Does New York City Get Its Fair Share of State Funding?

Commentary # 30 by Paul Francis

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This Commentary expands upon the comments in my New York Daily News op-ed “Mayor Mamdani’s Budget Gambit” regarding Mayor Zohran Mamdani’s contention that New York City’s deficit is caused by New York State “draining” resources from the City. Mayor Mamdani claims that New York City contributes far more in tax revenue to the State budget than it receives in return – by approximately $21 billion in FY 22 alone according to his assertion. The Mayor’s statistics are based on a report by the CUNY Institute for State and Local Governance, initially released in December 2025 and updated in February 2026, that analyzed the sources of State tax revenue and the distribution of State spending in State fiscal year 2021-22 (“FY 22”). My Daily News op-ed sought to rebut the Mayor’s arguments.

The first part of this Commentary explains at greater length why I disagree with the Mayor’s claim and includes more factual information than the limited space of the Daily News op-ed allowed. The second (and more wonky) part of the Commentary discusses other examples, such as School Aid, in which the State uses funding formulas to arrive at State spending distribution decisions. Finally, the Commentary sets forth a hypothetical framework for a statewide “Equity Index” which could be a frame of reference that might inform this ongoing debate between New York City and the State.

Introduction

Beginning with a press conference a few weeks before the release of his Preliminary Budget, New York City Mayor Zohran Mamdani sought to blame his budget “crisis” on under-budgeting by the Adams administration and actions by New York State between 2011 and 2021 when Andrew Cuomo was governor that “drained” resources from New York City. I’ve previously addressed the validity of the Mayor’s assignment of blame to Gov. Cuomo, including noting that the 2015 freeze of the local contribution for Medicaid by itself shifts several billion dollars of spending annually from New York City to New York State.

During his ritual testimony in Albany on the New York State Executive Budget, the Mayor launched another line of argument to obtain more funding from Albany, which is that New York City is not getting its fair share of State spending relative to the amount of State tax revenue it contributes. He added a new mantra – “End the Drain” – to his campaign and governing phrases such as “Freeze the Rent” and “Fast & Free Buses.”

We can expect this argument – which is sometimes referred to as the “Balance of Payments” between the City and the State – to go on for many years. Both the facts and the underlying premises of the debate bear more scrutiny. Because the facts – not to mention the methodology – are open to interpretation, this debate would be more factually grounded if the New York State Division of the Budget – perhaps in concert with New York City’s Independent Budget Office – prepared a comprehensive and up-to-date analysis of this issue. In the meantime, I hope the points made below will add some clarity to this policy discussion.

How Much State Tax Revenue Does New York City Contribute and How Much State Spending Does It Receive in Return

The statistics Mayor Mamdani uses to claim that “New York City contributes 54.5% of state revenue but only receives 40.5% back” are derived from a report titled The Fiscal Flow Between New York City and Albany: A Data-Driven Assessment of New York City Revenue Contributions in the New York State Budget (the “CUNY Report”).

Suggesting that New York City “contributed” 54.5% of State tax revenue is misleading, because that value includes personal income taxes paid by commuters who work in New York City but reside elsewhere. The percentage of State tax revenue excluding income taxes paid by individuals who do not reside in New York City is 46.7%. New York City does not “contribute” State tax revenue paid by commuters.

There are methodological problems with the CUNY Report’s estimate of the percentage of State spending New York City receives back. The “40.5% back” statistic is also misleading because it includes in the denominator State funds spent on “State Operations.” State Operations expenditures, which range from paying the salaries and benefits of employees in State agencies such as the Department of Health and the Office of Temporary Disability and Assistance, to the cost of operating prisons (many of whose inmates come from New York City), reflect activities that benefit all residents of the State, but in the CUNY Report are coded almost entirely to “Rest of State.”

Excluding State Operations from the denominator of total State spending increases the percentage of State spending directed to New York City to 48.2%. The right measure of how much State spending is directed to New York City government or its residents should address locality-specific funding, not funding such as debt service or State Operations that benefit all residents of the State.

