Tag: Education

I was furious to read a Wall Street Journal opinion essay by former NYC Schools Chancellor Joel Klein on the effect of teacher pensions on public education. Not because of what he said – I’ve said as much myself. But because of what he didn’t say, and when he said what he did. Come on Mr. Klein; you’ll have to do better than that.

Comptroller DiNapoli is reporting that the end of the federal stimulus program in FY 2011-2012 will mean the NYC schools lose 5.7% of their budget, as reported by Capitol Confidential. A large share of the so-called school budget, however, goes to debt service, pensions and retiree health care, not schools. And that share is set to soar in FY 2011 — 2012, as more of the cost of the 25/55 pension deal and the investment losses of recent years are admitted to. Therefore, expect funding for actual schools to fall by at least 10 percent and possibly much more than year, even if city and state funding does not fall further. That will be after whatever cuts happen in FY 2010-2011, the worst of which will probably not occur until after the November 2010 election. And I wouldn't expect any recovery in city and state funding until FY 2013-14.

Bottom line, a return to the 1970s for the city's school is scheduled for September 2011, 15 months after the MTA goes back in time. This time many other schools will join them, despite soaring taxes, unless those debt, pension and retiree health care costs somehow go away.

The U.S. Census Bureau has released elementary and secondary school finance data for fiscal year 2007, and I’m pleased to see one publication has already covered it and done a computation or two.  My contribution is summarized in the attached three spreadsheets. The numbers are available, and anyone is free to interpret them.

My main finding is that FY 2007 is the year that New York City public school spending, very low a decade earlier, went over the moon, soaring to an extreme high of $19,336 per student (all future figures on that basis), compared with the national average of $11,556. It is almost as high as the Downstate Suburban average of $20,120, and is far above the average for New Jersey ($18,094) and Massachusetts ($14,422). Even adjusting downward for the higher general wage rate here (in the private sector excluding the Finance and Insurance sector), New York City came in at $14,129, still a solid 22.3% above the national average and just below the Downstate Suburbs ($14,767) and New Jersey ($14,876) though well below Upstate New York ($15,632). That adjustment cuts Massachusetts to $12,764. For instructional spending alone NYC is now higher than any of those areas, meaning that funding is no longer an excuse for any educational deficiencies in the city – far from it. From FY 2002, the last budget before Bloomberg, to FY 2007, however, New York City’s extra spending did not go to administration, no matter what you hear, nor for the most part to higher teacher pay or smaller class sizes. It went to soaring spending on debts and employee benefits such as pensions and retiree health care, a shift the city had in common with other areas. Contract spending also rose.

Following public policy in New York is like watching the same horror movie over and over again, while knowing that what appears on the screen will eventually happen to you, your children, and/or people you care about. Case in point, the long series of “screw the newbie, flee to Florida” public employee union contracts that both inflate the cost of public services and degrade their quality, while cheating younger generations.

Just 18 months ago, Bloomberg and the United Federation of Teachers (UFT) cut a deal, the state legislature passed it (virtually zero no votes), and then-Governor Eliot Spitzer signed it, to allow existing teachers age 55 and up to walk out the door into retirement up to seven years early, receiving unlimited untaxed health insurance from the city without assistance from federal Medicare for ten years rather than three, without contributing an extra dime. Those just under age 55 would have to pay more for just a few years before retiring seven years early, and receiving pension income free of New York City state and local taxes. Because that deal also cut the take home pay of future teachers by 5 percent for the first ten years of their careers, and because a historically (looking at long term data) impossible rate of return on pension assets was assumed, the undebated, unvetted, unannounced deal was described as costing nothing. Well guess what? This week, for the umpteeth time, we got the first phase of the inevitable second half of that deal – the screw the newbie and the children half.

