-- Review finds DOE cannot account for Chancellor’s claims of $250 million in savings, no evidence of savings returned to classrooms; headcount increased at central DOE, but teacher-student ratio unchanged --

View Letter to Bloomberg
View Chancellor Klein Testimony on Preliminary Expense Budget
View Chancellor Klein Testifies in front of City Council
View Chancellor Joel Klein's Reflections On The 2003-2004 School Year

New York City Comptroller William C. Thompson, Jr. today released a letter to Mayor Michael Bloomberg faulting the Department of Education (DOE) for engaging in a budgetary “shell game” by inflating its claims of administrative savings by more than $100 million.

Thompson issued his letter after examining whether the DOE’s Children First reorganization has yielded the $250 million in savings reported by Chancellor Joel Klein. The Comptroller’s review found that not only has the DOE failed to achieve its savings goal, but the agency’s accounting and fiscal practices have not significantly improved.

“From all appearances the DOE is playing a budgetary ‘shell game,’ making it impossible to determine the magnitude of its failure to achieve savings which the public has been led to believe were transferred to directly benefit our children in their classrooms,” Thompson wrote.

The Comptroller produced copies of testimony by Schools Chancellor Joel Klein and DOE news releases that indicated that the agency generated $250 million in administrative savings. However, Thompson’s review found just $140 million in savings.

“My office has been unable to independently verify that the DOE increased its investment in the classroom by $250 million between FY 2002 and FY 2004,” Thompson wrote.
“Although in testimony Chancellor Klein has attributed new investments in this amount to math and literacy coaches, a new core curriculum and eight million new books, my office has yet to be provided with documentation of these expenditures.”

Thompson’s review also uncovered the following:

• Of the $140 million in achieved savings, only $4 million can be attributed to cost-cutting at central DOE headquarters;

• There is no evidence to show that any DOE cost savings resulted in more dollars spent in classrooms;

• Between Fiscal Years 2002 and 2004, headcount at central DOE increased by 94.

Additionally, Thompson pointed out that despite the addition of math and literacy coaches, there has been a net loss of 2,023 teachers during this time period. The teacher-pupil ratio in FY 2004 has remained the same as it was in FY 2002: 1 teacher for every 12 students.

“If dollars that are going directly to the classroom are not being invested in teachers, it begs the question: how was the money spent?” Thompson said.

“Fiscal transparency and agency accountability must be regarded as synonymous. The continued inadequacy of the DOE’s financial reporting places the agency well short of this threshold for accountability,” Thompson wrote, before recommending that a monthly budget monitoring process be instituted for the DOE. “Our responsibility to the public as well as our mutual concern for accountability of public education makes such action at this time imperative.”