Category Archives: Education

Answering Back: SOS Report on IBO’s Comparison of Public Funding for Charter & Traditional Schools Doesn’t Make the Grade

Posted by Doug Turetsky, October 10, 2013

We rarely comment on publications by other organizations. But a report that includes IBO in its title that was just issued by the organization Save Our States demands a response on at least two counts.

The new report “revisits” our February 2010 fiscal brief and 2011 blog post, which compared the amount of public funding for general education at charter schools with that for the city’s traditional public schools. We found that charter schools co-located in public school buildings receive slightly more per student in public support than traditional public schools when the value of free space and other in-kind contributions are accounted for.

The authors of the SOS report, Harry J. Wilson and Jonathan Trichter, contend that our finding was flawed and that the amount of public support that charter schools receive is thousands less per general education student than the true cost of educating students at traditional district schools. What was the flaw? They say we failed to consider the underfunding of the city’s pension plans and commitments for retiree health care benefits for school staff and should have accounted for those future costs when totaling the amount of support for the traditional public schools.

The problem with their contention is that our focus is the current level of actual public spending in support of charters and traditional schools in a given school year, as presented in the Bloomberg Administration’s financial plan. (Moreover, estimates of future costs and when they will come due, particularly for retiree health care benefits, vary considerably.) We clearly state the basis of our comparison in the fiscal brief and blog.

But even if we did take unfunded pension and retiree health care liabilities into account, the SOS contention fails to hold water. Why? Because there are two sides to the ledger. The formula in state law that determines the allocation to charter schools for each student enrolled includes an amount based on the pension and fringe benefit costs of personnel at traditional schools. So, for example, if the city administration chose to increase the amount spent for pensions each year to more fully reflect future liabilities for staff at traditional public schools, that amount would also go into the formula for charters, thereby increasing the per student allocation for charters as well.

In short, the difference in public support between traditional and charter schools would remain unchanged. Of course, given that charters tend to rely on cheaper 401(k) plans for retirement benefits, taking unfunded pension costs into account would increase the public subsidy to charters even though their retirement costs have not increased.

The SOS report is framed as a critique of IBO’s analysis of comparative public support for the city’s charter and traditional public schools. While the report provides important insights into the critical municipal finance issue of unfunded pension and health care costs, it offers nothing to undermine our core findings on public support for charters and traditional public schools.

The Last (Budget) Dance?

Posted by Doug Turetsky, March 1, 2013

Public hearings on the Mayor’s budget plan get underway next week at City Hall. These hearings are the opening steps in what has become known as the “budget dance” between the Mayor and the City Council. The dance begins with the Mayor proposing budget cuts to a mostly routine group of programs and ends with a typical set of restorations negotiated by the City Council.

While the dance involves funding for services that many New Yorkers find crucial—and are crucial to the budgets of many service providers—there are many who probably wish the annual ritual had faded with the Macarena. For all the angst kicked up by the annual dance, the process revolves around less than 0.5 percent of the city’s $70 billion budget.

That there are cuts in the proposed budget that would affect city services may come as a surprise to those who got their budget information from the city’s social media feed. On the afternoon the Mayor presented the preliminary budget for the upcoming fiscal year, the City of New York’s Twitter feed brightly chirped: “Today Mayor Bloomberg presented FY2014 Budget which will not increase taxes or cut services.” NYCgov’s Tumblr post proclaimed that there’s “no reduction in city services” in the budget plan.

Social media assertions aside, some of potential service reductions in the budget plan were in plain sight. Consider for example, a new $10 million reduction in funding for after-school programs that would eliminate about 3,600 slots from the 2014 budget, the $8.1 million cut in subsidies for cultural groups, or (speaking of plain sight) the elimination of all $2.8 million in funding for eye exams for kindergartners and first graders.

Besides such newly proposed spending cuts that would lead to service reductions, other cutbacks were introduced by the Mayor in previous budgets and embedded in the financial plan for 2014. In most of these cases, the programs had temporarily escaped cuts through City Council-initiated restorations for one year at a time. This is the heart of the dance: the Mayor proposes a cut for the upcoming budget year as well as for the subsequent years of his four-year financial plan; the Council restores the funds only for the upcoming year; but the cut remains in the financial plan for the ensuing years, to be negotiated again and again, sometimes with additional reductions.