In addition to this methodological flaw, the CUNY Report undercounts the amount of State spending that is directed to New York City. This bias can be found in examples large and small. On the smaller side, spending associated with Tuition Assistance Payments (TAP) scholarship payments funded by the State are coded based on the location of enrollment, not the home residence of the students – many of whom come from New York City.

A larger example involves Medicaid spending. The CUNY Report estimates that New York City’s share of Medicaid spending is 61.5% of the total. Based on the fourth quarter of FY 25 Medicaid Global Spending Cap Report, New York City accounts for 61.75% of the FY 25 Medicaid spending in the eMedNY system, which appears to be consistent with the source of the amount of Medicaid spending the CUNY Report identified as being directed to New York City.

However, eMedNY spending does not include “supplemental programs” (which amounted to about 28% of the amount of eMedNY spending in the last Medicaid Global Spending Cap Report), such as DSH payments and State operating support for financially distressed hospitals. These supplemental payments are disproportionately weighted to New York City, so taking them into account will increase the percentage of total State spending New York City receives.

The CUNY Report, while recently published, is based on revenue and expense data from the State’s 2021-22 fiscal year. Between FY 22 and FY 26, both State tax revenue and State Operating Funds spending increased by more than 30%. I expect that the share of revenue contributed by New York City increased over this time because of the growth in taxes on New Yorkers with the highest marginal tax rates. But I expect spending directed to New York City also increased over this time because of the significant growth in Medicaid spending, especially on personal care and distressed hospital funding that is concentrated in New York City.

In the end, with updated numbers and a more accurate methodology, I suspect it will be fair to say that New York City contributes roughly half of State tax revenues and gets back roughly half of State spending that is locality-specific in return.

What Accounts for State Spending Decisions that Shifted Funding from New York City?

The distribution of State spending between New York City and the rest of the state has always been a major focus of State Budget negotiations. When the State shifted funding from the City, the Administration had to persuade legislative leaders that these adjustments were warranted because of other funding flows that benefited the City. These legislative leaders in turn needed to persuade their conferences – a majority of whose members come from New York City – that the adjustments were fair.

In his Budget testimony, Mayor Mamdani referred to specific examples of State reductions in local assistance to New York City without providing the proper context, including looking at countervailing measures (such as the freeze on the local contribution to Medicaid) that improve the City’s finances at the expense of the State.

For example, Mayor Mamdani said: “This drain on the City includes sales tax revenue intercepts totaling over $1.6 billion since 2021.” First, I believe the total amount of “Sales Tax Intercepts” between FY 21 and FY 26 is closer to $1.0 billion, so it’s not clear what the $1.6 billion figure is based on. Moreover, the Sales Tax Intercepts applied to all counties, with New York City bearing a share comparable to its share of total Medicaid spending. New York City was not singled out.

The Sales Tax Intercept is an example of the ongoing negotiations between the State and localities, including advocates of the City in the legislature, to maintain equity in the distribution of funding. When the Sales Tax Intercept program was introduced in 2021, it coincided with a period of substantial growth in State operating support for financially distressed hospitals, with no end in sight. Approximately 85% of distressed hospital funding was directed to hospitals located in New York City. The State-share contribution to increased subsidies for New York City-based distressed hospitals grew from approximately $661 million in FY 21 to $1.4 billion in FY 22.

The second purpose of the Sales Tax Intercept program was to recapture a portion of the windfall that New York City and other counties were realizing from a federal statutory provision that required the benefit of the 6% enhanced federal Medicaid matching payments (known as FMAP payments), implemented in connection with the passage of the Affordable Care Act, to be shared proportionately with localities that were contributing to the non-federal share.

However, since 2015, the local share of New York City and other counties has been fixed at 2015 levels, so the savings from the enhanced FMAP payments were a windfall that effectively reduced local contributions to Medicaid while the State was absorbing 100% of the increased costs of Medicaid. In short, New York City, whose Medicaid contribution was capped at approximately $5.3 billion, was realizing the windfall of roughly between $300 million and $500 million a year from enhanced FMAP payments – far more than the amount of the Sales Tax Intercept.

