Testimony of the New York City Department of Education on the FY2011 Executive Budget
Before the New York City Council Committees on Education & Finance
Joel I. Klein, Chancellor
INTRODUCTION
"Good morning Chair Jackson, Chair Recchia, and members of the Education and Finance Committees. Thank you for inviting me to testify about next year’s education budget. I am joined today by Deputy Chancellor for Finance and Technology, Photeine Anagnostopoulos.
Before I get into our very difficult and challenging budget situation, I want to take a few moments to mention some bright news. Last week, the 2009 NAEP reading scores for urban school districts were released. The results showed that our fourth-grade students gained four points while the rest of the nation was flat and the rest of New York State actually went down one point. Our eighth-grade students increased by three points as compared to the rest of the nation’s one point gain and no gain by the rest of New York State. This means that since Mayor Bloomberg took control of the schools, our students have made consistent, significant gains on three of four NAEP exams while the rest of our state—which has far fewer students who are poor or minority—had no significant gains over that same period.
The progress on NAEP assessments—which are often referred to as the “gold standard”—is a true testament to the hard work of our students, teachers, and principals. I know you will join me in congratulating them for the outstanding job they’re doing.
OUR BUDGET SITUATION
I wish I could tell you that our budget situation has changed dramatically since my testimony in March, but unfortunately the picture remains very uncertain and very challenging. Based on our best estimates—which could shift as Albany has yet to pass its own budget—we are planning for a cut of $500 million in State education aid for the 2010-2011 school year. At the same time, our costs continue to rise, resulting in an actual budget hole of $750 million. And while our situation has improved slightly since March, we still face the unwelcome prospect of losing more than 6,400 hard-working school staff—largely teachers—next year, 4,400 of them through layoff.
Over the past several months, the Mayor and I—along with many members of this Council—have made it clear that the Governor’s proposed budget is unacceptable. It treats New York City unfairly compared with other communities across the State, and this is particularly egregious when you consider that budget cuts of this magnitude will cause real pain to our children. We simply cannot ask our children to bear the brunt of a fiscal crisis that they had no part in creating.
The Mayor and I will continue to fight for a rational and equitable budget that restores funding to City schools, but given the economic realities that everyone in this room understands, some significant reduction in State education aid is likely unavoidable.
As much as I would like to be able to provide definitive details about how the budget situation will affect our schools and our students, it is difficult to speak with real certainty when State lawmakers have yet to pass their own budget. Considering our City’s own fiscal calendar, and the urgent need for our principals to begin planning for the coming school year, we have no choice but to move forward. We currently intend to get budgets out by June 1, but our situation is very fluid and some issues remain in play.
In 2010-2011, assuming a $500 million cut from the State, the Department of Education will have a total budget of $22.8 billion. All in, this is $306 million greater than our current year budget. However, our nondiscretionary expenditures are outpacing this increase, leaving us with an overall funding gap of $750 million.
Next year, our uncontrollable expenses will grow by nearly $1.2 billion. Included in this growth is $370 million for pension and other compensation obligations, $140 million for the City’s portion of mandated instruction for special education students, $80 million for debt service, and $40 million to pay for feeding our students and leasing and operating our buildings.
Also included is an additional $125 million to cover an increase in charter school enrollment of nearly 10,000 students. It is important to note that we would incur the costs for these students whether they were in a district public school or a charter public school. In fact, a recent IBO report illustrated how charters actually receive less money per student.
Additionally, we estimate another $100 million will be needed to cover enrollment growth, which we anticipate will be significant. So far, no State budget proposal has taken this increase into account.
For this school year, our schools enrolled 14,000 students more than had been projected—and about half of them require special education services. This was the first enrollment increase in our public schools since at least 2001, and it is therefore difficult for us to determine if this growth will continue. Our most recent estimates for the 2010-2011 school year include an increase of about 5,000 general education and 7,300 special education students. However—as we noted in the Mayor’s Executive Budget—actual enrollment figures could be significantly higher. We are currently working to determine the best way to factor this potential increase into school budgets.
To cover a good portion of our growing expenses, the City is increasing funding to the Department by more than $800 million and we are reducing non-school budgets by another $130 million. Yet, these dollars aren’t enough to fund our expenses fully. When you consider the combined effect of a $500 million cut from the State and these sharp increases in nondiscretionary costs, we are looking at a budget gap exceeding $750 million dollars.
