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Tweed trying to take back half of principals' saved funds, again

City principals might be well advised to go on spending sprees — or else pay a price for planning ahead.

For the second time in two years, the Department of Education is trying to counter budget cuts by limiting the amount of money principals can roll over from this year’s budget into next.

Typically, a program known as the “Deferred Budget Planning Initiative” allows principals to stash unused money in a rainy-day fund that they can raid in the case of unexpected expenses or midyear cuts. But this year, principals are being asked to hand over half of their unused funds to the department’s central administration.

“This year, considering the current budget climate, the Deferred Program Planning Initiative is not a prudent option as it was originally designed,” said Barbara Morgan, a DOE spokeswoman.

The announcement seems to give principals the incentive to spend their last cent, rather than plan ahead for next year, when the budget situation is projected to be worse.

“No one will roll over when they know they will only get 50 cents on the dollar,” one principal told me.

Principals must decide before March 7 how much money to roll over to next year. If they decide not to opt into the rollover program, they have until June to spend this year’s budget, Morgan said.

And that’s precisely what the principals union is encouraging its members to do.

“Your students would really be the losers if you chose not to spend the money; they would not benefit from these funds in the future,” wrote Council of School Supervisors and Administrators President Ernest Logan in an email to principals yesterday.

Logan also questioned how the DOE would use the 50 percent of rollover funds that it plans to garnish. “It would be interesting to know if the DOE would use your savings to hire additional high-priced consultants or to maintain the many very generous senior management salaries that CSA has observed in the DOE’s Management Pay Plan,” he wrote.

The announcement was buried deep inside Chancellor Cathie Black’s weekly email to principals. In dense, bureaucratic language, principals are told that they “have the option” of reserving extra funds from this year into next year’s budget, but only 50 percent of what they have accrued.

This isn’t the first time the city has tried to tap into schools’ rainy-day funds. Last year, former Chancellor Joel Klein told principals in early January that they wouldn’t be able to roll over unused funds to this school year. A week later, he reversed that decree.

The full item from the Principals’ Weekly newsletter:

Apply for Deferred Program Planning Initiative

All schools / Deadline: March 4

Schools with FY 11 accruals in select tax levy allocation categories will have the opportunity to transfer these funds into their budget for the 2011-2012 school year. You can apply for the program from now through 2:30 p.m. on March 4. Through this initiative, schools will receive 50% of their deferred funding in FY 12. For example, if you set aside $50,000 in FY 11, your school will receive a total of $25,000 in Deferred Funding FY 12. Financial criteria for participation, including guidelines regarding maximization of stimulus (ARRA) funding, and the application process can be found in the program guidelines. Participating principals can now schedule these funds in the “Deferred Program Set Aside” title in the OTPS section of their Galaxy table of organization (TO).

All Deferred Program Set Aside funds will be removed from the 2010-2011 budgets of participating schools on March 7. The “Deferred Program Set Aside” title and items associated with it will also be deleted. CFN budget liaisons will contact you regarding your school’s pass/fail status. The criteria will be updated according to the calendar in the guideline memo. If you have any questions regarding your school’s standing in respect to the program criteria, or questions about eligibility, contact your network budget liaison.

And the complete email message to principals from Logan:

Dear Colleagues,

In this week’s Principals’ Weekly, the Chancellor announced that schools that saved funds in FY 11 will be credited for only half the amount of their savings in FY 12. Their other option will be to spend all saved funds right now. We have heard from many of you regarding your dismay over this announcement. In effect, it means that if you exercised budgetary restraint this year, you will be penalized by losing 50% of your savings next year unless you spend everything now. Your students would really be the losers if you chose not to spend the money; they would not benefit from these funds in the future. In addition to undermining your incentive to be frugal going forward, the DOE seems to be employing this “use it or lose it” option as a way of keeping more money at Central. It would be interesting to know if the DOE would use your savings to hire additional high-priced consultants or to maintain the many very generous senior management salaries that CSA has observed in the DOE’s Management Pay Plan. In the meantime, you should feel free to express your concerns and outrage over this policy with the Chancellor and the public.

As we explore this matter further, I don’t want to miss the opportunity to wish you all a peaceful and enjoyable winter break. You’ve earned it.

Sincerely,
Ernest

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