The combination of these two factors – the ongoing windfall from FMAP payments and the growth of State subsidies for New York City-based financially distressed hospitals – led the State to push for a rebalancing. The Administration was sufficiently persuasive that its proposal was enacted (after negotiated modifications) by the State Assembly and the Senate, both of which had majority Democratic conferences controlled by New York City members.

Mayor Mamdani also stated in his Budget testimony that New York City had been deprived of “$4.8 billion over 16 years” because the State, beginning in 2010, eliminated the $300 million annual payment to New York City under the general Aid and Incentives for Municipalities (AIM) program. When I was the New York State Budget Director in 2007, I sought (unsuccessfully because of resistance from New York City’s advocates in the legislature) to eliminate this AIM payment because the City was generating budget surpluses at the time – driven in part by increased State assistance in other areas such as School Aid – while the State was struggling to meet other needs.

Circumstances change and financial fortunes reverse. Given the relative fiscal conditions of New York City and the State, it may no longer be appropriate to exclude New York City from the AIM program. But the main point here is that you have to look at the aggregate level and composition of State assistance to New York City in evaluating the fairness of distribution of State spending, rather than focusing on discrete funding programs. Money is fungible. Moreover, localities can’t argue (although all of them do) that “what’s ours is ours and what’s yours is subject to negotiation” when it comes to State funding distribution policies.

Is “Balance of Payments” a Good Measure of Distributional Equity?

Even if Mayor Mamdani were right about the “Balance of Payments” between New York City and New York State, it would not be dispositive. Among other reasons, the logical extension of this principle would lead to increasing the amount of State spending to suburban areas that get back a much smaller percentage of the tax revenue they send to the State than is the case in New York City.

Ironically, Mayor Mamdani’s suggestion that the measure of equity in governmental funding should be whether a jurisdiction gets as much back in spending as it provides tax revenue is practically the inverse of “progressivism.” Democrats and other progressives usually maintain that one of the purposes of government is the redistribution of funds from those who have more and need less from the government to those who have less and therefore need more from government.

The logical extension of Mayor Mamdani’s argument that the “Balance of Payments” should drive distribution decisions is that wealthier suburban communities should receive more back in State funding because they receive less than they contribute in State tax revenue. The numbers would be relatively small, but if the principle suggested by Mayor Mamdani were to apply, the increased funding wealthier communities would receive could only come from less wealthy areas in a “beggar thy neighbor” approach to governing. 

How the State’s School Aid Funding Formula Allocates State Aid

A better measure of interregional and intergovernmental equity would evaluate the ability of the local jurisdiction to raise its own funds and its level of need for government funding in the jurisdiction. This is the philosophy of the State’s School Aid funding formula.

School Aid accounts for approximately 26% of State Operating Funds. The large majority of School Aid is based on a funding formula that incorporates the “ability to pay” (i.e., the capacity of a local school district to raise funds from its own tax base) compared to “need” (i.e., what it should cost to provide a quality education in the school district in question).

The calculation of the first part of the School Aid formula (i.e., the ability to pay) is based on the Combined Wealth factor, which is comprised of the total Adjusted Gross Income (AGI) of residents in the school district and the Aggregate Value of all real property in the district. These two inputs are given equal weight in determining the Combined Wealth factor. When compared to the number of students enrolled in the school district (adjusted for resource-sensitive factors such as the percentage of students in secondary school, but not student need), the Combined Wealth factor is converted into the Combined Wealth Ratio (CWR).

Most people intuitively know that on a per capita basis, the CWR of New York City is greater than that of other parts of New York State, but they might be surprised by the extent of the difference, with the exception of downstate suburban school districts.[i] 

TABLE NOTES:

1. NYC, Buffalo, Rochester, Syracuse: AV and AGI from NYSED Foundation Aid Output Reports (SA252-6, 2025-26 Enacted). Buffalo uses 2020-vintage AV from SA232-4.

2. Yonkers: AV and AGI estimated from known CWR of ~0.68 and statewide averages. Per-pupil CWR confirmed from NYSED general aid runs.

3. Suburban counties: AV estimated from ORPTS equalization data and OSC property tax reports. AGI estimated from BEA per capita personal income and IRS SOI county data.

