The legal cash machine: a New York adequacy case tests the limits of fiscal coherence

Education Next, Summer, 2005 by Joe Williams

The changes in New York City were even more dramatic, especially on the financial front. The longstanding practice whereby the city received a disproportionately small share of state aid had been reversed, with the city receiving 37.1 percent of state education dollars in 2004-05 despite enrolling only 36.5 percent of the state's students. In fact, the state's payments to New York City schools had increased faster than the city's own contributions to its schools: a 289 percent increase from the state, or more than $4 billion per year, compared with the city's 127 percent increase, between 1982 and 2001. In just the previous ten years, the state had increased education spending overall some 60 percent.

Twelve years after the CFE suit--and without a penny from it--the city was spending some $13,600 per student, about $100 above the state average, which was already the highest in the nation, and more than $5,000 above the national average. In fact, between 1997 and 2004 alone, the city schools' annual budget had increased more than $6 billion.

What hadn't changed, it appeared, were the academic numbers: the city's dropout rate, over 11 percent, was more than 4 times greater than the state average, and only 47 percent of its 4th graders passed the state's English Language Arts exam in 2001-02. This was 24 percentage points below the pass rate in the rest of the state. As New York City councilwoman Eva Moskowitz noted in a letter to Justice DeGrasse, "Education spending has increased by about a third since I took office in 1999, yet our schools have not improved by a third."

While it may never be known how many of these changes were made because of the threat posed by the lawsuit, the CFE case seems to highlight, if nothing else, the many--and many significant--contending powers that locked horns in court. This was a heavyweight contest, with extravagant resources in all corners, and no one willing to take a TKO.

The Nine-Hundred-Pound Gorillas

The CFE, which had begun as a modest public-interest group in 1993 by Robert Jackson, then president of one of the city's 32 community school boards, and Michael Rebell, the attorney for the same school board, had grown into an impressively powerful education lobbying organization. Though it received pro-bono legal help, that help was from Simpson Thacher & Bartlett, a 122-year-old, 75-lawyer firm with a midtown Manhattan address and a laundry list of affluent corporate clients. In addition, CFE received more than $7.4 million in contributions and grants between 1999 and 2003, from such well-heeled donors as the Atlantic Philanthropies, the Ford Foundation, the Bill and Melinda Gates Foundation, and the Rockefeller Foundation. Its board of directors included a former city borough president, a former chancellor of the State Board of Regents, and two former members of the Board of Regents. Among its advisory board were education celebrities like Linda Darling-Hammond (Stanford education professor), Harold Levy and Frank Macchiarola (former city school chancellors), Deborah Meier (author and educator), Thomas Sobol (former state commissioner of education), and Randi Weingarten (president of the United Federation of Teachers).