School Budget Cuts

Letter from the Chancellor... From May 29th, 2008...

Dear Teachers,

It’s been a week since I wrote to you about the 2008-09 school year budgets. In this time, my team and I have been doing everything in our power to help schools budget for student success. We’re working hard to make school budgets manageable for all schools—even in this time of economic hardship.

Today, I’d like to briefly emphasize a few very important points that came up this week when I testified before the New York City Council.

The Mayor has substantially increased the City’s investment in its public schools since he took office in 2002. The City has increased education funding by 79% since 2002, compared to an increase of 55% from the State. The City didn’t just increase its contribution to the Department of Education relative to the State. It’s also increased spending on education faster than it has increased spending on other essential City services. Excluding DOE, all other agency spending in City funds has grown from $17.991 billion in FY02 to $25.506 billion in FY09. That represents an increase of $7.5 billion, or 42%. This means City spending on education has grown at almost twice the rate of overall City spending excluding DOE since 2002. Here’s another way of looking at it: Since FY02, New York area’s Consumer Price Index (CPI is a measure of inflation as experienced by consumers in their day-to-day living expenses) has increased by 3.3% annually on average (compounded) or by 26% over the period. Since FY02, City funds spending on DOE has increased by 8.7% annually on average (compounded) or by 79% over the period (including pensions, fringe benefits and debt service costs). This means the City’s increase in school spending is almost three times the annual rate of inflation during this period. So, while this year raises challenges, it is clear that the Mayor has prioritized education during the course of his tenure and that the City has increased its contributions to our budget significantly more than has the State. Those who are suggesting otherwise may try to score political points but they’re ignoring the facts.

Second, the State’s restrictions make our current challenges more difficult. As I explained last week, we have $299 million more in new expenses than we have in new revenues. We, like all City agencies, must balance our books. Our primary goal in tackling this shortfall was to absorb as much as possible centrally and in other non-school budgets. We were successful in reducing the gap by nearly 70% by identifying $200 million in savings outside of school budgets. The remaining $99 million, which must be taken from schools’ budgets, would obviously be more manageable if the reduction were applied evenly, so all schools shared the burden (resulting in a 1.4% reduction in each school’s spending power). The State’s mandates under the Contract for Excellence, however, mean that some schools will face reductions in spending power of up to 6% while others will actually see increased spending power. We’re trying to fix this, working with Albany. Here’s the thing that’s difficult to understand: Even if we came by more City money, we couldn’t use it to equalize the burden on schools. City Council members were mistakenly dubious about this yesterday and, so, I’d like to walk you through the issue.

First, we have applied an across-the-board reduction to tax levy funds (those allocated through Fair Student Funding).
The remaining reduction was offset—but offset differentially—by increases in State Contract for Excellence funds.

If we distributed the full amount of Contract money in accordance with current State guidelines (rather than holding back $63 million as we did), schools eligible for large amounts of Contract funds could see their entire gaps eliminated, or even see increases in spending power. Schools eligible for only small amounts of Contract funds would see relatively minor restorations to spending power.

In other words, the application of the current State guidelines would lead to a situation in which some schools would see decreases of 6% and others would see increases of 4%.

To be clear: the guidelines preclude the City from redirecting funds from schools that would see an increase in spending power to schools that experience large reductions in spending power to equalize the burden on schools.
The rule at play here is the State’s Contract for Excellence regulations, which require that new Contract funds must be used to supplement, not supplant, City money.

I also want to emphasize that the State must approve our plan for distributing Contract for Excellence funds before we receive the State’s funding.

This is why we’re appealing to State lawmakers, asking for assistance. If they would grant us the ability to send the $63 million of Contract for Excellence money to the schools receiving reductions of greater than 1.4%, we would be able to equalize the burden on schools, so all schools would face a 1.4% reduction in spending power. We hope that Albany will help us achieve this end, which I believe is better for our students. We implemented Fair Student Funding so that all schools could be treated fairly and equitably.

We would all, of course, like additional money for our schools. That has always been my position. The record demonstrates that we have given schools substantially more funds and also treated them equitably. While others may have a different opinion, that doesn’t mean they’re entitled to misrepresent the basic facts.

Now, I’d like to direct you to a few online resources that you could consult if you want to learn more about this year’s budget or your school’s budget:

DOE Budget Overview. This site provides an outline of the 2008-09 budget for the Department of Education.

School Budget Overview. This Web site gives detail on each school’s 2007-08 funding streams, FSF formula entitlement level for 2008-09, and preliminary actual 2008-09 budget, including how the different reduction scenarios affect each school’s budget in 2008-09. From this page, you can also find your FSF Formula Overview, which gives detail on each school’s 2008-09 FSF formula entitlement and how a school is moving from its 2007-08 FSF allocation to its 2008-09 allocation, including information on the change in number and need level of students and the change in weight amounts due to collective bargaining salary increases.

FY08 and FY09 Funding Stream Comparison. This Web site will give each school’s total amount allocated by funding stream for FY08 and FY09 so that you can see the year to year changes.

Please talk to your principal if you have any further questions about the budget. Or you can feel free to e-mail questions or comments to teachers@schools.nyc.gov.

Sincerely,

Joel I. Klein
Chancellor