4. Rural Counties: 10-county Rockefeller Institute definition (Allegany, Chenango, Delaware, Essex, Greene, Hamilton, Lewis, Schuyler, Sullivan, Wyoming). Figures are aggregated estimates.

5. Per-Pupil CWR from NYSED 2025-26 Handbook. Suburban county CWRs are enrollment-weighted averages of constituent school districts.

6. Per-Capita CWR = 0.5 × (Jurisdiction AV per capita ÷ State AV per capita) + 0.5 × (Jurisdiction AGI per capita ÷ State AGI per capita).

7. AV = Selected Actual Valuation (equalized full market value of taxable property). AGI = Adjusted Gross Income from NYS personal income tax returns.

8. Statewide aggregates derived from NYSED Primer SY 2020-21 per-pupil averages × total TWPU. Population from Census 2023 vintage estimates.

This table was generated by Claude Sonnet 4.6 based on the sources cited in its notes. We believe it is a reliable presentation of the underlying data.

As described in more detail below, the second part of the School Aid formula involves a complicated estimate of “need,” which is essentially a function of the characteristics of student enrollment that affect the cost of education and regional cost differences for providing educational services. This “need” calculation also takes into account the school district’s expected level of local contribution based on its income capacity.  

“School Aid” is actually composed of several funding formulas, including Building Aid and other smaller categories more based on cost reimbursement, but by far the largest component of School Aid is Foundation Aid. Foundation Aid is based on an intricate formula that has been heavily negotiated over the last two decades to meet competing and somewhat subjective perspectives of “need.”

In determining the amount of School Aid a school district should receive, the Foundation Aid formula makes several adjustments to identify the need for State funding. The Pupil Need Index (PNI) is based on poverty concentration, number of students who are English language learners, and sparsity of population. There is a further adjustment that increases enrollment for purposes of the formula to take into account the number of students with learning disabilities. The Regional Cost Index is intended to capture regional differences in the cost of providing educational services. The final adjustment takes into account the expectation of the amount of funding the local district should be providing on its own based on the income capacity in that district.

The table below shows the amount of Foundation Aid and total School Aid New York City receives compared to a selection of other school districts given their respective Foundation Aid Combined Wealth Ratios, Pupil Need Indices, and Regional Cost Indices. The table also shows the percentage of State School Aid each listed school district receives as a percentage of its total school budget. In essence, New York City’s high Foundation Aid Combined Wealth Ratio (FACWR in the table) offsets its high Pupil Need Index and Regional Cost Index. New York City receives a larger percentage of its budget in State aid than suburban school districts, but a much lower percentage than relatively poorer upstate school districts.

TABLE OBSERVATIONS:

• The three formula inputs — CWR, PNI, and RCI — interact multiplicatively to produce very different per-pupil aid amounts. Rochester's combination of low CWR (0.312), maximum PNI (2.00), and moderate RCI (1.141) produces the highest per-pupil Foundation Aid ($15,200) among the Big 5.

• NYC has a high PNI (~1.88) and the highest RCI (1.425), but its above-average CWR (1.082) offsets much of this advantage. The formula recognizes NYC's high costs and high need — but also its substantial local fiscal capacity.

• Wealthy suburban districts have very low PNIs (1.02-1.08) reflecting minimal poverty and ELL populations. Combined with their high CWRs, this produces $500/pupil minimum Foundation Aid regardless of their high RCI values.

• The RCI is frozen at 2006 values (except for the new Westchester carve-out at 1.351 starting 2025-26). NYC/Long Island share the same 1.425 RCI, while upstate cities range from 1.045 (Syracuse) to 1.141 (Rochester). This means the formula adds ~42.5% to the foundation amount for NYC costs vs. only ~5.8% for Syracuse.

• Yonkers benefits from the new Westchester RCI of 1.351 (previously grouped with Hudson Valley at 1.314), and its PNI of ~1.65 reflects significant but more moderate need than the upstate Big 4 cities. Its CWR of 0.68 is notably higher than the Big 4 but well below NYC.

TABLE NOTES:

1. FACWR: Foundation Aid Combined Wealth Ratio. Big 5 values from confirmed NYSED state aid output reports (SA252-6 Enacted, SA232-4, BT252-6). Non-Big 5 district CWRs are approximate based on known district characteristics.

