Defendants argue that the State-local partnership in school funding allows a local district to choose to spend more than the average local contribution, but the State is not required to lift up laggard districts. Defendants argue that New York City in recent years has tried to buck this principle by reducing its contribution as the State has increased its contribution to education. The evidence at trial supports this assertion. Based on data compiled by the State Comptroller's Office, the share of school district spending represented by State aid grew over the period 1986-1997 from slightly over 37% to more than 42% for New York City, while in the rest of the State the share of State on average spending decreased from over 41% to below 37%. Over the same period, the City's local share of education funding [187 [187 Misc.2d Misc.2d 98] 98] decreased from over 52% to below 48%. BOE has noted this phenomenon in official documents. Plaintiffs do not dispute Dr. Wolkoff's testimony on this issue, but point out that New York City collects more tax revenue per capita than the State average and argue that this demonstrates that the disparity in education funding is a result of the extraordinary burdens placed upon the City's fiscal resources by the need to provide extensive and expensive municipal services. The evidence confirms that New York City's combined property and income tax burden is above the New York State average. In February 2000, the Independent Budget Office published an analysis demonstrating that City residents' combined property and personal income tax burden averaged $7.26 per $100 of income, compared to averages of $6.90 per $100 in the City's suburban counties and $6.78 in upstate counties. In addition to this higher-than-average tax burden, various structural characteristics impede New York City's ability to fund education at a constant and more generous level. Outside of New York City, local school districts rely principally on property taxes to finance school budgets. By contrast, local education funding in New York City is derived from municipal revenues. Approximately 37% of these municipal revenues are raised from property taxes. Twenty-one percent of municipal revenues come from personal income tax, 16% from sales taxes and 26% from all other taxes, including a variety of business taxes. Income, sales, and business taxes are particularly susceptible to changes in the local economy. New York City's economy has come to rely to a great degree on cyclical business sectors, namely finance, insurance and real estate, creating a tax base sensitive to the vagaries of the economy. In addition to the instability created by a tax base particularly sensitive to business cycles, New York City's municipal finance system is subject to an extraordinary array of demands for services. The per capita costs of providing these services are increased by higher demand in New York City and higher regional costs. Some of the demand is amplified by State requirements. For example, the State has imposed a matching requirement for Medicaid and public assistance funding which forces City taxpayers to pay nearly $300 more per capita for Medicaid and $70 more for public assistance than residents in the rest of the State. New York City also has a heavy debt burden that reduces its ability to support education. [187 [187 Misc.2d Misc.2d 99] 99] In addition to these impediments to increased City funding, the City is also under no legal compulsion to maintain its funding at a given level. The evidence at trial demonstrated that the State's "Maintenance of Effort Law," which is ostensibly designed to stabilize the City's education funding, is ineffective. This law, referred to as "the Stavisky-Goodman bill" requires New York City to appropriate an amount of funds to BOE from the total budget equal to the average proportion of the total budget appropriated for the Board in the three preceding fiscal years. Because this law applies to all funds within the City budget, not just local revenues, the City is generally not forced to spend more of its own funds. The Regents and SED have repeatedly and in vain called for the Legislature to strengthen Stavisky-Goodman. In sum, the court finds that the City's ability to contribute to education is hampered by its diversified tax base, its higher costs for other municipal services, and by its debt burden. However, as discussed below, it is the Legislature's duty in the first instance to reform how education is financed in New York State in conformance with the strictures of the Education Article of the NY Constitution. This duty entails evaluation of a variety of policy choices. If the Legislature determines that the City, despite the substantial impediments described above, should fund education more consistently and generously, it has the power to force it to do so, inter alia, by tightening its maintenance of effort law. Having found that the State's system of school funding violates the Education Article of the NY Constitution, the court now addresses plaintiffs' claim arising under Federal law. V I . T i t l e V I R e g u l at i o n s C l a i m Plaintiffs' second claim arises from implementing regulations promulgated pursuant to title VI of the Civil Rights Act of 1964 (42 USC § 2000d). Section 601 of title VI (42 USC § 2000d) provides that: [n]o person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance. The Supreme Court has ruled that a plaintiff must make a showing of intentional discrimination to succeed on a title VI claim (Guardians Assn. v Civil Serv. Commn., 463 U.S. 582, 610-611 [Powell, J., concurring], 639-642 [Stevens, J., dissenting] [1983]). [187 [187 Misc.2d Misc.2d 100] 100] Plaintiffs make no claim of intentional discrimination here. Instead plaintiffs rely on regulations promulgated by the United States Department of Education (DOE) pursuant to title VI. Section 602 of title VI (42 USC § 2000d-1) expressly authorizes Federal agencies to promulgate rules and regulations to effectuate its provisions. The DOE regulations relied on by plaintiffs incorporate a disparate impact standard of liability. The United States Supreme Court has held that Federal agencies have the authority to promulgate regulations pursuant to section 602 that prohibit recipients of Federal funds from taking any action that results in a disparate impact or produces discriminatory effects on the basis of race, color or national origin (see Guardians Assn., supra, 463 US, at 584, n 2, 591-592, 623, n 15). As the Court of Appeals has already held in this case, "[u]nder Title VI's implementing regulations, proof of discriminatory intent is not a prerequisite to a private cause of action against governmental recipients of Federal funds." (Campaign for Fiscal Equity v State of New York, 86 N.Y.2d 307, 322, supra.)

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