Take, for example, the Mayor’s recent proposal to reduce after-school spending by $10 million next year. To offset a cut proposed to take effect this year, last June the Council restored $50.6 million to the Out-of-School Time program for 2013, but only for 2013. (The Council only can vote on changes in the current year’s budget and, come June and the final negotiations with the Mayor, the budget adopted for the upcoming year. The Council has no control over the remaining years of the Mayor’s four-year financial plan). So no money was added to the plan for 2014 through 2017 to cover the funding cutbacks for those years. That means that the new $10 million reduction introduced for 2014 would come on top of the previously scheduled cutbacks. If the new and underlying cuts are not restored, the number of Out-of-School Time slots would shrink from 56,000 this year to 21,500 next year.

Over the past five years, the Council has made changes totaling more than $300 million annually to the Mayor’s budget plan, reversing proposed cuts as well as funding some of its own initiatives. But as the Mayor’s proposed cuts have mounted, the Council’s ability to fully restore cuts or maintain or start new initiatives has become more difficult.

As the partners line up for the opening strains of this year’s budget dance, Council Speaker Christine Quinn has already said she intends to prevent the loss of 2,500 teachers that are part of the Mayor’s budget plan, which will cost about $160 million (although a legal challenge now underway could prevent this cut). She has also announced her intention to restore funding for 20 fire companies ($44 million), once again avoiding a cutback that the Mayor has been pursuing since his preliminary budget for 2010.

Then there are some of the other routine restorations which grow more expensive each year when you count the newly added cuts for 2014. It will take $102 million to avoid a cut to libraries, $78 million for youth services (including Out-of-School Time), and $77 million for child care. Already the list comes to more than $400 million, and that’s without restorations to other Council perennials such as cultural programs, health services, parks programs, legal services, domestic violence programs, and senior services.

This is the last go-around on the budget for Mayor Bloomberg and the current City Council. Only time will tell if it’s the last dance.

Mayor’s Plan for School Budget Savings Overstates Need for Teacher Layoffs

Posted by Ray Domanico, June 1, 2011

Probably the most well known piece of the Mayor’s budget plan for 2012 is the proposal to eliminate more than 6,166 teacher positions, 4,278 of them through layoffs and the remainder by not hiring new teachers to replace those that leave the school system. But an analysis by IBO indicates that the calculation of the savings cited by the Mayor and the Schools Chancellor from these reductions significantly overstate the number of layoffs needed to meet the budget target. Savings from attrition could be almost $104 million higher than the budget assumes, which would reduce the number of layoffs needed by more than 1,600 to achieve the same budget cut.

The Mayor’s Executive Budget for Fiscal Year 2012 calls for the city school system to operate with 6,166 fewer teachers next year: a cut of 5,778 teachers introduced by the Mayor during this year’s budget process plus another 388 teacher reductions that are still pending for 2012 from last year’s budget cycle. The 5,778 assumes 1,500 teachers will leave voluntarily and not be replaced (attrition) and that an additional 4,278 teachers will be laid off. The remaining 388 planned reduction appears to be through attrition. IBO has estimated the savings associated with these staffing changes and compared our estimates with those included in the Mayor’s Executive Budget.

The Mayor’s budget projects savings of $269 million from the layoff of 4,278 teachers, or an average of $62,879 per teacher, while the savings from not replacing 1,500 teachers who leave voluntarily is reported as $106.8 million, an average of $71,180. The difference between the two estimates is that the city will have to pay increased unemployment insurance premiums because of the layoffs, offsetting some of the savings.

The Bloomberg Administration’s estimates don’t reflect the fact that the salaries of teachers who leave voluntarily are likely to be higher than those who are laid off. Current law requires the school system to lay off the newest teachers first within teacher license areas (English, math, science, etc.). Given that teachers who voluntarily leave the city system will almost certainly include some higher paid teachers opting for retirement and that teachers being laid off would be drawn largely from lower salary levels, on a per teacher basis, the salary savings associated with attrition will be greater than those associated with layoffs. The city is assuming the same average salary of $54,000 for both types of teachers leaving the payroll.

Using data obtained from the Department of Education on the current and past pool of teachers in the city’s public schools, including their salary “step,” IBO did its own estimate of the amount that the city can expect to save from teacher attrition in the coming year, based on the final salaries of those who left the system at the end of the 2009-2010 school year. The method we used was straightforward. We began by identifying teachers who had been assigned to classrooms in the 2009-2010 school year but who did not have classroom assignments in 2010-2011. (In neither year did we include teachers identified as being in the Absent Teacher Reserve pool.)

Next, given that DOE has the discretion to exempt teachers in certain assignments from its reduction plan, we dropped math, science, special education, bilingual education and English as a second language teachers. These are either hard to staff positions or mandated services, so we assume that the DOE will fill these positions despite its reduction plan. We were left with 2,571 teachers who had worked in the school system in 2009-2010 and who had not returned this year—well above the level of attrition assumed in the Bloomberg Administration’s estimate. The teachers we identified had an average salary of $64,731, which is $10,731 higher than the average salary assumed by DOE. Once we add in the cost of fringe benefits for such teachers, IBO estimates that each teaching position lost through attrition saved the city $81,911.

