Testimony of New York City Comptroller Brad Lander to the New York City Council Committee on Education on Resolution 283-2022 to Immediately Reverse DOE Reductions to School Budgets for FY 2023
Good afternoon Speaker Adams, Chair Joseph, and members of the City Council Education Committee. Thank you for the opportunity to testify before you today on Resolution 283-2022, calling on the Mayor and DOE Chancellor to act immediately to utilize unspent federal stimulus funds to fully restore the $469 million removed from school budgets by the DOE in June.
I support Resolution 283-2022 and its call for a responsible budget that restores unnecessary and harmful cuts to our schools before they re-open this fall. The Mayor and Chancellor should heed it immediately.
Just yesterday, I spoke to the mom of a 5th grader at a public elementary school in the Bronx. At their school, there’s long been a band program available to 5th graders that her son had been looking forward to for years. It’s not only been a great way to start playing an instrument, but a sign of having made it to the top grade in the school. Unfortunately, that teacher is one of the three staff positions the principal was forced to cut.
By refusing to reach an agreement with the City Council, City Hall and the DOE are enforcing cuts to school budgets that mean stories just like that are playing out right now at 1,156 schools across the city – 77% of our public schools will open on September 8th with larger class sizes, fewer arts programs, and/or fewer guidance counselors than they had last year.
What’s especially painful and puzzling about this, as today’s resolution points out, is that it is totally unnecessary. In my first time in the City Council, in the wake of the Great Recession, the City was forced by declining tax revenue to make cuts to our public schools. But there is no such fiscal necessity now.
We estimate that $4.34 billion of the $7 billion allocated to DOE in federal stimulus funding remains unspent; so DOE could fully restore the $469 million in cuts with less than 11% of the remaining stimulus funds, and still have $3.87 billion to spend for other important purposes.
Even at this late hour, I urgently hope the Mayor and Chancellor will heed this resolution.
My testimony covers three questions: What is being cut from school budgets? What is the status of remaining federal stimulus funding that could be used to fill the gaps on a short-term basis?
What is being cut from school budgets?
Unfortunately, one of the problems in this debate is that the numbers have been murky throughout. My office has tried to bring transparency and clarity to the conversation by highlighting the actual amount cut from individual schools.
In the Preliminary Budget in February, the Administration projected that there would be a net reduction of $215 million from individual school budgets, based on declining and shifting enrollment. To be more precise, they indicated that the application of the Fair Student Funding formula would otherwise result in net reductions of $375 million, but they would offset that reduction with $160 million in register relief. In addition, the Preliminary Budget indicated that $83 million of that $215 million was supposed to come out of fringe benefits—not directly from school budgets.
If the numbers in the Preliminary Budget (which did not change in the Executive Budget) had been accurate, that would have left a net reduction of $132 million directly to schools. However, when DOE released the School Allocation Memorandum detailing Fair Student Funding to schools in early June, it showed much larger cuts to individual school budgets. Calculating the net decline in Fair Student Funding reveals a net reduction of $372 million—nearly 3 times the $132 million in cuts in the February forecast. To be clear, in this analysis, we took each individual school’s initial Fair Student Funding allocation, net of register relief, from School Year 21-22, and subtracted their FSF allocation, net of register relief for School Year 22-23.
This is a net number, however, and therefore does not fully reflect the cuts to individual schools. FSF was originally imagined as a way to shift resources between schools, so that if one school grows and another shrinks, the money follows. And that still happens to some extent. Based on enrollment increases, the DOE has provided FSF increases to 354 schools (approximately 23% of schools).
However, with broader enrollment declines, FSF has primarily become a formula for cutting resources to schools. Many more schools, 1,166 schools across the city (approximately 77%), are receiving cuts from their FY22 to FY23 budgets, for total cuts to individual school budgets, based on the FSF calculations, of $469 million.
That’s an average FSF cut of $402,456, which on average is 8% of individual school budgets. Roughly 450 schools have cuts exceeding 10% of their budgets. Dozens of schools are seeing cuts of over $1 million. This type of dramatic decrease is not something individual schools can absorb in one year without drastically impacting the essential services and supports students receive.
In response to pressure from the public and the Council, at the beginning of this month, DOE added flexibility to previously-allocated ARPA Academic Recovery funds, allowing schools to use it for salaries in addition to tutoring. However, the average amount of those funds per school is just $62,710, approximately 16% of the average cut to schools of $402,436, still leaving an average reduction of $339,726. And from what we are hearing even now principals have yet to hear anything from DOE about how they can move forward with using those flexible funds to actually hire back teachers they were forced to excess.
What do we know about the status of stimulus funding?
To help school systems across the country deal with pandemic revenue declines, cost increases for PPE, ventilation, and remote learning, and to address the daunting social, emotional and academic supports needed to help students recover, the federal government provided stimulus funding to school districts. The New York City Department of Education is receiving $7 billion.