2. PNI (Pupil Need Index) = 1 + Extraordinary Needs %. EN% = (0.65×FRPL count + 0.65×Census poverty count + 0.50×ELL count + Sparsity count) ÷ K-12 enrollment. Capped at 2.0. Values shown are estimates based on publicly reported FRPL rates, ELL counts, and census poverty data for each district. Exact PNI from NYSED SAMS at eservices.nysed.gov/publicsams/.

3. RCI (Regional Cost Index) set by statute based on 2006 labor force region analysis. Long Island/NYC = 1.425; Westchester = 1.351 (new for 2025-26); Hudson Valley = 1.314; Finger Lakes = 1.141; Capital District = 1.124; Western NY = 1.091; Central NY = 1.058; Southern Tier/Mohawk Valley/North Country = 1.045.

4. Foundation Aid per pupil and total Foundation Aid for Big 5 from enacted state aid runs. Non-Big 5 figures are estimates.

5. Total School Aid (GSPS) includes Foundation Aid plus Building Aid (~$3.3B), Transportation Aid (~$2.5B), BOCES/Special Services (~$1.4B), Special Education Aids (~$1.0B), UPK (~$0.8B), and other aids (~$0.9B).

6. Rochester's PNI hits the 2.0 maximum, meaning its EN% ≥ 100%. This reflects extremely high poverty concentration and significant ELL enrollment.

7. The PNI uses Census 2000 poverty data for the census poverty component — a known limitation. Updated SAIPE data is available but has not been incorporated into the formula, potentially benefiting districts where poverty has decreased since 2000 and disadvantaging districts where it has increased.

8. The Foundation Aid formula: Per Pupil FA = [Foundation Amount × CPI × RCI × PNI] minus [Expected Local Contribution]. For 2025-26: Foundation Amount = $8,040; CPI = 1.029; Adjusted Foundation Amount = $8,273 before RCI and PNI.

9. Total District Budget (Column K) = Sum of General Fund + Special Aid Fund + School Food Service Fund expenditures from NYSED ST-3 Annual Financial Report, School Year 2023-24 (FY ending June 30, 2024). Source: https://stateaid.nysed.gov/st3/st3data.htm. Note: ST-3 data is FY2024 actual expenditures; State Aid figures in Columns I-J are 2025-26 enacted amounts, creating a ~2-year timing difference.

This table was generated by Claude Sonnet 4.6 based on the sources cited in its notes. We believe it is a reliable presentation of the underlying data.

In theory, the “need” inputs of the School Aid formula would be designed in the abstract based on objective criteria, without regard for the distributional results those inputs produce.[ii] In practice, however, the inputs of the School Aid formula have been gerrymandered over the years to produce the distributional results the political system will accept, rather than allowing neutrally selected inputs to actually determine the result. That is why School Aid continues to reflect the rigid regional “shares” among New York City, Long Island, and Rest of State that have existed for decades, irrespective of substantial changes in underlying conditions during that time. Under these regional shares, New York City historically has received approximately 39% of total School Aid – and received 38.5% in the most recent school year.

Regional Variation in Other State Funding Formulas

Arguably, the purpose of any funding formula is to enhance the equity of distribution within the particular program. The School Aid formula is unique in that it explicitly takes into account the local jurisdiction’s “ability to pay,” because localities are expected to finance a significant portion of their school budgets. But many other New York State spending programs have distribution formulas that seek to create equity among regions by incorporating regional cost differences.

For example, Medicaid reimbursement rates are based on a complicated formula that takes into account regional labor cost differences; Child Care subsidies use a Child Care Market Rate Survey to understand what child care actually costs in different areas; and the State adjusts the “shelter supplement” portion of public assistance to reflect more expensive housing markets in certain parts of the State.

When the State decides to create a funding program, it knows which regions will benefit from it. The funding formula within the program is then designed to achieve equity within the context of the particular program. A good example of this is the State’s STAR program, which provides real property tax relief to homeowners.

