|
Note: Taken from pages 74, 75 and 76 of New
York State Budget Analysis 2006-07 by Alan Hevesi. –Fred Lane
Education
EXCEL
The Legislature added $12 billion in new State
and local debt authorization for K-12 education needs. The EXCEL
program administered by DASNY will issue $2.6 billion in bonds and
distribute the proceeds as follows: $1.8 billion for New York City,
$400 million for high needs districts and $400 million for all other
districts.
The $2.6 billon in debt issued by DSANY will
be considered State-Supported debt as per the Debt Reform Act of
2000 and State-Funded as per the Comptroller’s definition. This
funding is restricted to the following:
Educational technology,
Health and Safety improvements,
Disability access,
Increase in physical capacity (additional classrooms), and
Energy initiatives.
In addition to the above, all projects eligible
for funding in New York City must be part of the Five-Year Capital
Plan approved by the City Council as of July 2005.
The structure of this program has the potential
to generate significant out-year costs, in addition to debt service
for the State, because districts will be allowed to use EXCEL
funding to replace the local share (amount not reimbursed with State
Building Aid) on new capital projects that meet the program
guidelines listed above. For example, if a district has a capital
plan that assumes $5 million for a particular project where 50
percent is reimbursed by the State and 50 percent is financed from
local funds, the district can finance the local share with EXCEL
funding and use the supplanted local share for another reimbursable
project. In essence, school districts will get double the aid for
the same level of local cost.
Funding provided by the EXCEL program is not
appropriated but rather bond proceeds will be distributed directly
to school districts by DASNY, thus circumventing the State’s central
accounting system and associated pre-audit procedures. The $2.6
billion is considered “off-budget” spending and will not appear in
the State’s Financial Plan or in the State’s cash reporting.
Furthermore, while schools are required to use the funding for
capital needs, as listed above, the Dormitory Authority will be
issuing bonds backed by debt service contracts with the State, so
information on individual projects that are financed with EXCEL
dollars will not be readily available. As
such, the bonds are backed by a State debt service contract pledge
as with other back-door borrowing.
While the Enacted
Budget does include an increase of $100 million in 2006-07, the
Financial Plan will not reflect the entire $2.6 billion in
additional spending intended by the State for out-years. Not
accounting for this, State spending is misleading today’s and future
taxpayers who are footing the bill for this debt.
In 1997, voters were
asked to approve a $2.4 billion General Obligation bond act to
finance education infrastructure around the State. The measure was
voted down by a 53 percent to 47 percent margin, largely because of
a lack of information on how the funding would be used and where it
would be spent. The EXCEL program is not subject to voter approval
and without an appropriation and payments coming directly from a
State authority, detailed spending information is neither accessible
nor structured in such a way as to be scrutinized by the public.
Essentially, the State did indirectly what voters directly said no
to in 1997. |
