Trends in NYC Education Finance: Same Victims New Predator Part 2

As noted in my previous post on education finance, in FY 1996, total public school expenditure per student – with a cost of living adjustment for NYC – was 1.4% above the U.S. average in FY 1996, and 36.5% above the U.S. average in FY 2009. As we face ongoing cuts to the actual education provided by the New York City schools, this huge increase in the city’s relative spending has changed my understanding of what the cause of decreased educational quality is — underfunding compared with being cheated of fair value.

But most of those discussing education finance policy are either funded or supported by those with a self-interest in taking more for themselves, or tribally aligned with one position or another and unwilling to consider facts contrary to their world view. Thus, according to many people who have commented on my internet comments, posts or reports over the years, what has actually changed is that I have gone from someone in the pocket of the United Federation of Teachers who hates the suburbs and Upstate New York, to someone in the pocket of corporate interests who hates teachers and wants them to eat cat food when they get old. But while facts may interest only me, I’ve done the spreadsheets so I might as well discuss what they say.

First, let me apologize to those who attempted to read my previous posts and download the spreadsheets. Thanks to the Anthony Weiner “issue,” and the interest in what the other Room Eight writers had to say about it, the site has been overwhelmed with traffic. It is as if the Congressman had created a denial of service attack. Before reading this post, you should read the prior two on NYC’s comparative public school finance in FY 2009, and changes from the past through today. 

I’ll pick up the latter discussion with the spreadsheet “Census Education Finance FY96 and FY09 NYC Etc” which was attached to my previous post. This shows the change in per student revenues and expenditures by category, adjusted for inflation, between New York FY 1996 and FY 2009 for New York City, the Downstate Suburbs, Upstate New York, New Jersey and the United States, based on data provided annually by the U.S. Census Bureau.

What the data for the U.S. average shows is that national commitment to education soared during these years. Total revenues per student increased by 36.3% adjusted for inflation, and total expenditures per student increased 37.2%. The federal government accounts for a relatively small share of elementary and secondary education funding, but to the extent that it does provide money, its per student contribution doubled while the state and local contribution grew by just under one-third. This era, of course, has been the era of “No Child Left Behind,” “Race to the Top,” etc. etc. In FY 2009, to keep the nation’s schools from collapsing with tax revenues in the Great Recession, the federal government temporarily increased is education spending even more.

As discussed in my previous post in FY 1996, in response to a budget crisis, the State of New York had slashed New York City’s already low share of state school aid further, devastating those schools financially. With 37.2% of the state’s public school children, the city received only 29.6% of its school aid that year. After the late 1990s economic boom allowed more powerful interests to be satisfied, however, state funding for the city’s schools increased, and following the settlement of the Campaign for Fiscal Equity lawsuit it increased even further. So the FY 1996 base may be considered a low point, both for the funding of the city’s schools and for state aid to those schools.

From FY 1996 to FY 2009, the total increase in per student state support for the NYC public schools was 121.4% (more than double), over and above inflation. The City of New York, for its own part, increased its per student funding of the schools by 84,3% more than inflation. Overall, funding for the city’s schools increased by 96.5% more than inflation from FY 1996 to FY 2009, to the point where (as described in my first post in this series) in the latter year it was (after adjustment for the cost of living) far higher than the U.S. average, higher than the Downstate Suburbs and New Jersey, and only slightly lower than Upstate New York.

The schools in Upstate New York and the Downstate Suburbs were already well funded in FY 1996. But in order to keep up with soaring spending in the city and nationally, they had some revenue increases of their own. Their per student federal aid increased more than the federal aid to New York City during those years, while state aid increased by 87.0% more than inflation in the mostly affluent Downstate Suburbs (with the STAR program playing a leading role) and by 69.5% in Upstate New York. Clearly, the state couldn’t get away with the targeted destruction of the city’s schools for long, and in a few years it had largely succeeded. Some of the larger increase in state school aid to NYC compared with other parts of the state is merely a reversal of the draconian cuts in FY 1996. Still the city’s share of state school aid did rise particularly in the post FY 2006 period, as shown in the previous post.

What is a bit of a surprise to me is that local spending per student increased by just 21.0% more than inflation, roundly speaking, from FY 1996 to FY 2009 in the Downstate Suburbs and Upstate New York. Given that most school districts outside NYC were, if anything, overfunded in FY 1996, particularly given their (in most places not all) less disadvantaged student population, once could argue that local spending per student should have gone down over these years. But Governor Pataki and the state legislature wanted to keep spending in the rest of the state higher than in New York City, even if the city’s spending rose. So they designed the STAR program to give more state funding to school districts that spent more, with predictable results.

Still, with all the complaints about property taxes in the rest of New York State, I’m surprised that the inflation-adjusted increase in local school revenues per student there did not increase by more than it did. Perhaps, as much as property taxes increasing relative to inflation, the source of angst in the rest of the state is that people and businesses are getting poorer relative to inflation. This may be occurring as their population ages, the educated young move away, large corporations move out or close, and no new growing major businesses are created. What is left behind is those retired or laid off from the private sector, struggling small businesses and the low-wage workers who work there, and – the increasingly better off public employees and retirees they pay for. Or New York City pays for.

