The good news is: The Consumer Price Index is at close to zero. The cost of living, as calculated by the federal Bureau of Labor Statistics, is not increasing largely because of the decline in gas prices. That means, on average, American households aren’t spending more money this year than last year.

The bad news is: The CPI is used to calculate the cost of living for everything from Social Security to the tax levy cap for New York State schools.

Inflation adjustments of zero have occurred just twice before, in 2010 and 2011, and that was before the state set its tax cap for schools.

The CPI is a blunt instrument that isn’t able to measure with precision the pieces needed for fairly calculating costs.

With Social Security, for example, one of the chief expenses for the elderly is medical costs, which have skyrocketed. People on Social Security experience higher inflation rates than the norm because they spend more on health care, services, and long-term care and less on things with prices that rise more slowly like recreation or clothing.

The American Association for Retired Persons and other advocates for the elderly have pushed for a different index to more accurately reflect the care that those on Social Security face.

The point should be the same for school financing. The state’s tax-cap law, which went into effect in June of 2011, requires schools (and municipalities) to keep tax-rate hikes under 2 percent or the rate of inflation, whichever is less. The only way to get around this is to have a budget pass by a supermajority, of 60 percent, rather than a simple majority of 50 percent.

The consequence of a twice-defeated school budget, according to the law, is to restrict a district to no tax increase. Since districts are going to be stuck with no tax increase anyway, the logical course of action for them to take is to go ahead and put up a budget for vote with a larger tax hike.

Clearly, this is a flaw in the law.

Assemblywoman Patricia Fahy last week told the Guilderland School Board that the tax cap is a “signature issue of the governor and extremely popular with the public…It’s something I’m going to support,” she said.

She’s right about the popularity of the tax cap; it’s not going to go away. But the law should, at the very least, be amended so that another more accurate instrument is substituted for the CPI.

As it is now, at a predicted zero increase, in the words of Guilderland School Board member Judy Slack, “It’s devastating.” Slack went on, “Our expenses are not fixed at 0 percent.”

Fahy cited the cap instituted in Massachusetts in 1982 that sets a 2.5 percent ceiling on total property tax revenues annually as well as the 2.5-percent limit on property tax increases. Municipalities may exceed or reduce the limits, by majority vote, on overrides or underrides.

“In Massachusetts, it’s 2.5 percent, and it’s a real number,” Fahy said.

When New York was considering its tax-cap law, the Fiscal Policy Institute, an independent nonpartisan, not-for-profit research organization, did an analysis, comparing New York’s proposal to Massachusetts’ law that showed, if a hard cap of the lesser of 2 percent or the rate of inflation, with no overrides, had been in effect in Massachusetts since 1982, that state’s property-tax revenue would have been about 60 percent less than it actually was.

Between 1982 and 2010, the study said, total real property tax revenue in Massachusetts increased from $2.8 billion to $12 billion. If a hard cap of the lesser of 2 percent or the rate of inflation, with no overrides — New York’s version — had been in place instead, total property tax revenue in Massachusetts in 2010 would have been $4.83 billion rather than the actual amount of $12 billion — a reduction of $7.2 billion or 60 percent.

“Massachusetts would not have been able to provide anywhere near the level of educational and other public services that they have actually provided,” the report says.

“The Massachusetts experience does not support the claim that a cap of 2 percent (or the rate of inflation if it is less) on the growth in property tax levies is workable let alone desirable,” the report concludes. “The proposed cap would undermine the quality of the entire array of locally-funded public services while providing very little relief, if any, to those homeowners who are most overburdened by real property taxes.”

That prediction has turned out to be true. We repeat: At the very least, New York’s law should be amended. Better still, would be revamping the way the state funds education.

We understand the popularity of the tax-cap law: Citizens faced with ever-rising tax bills — and the largest chunk goes to pay for schools — felt they couldn’t afford to keep paying more. Some felt taxed out of their homes.

As we’ve written time and time again in this space, for at least the last two decades, the solution is to have education largely funded through the state rather than through local property taxes. The current system creates a badly skewed dynamic where wealthy districts offer better education than poor districts. Aside from the burden on local taxpayers, it’s simply not fair to the students.

The Center on Budget and Policy Priorities, a Washington, D.C.-based think tank that analyzes the impact of federal and state government budget policies, notes that, with a capped tax, state aid needs to target low-income communities or they will fall further behind. “Massachusetts has a highly targeted system of aiding local governments,” the center says, which has somewhat shielded low-income communities but, when state aid recedes, the poorest communities have had to make the largest budget cuts.

“In states that do not have a system of school aid that is targeted as effectively as Massachusetts’, students in low-income communities are likely to fall increasingly behind students in schools that have greater resources,” the center says.

It also says that wealthier communities will override a tax cap more frequently than poorer ones, which has contributed to a growing spending gap between high-income communities and all others. Further, it says, middle-income communities may end up bearing the brunt of a cap. In Massachusetts, budgets in middle-income communities grew more slowly than budgets in either low-income or high-income communities, the center says, because they did not receive as much state aid as the former or override as often as the latter.

Governor Andrew Cuomo campaigned as a champion of equality in educational funding. As a candidate in 2010, he said, “I think the inequity in education is probably the civil rights issue of our time. There are two education systems in our state. Not public and private. One for the rich and one for the poor and they are both public systems. The way we fund education through the property tax system, by definition is going to be unfair. And it is.”

Referring to the Campaign for Fiscal Equity lawsuit filed by New York City parents in 1993 because the state was underfunding their schools, Cuomo went on, “The state is supposed to equalize or come close to equalizing with its funding. That’s the CFE lawsuit that the state is yet to fully fund.”

In 2006, the state’s highest court ruled in the Campaign for Fiscal Equity case that New York is violating its constitutional obligations to provide a “sound basic education” to all its residents. The state was to pay $5.5 billion over four years in Foundation Aid to schools in poor districts. But, from 2009 to 2013, frozen funding and school aid cuts instead led to over 40,000 jobs cut and the loss of many programs.

The gap between rich and poor schools has continued to widen — to its largest ever. According to a report released earlier this year by the Alliance for Quality Education, during the first two years of Cuomo’s term, the spending gap between rich and poor school districts went from $8,024 per pupil to $8,733 per pupil. The $8,733 more spent on each student in wealthy districts does nothing to help those in poor districts.

Students in poverty are already struggling with less help at home and a myriad of other problems. A good school, with smaller classes and more support staff, would help bridge the divide. As it is now, one quarter fewer students graduate from high-needs school districts than from wealthier ones.

What good is a court ruling if it’s not followed? Aid needs to be targeted to the schools that need it.

The students whose parents first filed suit in 1993 are now grown. Let’s not lose another generation to unfair funding.
— Melissa Hale-Spencer