Based on the number, salaries, and benefits of teachers in nonmandated or priority assignments who voluntarily left the system at the end of last year, IBO estimates possible savings of $210.6 million if teachers leaving the system this year are not replaced for the coming year, almost twice the savings the Mayor’s Executive Budget is assuming for next school year. If the attrition pattern from 2009-2010 holds, the additional $103.8 million in attrition savings could be used to reduce the number of teachers to be laid off by 1,651.

As a final check of our analysis and data, we estimated the amount of money that would be saved by the current plan to lay off 4,278 teachers. Using the same database as we used for the attrition analysis, we identified the 4,278 least senior teachers in assignments as of November 1, 2010. Our analysis confirmed the Mayor’s estimate of $269 million in savings to be realized from those layoffs.

For the system as a whole, whether the teaching force is reduced through layoffs or attrition matters less than the number of teaching positions that are ultimately lost. But for the teachers threatened with layoffs—and the schools most heavily staffed with recent hires—it obviously means a lot if the city could rely more heavily on attrition.

Charter Schools Housed in the City’s School Buildings Get More Public Funding per Student than Traditional Public Schools

Posted by Ray Domanico and Yolanda Smith, February 15, 2011

Last February, IBO published estimates (Comparing the Level of Public Support: Charter Schools versus Traditional Public Schools) of the level of public financial support for the city’s traditional public schools and charter schools in school year 2008–2009. Our new review of public financial support for general education services during 2009–2010 finds that charter schools located in public school buildings received an average of $649 more per student than traditional public schools. We have also updated our estimate for 2008-2009 to reflect some revisions to our methodology.

We estimate that total public financial support in 2009–2010 for general education services averaged $16,011 per pupil in traditional public schools, $16,660 per pupil in charter schools housed in public school buildings, and $13,653 per pupil in charter schools housed in private space (see Comparison of Funding Traditional Schools Versus Charter Schools table) The reason we calculate a higher funding allocation for charters housed in public school buildings than charters in private space is the value of in-kind services they receive due to their location: charter schools co-located in public school buildings don’t have to budget for space costs and utilities, janitorial services, or school safety agents. As of 2009-2010, two-thirds of the city’s 98 charter schools were housed in public school buildings.

School year 2009-2010 was the last year of a funding freeze on the state-mandated charter school per pupil allocation. The freeze was lifted for the current 2010–2011 school year, increasing the per capita adjusted operating expense for charter schools in New York City by $1,084. The adjusted operating expense per capita is the largest public source of funding for charter schools. When complete data from 2010–2011 become available, they are almost certain to show an even greater advantage for those charters housed within public school buildings compared with traditional public schools.

Applying our revised methodology to the 2008–2009 data, we now estimate that average public funding for traditional public schools was $15,672 per pupil that year. IBO’s estimates of public support for charter schools housed in public school buildings and charter schools in private space for 2008–2009 were unchanged at $16,373 and $13,661 per pupil, respectively.

Based on our revised approach, we estimate that charters in public school buildings received public funding that exceeded the support for traditional public schools by an average of $701 per pupil in 2008–2009. We’d previously estimated that funding for charter schools housed in public school buildings averaged $305 less per pupil. Our conclusions for charters housed in private space have not changed dramatically; these schools still received significantly less per pupil than did traditional public schools. (For an explanation of our methodological changes and a crosswalk between the estimates we published last year and our revised estimates for 2008–2009 see “Changes in Methodology.”)

With an overall increase in the Department of Education’s budget from 2008–2009 to 2009–2010, the funding provided to traditional public schools increased by an average of $339 per pupil. Average funding of charter schools housed within public school buildings increased $287 per pupil, while funding for charter schools housed in private space inched down by $8 per pupil. Thus, the funding advantage for charter schools housed in public school buildings narrowed somewhat in 2010, while the funding disadvantage for charter schools housed in private space widened.

For background on how we did the comparisons and detailed tables of our calculations click here.

What is Yellow and Rises at the Same Time it Falls?

Posted by Yolanda Smith, December 23, 2010

Many school kids love puzzles, and extra credit is in order for any who can solve a particularly tough one about the yellow buses that take more than 140,000 children to and from school each day. Currently, yellow bus service is one of the fastest growing parts of the overall Department of Education budget. And here is the puzzle: why are these costs rising even as their ridership falls?

