Moody’s offered praise today for the school-aid increase in the state budget, saying the $805 million increase will benefit low-wealth districts, particularly in the major cities.
“The budget’s passage is credit positive for less affluent school districts struggling to overcome constraints caused by the state’s new 2% cap on annual increases in property tax levies, which take effect in fiscal 2013,” Moody’s said in its weekly credit outlook report.
The state budget gives nearly $20.4 billion in aid to schools, a 4 percent increase and the largest increase in several years. Moody’s also took heart in that future school aid increases would be tied to the growth in personal income, saying it would likely grow more than 4 percent as the economy improves.
“The burgeoning economic recovery improves prospects for future increases in school aid because, as part of the 2011-12 state budget, the total amount of aid the state provides to schools will factor changes in personal income levels. Moody’s Analytics expects annual personal income growth in New York will exceed 4% over the next two years,” the report said.
Moody’s said that 52 percent of the increase in school aid is for general operating aid, and 76 percent of that will go to high-need districts, defined as those with high rates of poverty relative to the district’s wealth. About one-third of the state’s 676 school districts as defined as high need, Moody’s said.
About half of the increase in school aid is going to the five largest cities’ schools.
The two-page analysis on the school aid starts on page 34.