Last year, we faced a similar situation, and President Obama and Congress passed a stimulus package that averted as many as 14,000 teacher layoffs here in New York City. Even so, we lost roughly 1,800 teaching positions due to attrition. And because the State front-loaded stimulus funding into the current fiscal year to plug holes in their own budget, we will have $300 million less in federal stimulus funding for this coming year. Although we will continue utilizing stimulus dollars to blunt layoffs and help spread the cut across schools as equitably as possible, these funds are nowhere near enough to prevent layoffs as they did last year. Next year, we will face an even greater challenge when the stimulus program ends and $850 million of stimulus funding drops out of the Department’s budget.
ABSORBING THE CUT
As budget negotiations continue in Albany, we will keep fighting for more money for our schools. Additionally, we are also aggressively advocating in support of the Keep Our Educators Working Act—a $23 billion education jobs bill sponsored in Congress by Iowa Senator Tom Harkin. I have lobbied our lawmakers in Washington about this legislation, which if passed could provide New York City $400 million to offset teacher layoffs.
As you know, our agency has endured several rounds of belt-tightening over the past few years. Each time, we’ve worked to minimize the impact on schools and students. Between 2008 and this school year, we have cut the central administrative budget by nearly 20-percent—more than double the reduction to school budgets. This has included a headcount reduction of 550 positions in central and field offices and comes on top of having already redirected more than $500 million in savings to school budgets during brighter economic times. Through these cuts, our central and field budgets, which cover essential functions such as payroll, human resources, school support, and technology support, have been whittled down to just three percent of the total Department budget.
For the coming school year, we will cut an additional $38 million from our Central administrative budget. We will achieve the cuts through an additional five percent administrative headcount reduction along with significant non-personnel cuts in areas such as software development, hardware purchases, and printing costs. We will also trim another $50 million from other non-school budgets by finding improved efficiencies in areas such as food operations. You can be sure that we remain steadfastly committed to cutting central and field budgets before touching school budgets. Unfortunately, facing a $750 million funding hole, we have no choice but to find significant savings in our schools and classrooms.
To turn then to our schools' budget, as you know, we allocate the bulk of unrestricted dollars to schools through our Fair Student Funding (FSF) formula. This money funds basic classroom operations, including special education and English language learner instruction. The FSF formula also provides supplemental funding for additional instructional services for students who are struggling academically.
As a result of the significant budget cuts we’ve been forced to absorb over the last two years, all schools have seen their FSF budgets reduced by more than 25-percent. But, through the implementation of Fair Student Funding, we’ve moved relatively more dollars to traditionally under-funded schools, enabling them to manage recent budget reductions better than they would have under historical funding patterns. However, for a number of schools—particularly middle schools—their Fair Student Funding budgets are now well below what is needed to cover basic operations with these dollars.
One reason for this disparity is that many middle schools started out very close to or well below their FSF formula. Another reason is related to the improved performance of students entering middle schools. Since greater numbers of proficient students are graduating from our elementary schools and entering our middle schools, middle schools are receiving fewer FSF dollars relative to elementary and high schools.
While funds from sources other than FSF have helped to support the operations of our schools in these declining budget times, we must bring these schools’ unrestricted budgets closer to a basic-operating level before implementing another large cut to next year’s budget. We plan to do this by shifting dollars from schools where Fair Student Funding combined with other unrestricted funds are above a minimum operating threshold and redirect them to the severely under-funded schools. Then, once all schools have unrestricted funding that meets a minimum operating level, we will work to reduce all school budgets by the same across-the-board percentage.
THE IMPACT OF PROPOSED CUTS ON CITY SCHOOLS AND STUDENTS
As mentioned earlier, we are aiming to get school budgets out by June 1. But, given Albany’s continued inaction, I cannot yet provide a precise figure with respect to the actual budget cut our schools will face next year. We are still working through the details, but we have advised principals to brace for a cut substantially larger than the 4.9 percent reduction they absorbed for the current year. A cut of this magnitude, particularly after previous reductions, will obviously be painful. I remain confident that our principals will again be able to make wise decisions that preserve their schools’ most important programs and services. But, with 85 percent of the dollars in school budgets tied up in compensation costs, it will be necessary to lay off thousands of teachers.
Under the current budget scenario, we anticipate losing 6,400 school staff, mainly teachers citywide: 2,000 through retirement and attrition and an additional 4,400 through layoff.
No one wants to lay off teachers, and we are taking steps to try to minimize these staff cuts as much as possible. Hiring restrictions remain in place for nearly all license areas. We are also working to retrain some teachers facing layoffs in areas where we have need, like special education.
Unfortunately, these efforts—and our own spending cuts—will only take us so far in covering our $750 million budget shortfall.
