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Campaign for Fiscal Equity

State Witness Makes Devastating Admissions

On Thursday, the State presented testimony by Dr. Robert Palaich, senior partner for the Colorado-based Augenblick, Palaich and Associates. Dr. Palaich was brought in by the State as their main expert to validate the methodology used by Standard & Poor's in the State's costing-out analysis, despite the fact that he did not participate in the S&P study. No representative of S&P itself is scheduled to testify .

Members of the panel specifically asked Dr. Palaich to discuss the basis for the defendants' decision to set aside the highest spending 50 percent of the state's "successful school districts" in calculating the adequacy gap for New York City. Dr. Palaich first testified that in the costing-out studies his firm has conducted in other states, he has recommended removing the five percent highest spending districts and the five percent lowest spending districts from the sample, but not 50 percent. Although Dr. Palaich wrote in his affidavit that that use of a 50 percent cost reduction factor was "standard practice in the field of education finance," he acknowledged under cross examination by Joseph Wayland, co-counsel for plaintiffs, that New Hampshire is the only state that has ever used this factor. He also acknowledged when pressed that in New Hampshire, it was actually the legislators -- not Dr. Palaich's firm, the professionals who conducted the study -- who chose to arbitrarily discard 50 percent of the highest spending successful school districts in order to arrive at a pre-determined figure and to reduce the amounts actually recommended in the study. In a final devastating admission, Dr. Palaich conceded that outside of New York, no education finance professional has ever recommended eliminating the top 50 percent of highest spending districts, and that he personally would not recommend that procedure.

Dr. Palaich was also asked to justify the governor's claim that New York City's needs are limited to an additional $1.93 billion -- the lowest number in a range of 16 set forth in the S&P report. Dr. Palaich was not able to identify anything in the S&P study or the Zarb Commission's report that actually recommended this low number, and acknowledged that it was the governor who came up with the figure. Dr. Palaich explained that "I haven't done the study, so I can't say that we would have come up with the same number." Dr. Palaich called the $1.93 billion costing-out figure "sound," but he was unable to explain why this figure is any more sensible than the other figures, ranging up to $7.3 billion, that were presented by S&P in their study.

When asked to defend the "successful schools" methodology used in the S&P report, Dr. Palaich testified that "the most typical approach" his firm uses for such studies is a combination of successful schools and professional judgment, unlike the State, which relied solely on successful schools. He explained that he uses these two in combination to diminish the possible weaknesses that any single methodology may have. Under cross examination, Dr. Palaich admitted that the AIR/MAP study used an even more extensive version of this type of combination approach, incorporating aspects of four different methodologies. He also noted that Dr. Jay Chambers, Dr. Thomas Parrish, and Dr. James Guthrie, three of the lead researchers who conducted the AIR/MAP study upon which plaintiffs are relying, are among the foremost education finance experts in the country.

The next hearing will take place on Wednesday, October 13, at 9:00 a.m. at Fordham Law School details>>.

October 8, 2004

Parents from across the state march on the Capitol in Albany to show support for CFE.
CFE Litigation CFE v. State of New York
In 2006, after 13 years in the Courts, the New York State Court of Appeals affirmed the right of every public school student in New York to the opportunity for a sound basic education and the state’s responsibility to adequately fund this right, but deferred to the Governor and the Legislature to determine the appropriate amount. more >