Generally, state law sets the criteria for transportation to school of public and nonpublic school students. Eligibility basically rests on the distance students live from their schools, with variations depending upon grade level. New York City sets its own minimum distance requirements, which provide transportation for more students than the state requires. The state also requires school districts to transport students with disabilities or living in temporary housing.

This school year the city’s total school transportation costs are expected to exceed $1 billion. The biggest portion of this is the cost of contracting for the school buses, which grew from $772 million in 2005-2006 to $887 million in 2009-2010, an increase of $115 million. Over that five-year period, the cost of yellow buses for general education students jumped $86 million or 16 percent and for special education students $29 million or 15 percent.

But fewer kids rode the buses last year as compared with the 2005-2006 school year. The number of students riding the buses in 2005-2006 totaled 156,980. They included 96,384 general education students and 60,596 special education students. By last school year, the number of general education students riding yellow buses had fallen 12 percent and special education ridership fell 6 percent. (It’s worth noting that during this same period the number of kids using student MetroCards grew from 520,596 to 579,984, yet the city’s cost remained $45 million a year under the long standing agreement with the Metropolitan Transportation Authority.)

So what’s driving up costs even as ridership declines? One piece of the puzzle may be the contracts the education department has with the companies that supply the buses and personnel such as drivers and matrons. These contracts allow price increases for things like fuel to be passed on to the city. But the average price of fuel in New York grew by only 4 percent from 2006 through 2010, much less than the overall increase in yellow bus spending.

Limited competition may be another piece to the puzzle. A side-by-side comparison shows that fewer vendors are providing yellow bus services to the city’s public, private, and parochial schools in 2009-2010 than were in 2005-2006. Although the education department does not use competitive bidding to award yellow bus contracts, having fewer vendors to work with can weaken the city’s bargaining position.

The rising cost of insurance, which swelled from $15 million to $25 million over the last five years, also played a role. The additional $10 million was specifically for insuring buses carrying special education students and accounted for over one-third of the increased cost of busing these students. (In the current school year insurance costs are expected to decline by $1 million.)

Clearly, there are other pieces to solving this puzzle. The increasing emphasis on school choice may have played a role in pushing up the cost of busing as students attend schools farther away from their homes. It is also possible that school bus routes have become less efficient as the number of students riding the buses has declined. A few years ago the education department sought to improve route efficiency, an effort that left some kids literally standing on frozen street corners in January waiting for buses that never came. Public outcry led to the reversal of much of that initiative.

While we have no definitive answer to why school bus costs are rising even as ridership is falling, there’s one factor that makes this a little bit less pressing from the perspective of the city budget: transportation costs are partially reimbursed from state aid for education. At least for now, city dollars have been a declining share and are expected to represent only 38 percent of transportation funding while state aid is the main support for these expenditures and makes up the balance.

New York City residents, of course, also pay state taxes, so they end up paying coming and going.

Education Department Releases Plan to Add 20,000 New School Seats, but Where’s the Money?

Posted by Sarita Subramanian, November 22, 2010

The city’s newly released proposal to increase the plan for building, expanding, and repairing schools by $4.5 billion, or 38 percent, has received scant attention as the media has been focused on the appointment of a new Chancellor at Tweed Courthouse. The increase included in this year’s proposed amendment to the Fiscal Year 2010-2014 Five-Year Capital Plan was surprising, not so much for its identification of the need for 20,000 additional seats, but for the reliance on substantial amounts of additional funding from the city and the state with no detail on how it could be provided.

The timing of the education department’s acknowledgement of the need for more seats is also interesting, given the budget strains faced by the city and especially the state. Like the previous five-year plan (2005-2009) the current plan assumes that the costs will be funded equally by the city and state governments.

The bulk of the newly proposed spending aims to increase the school system’s capacity. Advocates have been calling for additional seats since the plan was originally adopted in June 2009, and the Department of Education has had to scramble—not always successfully—to identify classroom space to meet growing demand in a number of communities in recent years. The amendment adds $3.4 billion to the five-year plan to fund almost 20,000 additional seats, bringing the total number of new seats in the plan to about 50,000. Most of these new seats in the amendment, 18,883, would be at the elementary and middle school levels.

This emphasis reflects what the education department has described as “the start of a new growth trend” in public schools in the city. Total enrollment increased in the 2009-2010 school year after seven years of decline. School Construction Authority projections indicate that this increase is not an anomaly, but the beginning of a persistent trend, fueled by two main factors. First, enrollment in public and charter schools is increasing as enrollment in nonpublic schools is declining. Second, there is evidence that more students are remaining in the public school system for longer spans.

