The previous three posts showed that after being underfunded in the past, spending per student in the New York City public schools soared to levels that by FY 2009 not only far exceeded the U.S. average after adjustment for the cost of living, but also exceeded (on average) other parts of the metro area in the Downstate New York Suburbs and New Jersey. But a large share of the increased spending went to a category in which New York City’s spending was already high – instructional employee benefits, particularly on the retired, as rich benefits for those not working and no longer working became richer still. So instead of money being drained from the classroom to got to the overfunded school districts in the rest of the state due to the state school aid formula, money has been drained from the classroom to go to the retired due to a series of retroactive pension enhancements.
FY 2009 is the most recent data from the U.S. Census Bureau, and thus the most recent data for which New York City education finance may be compared with the U.S. average and other places. This post uses New York City “Budget Summary” documents dated May 2009 and May 2011 to analyze how the city’s spending has changed from FY 2009 to FY 2011, and how it is proposed to change from FY 2011 to FY 2012. A spreadsheet is attached, with data in $millions. The data is not inflation adjusted, as inflation has been low in this period of recession, and compensation increases for most workers have been absent or negative. And it is not per student, as I don’t have enrollment figures and estimates for these years, just total. But if enrollment in FY 2011 is at the same level as it was in FY 2009, spending per student is up to $23,167 this year. An incredible sum.
The data shows that overall spending on the New York City public schools increased by 9.1% from FY 2009 to FY 2011 ($1.9 billion), and is proposed to increase 4.7% from FY 2011 to FY 2012 ($1.1 billion), despite the recession and actual funding reductions for some other city services. There are folks out their collecting signatures against teacher layoffs and “cuts.” But the data shows there are no cuts, just shifts in where the money is going. I can only assume that those signing are actually endorsing a new pension “incentives” allowing teachers to retire at age 50 after 15 or 20 years of work, if the fine print is read, not maintaining the same number of teachers in the classroom.
There has a shift in who is doing the paying. The federal and state governments increased their contribution to the city’s schools by 7.1% ($738 million) from FY 2009 to FY 2011, but are slashing that contribution by $8.0% ($895 million) from FY 2011 to FY 2012, in large part because the federal government’s temporary increase in education funding during the recession is ending. With the State of New York stil fiscally troubled and not increasing its contribution to make up the difference, non-city funds for the New York City public schools will be lower in FY 2012 than they had been in FY 2009.
Since we don’t have comparable figures for other parts of the state, we don’t know if state funding for the New York City public schools has been disproportionately cut, as in the previous two recessions (even after 9/11). We won’t know that for a few years. We do know, based on what can be read in the newspaper, that while many affluent suburbs continue to receive general municipal aid from the state, New York City’s municipal aid has been cut off. The reason is that because city residents pay a local income tax in addition to property taxes, freeing up the state income taxes city residents also pay to be used elsewhere in the state. Or so they said.
The funds New York City taxpayers provide its public schools, meanwhile, increased by $1.16 billion (11.1%) from FY 2009 to FY 2011 despite the budget crisis, and are proposed to increase by $2.0 billion (16.9%) in FY 2012. That is how much extra New Yorkers are paying for schools, above the already sky high levels of FY 2009. In exchange, they received 5,000 fewer teachers (and two fewer days worked due to the elimination of preparation time before Labor Day) in FY 2011 than in FY 2009, with a proposal for 6,000 fewer in FY 2012 than in FY 2011.
The only objection anyone with power seems to have to this trend is that some teachers would be laid off, instead of just getting to retire early (the union and City Council objection) and the layoffs would be via seniority (the Mayor’s objection). That the total number of teachers would fall from 80,000 to 69,000 with additional decreases coming despite higher spending, after all, is a problem for school children and not organized workers. I haven’t heard the “we’re ripped off no matter how the staff is cut” perspective in the MSM, or for that matter anywhere else.
