If pension and debt service costs attributable to BOE are included, total City spending (unadjusted for inflation) increased slightly between 1994 and 1996. It should also be noted that 1994 represented a peak in total real City spending and that 1995 and 1996 funding levels are quite comparable to those before 1994.

City funding covers only part of BOE's budget; in 1996, the State and federal governments contributed 60 percent of funding. Total funding trends are somewhat different than looking solely at City funding over the past few years. In real (or constant dollar) terms, total BOE spending peaked in 1995 before dropping 3.1 percent last year to a level that was still above the average of recent years.

In contrast, the current plan for fiscal year 1997 calls for a 4.4 percent increase in real City funding and a negligible increase in total real expenditures. Figure 1 below presents City spending and total BOE expenditures. Debt service and pension costs are not included.

School enrollment in New York City has grown strongly in recent years. (See Figure 2.) With an influx of over 130,000 students since 1988, it has been difficult for the City to maintain per pupil spending levels.

With total City funding at $3.130 billion for a total enrollment of 1.060 million students, the City spent an average of $2,954 per pupil in fiscal year 1996. Adjusted to 1994 dollars, spending averaged $2,805 for each student.

From 1988 to 1994, real per pupil City funding increased slightly (with some ups and downs mixed in) from $3,165 to $3,176, a 0.3 percent increase. From 1994 to 1996, real City funding per pupil decreased from $3,176 to $2,805, an 11.7 percent decline. These figures do not include debt service and pension costs; even if they were added in, though, the trend is still downward.

It is also important to look at the portion of per pupil spending funded by the State and federal governments. Although State and federal aid has varied over the past decade, in real terms non-City funded spending per pupil in 1997 is virtually identical to non-City funded spending in 1988.

Total BOE spending per pupil, adjusted for inflation, went from $7,232 in 1988 to $7,444 in 1994, a 2.9 percent increase. However, from 1994 to 1996, total real funding went from $7,444 per pupil to $7,021 per pupil, a 6 percent decline. It should be noted that the 1996 number is different than the system-wide per pupil spending amount of $8,342 that BOE reported a few weeks ago in its release of school-based budget reports. The latter figure, however, included debt service and used BOE expenditure forecasts which turned out to be too high.

Per pupil spending is a significant budgetary indicator, but it is only an input in the educational process. To evaluate performance, it is important to measure outcomes and impacts such as the effectiveness of the instruction being provided.

There are a few caveats on per pupil spending figures. Mitigating factors include:
• Early retirement initiatives in recent years have reduced average teacher salaries, and thus personnel costs, without reducing service levels. However, salaries have dropped only slightly in real terms.
• Some programs, such as some student health-related services, have been shifted out of the BOE budget to other agencies. However, such actions are not significant enough to change the downward direction of per pupil spending.
• Pension and debt service costs attributable to BOE have risen in recent years. From 1994 to 1996, pension and debt service expenditures increased from $630 million to $791 million. However, in real terms, the increase is not significant enough to change the downward direction of overall City funding and per pupil City funding. (See Figure 3.)

Exacerbating factors include:
• Special education costs have increased at a much higher rate than mainstream classroom costs, meaning that real per pupil spending on general education is being squeezed even further. A 1996 Comptroller's Report, "Comparison of Per Capita High School Spending on Instruction for General Education v. Special Education Students" indicates that special education spending has increased 60 percent since 1988.

Over the 1992-1997 fiscal year period, Board budget reduction actions – or Program to Eliminate the Gap (PEG) actions – totaled nearly $2.6 billion. Based on IBO's classification of the savings, 32.9 percent resulted from service reductions, 23.1 percent from revenue increases from State and federal program reimbursements, and 11.9 percent from productivity measures and administrative reductions. The remainder, 32.1 percent, either could not be classified due to a lack of descriptive information regarding the nature of the reductions or was a miscellaneous collection of various small initiatives.

Figure 4 classifies the PEG savings captured from 1992 to 1996 and budgeted in 1997.

It is difficult to draw conclusions about the specific service implications of these savings because, unlike Mayoral agencies, BOE is not obligated to provide OMB with detailed implementation plans and progress reports. The various ways that school districts and high schools implemented across-the-board per capita reductions, which accounted for most of the service reductions savings, are not fully defined even for the central Board. The next most sizable service reduction, savings from special education class size increases, are categorized by the BOE as productivity/mandate relief savings; all increases were within newly-defined guidelines or were calculated to ensure that class sizes were not under-subscribed after accounting for absences.

Among productivity and administrative savings, BOE labeled large portions as administrative reductions with few details to explain if service levels (for students or otherwise) were affected. The undefined/miscellaneous savings were often substitutions for savings proposals that did not materialize; it is likely that the actual means by which savings were captured had some service impact. In general, the lack of definition provided by BOE reflects the autonomy with which it acts relative to Mayoral agencies.