The amendment also proposes an increase of $1 billion in technology improvements to expand the Department of Education’s Innovation Zone program to reach a total of 200 schools. The department is also focusing on enabling on-line assessments in English and math in the 2014-2015 school year, on-line advance placement courses, and on-line credit recovery courses. All of the additional funding for technology is expected to be allocated in 2011-2013. The total for technology in the plan is $1.8 billion.

The great unknown surrounding the plans laid out in this amendment is the source of funding. The five-year plan counted on the state-funded borrowing of $1.071 billion for fiscal year 2010. Under the amendment, the state’s annual contribution would range from $1.326 billion in fiscal year 2011 to $2.135 billion in fiscal year 2014. Focusing on the November 2010 amendment alone, the increases in borrowing would require additional support from the state totaling an increase of 39 percent over the five years. The biggest year-over-year jump in state funding would occur in fiscal year 2013, when the plan anticipates a 43 percent increase. While the state’s fiscal condition three years from now remains an unknown, we do know it’s currently looking at steep budget gaps: $9 billion in the fiscal year starting April 1, 2011 and more than $17 billion in the following year, according to the latest estimates by the state’s Division of the Budget.

If the increases in state and city funding anticipated in the amendment occur as planned, the city will make progress toward alleviating current and projected school overcrowding. If the money does not materialize, families in some neighborhoods—particularly in Brooklyn and Queens, where 67 percent of the new seats are planned—will be left scrambling for scarce seats, little comforted by the knowledge that the capital plan included the best of intentions.

As the School Year Begins, School Budgets are Up and Down

Posted by Yolanda Smith, September 21, 2010

As students and teachers headed back to school this month it was widely reported that given lower state aid, growing enrollment, and rising costs, school budgets had been cut. But the effect differed from school to school, with some schools even seeing their allocation per student rise. To provide parents, teachers, policymakers, and other interested New Yorkers with a clearer view of the funding available for schools across the city, IBO compared the initial allocation each school received to fund its basic operations this September with the allocation last September. Click here to look up the figures for particular schools.

Much of the year-to-year change was due to annual adjustments that take into account changes in the make-up of a school’s student body (how many students need special ed, are performing below standards, etc), plus changes in a school’s enrollment. But some of the change this year arose from funding shortfalls that threatened to leave some schools with budgets too small to cover basic operations, which led the education department to shift some of the basic allocation funding.

More schools than not will begin this year with less money per pupil for their basic operations than they had at the beginning of last school year. According to IBO’s calculations, 864 out of 1,464 schools have received an initial operating allocation per pupil that is less than last year’s. In contrast, 585 schools have received a greater per pupil allocation than last year, and 15 received exactly what they had a year ago, on a per-pupil basis. (Schools which have either been closed by the Department of Education or newly opened this year are not included in these counts.) These changes have real consequences—among schools with lower per capita allocations this year, the median decline was $151. In a school of 500 students such a change is roughly equivalent to the cost of one teacher. (Click here for table showing how changes in percentage terms were distributed.)

Each year the education department creates school allocation memoranda, often referred to as SAMs. These SAMs detail for principals the various sums of money available for each school’s budget. The most important of these, SAM #1, sets up the opening basic operating condition and the allocation of dollars largely through the fair student funding (FSF) formula, although some non-FSF funds are included in this allocation. In this post, we are comparing the initial SAM#1 FSF allocations made to schools this year and last year.

Fair student funding—the largest part of the SAM#1 allocation—is the method used since school year 2007-2008 to distribute most of the city and unrestricted state funds needed to run the schools. The FSF formula takes into account the student demographics at each school, with more money allocated for higher needs students. The FSF allocation is the core of a school’s budget, covering instructional staff and school operating overhead. The total amount of FSF allocated through SAM #1 this year is $4.4 billion, $91 million more than last year (including hold harmless and incremental funding, which are explained below).

The fair student funding methodology was originally going to be implemented gradually. In order to preserve stability and protect core programs in the first two years of implementation, the FSF allocations included hold-harmless money to avoid funding reductions for schools deemed “overfunded” under the formula. Schools deemed “underfunded” under the formula were only allocated enough to eliminate 55 percent of their shortfall with the expectation that their allocations would increase over time. The goal was to have all underfunded schools receive their full FSF funding level by 2009-2010. Yet as early as school year 2008-2009, the education department indicated that full implementation was likely to be slowed without adequate state and city funding. (See IBO’s report on FSF “New Funding Formula Seeks to Alter School Budget Disparities” for more details.)