As we turn our attention to the change in NYC expenditure from FY 1996 to FY 2009, bear in mind that both the absolute change and the percentage change are indicators of priorities. A large percentage gain in particular category, for example, may not account for much of the overall increase in spending if was from a very low base. The overall increase in NYC expenditures per student – adjusted for the cost of living — was $8,037 in from FY 1996 (adjusted for inflation) to FY 2009. To put that in perspective, total spending per student in the U.S. in FY 1996 (in FY 2009 dollars) was $9,135. So the mere increase in the city’s spending over those 13 years was nearly as large as the national average for spending at the start of the period. It is also an 84.7% increase compared with the city’s own spending in FY 1996. Given that public education is the largest local government expense, this increase – albeit from an unusually low base – could only be described as massive.

Still, I wasn’t necessarily upset about it. Back when I thought it might make a difference, I was willing to pay taxes to spend one-third more than the U.S. average on schools, even after an adjustment for the cost of living. In fact, in lieu of the property tax now being discussed I had in the past proposed that amount as a spending cap – with one dollar of state aid taken away for each dollar spent above the cap – in the hopes of school spending becoming equitable at between 25.0% above the national average (adjusted for the cost of living) and 33.0%. Ironically, in FY 2009 not only were the overspending (on average – not every school district) Downstate Suburbs and Upstate NY over what had been my proposed cap, but New York City was slightly over as well.

So how was this bounty spent? Back when I was purportedly a tool of the teacher’s union rather than a tool of corporate interests (I haven’t met anyone from any of these interests), I used Census Bureau data to show that NYC school teachers were relatively underpaid and understaffed. At the time, because starting salaries were already low, city’s new teachers were under qualified. And its older teachers, working in chaotic environments with large classes, no support services and limited supplies and facing a student populations with little parental educational contribution – were on average under-motivated and doing all they could to get out the classroom to one of the many make work non-jobs that had been created.

Well the good news is that instructional wages and salaries per student for NYC teachers actually teaching, adjusted for inflation and the cost of living where relevant, increased 64.6% from FY 1996 to FY 2009, compared with an increase of 21.0% to 28.0% for the U.S., the Downstate Suburbs, Upstate New York, New Jersey and the United States. The total increase in instructional cash pay per teacher, at $2,560, accounted for 31.8% of the total increase in spending per child in the city. (I would have preferred that share to be a little higher). Higher cash pay per student could have been used for fewer students per teacher, given the same inflation-adjusted pay for the teachers, higher pay for the teachers given the same number of students per class, or a combination. My best estimate is that it was used for a combination.

As best as I could tell, however, the distribution of the increased spending among teachers was NOT what I would have wanted, or what anyone who actually cares about education should have wanted. The quality of worker attracted to teaching, and the quality of teacher attracted to New York City, is affected primarily by starting and early career pay. So I would have preferred a large share of the money to go to the early years of a teaching career, with pay rising as fast as competence and then leveling off to slight gains. Instead, the union and Mayor Bloomberg singed a contract in the mid-2000s that increased starting pay for future teachers by 6.0% less than late career pay for those retiring. Otherwise, the rate at which newer teachers gain salary was unchanged as far as I know, based on what I read in the newspaper.

I would also have wanted much smaller class sizes for green teachers in their first of second year, compared with veterans. As in any job, those teachers are still learning the ropes and some will find they are not cut out for the job and leave. Novice teachers also have to create their lesson plans, rather than merely updating those from past years, so they have more work. Lower class sizes for early career teachers would both take the pressure of the novices and limit the number of children stuck with bad teachers. It seems that did not happen either.

The difficulty of teaching varies enormously, based on the level of parental support and the subject being taught. I would have preferred that those who did the most difficult jobs get the most pay, both due to fairness and due to the need to attract quality workers to the more difficult situations situations. This isn’t just a preference in education; it is common sense for every job. All the cops, for example, say they deserve more money because they risk their lives every day, but very few risk their lives at all. Shouldn’t those in the toughest neighborhoods be paid more?

Thus, I would have insisted that much of the money available for raises go to pay higher differential pay for those teachers with unusually large classes, those with many disadvantaged or troubled children, and those teaching subjects that are essential but less fun and more difficult to learn and teach, such as math. Based on what I read in the newspaper, however, none of that happened. The only factors that affect what different teachers are paid are courses taken and seniority, as far as I know.

So who would be against allocating the total pay NYC teachers receive the way I suggest? The United Federation of Teachers. And how does the United Federation of Teachers want pay allocated among teachers, based on what they have done and ignoring what they might say? With as much as possible going to the year (s) immediately before retirement, to inflate the pensions, and as little going to starting pay as possible, since starting pay could be held hostage to equal or larger raises for those cashing in and moving out when the quality of teachers hired goes down.

