Public education (K-12) is New York State’s largest public spending program, accounting for over 25 percent of all State operating spending and over 40 percent of local government spending.[1]

Public school funding is allocated to local school districts based on formulas specified in state law, primarily through a formula known as Foundation Aid. This brief explains the State’s rules that govern public school funding.

New York State’s school funding formulas date back to the early 2000s, when the Campaign for Fiscal Equity (CFE) won a series of legal victories on the grounds that the structure of public school funding failed to fulfill the New York State constitution’s right to a “sound basic education.” The CFE’s legal victory resulted in the State’s adoption of a public school funding formula — known as “Foundation Aid” — that would ensure adequate funding for all school districts. This formula is progressive in character, factoring in local property values and incomes to direct the greatest funding to districts with the lowest resources.

Following the 2008 financial crisis and Covid-19 pandemic, the State delayed fully funding Foundation Aid until 2023. While the State is currently meeting its Foundation Aid funding obligations, spending growth required by the Foundation Aid formula is almost certain to be a focus of budget negotiations in the coming years. Already, in fiscal year 2025, the Governor proposed altering the Foundation Aid rules to cut $454 million from planned increases in school spending. These changes were rejected by the legislature, but the enacted budget commissioned a study of the Foundation Aid formula that will shape recommendations for next year’s budget.

Some education advocates have raised concerns that the commissioned study could endorse the Governor’s call for reductions in required Foundation Aid spending. At the same time, advocates have called for Foundation Aid modifications that will increase funding for school districts in poorer parts of the state. These competing goals position Foundation Aid to be a point of debate in fiscal year 2026’s budget process.