Changes in the characteristics of a school’s student body generate changes in per pupil funding because FSF takes into account individual student needs. The formula, in other words, is weighted based on needs. Each student starts with a weight based on grade level, which can grow depending on the student’s characteristics. For example, a high school student performing below standards has 0.25 added on to her weight and high school students in English learner classes receive an extra 0.50 weight. All students’ weights are translated into dollars which determine the FSF formula allocation for the school.

The effect of changes in individual school demographics on each school’s SAM #1 allocation can be observed by looking at the percentage change in dollar allocations per needs-weighted student. We found that these changes in school demographics explain much, but not all, of the changes in per pupil funding for individual schools

Using the weighted student enrollment, the year to year per capita changes tended to be smaller compared to the simple per capita change, with most schools clustered between -2.9 percent and plus 2.9 percent, but there were still a significant number of schools that saw larger changes. One hundred and two schools saw their allocation per weighted student decrease by 3 percent or more and 151 schools increased by 3 percent or more. In total, 68 percent of all schools experienced a decrease in funding in weighted per pupil terms.

The combined effect of rising costs and reduced state aid also played a role in this year’s funding changes for schools. The Department of Education initially attempted to deal with these pressures, along with rising enrollment, by imposing a 4 percent cut on school budgets for the 2010-2011 school year; the second consecutive year with such a cut. After calculation of the baseline formula incorporating the 4 percent cut, the education department determined it had a problem: 400 schools would fall below the minimum funding level needed to maintain basic operations.

The education department then decided it needed to adjust its allocation methodology. In order to insure that all schools received at least a base allocation amount (actually 86 percent of the amount the department labeled “operating threshold”), other unrestricted funding was added to the pool to be allocated and the amount of funds that could be reallocated from any school was capped at 3 percent. This cap allows overfunded schools (in fair student funding terms) to remain overfunded. With the additional funding and the cap on reallocation in place, this year’s opening allocations were set by reducing the result under the FSF formula by 4 percent across the board and then using federal stimulus funds as needed to reach a final cut of not more than 4.2 percent in the total SAM#1 allocation—including dollars in addition to the FSF funds—for every school.

School Nurse Cuts Would Hit Private Schools the Hardest

Posted by Jenna Libersky, June 11, 2010

Six years ago the City Council passed a law requiring more nurses on site at public and private elementary schools in the city. Mayor Bloomberg’s Executive Budget would “expel” some of those additional nurses from their schools.

The nurses affected by the Mayor’s plan are funded through the Department of Health and Mental Hygiene. The proposal has some challenges ahead, including the need to first have a change in existing law which requires the presence of a nurse at schools with a certain number of enrolled students. For the cuts to take effect, that threshold number would have to rise.

If that happens, the health department estimates that 19 public schools and 127 private and parochial schools would lose publicly funded nursing coverage for about 33,000 students. Others outside the Bloomberg Administration have cited larger effects.

The Mayor’s proposal would have a minimal effect on middle and high schools, as they are not currently required by law to have nurses on staff. The budget would reduce the number of full-time equivalent school nurses directly employed by the health department by 62 through attrition, saving the department $3.1 million in 2011 and more in subsequent years. Contracts with nurse providers that supplement the nurses on the health department’s payroll would also be reduced.

The department’s school health budget has grown from $53.4 million in 2004 to $90.6 million in 2009, with about 60 percent of the total coming from city funds. The number of full-time equivalent nurses on the department’s staff has increased from 697 in 2004 to 802 in 2009, with the bulk of the positions in both years filled with part-time nurses. The department also contracts out for nurses; currently, an additional 84 nurses work under contract with the agency.

The growing school health budget is largely the result of the changes in city policy. In 2004 the City Council enacted Local Law 57 to require more elementary schools to have nurses on staff. The law lowered the enrollment threshold at which an elementary school was required to have a nurse on staff to 200 students. The Department of Education has also been pushing the development of new small schools, further increasing the number of nurses required. Between 2004 and 2009, 68 new elementary schools were added to the list of sites requiring nurses. The total number of public elementary school sites with health department nurses now totals 717, excluding 52 sites where special School Based Health Centers provide more intensive primary health care services to children.

Not all of the schools that would lose a health department nurse due to the proposed increase in the eligibility threshold would be left without access to a health care professional during the school day. The Department of Education is responsible for providing nurses to public schools enrolling students with special medical needs as required by Section 504 of the federal Rehabilitation Act and the Individuals with Disabilities Education Act. The education department employed 549 full-time school nurses of its own in 2009, up 24 percent since 2004. The Executive Budget does not cut funding for Department of Education nurses.

