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IBO: City could save money by eliminating principal bonus pay

The Independent Budget Office’s latest suggestion for how to cut costs at the Department of Education is to cut a performance pay program for school administrators that the Bloomberg administration convinced the principals union to accept.

Since 2007, the department has distributed about $6 million a year to principals and assistant principals on the basis of their schools’ progress report scores. Last year, 275 administrators — including some who were under investigation at the time — took home $5.7 million, with individual rewards as high as $25,000, for principals at the top 1 percent of schools. Department officials said today that this year’s bonuses, based on 2011-2012 progress reports, are in the process of being paid out now.

In its annual “Options” report listing ways for the city to save funds and raise revenue, the IBO argues that the performance pay might be better off conserved. The annual report is meant to inform city government officials as they head into their final negotiations before adopting a budget for the 2014 fiscal year. The education department, which takes up about a quarter of the city’s planned spending, was listed in 14 of the 80 suggestions this year.

For each cost-cutting idea, the IBO lists arguments that supporters and opponents might make. For the performance pay idea, the report notes, “Proponents might argue that the more weight that is placed on the Progress Reports, the more incentive there is for administrators and teachers to ‘teach to the test’ and even to manipulate data. Moreover, the remaining measurement problems in the Progress Reports might imply that the basis for awarding the bonuses is flawed.”

The report notes that the city discontinued its teacher bonus program after research showed it did not lead to higher student performance. And it points out that administrators’ bonuses are counted in their pension calculations, meaning that “the bonus payments may actually create an incentive for high-performing principals to retire.”

On the other hand, the IBO notes, opponents of eliminating the bonus program could argue that its utility should be studied before it is ended and that it rewards administrators who have worked hard. The IBO also notes that the city would enter tricky territory if it tried to go back on its 2007 deal with the Council of School Supervisors and Administrators, which created the bonus program.

“An agreement to eliminate bonuses might include increases in other forms of compensation that could partly or fully offset the savings attributable to the elimination of bonuses,” the IBO’s report says.

Indeed, cutting the performance pay program for principals would require the city to return to the negotiating table with the CSA, according to an union spokeswoman, Chiara Coletti. “The IBO’s proposal to eliminate performance differentials for principals and APs isn’t a matter for comment but for negotiation,” she said.

Coletti said the Bloomberg administration had pushed heavily for the performance pay program. “After significant negotiations with CSA, they became a reality,” she said. “To change this would require new negotiations between the DOE and the union.”

Members of the principals union, like the members of all other municipal unions, are currently working without an active contract. Negotiating new contracts with each of the unions will be a top priority for the next mayor when he or she takes office next year.

The IBO’s full list of cost-cutting proposals include all of the ones the office made a year ago when it last suggested ways to cut costs, but the costs are adjusted to reflect this year’s proposed budget. The office now estimates that eliminating the parent coordinator position would save the city $91 million, up from $73 million last year, and adding time limits for teachers in the Absent Teacher Reserve pool is pegged at saving $71 million, up from $50 million last year.

The IBO is also still suggesting that the city consider charging rent to charter schools that occupy space in public buildings. Last month, a New York State Supreme Court judge dismissed a lawsuit aimed at forcing charter schools to pay rent but said the concerns that the plaintiffs raised were legitimate. Charging charter schools rent would save the city $53 million a year, the IBO estimated in a proposal that drew sharp criticism from the charter sector, which has depended on no-rent space agreements to flourish.

Here’s the full list of education-related cost-cutting proposals that the IBO is making this year:

  • Eliminate public funding of transportation for private school students ($47 million)
  • End the Department of Education’s financial role as FIT’s local sponsor ($45 million)
  • Eliminate performance bonus for principals and assistant principals ($6 million)*
  • Eliminate elementary and middle school summer school program ($22 million)
  • Eliminate Youth Connect, a toll-free hotline for youth and their families ($255,000)
  • Impose a one-year hiatus on the creation of new small schools ($14 million)
  • Establish co-payments for the Early Intervention program ($22 million)
  • Eliminate city dollars and Contracts for Excellence funds for teacher coaches ($27 million)
  • Eliminate hiring exception for new schools ($12 million)
  • Eliminate the 20-minute “banking time” for certain education department staff ($1 million)
  • Eliminate the parent coordinator position ($91 million)
  • Encourage classroom teachers to serve jury duty during noninstructional summer months ($2 million)
  • Institute time limits for excessed teachers in the Absent Teacher Reserve pool ($73 million)
  • Charge rent to charter schools in shared facilities ($85 million)

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