INTRODUCTION
Good morning Chairman Kruger, Chairman Farrell, and Vice-chairwoman Krueger. First, I’d like to congratulate the new chair of the Senate Finance Committee and the Vice-chair on your recent appointments. Thank you for giving me this opportunity to comment on the 2009-10 Executive Budget Request. I am joined by our Chief Operating Officer Photeine Anagnostopoulos.
There’s no way for me to sugarcoat our budget situation. As economic conditions deteriorate, New York City schools will have to cut approximately $1.4 billion from our budget in the next school year. We project that this will force our schools to let go of roughly 15,000 school-based personnel, predominantly educators, in the next year.
We must do everything in our power to protect our schools and keep our country’s financial crisis from turning into a crisis in our classrooms. To that end, I know you want to work together this year as partners on behalf of our kids.
In today’s testimony, I’ll describe our budget situation and then discuss six specific ways you can help to make this tough time more tolerable for our schools and students.
OUR BUDGET SITUATION
The Governor’s Executive Budget Proposal represents a real cut of $700 million for New York City schools for the upcoming school year. This total includes a $306 million reduction from this year’s funding levels and $97 million from a shift in costs from the state to the city in mandated pre-k special education, The Governor has also proposed eliminating the State’s commitment to give New York City a $293 million increase under the Campaign for Fiscal Equity settlement. For this school year, there is a proposal to shift $84 million of costs in pre-Kindergarten special education.
All together, between the $700 million cut for next school year from the State, the City’s $500 million cut, and $200 million in uncovered increases in nondiscretionary costs—due to growth in labor prices and special education mandates—New York City schools face a hole of $1.4 billion for the 2009-10 school year.
As the economy has weakened, we have implemented four separate cuts in the last 12 months. As we plan our budget for the next year, the State cut will bring that total number of reductions to five—removing a total of $1.9 billion from our school system in just over a year.
We have worked hard in the last year to shield schools from budget hardship. Between City FY08 and City FY09, we reduced administrative spending by 14%, compared to a 4% reduction in school budgets. This dramatic administrative reduction followed a five-year effort to slash bureaucratic spending that sent more than $350 million in savings to schools and classrooms. Today, the DOE’s administrative costs make up just 3% of our overall budget.
Also nearly half of our $21 billion budget cannot be reduced because of fixed costs like pensions, debt service, special education mandates, energy, and leases. We have $11 billion that are available for reductions, but 90% of those funds are tied up in compensation.
What does this mean? It means we have no choice but to cut back on core school operations to fill this year’s budget hole. As a result, the New York City Department of Education’s overall budget for the 2009-10 school year will drop by 8% while the schools’ total budgets excluding federal aid, where we are able to make cuts, will drop by 18% .
The impact of the cut’s size is exacerbated by the restrictive nature of school funding. For example, the Governor’s Deficit Reduction Assessment (DRA) would allow a New York City school’s Contracts for Excellence (C4E) money to be cut by only 5% while the rest of the school’s budget would be cut by significantly more than 18%. The effective result is that schools with a lot of C4E money experience smaller cuts compared to schools with little or no C4E money. Effectively, the Governor’s proposal would transfer more than $70 million worth of cuts from supplemental Contracts-funded programs to our core instructional services.
If President Obama’s proposed Federal Stimulus package comes through, the situation will be better, but still very tight, and many disparities would remain because a significant portion of these Federal funds will be restricted in terms of how they can be distributed and are largely tied to Title I and special education.
HOW YOU CAN HELP
There are six ways you can help us to minimize the impact of this situation on our students:
- Give each school more flexibility to spend resources on the core instructional services that students need.
- Help us make school cuts more even, so some schools aren’t saddled with even worse burdens.
- Enable New York City to use pre-Kindergarten funds for full-day pre-K.
- Do not allow a budget cut in the middle of this school year by stopping the $84 million pre-K special education cost shift.
- Implement special education mandate relief.
