Testimony by Senior Policy Analyst & Strategic Organizer Lara Lai to the New York City Council Committee on Federal Education Spending

Good afternoon, Chair Joseph and members of the City Council Education Committee. Thank you for the opportunity to testify before you today on the status of DOE federal stimulus funding on behalf of NYC Comptroller Brad Lander.

Three months ago, the Comptroller testified before this committee supporting Resolution 283- 2022, calling on DOE to utilize a modest portion of their stimulus funds to hold schools harmless from budget cuts. If the administration had done so this summer, we could have prevented the elimination of arts and music programs and larger class sizes at hundreds of schools. This past week, the administration announced that $200 million in stimulus money would be used to hold harmless schools with subsequent enrollment declines, though they chose not to reverse those earlier cuts.

At that hearing in August, the Comptroller outlined what our office knew about the status of the $7 billion in federal stimulus funds available to DOE to help deal with pandemic needs such as PPE, ventilation, and technology, and to address the daunting social, emotional and academic supports needed to help students recover.

Update on DOE Stimulus Spending

Today I would like to share the Comptroller’s Office’s analysis of the latest available stimulus information. As of the close of FY22, DOE had spent a total of $2.97 billion out of the $7 billion in federal stimulus funds allocated – $265 million was spent in FY21 and $2.71 billion in FY22. DOE had budgeted to spend $3.018 billion in FY22, meaning that there were approximately $310 million in unspent FY22 funds. This left a total of $3.99 billion left to spend in FY23, FY24, and FY25. As of the June Adopted Plan, the City had budgeted $1.8 billion in FY23, $1.4 billion in FY24 and $530 million in FY25.

Yesterday, as part of the November modification, the City adjusted their plan for spending these grant funds by shifting $284 million from FY25 to FY24, swapping out those funds for City dollars to fund more of 3-K in FY24. This shift, in combination with rolling back the de Blasio Administration’s commitment to universal 3-K (what the Adams Administration calls 3-K “rightsizing”) means that the City’s 3-K program is funded at a lower level with less of a dropoff in FY26.

The City did not rollover the $310 million in unspent funds from FY22 as part of this modification, nor did they otherwise adjust the outyear amounts. Therefore, the budget for these stimulus funds as of yesterday is now $1.8 billion in FY23, $1.7 billion in FY24, and $246 million in FY25.

Of the $1.8 billion budgeted for FY23, the City has spending commitments of $836 million, leaving $964 million uncommitted. As previously noted DOE has also recently announced plans to allocate $200 million to hold individual schools harmless for additional enrollment declines beyond DOE estimates, and that this funding would come from FY24 funding that will be pulled forward. However, the City did not make that adjustment in the November modification.

Transparency

Unfortunately, beyond total spending, the Comptroller’s Office cannot discern how stimulus funding is spent on specific initiatives by DOE on an ongoing basis, given (a) the small number of units of appropriation (UAs)/budget codes utilized by DOE, (b) the lack of correlation between those codes and either individual School Allocation Memorandum and/or the stimulus funded programmatic initiatives outlined by DOE, and (c) the fact that the DOE has not provided a detailed accounting thus far. We will welcome that information if they’ve provided it for this hearing.

Some initiatives funded by federal stimulus funds, such as Summer Rising and 3K are clearly articulated in school allocation summaries and other budget documents. Other initiatives, such as Mosaic Curriculum, restorative justice, and special education, are less clear:

• For example, DOE has allocated $227 million for “Other Academic Supports.” In looking through SAMs, it is unclear what this category represents. Perhaps it includes the $10 million for IEP Team Staff allocated to schools via SAM 21, or the $8 million for arts funding in SAM 36? Even with both of those allocations totaling $18 million, it is unclear what the other $209 million in this category is being spent on.
• In the Academic Recovery category budgeted for $225 million, there are two possible SAMs that represent this initiative– SAM 31 which represents $125 million broadly designated for academic recovery, and SAM 61 which provides $12 million to provide compensatory services to students with IEPs. Together these two allocations only represent 61% of the $225 million that was budgeted which begs the question — has the rest been allocated and for what?

The Comptroller urges a more transparent accounting from DOE to provide updates on stimulus spending on the priorities laid out by the administration. This funding represents a one-time opportunity for investment in our schools, and we must ensure these funds are being spent equitably and effectively.

With regard to effectiveness, the Comptroller’s Office reiterates its request that DOE provide the outcomes and metrics by which stimulus funded programs are being measured. It is important that beyond monitoring spending, we look at whether these programs are effective in achieving the outcomes for which they are intended. Are students with disabilities progressing beyond any pandemic-related losses they may have experienced? How many mental health workers have been hired?

This information is critical not only for looking backward, but forward, as we evaluate whether or not to continue Summer Rising, new mental health programs, the new dyslexia program, and other initiatives after stimulus funding expires.

Longer term funding questions Finally, in light of the sunsetting of stimulus funding in FY25, and given sizable out-year budget gaps even before the possibility of an economic downturn, new State legislation mandating class size reductions, obligations to better meet the needs of students with IEPs, and the desire to continue valuable programs that have been launched or expanded with stimulus funds, it is important for the City to begin a longer-term conversation about how to fund and meet our educational goals.

The Fair Student Funding working group (in which this office and members of the City Council took part) has begun good work looking at the various factors and weights within FSF. However, as the working group has noted, a zero-sum approach of moving money between schools will not meet all our broader educational goals. Even given the trend of enrollment declines, and even with reasonable savings projections from PEGs, new funding would very likely be needed in the coming years to meet state class size reduction mandates, fulfill our obligations to students with special needs, expand early childhood education, and continue valuable programs launched with stimulus funds, such as the new dyslexia programs, Summer Rising, etc.

If we hope to meet any of those goals beyond the expiration of federal stimulus funds in FY25, it is not too soon to begin the conversation about where to find those resources.

###