Schools won’t have to cut their budgets this month, but they will have to start tightening their belts and won’t be able to sock away any savings for next year.

That’s what Chancellor Dennis Walcott told principals in an email sent Monday evening, the first to name specific actions the Department of Education is taking to make up for $240 in state school aid sacrificed when the city and teachers union failed to agree on new teacher evaluations earlier this month.

Mayor Bloomberg is set to offer details about his plans to close the midyear school budget gap at a press conference later today. But Walcott said the department would absorb enough of the cuts centrally that he would not have to impose cuts of a certain size on each school, as happened several times during the leanest years of the economic recession.

Still, he announced several significant policy changes that could cost schools just the same. The department is doubling down on hiring restrictions, blocking schools from hiring substitute teachers, reducing aides’ schedules, and seizing funds that principals had set aside in this year’s budget for next year.

Starting Feb. 13, school aides working longer than five hours a day will have 30 minutes trimmed off their schedules, Walcott said. “You will need to revise staff workload and responsibilities to accommodate these reductions,” he told principals.

He also said the department would issue fewer exceptions to longstanding (and substantially relaxed) hiring restrictions and would require schools to use teachers assigned to them from the Absent Teacher Reserve before calling in an outside substitutes. Teachers in the ATR pool, those whose positions have been eliminated but who remain on the department’s payroll, have rotated among schools as short- and long-term substitutes for years.

And in a significant shift, Walcott announced that schools would not be able to hold onto any funds from this year to use next year through a program known as the “Deferred Budget Planning Initiative.” In 2010, department officials reversed plans to tap into the rainy-day funds after principals argued the cuts would penalize them for planning prudently. But two years ago, the department garnished some of the savings, allowing principals to hold on to the rest.

Now, principals have an incentive to spend their last cent on supplies and teacher training rather than set aside funds for next year, when the budget situation could be worse. Earlier on Monday, Bloomberg told legislators that the midyear loss, combined with proposed cuts next year, could cost the city 2,500 teaching positions and 700,000 hours of after-school programming over the next two years.

“No one will roll over when they know they will only get 50 cents on the dollar,” one principal told GothamSchools the last time the rainy-day funds were threatened.

Walcott appeared to acknowledge the spending incentive in his email, in which he told principals that “deadlines for budget modifications and purchasing will be slightly accelerated in the coming months.”

The chancellor’s complete message to principals is below:

Dear Colleagues,

As I shared with you on January 18, we are committed to designing a fair teacher evaluation system that would create meaningful supports and accountability for our teachers. However, despite our hard work over the past two years, the failure of the UFT to accept a fair and reasonable agreement on a new teacher evaluation system has triggered significant adverse effects on our budget, including an immediate reduction of $250 million in State funding.

In addition, Governor Cuomo’s proposed budget for next year includes significant cuts to our school district. At this morning’s State budget hearing, Mayor Bloomberg strongly urged the legislature to take immediate action to modify the Governor’s proposed budget so that it does not penalize our students. I’m writing today to provide you with more information about how we plan to address these upcoming and potential losses.

Immediate budget implications—for this school year

Cuts in central expenses will help offset some of these losses, and there will be no across-the-board PEG to schools this school year. However, we will need to work together to implement the programmatic changes and reductions outlined below. Your network will share more specific guidance with you as these plans are formalized over the next several weeks:

  • We will need to cancel the Deferred Program Planning Initiative that allows you to roll money into the following fiscal year to fund pedagogical staff and programs.
  • Consistent with an agreement with DC37 at the start of this school year to avoid layoffs, we will need to implement a reduction of 30 minutes in the schedules of school aides, supervising school aides, and school health service aides working 5 hours a day or more; and family workers working 6 hours a day or more. You will need to revise staff workload and responsibilities to accommodate these reductions which will go into effect on February 13. Funds associated with this reduction will be removed from your school budget.
  • We must strictly adhere to existing hiring restrictions, which limit the replacement of departing teachers, assistant principals, and guidance counselors to candidates in the ATR pool. Please carefully consider available internal staff before requesting an exception to hire externally.
  • You will need to utilize teachers from the ATR pool who have been rotated into your school in lieu of calling a sub of your own choosing or through Sub Central. When absences occur, assigned ATRs must be used to cover classes before other subs are called in for duty. We will reinstate the prior policy of a 50 percent discount rate, which will be deducted from your school budget.

Given the difficulties of attaining such large savings at the mid-year mark, deadlines for budget modifications and purchasing will be slightly accelerated in the coming months. A calendar with key end dates for financial transaction processing will be included in tomorrow’s Principals’ Weekly.

Anticipated budget implications—for school year 2013-14

While we are advocating strongly to prevent the Governor’s proposed budget from passing in the State legislature, and continuing to pursue solutions to the UFT’s attempt to block a fair evaluation system, it is possible that these additional reductions will become a reality in the 2013-14 school year. The proposed reductions could lead to significant staff attrition and close to 700,000 hours of lost tutoring, coaching, and arts enrichment programs.

Notwithstanding these fiscal challenges, we cannot abandon our goals or lose ground on the progress made so far. We must continue to focus our resources and energies on the needs of our students, striving to ensure that we are preparing them to succeed in our schools and beyond. I thank you for your hard work and flexibility, especially during these difficult times. We will continue to communicate with you about these issues as more information is available.

Sincerely,
Dennis M. Walcott
Chancellor