ALBANY, N.Y. (NEXSTAR) — The Rockefeller Institute of Government released a report on December 2 with detailed recommendations to update New York’s Foundation Aid formula. That formula determines how and where the state distributes money earmarked for public education.
The 314-page report available at the bottom of this story—and titled "A review of New York State’s Foundation Aid education funding formula with recommendations for improvement"—outlines long-term strategies alongside changes that legislators could implement immediately. It made the case for ongoing, regular reviews every five years—at most—so the formula stays relevant.
Check out the entire formula flowchart from page eight:
The citation below the image points to "State Aid to Schools: A Primer Pursuant to Laws of 2020." Released by the New York State Education Department and the State University of New York in August 2020, that report "breaks out the vital components of the Pupil Needs Index—poverty, [Free or Reduced-Price Lunch (FRPL), English Language Learners (ELL)], and sparsity." That's according to a spokesperson from the Rockefeller Institute, who explained that more recent versions of the primer kept those factors together.
Rockefeller Institute spokesperson Joel Tirado explained that they received lots of feedback about the importance of those four components, so they relied on the separated formula from the 2020 primer. Still, in the image above, one leftover component from the old formula—"Phase in Foundation %"—became obsolete when Foundation Aid got full funding for the first time for the 2023 to 2024 school year.
After Gov. Kathy Hochul and the New York State Legislature fully funded Foundation Aid, the 2024 to 2025 stage budget mandated an analysis of the formula. So, the state charged the Rockefeller Institute with identifying improvements.
The Rockefeller Institute called attention to the current formula being 17 years old, noting that the 2007 formula falls short of today's needs. Reforms suggested by the report, commissioned in April, target the current reliance on outdated data and failure to meet the needs of a modern student. After all, today’s costs, student populations, and expectations for academic success, learning standards, and school district responsibilities have changed and will continue to do so.
Inequity in the funding process and unpredictability for school administrators planning budgets represent the report's two major issues. Outdated data in the Foundation Aid formula aggravate disparities in how the state distributes money to public schools. This hurts high-need districts with higher poverty rates, more special education students, and rising numbers of ELLs. And that budget instability means cuts to extracurriculars or delays in repairing facilities.
High-need districts like Syracuse, with poverty rates above the state average, struggle to cover their bases under the current formula. Foundation Aid reform addresses concentrated poverty, growing immigrant populations, or shrinking tax bases, but also cuts funding to wealthier, whiter districts. Outdated measurements make funding gaps worse in urban districts that serve primarily Black, Latino, and immigrant students with less to spend per student.
In a statement, Assemblymember Michaelle Solages, Chair of the New York State Black, Puerto Rican, Hispanic, and Asian Legislative Caucus, agreed that changes to Foundation Aid can help confront systemic inequality. “For far too long, communities of color have been shortchanged by an education funding system that relies on outdated formulas and ignores the realities of poverty,” she said, advocating for reforms to modernize poverty metrics, boost ELL support, and direct funds to high-need districts. "Schools in Black, Latino, and immigrant neighborhoods face the greatest obstacles but often receive the least support."
The report suggests phasing in changes immediately or over three or five years, prioritizing high-impact adjustments like updating cost-of-living metrics and more funding for English instruction. Pilot programs or longer timelines can help ease financial and logistical challenges, making room for a smoother rollout and less resistance from schools taking advantage of the current formula.
The report recommends more support for ELLs. The formula could scale funding based on how much instruction a student needs to learn English well, giving more to schools whose students need intensive services. Changing the formula to reflect the actual cost of educating ELLs could transform districts like Buffalo, Rochester, and Yonkers—with significant ELL populations—by boosting literacy across the board.
Outside of cities, meanwhile, rural districts with declining enrollment have to weigh shrinking budgets against fixed costs like transportation or maintenance for infrastructure. The report suggests changing sparsity-related aid, targeted at districts with low population density that can't rely on economies of scale. The state could change the formula to give rural districts more control over how that aid gets allocated among schools.
The report argued for modernizing the way we account for poverty by replacing the outdated FRPL data in the formula with federal poverty estimates. Using a three-year average of Small Area Income and Poverty Estimates would be more representative.
The report also recommended taking out the Regional Cost Index from the formula and substituting it with the annually updated Comparable Wage Index for Teachers, a better reflection of the rising cost of living and regional labor costs. And to better account for inflation, the formula could also stop using single-year U.S. Consumer Price Index (CPI) rate changes, incorporating instead a five-year average of CPI changes that isolates states in the Northeast.
According to the report, the current "Successful School Districts" model benchmarks funding levels based on high-performing districts, under the assumption that following the lead of those districts will improve outcomes at other schools. The report suggests updating that model with a temporary system using three years of math and English test results for third through eighth grades. It also recommends ending the use of an "efficiency screen" to measure how well districts use state money. It helps keep spending low, but it can unfairly punish districts whose unavoidable high costs are out of their control.
Categorical aid represents specific state money for purposes like special education, transportation, or tech upgrades, that can't be spent elsewhere. Unlike Foundation Aid, which provides general support, categorical aid targets specific needs. The Rockefeller Institute report says that separating some elements of the Foundation Aid formula as categorical aid instead would streamline funding and be more effective. Simplifying the formula by creating targeted categorical grants could help money go where it's needed most.
Considering property values and income levels, the local share calculation estimates how much funding a district should contribute to public education based on local wealth. The report recommends reforming local share calculations by ending minimum wealth thresholds in the Income Wealth Index (IWI) and letting districts decide how to balance property versus income. A key component of the Foundation Aid formula, the IWI measures a district’s relative wealth based on residents' income levels. Refining it would help align financial aid with the actual local economic conditions, per the Rockefeller Institute.
The report combined policy research, public feedback, and collaboration with students, parents, educators, school administrators, and advocacy groups. The Institute held five hearings over the summer and collected over 1,800 public comments proposing updates, giving state lawmakers a range of detailed options to consider.
"The governor and state legislators cannot use the debate over the Foundation Aid formula to be an excuse for deferring this critical funding nor a reason to delay or withhold the funding that is projected under current law," reads part of a statement from the advocacy group Alliance for Quality Education. "The state’s constitutional obligations cannot be overlooked, no matter how Governor Hochul responds to the Rockefeller recommendations. Under current law, New York is projected to provide an additional $1.4 billion in funding for schools in the 2025-2026 school year."
Check out the full report below:
