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New York City
June 2001

Mayor’s Budget Would Slow City Spending on Schools

From the New York City Independent Budget Office

After four years of increasing city funding for the Board of Education (BOE), the Mayor’s Executive Budget for fiscal year 2002 would hold city funding essentially flat. The Budget increases city funds for the BOE by less than one percent above the current level—to $34 million. Over the past four years, increases have averaged 11 percent.

Because of restrictions on how some of the money is to be spent, this slight increase actually results in a $141 million decrease in city funds immediately available to the school system. The Mayor would hold $85 million in escrow outside the BOE budget, subject to his control, and would reserve $284 million in city funds for BOE collective bargaining needs—$90 million more than in the 2001 budget. These constraints on city funding are compounded by the Administration’s proposal to set aside $183 million in 2002 state aid for prospective labor settlements with the teachers and other unionized BOE employees.

Because the State budget for 2002 is already late (the statutory deadline was April 1), the city must forecast the level of state aid when preparing its own spending plans. Thus, the Executive Budget assumes a $253 million increase in state funding for BOE, representing a 4.8 percent boost over 2001. While it seems reasonable to assume that State aid will rise given the legislature’s desire to increase support for education across the state, it is not at all certain that the bulk of the increase will occur in unrestricted school district operating aid. If the state provides less than $183 million in new unrestricted aid—directing increased state aid into categorical programs such as class size reduction instead—then BOE would have to trim spending in other areas to pay for the labor settlements.


Privatization Pressure

The Executive Budget proposes taking $80 million from the BOE budget and placing it in the escrow account until the Board signs contracts with private educational companies to manage some failing schools. This initiative seeks to pressure BOE to contract with these firms. The $80 million transfer sets aside an amount equal to 12 percent of the instructional budget for 98 low-performing schools. The Board recently attempted to convert five low-performing schools into privately managed charter schools, but parents at each of the schools defeated the plan.


New Programs, No New Funds

As has been the case in recent years, the Mayor’s proposed budget includes new initiatives to increase instructional time and enhance school safety. This year’s include Saturday classes for English Language Learners and students preparing for Regents science exams; summer classes for 50,000 additional students; hiring 800 school safety agents; purchasing 300 library books for each elementary and middle school classroom; and adding teachers to work with students serving in-school suspensions.

What is different this year is that there are no new city funds to pay for these programs. Instead, the Administration proposes using most of the $88 million per year that was removed from the Board’s budget last June and placed in a special escrow account. The Administration originally created the escrow account in an effort to compel the Board to downsize its central offices and redirect resources to instruction. Since then the Chancellor has detailed administrative cost reductions of $9 million in 2001 and $13 million in 2002. The city has agreed to return the entire $88 million to BOE in 2001, and the Executive Budget would return $83 million in 2002, and $67 million a year in 2003, 2004, and 2005 to help fund this year’s new initiatives.

The rest of the funds for the new programs would come from two other sources. The city would rescind a planned $20 million per year increase in spending for physical education and athletics that was originally funded in the city financial plan two years ago. In addition, the city expects BOE to allocate $19 million per year of the anticipated increase in state aid (above and beyond the amounts reserved for collective bargaining) to cover half the cost of the in-school suspension centers.

For more information about education funding, contact Robert Weiner at 212-442-0332 or email robertw@ibo.nyc.ny.us. This article was excerpted from the IBO’s “Inside the Budget” (May 15) available at www.ibo.nyc.ny.us.


Education Update, Inc., P.O. Box 20005, New York, NY 10001. Tel: (212) 481-5519. Fax: (212) 481-3919. Email: ednews1@aol.com.
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