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Many principals to see a 5% cut tomorrow, even after stimulus

Principals will receive school budgets tomorrow that include a new 5 percent cut, Schools Chancellor Joel Klein announced today. The cuts are so deep that the department is temporarily abandoning its plan to finish adopting a new funding formula that it said would make school budgets more equitable.

The cuts, totaling $405 million across the city schools, could threaten non-teacher staff positions, after school programs, and training for teachers. But roughly 60 percent of schools will not actually experience cuts of the maximum size, Klein told reporters at a briefing today. That’s because slightly more than half of all principals chose not to allocate every dollar in their budgets for this year, instead “rolling over” a total of $95 million. The rainy day funds are being wiped out by the new cuts but are also softening the blow of next year’s cuts for many schools.

In addition, about 80 schools receiving the largest amounts of federal anti-poverty funds will actually see a slight increase in the size of their budgets, Klein said. The remaining 40 percent of schools will see their budgets drop the maximum 4.9 percent, he said.

Today’s cuts are on top of a total average 3 percent cut made to school budgets over the last year and a half.

Because of the cuts, the DOE is suspending its plan to start charging schools the real salaries that teachers make, a change that had been the cornerstone of the department’s Fair Student Funding formula. The formula was intended to spread more talented teachers to low-performing schools.

But the formula’s full implementation was postponed in 2007 under opposition from the teachers union and some high-performing schools, via a “hold harmless” provision that sent extra money that would have been taken away from some schools back to them. The provision had been set to expire this year, in a change that would have taken money from more affluent schools with older teachers and given it to schools with needier students. “We’re holding harmless,” Klein said today. “A year from now we’ll revisit the issue.”

The department is also scaling back restrictions on hiring at new schools, dropping the proportion of new teachers permitted in schools in their first, second, or third years to 40 percent from half. The restriction had caused consternation from teachers union president Randi Weingarten and Board of Regents Chancellor Merryl Tisch, who said last week that she thought new schools should be subject to the same restrictions as all other schools.

The magnitude of cuts comes despite nearly $1 billion in federal stimulus dollars for the city schools. Klein explained the discrepancy like this: Before today, the DOE had scaled back its projected budget for the fiscal year that begins on July 1 by $943 million. The stimulus total was slightly more than that, $961 million, but much of the stimulus funds have been carved away into other areas.

Once benefits for retirees and other expenses are accounted for, only $625 million of the stimulus money went to the department’s operating budget, leaving a $318 million hole. The department also identified about $155 million in new expenses, including the costs of new schools, prekindergarten programs, special education services, and teacher compensation. The new costs widen the hole to $473 million.

Klein said the the department would cut another $20 million centrally and shave spending on some special education services by $48 million. But that leaves the hole still at a solid $405 million that schools alone will have to shoulder.

Klein said today that he did not know where the $20 million in central cuts would cut come from. He said he hoped attrition would make a staff reduction possible.

Tomorrow, principals will receive their schools’ budgets and will convene in Manhattan for a meeting with Klein and other department officials. They must submit their preliminary budgets by June 18. Klein said principals are being told to “think hard” about cutting staff members or excessing teachers, but he said, “The decisions ultimately are theirs.”

Here’s an e-mail Klein sent to principals today about the budget situation:

Dear Colleagues,

On Wednesday, you will receive your budget for the 2009-10 school year in Galaxy. In this e-mail, I will explain what you should expect—and remind you that you are welcome to attend a session Wednesday afternoon to talk more about this situation in person.

First, before I begin, let me remind you that this is a tough year in New York City and across the country. Tax revenues are down significantly in our City and State, and that affects our overall budget. The Federal stimulus package is making this situation more bearable, and helping us to avoid teacher layoffs, but it does not make us whole. This means we must reduce our operating spending—even as we have been able to preserve our school capital budget in full.

When you receive your budget, you will see:

  • Register adjustments, as you do every year;
  • A reduction to your Fair Student Funding allocation (all schools will receive the same proportional reduction to their FSF funds); and
  • Some combination of an increase in Title I dollars and/or an allocation of stabilization dollars from the American Recovery and Reinvestment Act.

In aggregate, the total dollars in school budgets will be reduced by 3.8%. While all schools’ total budgets prior to the roll were reduced proportionately, some schools’ cuts will be slightly less and some schools’ cuts will be slightly more because different schools have saved and rolled over different amounts of money from the current school year. To be clear: if you rolled over money, the good news is you will be able to spend that money. We are not cutting the money you rolled forward.

Many principals have asked me why schools must cut back this year—especially in the context of the American Recovery and Reinvestment Act. Here’s why: despite an increase in the overall DOE budget, coming largely from the Federal stimulus dollars, we will still experience a funding gap in school budgets. Between Fiscal Year 2009 and Fiscal Year 2010, uncontrollable costs will grow significantly. We will see significant increases in mandated costs. Special education costs for students in the public schools and for students whose education we must fund outside of the public school system continue to grow. Contractual costs are increasing, as is the cost of fringe. Since we value teachers and their critical importance to student success, we are paying them more, and as more teachers are staying in our system and the average level of seniority is rising, the associated salary costs are increasing. In this environment, the federal stimulus package will help us to avoid teacher layoffs, but it does not make our budget whole.

Once you receive your budget, we will work with you to plan for the coming school year. We will ask you to submit your preliminary budget plan by June 18.

If you haven’t yet RSVP’d, I invite you to join me Wednesday to discuss the budget situation at Murry Bergtraum High School at 4:30 p.m. Please let us know if you will be able to make it at www.zoomerang.com/Survey/survey-intro.zgi?p=WEB2295TMATML6. If you have any questions about this session, please e-mail DOEstaffing@schools.nyc.gov.

You are also invited to attend one of two online training sessions on FY10 Budget Development hosted by the Integrated Service Centers and the Children First Network. They are at 10 a.m. and 3 p.m. on Thursday, May 21. Please register at www.learningtimes.net/iscwebcasts.

I know that this year’s budget situation is not ideal, but I am confident that our public school principals can—even in this hard time—keep focused on student achievement and continue to help our schools and students move forward. I look forward to talking with you later this week.

Sincerely,

Joel I. Klein

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