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Klein reverses elimination of schools’ rainy-day funds

A week after informing principals that they would be prohibited from saving extra money this year to pad next year’s sure-to-be-slim budget, Chancellor Joel Klein has reversed his decision.

In an e-mail sent to principals this morning, Klein said the city’s budget office had figured out how to let principals roll money forward to next year after all. Only schools whose budgets meet criteria “to prudently set aside money” will be allowed to do so, Klein said.

The reversal puts back on the table a key strategy that many principals use to reduce the impact of imminent budget cuts. About half of principals managed to save money during the 2008-2009 school year, together rolling over $95 million into this year’s budget. The funds mitigated against the 5 percent budget cut announced last May.

Klein’s entire (brief) e-mail is below the jump:

Dear Colleagues, Based on further work with the City’s Office of Management and Budget, we have adjusted our budget plans to enable schools to roll money forward from their current budgets to next school year. Similar to last year, a school’s budget condition must meet the financial criteria necessary for the school to prudently set aside money this year. We will provide the guidelines and instructions for doing so on the Principals’ Portal over the next few days. Sincerely, Joel I. Klein