New York State spends approximately $1.4 billion, or about 1% of State Operating Funds annually, on the STAR program. The STAR program was created by Gov. Pataki to drive more State funding to residents of communities that are “tax donors” to the State in the sense that they provide more in tax revenue than they receive in return in State spending, which is exactly the philosophy Mayor Mamdani is advocating for. Progressives historically have long hated the STAR program on the grounds of distributional equity. They argue that STAR benefits should be included with School Aid when considering regional equity.

Even though funding formulas such as School Aid are imperfect and subject to political manipulation, the principle of determining distributional equity based on the ability of the jurisdiction’s own tax base to finance its needs and the cost of a program given locally-specific factors, is better public policy than a balance of payments measure of distributional equity.

Developing a Distributional Equity Index for New York State Spending as a Whole

If Balance of Payments is not a good measure of distributional fairness or equity of State funding directed to New York City and its residents, what would be an appropriate measure? Because New York City and other localities always have the option of supplementing State spending, I think the School Aid funding formula framework would be the right starting point – i.e., fiscal capacity of the locality compared to the costs of its population-specific needs. You could call this a “Population-Wide” or “Municipality-Specific” “Fiscal Capacity and Need Index,” but I’ll call this the “Equity Index” for short.

Mayor Mamdani will likely argue (with some justification) that if funding formulas are to consider "ability to pay" or fiscal capacity through local resources, New York City should have more authority to raise taxes on its own residents. The counter to that, as a practical matter, is that the State also has a stake in these decisions. State government represents all residents of the State, not just those who live outside of New York City.

Moreover, in the areas in which State approval is required, State tax revenue will also be affected by taxing decisions affecting New York City residents. For example, New York City's highest personal income tax rate is 3.9%, while the State's highest rate is 14.9%. If the City raised New York City income taxes and that resulted in outmigration of high earners to other states, the City would lose 3.9% of the income of those high earners, while the State could lose as much as 14.9%. This helps to explain why New York City has authority over its own property taxes, but not on taxes such as income or sales tax, which affect State revenue.

The development of a rigorous Equity Index is well beyond the scope of this paper. New York’s School Aid formula serves as both a case study and a cautionary tale about the challenges of developing a distributional equity formula that the political system will accept. In connection with the FY 25 Budget negotiations, Gov. Kathy Hochul directed the Rockefeller Institute of Government (RIG) to review the Foundation Aid formula with a view to making recommendations for improvement. RIG’s 309-page report, issued in December 2024, presented a comprehensive review of the issues involved with the State’s formula and looked worldwide for ideas for improvement. In the end, however, politics prevailed and the Foundation Formula remained largely unchanged.

The devil is in the details in this type of analysis. But while analytical precision is probably impossible, a serious effort by disinterested parties to develop this type of Equity Index could be directionally valuable.

Briefly, the Equity Index would create a ratio between the “ability to pay” or fiscal capacity numerator and a “need” measure across a wider range of social needs than the School Aid formula. Similar to the School Aid formula, this “need” calculation in the denominator of the formula would need to take into account regional cost differences. This ratio of fiscal capacity to regionally cost-adjusted need would then be compared to the total amount of State funding directed to the locality.

It would be relatively straightforward to develop the measure of fiscal capacity. The Combined Wealth factor in the School Aid formula would be a good starting point, although it should be expanded to take into account a wider set of factors affecting the “ability to pay,” such as corporate income and sales tax revenue.

The more difficult question involves the construction of the measure of “need.” For example, how should you measure the “need” for rental subsidies? The status quo standard under New York City’s cityFHEPS program restricts eligibility by imposing preconditions on eligibility, such as the requirement that certain applicants have spent a minimum amount of time in a homeless shelter, a requirement used to filter out the large number of potential applicants who are sharing an apartment with a friend or relative. The cityFHEPS reform passed by the City Council, by contrast, eliminates many of these barriers and in the process creates an entitlement extending far beyond the status quo, which would raise costs by an estimated $2 billion annually.