Our analysis based on the currently available data, reveals that DOE has spent $2.63 billion of that funding. That leaves $4.34 billion in total federal stimulus funding left to spend over the next three fiscal years.
To break this down a bit more, we spent about $265 million in FY21. For FY22, DOE budgeted $3.018 billion. As of August 18, 2022, my office estimates that DOE had $2.37 billion in stimulus funding committed and liquidated.
That would mean over $600 million that was budgeted but not spent in FY22 will be rolled forward to future years—more than enough to cover the cuts to school budgets for this fall. This would be in addition to a total of $3.7 billion that has been budgeted in the City’s financial plan over the next three years. DOE has indicated that it is planning to spend $1.8 billion in FY23, and $1.4 billion in FY24 and $530 million in FY25.
Like the Council, I urge the mayor to apply the rollover of stimulus dollars unspent in FY22 to hold core funding steady for schools this year. If we assume at least $600 million in unspent funds will be rolled forward, then offsetting the full cut of $469 million would require only 20% of the potential $2.4 billion in federal stimulus funding available for FY23. This still leaves more than the $1.8 billion currently budgeted in FY23 for the priorities laid out by the administration for Summer Rising, 3K expansion, academic recovery, support for students with IEPs, mental health initiatives, Mosaic Curriculum, and other important needs.
Is it fiscally responsible to use stimulus funding to cover the cuts?
Finally, I want to address the question of whether it is fiscally responsible, given enrollment decline, the one-time nature of the stimulus funds, and the City’s long-term fiscal outlook, to use stimulus funds to cover the reductions to school budgets this year.
This is an important question. The Mayor and Chancellor are correct that we must look honestly and seriously at the trend of enrollment decline, and that federal Covid stimulus will not continue after FY25. We face sizable out-year budget gaps, and there is a very real possibility of an economic downturn.
Nonetheless, I believe using a modest portion of remaining stimulus funds – again, the cuts to individual school budgets could be fully restored just with the unspent stimulus funds allocated last year, leaving 89% or nearly $3.9 billion remaining – is fiscally responsible.
The Covid stimulus funding must all be spent, on public education, by FY25. We can’t save it or use it for purposes other our public schools. Using it this way now does not force the City’s hand in future years. Think about that band teacher in the Bronx. We can afford to keep the program this year, using stimulus dollars. Perhaps at some point in the future, we won’t have the necessary funding, and that cut would need to be made. But we could make it then – we aren’t creating new long-term obligations by using this funding to allow schools to continue long-standing programs.
We do need to have a thoughtful, long-term conversation about school funding and priorities. That conversation needs to include a thorough, data-driven analysis of declining enrollment, the multiple factors causing it, what the impact is on schools (cf. the recent article in Chalkbeat highlighted the daunting challenge facing small schools if their student bodies and budget shrink below what’s needed for basic school operations), and how we want to address it. It needs to include the work underway to revise the Fair Student Funding formula, and a comparable process is needed to review the State Aid formulas.
At the same time, that conversation must include a future-oriented look at how to invest public funds to provide all our students with excellent public schools. If we continue to take in comparable tax revenues, but we have fewer students, then we have an opportunity to strengthen our schools, but we’ll have to decide what our priorities are: to reduce class size, to provide better supports to students with special needs, to expand continuing and technical education offerings – to provide the kinds of programs that attract families and support all students.
We won’t be able to make every investment we want to, and we’ll have to live within the resource constraints we have. But kneecapping our schools now does not actually face up to that goal or help draw families back into the public school system. That’s the long-term mistake that perpetuates the cycle of enrollment declines and disinvestment in our public schools.
Finally, it is most certainly important to increase long-term reserves to prepare for an economic downturn. That’s why I’ve praised the decision of the Mayor and the Council to add $2.2 billion to long-term reserves in FY22. And we can go further still. After the Council voted to adopt the FY23 budget and the financial plan for FY22 was finalized in early June, the City still took in an additional $800 million in tax revenue more than we had forecast.
The Mayor and the Council could put this amount entirely into long-term reserves, bringing them above $10 billion for the first time ever – while still utilizing the stimulus funds to cover school budget cuts as proposed in this resolution.
Conclusion
Making cuts to individual school budgets at this moment is wrong for our students, for our teachers, and stands in the way of the equitable recovery our city needs. Our schools have endured the hardest two years and need every penny to provide the social, emotional, and academic supports that all our students deserve this summer and fall. Using a modest portion of the unspent federal stimulus funding to cover these costs is the right thing to do.
As our city emerges from the trauma of the pandemic, our schools desperately need the resources to provide our students with every available tool to help them recover and grow. This includes the dedicated, talented, well-trained teachers, administrators, guidance counselors, social workers, and paraprofessionals we are fortunate to have here in NYC, as well as programming in arts and science, ample time for recess, small class sizes, mental health resources and the many other essential supports that make our schools the engaging, nurturing, learning, healing spaces we know they can be.
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