- Support the Governor’s pension reform proposal and eliminate the Board of Education Retirement System (BERS).
First, at a time when funds are scarce, it is critical that we give principals the flexibility they need to spend their resources on the core instructional services that students need.
Because the Contracts for Excellence law restricts how much money schools can cut from “Contracts” programs, principals will soon be in a position of needing to eliminate core instructional services while maintaining supplementary programs. Many of these supplementary programs are valuable and important, but they are not more important than having teachers in our classrooms. This is not an abstract problem. It will affect real schools and real students.
Take Brooklyn’s Sheepshead Bay High School as an example. Sheepshead Bay receives the vast majority of its funding, about 88%, from City tax levy dollars, and approximately 97% of those dollars are tied up in personnel costs. There is simply no way Principal Reesa Levy could absorb over a 18% budget cut without reducing staff. She estimates she could have to lay off at least 10 teachers to balance her budget. As a result, she could no longer provide the same level of support for her students, many of whom are at-risk for dropping out. The school also receives more than $1.5 million in C4E money. Principal Levy says she would have to use those dollars to continue to fund after-school or enrichment programs at a time when she’d be forced to lay off social studies and English teachers.
At IS 231 in Queens, Principal Emmanuel Lubin is in a similar situation. Close to 90% of his budget is tax levy dollars, and all but about 2% of those dollars go to paying teachers and other school employees. Mr. Lubin would have to lay off several teachers in order to have enough money to meet the budget cuts and operate. IS 231 also receives about $493,000 in Contracts money. Last year, the school used some of that money to hire a coach and mentor for his newly hired teachers. Under the current scenario, the school could be forced to fire the new teachers the mentor and coach were hired to help but, under Contracts regulations, he would have to continue to pay for the mentoring program or some other supplemental program.
You can help to solve this problem by changing specific sections of the contracts law.
Today, as I said in my introduction, the DRA allows principals to cut C4E spending by only 5% in FY10. At least under decreasing budgets, principals should be afforded the flexibility to distribute the funds to the programs and activities that are most needed in their classrooms. In FY11, the Contracts bill requires that spending on Contracts programs return to school year 2008-09 levels , even if we do not see a return in funding. This is not fair to principals because they will probably be forced to spend money on supplementary programs while laying off more teachers or further reducing other core services.
Second, it’s important for you to help us make school cuts more even, so some schools aren’t saddled with unmanageable burdens.
Just as schools need flexibility to spend money on the core services that students need, we need more flexibility to distribute money—and reductions—more evenly to schools. Today, some schools are funded almost entirely with unrestricted City tax levy dollars. Others are funded with upwards of 40% of their budget from restricted dollars like Title I or Contracts for Excellence. Without more flexibility to allocate money to schools, the schools with more unrestricted aid will face cuts of 20% to their budgets excluding federal aid. Schools with a large portion of their dollars coming from C4E and other restricted aid will see reductions as low as 12%. We should not allow arbitrary funding formulas to mitigate the burden on some schools while harming others.
For the 2009-10 school year, you can help alleviate this by lifting the distribution requirements of the C4E law. In the years after, we need to be treated the same as other districts in New York State. You can do this by changing the maintenance of effort requirements and by increasing our inflation factor. Maintenance of Effort regulations in the Contracts law treat New York City unfairly compared to other districts in the State. Maintenance for other districts is capped at 35% of their C4E funds while New York City is capped at 25%, or $30 million, whichever is lower. In the current school year, for instance, we have an effective 8% cap, or $30 million on $385 million of C4E funds.
Today, our inflation factor is the lowest in the State. This becomes even more important given that the Governor’s proposal calls for slowing down the phase in of the Campaign for Fiscal Equity settlement. Given that the inflation factor defines the size of unrestricted aid, a smaller inflation factor on a smaller dollar amount means a significantly smaller amount of dollars to use to restore the schools’ instructional programs and personnel. If we received more unrestricted aid from the State and less C4E aid, we would be able to more evenly distribute the burden on schools.