Let me say it again: no one wants to lose any teachers—not now, not ever.
However, I firmly believe that if we are forced to layoff teachers, we must ensure we protect our very best ones. Yet because of State law, we will be forced to do layoffs based solely on seniority, without regard to the effectiveness or expertise of individual teachers. As a result, for example, almost all elementary-school teachers hired since the fall of 2007 are at-risk for layoff.
Experience in the classroom is important—but it is not the only criterion that should be considered. Think about it—even if teachers have multiple unsatisfactory ratings, aren’t even currently teaching, or have poor attendance records, we’d be forced to keep them over newer teachers who might be achieving terrific results because of outdated State laws and current union rules.
Just to be clear, and so my views are not misrepresented, many of our longest-serving teachers are among our best. They inspire our students and mentor new teachers. I certainly want to keep these teachers—and all highly-effective teachers—where they belong: in the classroom.
And my concern about seniority-based layoffs is not just theoretical. Rather, I know that if our newest teachers are the ones laid off, the impact on low-income students will be devastating. We have made great strides in narrowing the achievement gap—and last in, first out policies threaten to undue the significant gains we have made.
Take P.S. 86 in the Kingsbridge Heights section of the Bronx as an example. According to our analysis, approximately 27 classroom teachers will be laid off based on seniority alone. By contrast, at P.S. 53 in Staten Island’s Bay Terrace neighborhood, no teachers will be laid off.
Attached to my testimony is a newly-released study by the Center for Reinventing Public Education, which describes the harmful effects of seniority-based layoffs on schools with poorer students.
Losing upwards of 6,400 teachers will also likely result in considerable class size increases, with average class size growth ranging from two to five students or more at individual schools.
And last in, first out has the potential to trigger a chain reaction of seniority-based “bumping” throughout the City’s schools. We would be forced to lay off our newer teachers and the remaining teachers would be shuffled from school to school to fill vacancies without regard for their skills or strengths, or the schools’ particular needs.
If we had the opportunity, we would make layoff decisions based on an evaluation of performance—just like almost every other organization across the country does. Here’s exactly what we would do:
- As a first step, we would lay off the 1,600 teachers with "unsatisfactory" ratings. These are teachers who have been evaluated and reviewed under our existing collective bargaining arrangement with the UFT.
- Next, we’d cut the 1,100 teachers who are in the so-called Absentee Teacher Reserve (ATR) pool and have been unable to find a job.
- Then, if there is a need to cut beyond that, principals would make decisions based on three universally agreed-upon, clear criteria:
- student progress;
- quality of teaching;
- and teacher attendance.
- Finally, superintendents would review every decision to ensure it was supported by evidence.
This is a common-sense approach that would spare our kids from having to endure the disastrous effects of seniority-based layoff rules. And, it’s an approach that has been endorsed by Children’s Defense Fund, the National Center for Teacher Quality, and the Center for American Progress, among others.
In the meantime, as we continue to wait for action in Albany on a budget or a rational layoff system, we must begin making the difficult layoff decisions. We must ensure that principals are able to finalize their staffing plans before summer break, with pink slips going out to affected teachers in June. While this timetable will be hard, it will guard our schools against additional instability and allow teachers who lose their positions to seek other opportunities as soon as possible.
KEY STEPS TO SUPPORTING OUR STUDENTS
There are steps we can take now to mitigate the impact of the budget shortfall. I ask you to join our effort to seek legislative reforms that will enable the State to win the Obama administration's Race to the Top competition, which would net New York City schools at least $200 million.
In order to make the strongest case in our Round Two application we must embrace the school reform initiatives advanced by the Obama Administration: lifting the cap on charter schools, evaluating teachers based on whether they’re helping their students to learn, making it easier to remove ineffective teachers and again—should we be forced to lay off teachers—ensuring that those who remain in classrooms are the very best, not merely the longest-serving.
CONCLUSION
At a time when funds are scarce, it is critical that we work together to protect our students and schools against the worst effects of ongoing economic uncertainty. As a Department, we have made every effort to reduce administrative expenses before cutting funding at the school level, but we are facing proposed reductions so severe that we are now forced to cut back where it matters most—in the classroom.
We are obligated to do everything in our power to protect our children from a budget crisis adults have created. Taking the necessary steps to win hundreds of millions of federal dollars and creating a rational process for layoffs are the very least we can do to ensure that we do not lose our momentum and our students continue to receive the high-quality education they need and deserve.
Thank you for your time and attention and I welcome your questions."