Revenue volatility in New York state school districts: Challenges and responses

This chapter examines revenue volatility across New York State school districts between 1997 and 2010. We find that both the property tax base and state aid have considerable volatility, with average deviations from trend above 7 %. However, deviations from trend in the property tax base and state aid are not strongly correlated, which lessens the overall amount of revenue volatility districts need to address. A preliminary analysis of how school districts in New York have responded to revenue volatility suggests that districts work to smooth growth in the property tax levy and deal with volatility in the property tax base primarily by adjusting effective property tax rates. Fluctuations in state aid, in contrast, are addressed through changes in fund balances and expenditures, and during the period examined, New York school districts relied much more heavily on changes in expenditures than changes in fund balances.