In their perfect world, teachers would be vastly underpaid, and therefore unmotivated and resentful, for most of their careers. Until their last year, when suddenly they would receive enormous pay and then spend the rest of their life in cosseted luxury while doing nothing. And despite a 64.6% increase in wage and salary expenditures per student from FY 1996 to FY 2009, my impression is that the distribution of pay among NYC is as likely to have moved closer to this “ideal” as further away. I certainly didn’t hear about much public pushback against it.

And it wasn’t just an education thing. The police and fire unions managed to get starting pay cut to $25,000 with the “savings” used to increase pay for those about to retire despite a budget crisis. The pay of new hires for most city workers, represented by DC 37, was cut by 15.0% compared with those who came before. All these deals were agreed to by Mayor Bloomberg, and described as “tough and fiscally responsible” negotiating by interests with no concern for the quality of public services. Some of them later because concerned with the effect on the quality of new police and firefighters, since even the rich rely on public safety. The city then had to try to negotiate out of this when the quality of recruit plunged, and starting pay is still far lower relative to year before retirement pay for both jobs than it was a decade ago.

The increase in wages and salaries for teachers in their last year of work was only one factor driving up pension costs. In FY 1996, probably as part of the deal to underfund the city’s schools that year, the United Federation of Teachers got a deal to allow teachers to retire at 57 instead of 62 in exchange for an additional contribution that was far less than the cost (no matter what Comptroller Liu says), and a pension “incentive” that allowed thousands of teachers to retire at the time with no additional contributions. Those teachers, and others working and long retired, got an automatic inflation adjustment in 2000. Those with more than 10 year’s seniority were allowed to stop contributing to the pension plan after that year, in exchange for agreeing for the city to be allowed to underfund the pension plan as well. And finally, the 25/55 pension deal that wrecked the schools after 1968 was re-imposed in 2008, with horrific and ongoing consequences.

Altogether, instructional employee benefits per student – which were already high in New York City in FY 1996 when compared with the U.S. average – soared 163.0% ($2,057 per student) from that year to FY 2009, after adjustment for inflation and the cost of living. While not as bad as in NYC, pension underfunding and retroactive benefit increases were common across the country in the years through 2000 – though only in New York did such pension deals continue after the stock market bubble was exposed. The increases in instructional employee benefits per student were 55.8% for the U.S., 58.7% for the Downstate Suburbs, 79.9% for Upstate New York, and 77.9% for New Jersey – less than in NYC but still a substantial rise. It may also be said that in FY 2009, most part of the U.S. had not even begun to pay for the retroactive pension deals past underfunding, so this is just the start.

It should be noted that the increases in non-instructional employee benefits per student over the 13 years were similar large, and also far in excess of wage gains. Non-instructional employee benefits per student increased by 98.7% more than inflation in New York City, from FY 1996 to FY 2009 compared with a 35.5% increase for non-instructional wages and salaries per student. The percentage non-instructional benefits per student increase in Upstate New York and New Jersey was nearly as large, though in he latter state required pension contributions were made in some years and not in others, possibility skewing the data.

As noted in my prior post, instructional spending on items other than wages, salaries and benefits was cut to virtually zero in FY 1996, when no one got any teaching supplies (and this was considered acceptable). There was also virtually no information technology in the New York City schools. So it is not surprising that spending in this category nearly tripled adjusted for inflation in New York City from FY 1996 to FY 2009. The city’s dollar increase was $868 per student, far less than the increase in instructional wages, salaries and benefits. But New York City’s increase in non-personnel instructional spending, both in dollars and as a percentage, was far greater than the increases in the rest of New York State or the U.S.

As for non-instructional spending, New York City was low in FY 1996 and low in FY 2009, but the gap between the city and the rest of the state and country closed somewhat during the period. General Administration spending per student fell by half while School Administration spending doubled, a shift explained by policy decisions such as the defunding of local school boards and the hiring of parent coordinators. Instructional staff support spending, rock bottom in FY 1996 and still relatively low in FY 2009 at one quarter the U.S. average (adjusted for the cost of living), nonetheless soared in NYC between the two years by 342.6% (or $102 per student).

Surprisingly, per student spending on Operation and Maintenance of Plan and Student Transportation, two categories of non-instructional spending for which NYC was above the national average in FY 1996 even after reducing the NYC figures to account for the cost of living, also increased by more than average in NYC from that year to FY 2009. The school bus companies, if you recall, had to resort to a series of lawsuits followed by dumping handicapped children in the wrong place in the freezing cold to accomplish this. So much for privitization savings when the private companies for an organized lobby and grabbing public money is their whole business.

So there we were in FY 2009. Do the numbers explain why many people believe there has been little improvement despite a massive increase in spending? Well, remembering what the schools were like in FY 1996, I don’t agree that there was little improvement as of FY 2009.

What happens next is another matter. This story seems to require a long discussion. Thus I will once gain break here, and add one final post on what has happened, and is happening, in NYC in the post FY 2009 period using City of New York budget summary documents. That story is not much different than the FY 2008 to FY 2012 analysis I did based on an earlier version of the proposed budget, which you can read here.