Giving school systems and school leaders more flexibility in how they can use their budgets is not the same as handing over a blank check. New York State and City are already monitoring how well schools are doing and holding them accountable for their results. Our accountability system ensures that the lowest performing students receive the resources they need to improve and succeed. This means that as principals move resources, there are measures in place to ensure they will do so equitably with a concern for all of their students. In any case, I see no justification for a policy that requires us to cut some schools by 20% and some by 12% or a policy that forces principals to fire teachers while maintaining supplementary educational programs.
The third way you can help us is to enable us to use a portion of Universal Pre-Kindergarten funds for full-day pre-K.
We can use universal pre-K funding only for half-day programs, even though there isn’t enough demand for these programs. Especially as parents work longer hours in this hard economic time to support their families, we must be able to provide full-day pre-K programs. We cannot expect our families to cover the cost of childcare. And—try as we might—and let me assure you we have tried—we cannot force more people into half-day programs. We need to be able to use the funds for full-day pre-K in order to serve our most disadvantaged students.
Fourth, do not allow an $84 million pre-K special education cost shift in the middle of the current school year when there is no money to fill the hole.
I want to draw your attention to one element of the Governor’s budget that we literally cannot operationalize. He proposes a shift in special education pre-Kindergarten costs from the State to the Counties during the current fiscal year. New York City is five counties and a school district, so the shift comes directly out of our school budget. Because of the way we are required by state law to do our budgeting, this would mean $84 million would be cut from this year’s school budget. This means that we would have to cut programs that are literally happening as we speak—as well as staff on the job right now.
The Governor’s proposed education budget recognizes the extreme difficulty of making any cuts to the current school year at this point in time. The changes to the proposed education law that would enact the governor’s proposed budget has a provision that does not allow the Regents to require implementation of unfunded required programs if the requirement was established after the school district’s budget was set. This same framework should apply to the Governor’s proposal on pre-k special education.
Fifth, you should urge the Board of Regents to relieve some special education mandates. This wouldn’t cost the State anything and would put more money into our classrooms where it could help our students.
We should urge the Regents to provide districts with relief from State mandates that are not required by the Federal IDEA. The Legislature should work with the Regents to eliminate the requirement for an arbitrary minimum level of special education services such as speech therapy and the maximum student caseloads for special education service providers. In addition, other districts around the State have the ability to add between one and three students to classes with poor attendance. New York City is not allowed to do this. This exception should be lifted. These decisions should be based on the individual needs of students and schools rather than across-the-board rules. I want to be clear that I am not talking about diminishing services that students need. Rather, we need local flexibility to make decisions that will improve student outcomes.
As the Mayor said, you should support the Governor’s proposal for a new pension tier. This action would save taxpayers more than $7.4 billion over the next 20 years. Another smart idea that would save money without costing the State is to eliminate the Board of Education Retirement System and merge its members into the New York City Employees Retirement System and the Teachers Retirement System.
CONCLUSION
Why is it important to take these steps?
What’s happening in our economy is not our kids’ fault and they should not bear the brunt of it.
In 2002, you granted the Mayor control of the City’s public schools, and we thank you for that. Since then, our students have made historic academic gains in math and reading, and our graduation rate, which was stagnant for decades, has jumped by more than 10 points (or 20 percent). More than 11,000 additional students are now graduating each year with skills they need to compete in the 21st century economy. Our neediest students have made the largest gains.
We—all of us—want to keep this progress going and to do everything possible to shield our students from potential harm. Please join me in making our difficult budget situation as tolerable as possible for our students. The best possible solution is to eliminate the reductions to the largest extent possible. We support the Regents in their call for restoration of funds.
However, I understand the State’s current financial predicament and that is why I have come here today with a variety of suggestions that won’t cost the State and taken together would significantly help our bottom line.
Thank you for your time and attention and I welcome your questions.