Key Points

  • The Third Department unanimously affirmed a ruling that New York's remedy for underfunding at-risk students in small-city school districts, built on full implementation of Foundation Aid, is rational.
  • The court refused to declare new constitutional liability for school years after 2013-2014 and repeated that the remedy did not require a current district-by-district accounting of resources.
  • The court agreed that full funding of a statutory formula does not perpetually demonstrate constitutional compliance, but held that the stale successful-schools data and the use of the Consumer Price Index did not make reliance on Foundation Aid patently irrational.
  • Applying the deference required by Campaign for Fiscal Equity v. State of New York (CFE III), the court declined to order the state to adopt Approved Operating Expenditure as an updating measure or to recalculate the successful-schools analysis on a set schedule.

A New York appeals court on Thursday upheld the state's response to an earlier ruling that it had underfunded at-risk students in a group of small-city school districts, holding that fully funding the state's main school-aid formula was a rational remedy and rejecting parents' arguments that the formula has grown outdated.

The Appellate Division, Third Department, unanimously affirmed a February 2025 judgment by Albany County Supreme Court Justice Kimberly O'Connor, who found the state's remedy rational and dismissed the parents' remaining claims. Presiding Justice Garry wrote for the four-justice panel, and Justices Aarons, Reynolds Fitzgerald and Ryba concurred.

The ruling leaves Foundation Aid, which Garry described as "the primary and largest unrestricted source of statewide school funding," as the centerpiece of the state's answer to the constitutional violation in the 18-year-old case. The panel also agreed with the parents and their supporters that "full funding of an existing statutory formula does not perpetually demonstrate constitutional compliance," and it said that the formula's evolution and its reliance on historical data are properly considered in judging whether the state's reliance on it remains rational.

The parents, led by Larry J. Maisto, sued under article XI, section 1 of the New York Constitution, which the Court of Appeals has read to guarantee students the opportunity for a sound basic education. They modeled their claims on the Campaign for Fiscal Equity cases, a series of Court of Appeals decisions finding that the state had failed students in New York City's schools. In 2021 the Third Department declared that the state had violated its obligation to at-risk students in the plaintiffs' districts from the 2006-2007 through the 2013-2014 school years. It then sent the case back for the state to craft a remedy, subject to court review for rationality.

The Legislature enacted Foundation Aid in 2007 in response to the Campaign for Fiscal Equity litigation. The formula sets a base per-pupil cost drawn from the lower-spending half of academically successful districts and adjusts it for regional costs, student poverty, English-language learners and a district's ability to raise local revenue. It was slated to increase the state's share of school funding by $5.49 billion a year once fully phased in over four years. The opinion recounted that the phase-in stalled during the Great Recession and again during the COVID-19 pandemic, and the formula was not fully funded until 2023.

The standard of review weighed heavily. Garry wrote that the court's role was to decide whether the state's chosen remedy was rational, not to pick the best way to calculate the cost of an adequate education. Quoting the Court of Appeals' 2006 decision in the third Campaign for Fiscal Equity case, Garry wrote that "the manner by which the State addresses complex societal and governmental issues is a subject left to the discretion of the political branches of government."

The state relied mainly on an affirmation from Sean Giambattista, director of the State Education Department's Office of State Aid. He documented large increases in state aid to each district, even as enrollment declined in most of them. He also showed that, largely because of their concentrations of at-risk students, the districts received Foundation Aid ranging from about 74% to 435% more than they would have received without those students.

The parents' expert, education consultant Stephen Uebbing, evaluated each district's staffing, counseling, class sizes, prekindergarten programs and other resources from the 2014-2015 through the 2023-2024 school years and identified continuing deficiencies in a number of those areas. The panel refused the parents' request for a new declaration of liability covering those years, writing that "our remittal did not contemplate a new determination of constitutional liability for succeeding academic years that were not at issue at trial." It also repeated its 2023 holding that the state need not show "an itemized understanding of the needs of the subject districts." Many of Uebbing's recommendations, Garry wrote, reflected professional judgments about best practices rather than the "constitutional minimum or floor" set by the Court of Appeals.

The court said the parents' second argument raised "a more substantial concern." The state updated its successful-schools study in 2006, 2009 and 2012, but in 2015 it refreshed only the expenditure data, and it has not run a new successful-schools analysis since. Elizabeth Biggerstaff, executive director of the New York State Association of Small City School Districts, said in an affirmation that the Consumer Price Index, which the state uses to adjust the formula each year, has lagged behind the operating costs that school districts actually bear.

The panel acknowledged that her comparison supported the claim that the formula may not track school costs as closely as periodic updates would. But it held that the state's choice of measure remained within its discretion. "The Legislature may wish to select a different updating mechanism like AOE, but the existence of such competing options does not render the use of CPI outside the range of rational legislative choices," Garry wrote, referring to Approved Operating Expenditure per pupil, the measure Biggerstaff favored. Ordering the state to redo the successful-schools study on a set schedule, Garry added, "would approach the judicial selection among competing school-finance methodologies that CFE III cautions against."

The court also rejected two arguments from the 15 education, school-administration, school-funding and children's-rights organizations that filed a brief as amici curiae, or friends of the court. It held that completing the phase-in counted toward the remedy even if it came about for reasons unrelated to the lawsuit, because withholding the aid had helped cause the violation. And it said a study of Foundation Aid by the Rockefeller Institute of Government, which the Legislature commissioned in its 2024-2025 budget, "does not amount to an acknowledgment that the existing formula is constitutionally irrational." To the extent the report was properly before the court, Garry wrote, its criticisms supported the view that Foundation Aid "should not be regarded as permanently insulated from scrutiny by virtue of CFE III."

"Plaintiffs and the amici have identified legitimate reasons why aspects of the Foundation Aid formula may warrant reconsideration; they have not demonstrated that it has become so disconnected from contemporary educational costs and student need that defendant's reliance upon it as part of its remedial response is patently irrational," Garry concluded.

Lawyers for the parents included George J. Szary of DeGraff, Foy & Kunz LLP. The state was represented by the office of Attorney General Letitia James. Michael A. Rebell and the Youth Advocacy & Policy Lab at Harvard Law School represented the amici.

The panel affirmed the judgment without costs, which leaves in place the trial court's dismissal of the parents' remaining claims.