If anyone is wondering why the previously-tolerant United Federation of Teachers (UFT) is suddenly desperate to sink charter schools, you need to remember what has been the most important decision about the New York City schools in the past decade, the one that has sealed the fate of the city’s schools for the next decade or two. Not the increase in charter schools. Not mayoral control. Not the Campaign for Fiscal Equity court decision. The most important decision is the shift from a teacher retirement age of 62 to a teacher retirement age of 55, with teachers then 55 or over at the time of its enactment not required to put in an extra dime, and those near retirement required to put in extra for just a few years. The result of that decision is a sweet deal for those cashing in and moving out, but will be devastating for New York City’s children – and for younger and future teachers (if the city can even afford to hire teachers to replace those who retire), particularly when the federal stimulus dollars expire. The city’s schools have been, in effect, re-Lindsayed, and will face a repeat of the 1970s as a result.

The UFT wants desperately to disassociate the pension deal with the coming consequences. So does the Bloomberg Administration, which agreed to the deal (why I don’t know). So do the Democrats and Republicans in the New York State legislature, who approved it unanimously. Charter schools, however, operating in the same city with less money but less of that money going to the retired, will be in a position to offer a better education and better pay and working conditions to those teachers actually on the job.  As the walls close in on the 25/55 pension deal, that is a comparison the UFT desperately wants to stop.

You might have read about the results of school district audits conducted by the staff of New York State Comptroller Tom DiNapoli over the past year. In a state with the highest public school spending relative to its residents’ incomes, and therefore the highest state and local taxes as a share of income collected for schools, DiNapoli’s staff has found that the school districts waste nickels and dimes, and sometimes follow only 49 steps in 50 step financial procedures. According to the New York Times, “state auditors found that the Niagara Falls, N.Y., school district overpaid 272 employees by more than $500,000 in 2006, apparently incorrectly sending out an extra paycheck to each of them. Separately, they discovered that a laptop computer assigned to a school administrator in Vestal, west of Binghamton, had been used to visit Internet sites for pornography. And they determined that districts in Mount Vernon, Newburgh, North Syracuse, Schenectady and Williamsville could have saved a total of $212,000 on electricity if they had shut off computers at night and used power-save settings.” Superintendents and school board members “complained that the audits could be too focused on relatively minor infractions and accusatory in tone.”

I agree with the superintendents and school board members about the minor infractions, but believe the tone could be even more accusatory. Without any staff at all, using only widely available public statistics, I’ve been able to find far more telling explanations of why New York’s school spending is so high, as reported in prior posts. Based on that data, the real story is the questions DiNapoli didn’t ask.

If you read my prior post you know that the school finance situation was grossly inequitable in FY 1996, as the Campaign for Fiscal Equity lawsuit got underway. The personal background of many of New York City’s children would have made education challenging enough, but the under-funding was at least a major contributing cause to the city’s unconstitutionally bad schools. So were the contract provisions the teachers’ union had obtained, allowing a lower level of effort by the teachers in exchange for lower pay (which obviously did nothing for teachers who made a real effort despite that pay). If you look at the change from FY 1996 to FY 2006, however, one thing the CFE lawsuit achieved was an increase in education spending. The New York City schools already had enough money three years ago as a result, it seems to me, and have since received more.

But education spending increased in places where it was already high, not just in places where it was low. New York City residents, which had been cheated out of a fair share of school aid for decades, ended up paying local taxes for much of the increase in spending inside the city and state taxes for much of the increase outside the city. And while the gap between the city’s education resources and that of other parts of the state did decline, it remained large. The Campaign for Fiscal Equity achieved higher spending but not fiscal equity, so it is not unreasonable to expect that now that its lawsuit is over New York City’s schools will fare even worse in the next fiscal crisis, and some of the gains will be lost.

If you read my last post and downloaded the data, you might be wondering why the Campaign for Fiscal Equity sued New York State on school spending, and why the courts ever ruled in its favor. To find the answer one cannot look at New York’s school spending in FY 2005-2006. One has to look back a decade earlier to the FY 1995 to FY 1996 school year. In June 2005, the New York State Court of Appeals ruled that the Campaign for Fiscal Equity lawsuit was legitimate, and could go forward. The context was a state and city budget crisis that came to a head several years after a recession had begun, when costs could no longer be deferred to the future and revenues no longer stolen from it, at least to the same extent. The resulting sacrifice would be targeted at those who mattered least. The following post will show what the city’s school finance situation was that year, the year the Campaign for Fiscal Equity lawsuit was launched; the next will review what the CFE got for its effort, and how much it cost.