It is somewhat easier, however, to identify the extent of poverty and “social vulnerability” as a proxy for the relative needs of localities’ populations. There already exist other surveys designed to capture social, economic, housing costs, and other demographic information, such as the American Community Survey (ACS). This survey and other existing federal data sources include a wide range of factors and already have data for every county in New York State.[iii] For example, the Centers for Disease Control and Prevention and Agency for Toxic Substances and Disease Registry Social Vulnerability Index (usually referred to as “SVI”) is a place-based index, database, and mapping application designed to identify and quantify communities experiencing social vulnerability. It seeks to objectively quantify the overall vulnerability of a location relative to other locations, based on specific variables listed in the graphic below, to aid in the allocation of public health planning and response resources.

Because School Aid has its own formula based on the same principles as the Equity Index, it might make sense for the Equity Index to be applied to the remaining non-education state spending: Medicaid (the largest single piece), social services, housing, transportation, public health, criminal justice, revenue sharing, and so on.

Hypothetical Population-Wide Need Index

The framework described below is not intended to be the final answer for what the “need” portion of an Equity Index would look like. This is hypothetical and intended to serve as a starting point for discussion and deeper investigation. With that disclaimer, the table below provides a summary of the factors that could go into an Equity Index.

The following five-category index is designed to capture the significant drivers of government service demand across the full population. Each category includes specific measurable indicators that would ultimately be weighted based on their relative impact. We also identified some potential sources for the data.

As noted above, the Equity Index would also need to develop regional cost adjustment factors. The School Aid formula and many other State funding formulas already include regional cost adjustment factors, which could be the starting point for the Equity Index.

The Equity Index would be an imperfect measure of distributional equity, but it’s at least logically aligned with the goals of progressive government and consistent with a long-standing philosophy of determining the fairness of allocations of State spending. It should not be expected to be determinative of State funding or to resolve all disagreements on this issue, given the inherently subjective nature of many of these measurements. Nevertheless, it would be an interesting data point to compare to other measures of whether New York City and other localities are getting their “fair share” of State spending.

Conclusion

Anyone who has served at senior levels of New York State government knows that distributional equity among regions – and especially between New York City and the State – is not an academic exercise. All four governors I worked under felt the responsibility to equitably balance the State’s resources fairly between the relatively wealthy downstate region, including New York City, and the State’s upstate cities and rural areas, which range from being moderately less well-resourced to being deeply impoverished.

Because this issue of distributional equity has long been a perennial factor in policymaking, the current equilibrium established through years, if not decades, of negotiation is unlikely to change dramatically. That said, I have made the observation elsewhere that the relative fiscal fortunes between New York City and the rest of New York State have experienced a number of reversals over the last 50 years. It may be that – at the margin – more funding should be directed to New York City and/or it should be enabled to raise more revenue by increasing its taxes while being mindful of the knock-on effects of tax increases on the State’s economy and tax revenue.

None of this changes the fundamental points I made in my Daily News op-ed: New York City’s budget deficit is largely a function of its own policy decisions and cannot be solved by scapegoating past mayors or suggesting that somehow past governors sought to “punish” New York City. A better understanding of how much tax revenue New York City contributes to the State budget and how much locality-specific funding it receives in return will benefit the public’s understanding of this debate, which we can be confident will not be definitively resolved soon.

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Endnotes

[i] Note that the comparison for New York City would look even starker if the combined wealth ratio included corporate income as well as personal income.

[ii] When considering New York State's School Aid formula, I am always reminded of one of the more memorable lessons I learned in school, which is known as the Rawlsian Veil of Ignorance. John Rawls proposed a thought experiment in A Theory of Justice (1971): imagine you're designing the rules of society from behind a "veil of ignorance," meaning you don't know what position you'll occupy in that society — your race, wealth, talents, gender, or health. Because you could end up as anyone, rational self-interest would lead you to design institutions that are fair to the least advantaged, since you might turn out to be among them. It's essentially an argument that true fairness requires stripping away knowledge of your own circumstances when deciding on principles of justice.

[iii] “Covering more than 40 topics—including education, employment, income, housing, and transportation—the ACS provides crucial insights into the changing needs and conditions of communities. Its data are used for countless reasons, such as to plan roads, schools, and emergency services, and to guide the distribution of government funding.”

[iv] Relevant to eligibility for federal assistance programs.

[v] United States Census Bureau, About Racial and Ethnic Diversity.