The joint Office of School Health manages both the education department and the health department school nurses but maintains their budgets separately. Since there are many schools that qualify for a nurse based on both local and federal standards, the two agencies have reached a labor agreement to avoid duplicating efforts. Schools that fall into this category are assigned either an education department or health department nurse. The nurses from both departments are licensed professionals with either associate or bachelor’s degrees in nursing, have similar skill sets, and according to the labor agreement, provide similar services in the schools they serve.

The overlapping requirements that govern school nurse coverage mean that enrollment is not the only factor used to determine which public schools would lose their nurses under the plan. The Bloomberg Administration estimates that the proposed change to Local Law 57 would leave 68 public schools at risk of losing nurses based on current enrollment; however, 36 of these sites enroll students with daily medical needs that would qualify them for nurses under Section 504, leaving 32 schools at risk of losing coverage.

Moreover, many of the public schools in New York City are co-located with other schools. Even though co-located schools are administratively separate, the Department of Health and Mental Hygiene stresses that they could share a nurse if needed. Of the 32 schools that are eligible to lose a nurse, 13 of the schools share a site with another school whose nurse would remain. Consequently, if Local Law 57 is amended and the Executive Budget cut is not restored, 19 public elementary schools would lose nursing coverage, according to the Mayor’s estimate.

While Department of Health and Mental Hygiene officials estimate that 19 public schools would stand to lose a nurse, the result would be greater at private and parochial schools. The Bloomberg Administration estimates that 127 private and parochial schools would lose nurse services, meaning that 3,000 public school children and 30,000 nonpublic elementary school children could lose access to the services that school nurses provide. These services include monitoring vaccine compliance, administering daily medication, screening for hearing or visual impairments, and linking children to additional health services. Losing these services might be a hard pill for some New Yorkers to swallow.

With Rising Enrollment Charter School Spending Increases, Shrinks for Other Public Schools

Posted by George Sweeting, May 26, 2010

Buried amidst the bleak news for city schools in the Mayor’s Executive Budget there is one spending category that is growing at a rapid clip: funding for charter schools. And because of the way charter school funding is mandated, it grows proportionately with enrollment even while the budget for traditional public schools, which also have growing enrollment, is shrinking.

The Department of Education (DOE) projects charter school enrollment to grow by 9,400 students next year, up from 30,500 this year—an increase of 30.8 percent. This enrollment growth reflects the planned opening of 29 new charter schools for September 2010, plus the addition of new grades to existing charters as they gradually expand towards their planned grade span. Enrollment in traditional public schools is also forecast to increase next year by 11,600, although in percentage terms the growth is much less (1.2 percent). In the case of charters, enrollment growth results in additional spending by the education department to maintain per capita support. For traditional public schools, other than a broad maintenance of effort requirement for total expenditures and mandates to provide some specific services, there are no explicit requirements to increase spending in line with enrollment and thus per capita spending will fall.

Under the state’s charter law, New York City, as the local school district, must provide charter operators with a flat per student amount for each student at a charter school. The budget assumes that amount is unchanged from its 2010 level of $12,443. (See “Comparing the Level of Public Support: Charter Schools versus Traditional Public Schools” for a discussion of additional resources that the city provides to charter schools beyond the mandated per student payment.) Thus, the enrollment growth increases the identified cost of charter schools in the education department budget by $117 million. The cost of providing mandated special education services to charter school students is also expected to increase by about $10 million this year, which brings the required charter school expenditure for the DOE to $545 million, an increase of 30.4 percent over the amount for 2010.

That $127 million in increased charter school expenses has to be absorbed in a proposed overall Department of Education budget that is virtually unchanged from this year. The budget for school year 2010-2011 shows year-over-year reductions in state and federal aid, and an increase in city support for the DOE that is just enough to offset the loss in state and federal funding, despite growing enrollment and mandated costs, including charter payments. As a result, the portion of the DOE budget used for traditional public schools (i.e. subtracting spending for charters and nonpublic schools from the total DOE budget) will fall next year from 90.2 percent to 88.7 percent.

Looking just at the traditional public school part of the DOE budget, spending will decline by $285 million (1.7 percent). The combination of a smaller budget and higher enrollment results in a $475 (2.8 percent) reduction in per student spending for traditional DOE public schools.

So it is clear that charter schools’ guaranteed adjustment for enrollment growth means that the cutbacks in the education budget has a smaller effect on charters than on traditional public schools. But does that mean that the budget cuts for traditional public schools are greater because of the shift of more money to charters? That depends on how much it costs to educate each additional student in the regular DOE schools—the marginal cost of a student—which is different from the average or per capita cost.

