencies in many categories. Sea walls and dams are not sufficiently protected against severe storms and flooding.³⁶ The water systems in some cities are almost 100 years old.³⁷ More than 2,800 local bridges are rated deficient, and that number may increase by 1,300 bridges in the next 10 years.³⁸ Almost 40 percent of New York’s pavement is in fair or poor condition, and 30 percent of the state’s sewage collection and treatment systems were beyond useful life as of 2004.³⁹ A December 2012 State Comptroller report details a state and local infrastructure funding shortfall of up to $89 billion over the next 20 years.⁴⁰

Although the need for significant capital investments has been documented in other sectors, no statewide assessment of school technology needs has been undertaken. Consequently, no information exists to assess the relative priority of the investments proposed in the Smart Schools Bond Act compared to these basic infrastructure needs. In addition the status of existing programs and equipment in school districts is unknown, and as a result, new funding needs will be even harder to identify.

The State’s capacity to fund its immense capital needs with state-supported debt is limited by a tightening debt cap imposed by the Debt Reform Act of 2000. Debt issued after April 1, 2000 is limited to 4 percent of state personal income and may only be issued for capital purposes. With the adoption of the fiscal year 2014-15 budget state leaders authorized $4 billion in new debt issuances including $1.2 billion for hospitals and other health care facilities, $1 billion for economic development, and $939 million for SUNY and CUNY.⁴¹ These capital projects will be financed with public authority debt, or so-called “backdoor” borrowing, which does not require voter approval. Fully 96 percent of New York State’s outstanding debt is authority bonds.⁴²

If the Smart Schools Bond Act passes, another $2 billion in debt will be incurred, bringing the State very close to the debt cap; capacity under the cap would fall to $366 million in fiscal year 2016-17, or 0.03 percent.⁴³ (See Figure 1.) If the Act does not pass, capacity is projected to be $3.5 billion under the Division of the Budget’s current estimate for personal income growth (5 percent per year on average). 

Staying under the debt cap is important for the State’s fiscal health. New York’s debt burden is high compared to other states by many measures. As a percent of personal income, New York has the second highest debt burden among other large states, behind only New Jersey.⁴⁴ CBC has measured the State’s debt and other long-term liabilities using an “affordability” index according to which the amount required to repay  debt should not cause taxes to increase or services to diminish more than in other states, creating a competitive disadvantage.⁴⁵ In 2010, when the analysis was last updated, New York’s long-term liabilities were fully $20 billion in the “danger zone” compared to the norm for other states. Debt service was $6.4 billion in fiscal year 2013-14, and comprised 7.1 percent of total operating costs.⁴⁶ Debt service that rises faster than operating revenues puts a squeeze on other priority items in the budget and constitutes a binding obligation for future taxpayers. The cost of repaying the State’s outstanding debt as of fiscal year 2011-12 was $2,899 per capita per year, the fourth highest among large competitor states.⁴⁷

With such limited capacity under the state-supported debt cap, it is important to reserve the use of borrowed funds for critical infrastructure investments. Although the new statewide capital plan identified $174 billion in needed investments, it did not contain a comprehensive financing plan. Sources were not identified to support capital spending for many agencies and authorities, and some of the agencies included in the plan, such as the MTA, have subsequently identified additional unfunded needs. The MTA’s new capital plan is only partially funded; for fiscal years 2015 to 2019 a $15 billion gap looms between what the authority says it needs and available resources.⁴⁸ And although construction is underway on the new Tappan Zee Bridge, the Thruway Authority has not yet released a financing plan that indicates how much of the $3.9 billion in borrowed funds for the project will be repaid from toll revenue versus general taxpayer support. 

Technology programs in schools are popular. But the evidence does not support a conclusion that they yield substantial benefits for students or taxpayers. Spending $2 billion for “smart” schools is not an effective use of borrowed funds, especially when weighed against high-priority investment needs in key infrastructure. The borrowing capacity remaining under the debt cap should be reserved to make these high-priority investments, not used to fund yet unjustified one-time technology purchases.

New Yorkers should reject the Smart Schools Bond Act.