The number of teachers is falling, and class sizes are rising, because teachers continue to get raises but the total money spent on wages and salaries is going down – by 0.4% ($37 million) from FY 2009 to FY 2011 and by a proposed 3.6% ($351 million) from FY 2011 to FY 2012. Total spending on personnel, in contrast, is going up substantially because of non-wage benefits. Spending on pensions increased 11.6% ($268 million) from FY 2009 to FY 2011, and is proposed to increase by 19.0% ($490 million) for FY 2012. That is unlikely to be enough, however, as two independent sources have found the NYC Teachers’ Retirement System one of the most underfunded major pension plans in the country. As bad as New Jersey. So the assertions that all those retroactive pension deals “cost nothing” or “saved money” were clearly false, or only applied to the years the deals were cut since the cost was deferred to a future that is now the present.
Those assertions conveniently ignored the added cost of earlier retirees receiving retiree health insurance for many more years before Medicare picked up some of the burden. But New York City’s spending on benefits other than pensions increased by 13.4% ($377 million) from FY 2009 to FY 2011, even as the city was raiding a fund set aside for retiree health care to balance the budget. And is proposed to increase by 4.8% ($153 million) from FY 2011 to FY 2012.
In addition to rising payments to workers who are no longer working (a decade or more earlier than most people will get to retire), spending on dept service has also soared – by 48.0% ($409 million) from FY 2009 to FY 2011 and by another $221 million (17.5%) form FY 2011 to FY 2012. This despite record low interest rates. That is another cost from the past shifted to the present. If this debt ever has to be refinanced at higher rates, the city’s debt service spending for education will soar and the money available for other things will shrink.
In some ways, this soaring debt cost may be thought of as a residue of past underfunding of the New York City public schools. That underfunding led to massive underinvestment in New York City school buildings, and partially curing it without enough current tax dollars led to a massive increase in debt. One might put it this way – a huge physical debt has been converted into a huge financial debt, with the future no better off (net). And some of that physical debt remains, as class sizes remain high in part due to a shortage of rooms rather than a shortage of teachers, even after all the borrowing.
What is likely to be controversial is the substantial increase in spending on OTPS (other than personal services) – by $962 million (18.3%) from FY 2009 to FY 2011, and by $539 million (8.7%) from FY 2011 to FY 2012. The question is, does this include payments to charter schools? If so, it could be explained by growing charter school enrollment and falling regular school enrollment, meaning that personnel expenditures per student in the other schools are rising much faster than even it appears. If this figure in the city’s budget documents does not include personnel expenditures in charter schools, the recent and proposed increases in OTPS spending are large indeed. I spent a half an hour plodding through city budget documents trying to answer this question, but could not.
Given the recession, the City of New York should have been squeezing its contractors and suppliers, so OTPS should have been slow to rise if it increased at all. One explanation that might make sense is that Mayor Bloomberg has realized that he has been defeated, and that the public school system (and equality of opportunity) are doomed by the shift of all available money to retired. And the only way people who are not rich enough for private schools or poor enough to not care about education will want to live there is if they can at least home school their children, perhaps co-operately in groups of families, with the assistance of some kind of online curriculum and support. So if that’s where the money is going, it might make sense. But I haven’t heard the Mayor admit that it’s “game over” for the New York City public schools, although Joel Klein all but has. And if the higher OTPS spending is not to create a lifeboat as the schools collapse, and does not represent charter school payments, my response is this.
In any event, it appears likely that the conditions of the 1970s will be repeated in the New York City public schools – but with vastly more public school spending, with much of it for the early retired. The United Federation of Teachers, on its Edwize blog, is probably no longer celebrating a 30 year campaign resulting a huge increase in retirement benefits, and in particular that its members received those increased benefits while other workers are having their retirement benefits reduced, as was stated here. Instead, it is trying to convince those who lost that the win at their expense never happened, or that the union is on the side of children or young teachers facing layoffs. But I know better.
Already there are press reports of growing “social promotion.” Let me tell you that “social promotion” never existed. The idea that NYC students were shifted from grade to grade to improve their self-esteem with nothing more than a rationalization. What there was then in reality, and may be again, is “fiscal promotion.” And this year is just the start. And expect that OTPS money to go away, eventually, too along with teaching supplies, school building maintenance, etc.