Suppose the increased charter school enrollment (9,400) for next year were instead educated in DOE traditional schools. More students would add to the cost pressure on the DOE budget for traditional schools, but there would also be potentially up to $127 million in additional resources available.

Assuming the additional money was allocated to the traditional public schools, this would likely have a somewhat smaller effect on classroom instruction spending—even with the higher enrollment—than will result from shifting those students and their funding to the charter schools. This is because the marginal cost of adding one student to the system is almost certainly lower than the average cost of educating a student or even the per capita charter school payment ($13,654, counting the required special education services), although how much lower is uncertain.

Operating cost adjustments in response to lower enrollment can take time. The loss even of thousands of students in a single year will not immediately lower the cost of running centralized departments such as human resources, information technology, food and supply warehousing, building maintenance, and the chancellor’s office. Even at individual schools, shifts of a handful of students may not significantly alter a school’s budget until the difference is large enough to trigger the loss or addition of a class section. While these adjustments can be expected to eventually occur, they almost certainly could not occur fast enough to offset the effect of next year’s shrinking DOE budget for traditional public schools.

The Cost of Students’ Free Ride

Posted by Alan Treffeisen, January 11, 2010

The uproar over the Metropolitan Transportation Authority’s plan to discontinue free MetroCards for students boils down to a couple of key questions: How much do the free rides really cost the MTA, and if they are to be provided, how to cover that cost? As is often the case, the answers are more complicated than the questions.

Around 450,000 school children in New York City use MetroCards that allow them to make three bus or subway trips, each with a free transfer, every school day. Roughly 58,000 students use MetroCards that permit three half-fare bus trips, each with a free transfer. The fare cards are distributed according to a student’s grade and distance of school from their home.

From 1995 up until this year, the city and state each contributed $45 million toward the cost of student MetroCards, with the MTA absorbing any costs above $90 million. Inflation has eroded the value of that $90 million by about 40 percent.

This three-way financing arrangement began when then-Mayor Rudy Giuliani suspended a $128 million per year city subsidy for the transit passes in October 1994. (The state had been reimbursing the city for $69 million of that amount, so the actual cost to the city had been $59 million.) While New York City has continued to contribute $45 million a year, New York State has now cut its contribution from $45 million to just $6 million, leaving the MTA to shoulder the rest of the student fare cost. Citing its own financial difficulties, the MTA says it can no longer afford to do so and wants students to pay half fare on subways and buses next school year and full fare in the school year that begins in September 2011.

But how much do those free MetroCards really cost the MTA? Back when Mayor Giuliani derailed the old subsidy arrangement, the MTA estimated the annual cost to be $135 million—with the city, state, and transportation authority splitting the bill evenly.

If the city and state payments had kept up with inflation they would now be around $72 million each. If the payments had increased in line with the MTA’s estimate of how much it costs to provide the students with MetroCards, they would have risen even more. The MTA currently pegs the cost of student MetroCards at over $250 million, meaning that a one-third share would be more than $83 million.

There are different ways one could calculate the school fare program. One way would be to compare the reimbursement that the MTA currently receives for the program with the revenue that it would receive if students (or the city and state on their behalf) paid the regular transit fare. This foregone revenue can be thought of as the cost to the MTA under the current arrangement, and appears to be how the transportation authority derives its estimate. Of course, if students or their families were responsible for paying the full fare, some would switch to schools within walking distance, or look for alternate modes of transportation.

Many economists would take a different approach, one that looks at the marginal cost of providing transit service to school children. In other words, what additional cost does the MTA incur by providing the service? Mayor Giuliani said in 1994 that there was no additional cost for transporting school children, since the trains would be running anyway. Untrue, responded the MTA, saying that it runs extra buses and trains, particularly during the morning commute, specifically to accommodate the additional passengers.

Regardless of how the cost is calculated, there’s also the question of who’s going to pay for it. Though the state and MTA have shared the cost of free- and reduced-cost student fares with the city in the past, some sections of state law appear to legally exempt the state and MTA from much of the responsibility.

Under state education law cities such as Buffalo and Rochester can be reimbursed by the state for up to 90 percent of the cost for the transit passes they provide to students. But this same law excludes cities with a population of more than 1 million—and there’s only one—from eligibility for the reimbursement. State law also makes it clear that education funds cannot be used to reimburse New York City for payments to the MTA for transportation costs.

State public authorities law, which covers the MTA, appears to put the legal onus for covering the cost of free or reduced fare passes on the city. The law says that if a Mayor requests a lower fare for some riders, it’s up to the city to pay for it. Of course, that wouldn’t prohibit the state and MTA from continuing to help out for the good of the city’s students.