Letters 01

EPP May 2001 Letter on the FY 2002 Executive Budget

May 18, 2001

Hon. Rudolph W. Giuliani
Mayor of the City of New York
City Hall
New York, NY 10007

Dear Mayor Giuliani:

On behalf of the members of the Educational Priorities Panel, we urge you to reconsider your Executive Budget proposals for the Board of Education, particularly your proposal to have state aid increases fund future collective bargaining agreements.

Of all of the budget proposals you have made during your administration, your plan to have state aid increases fund 40 percent of future labor settlements for Board of Education employees may have the most lasting, and damaging, impact. We are not privy to your rationale for this proposed change, but EPP assumes that your budget staff may simply have been looking for ways of funding your proposed tax cuts of $494 million for next year. Since state aid funds 45.2% of the Board of Education’s operating budget, this may appear to be merely an accounting change.

Identifying state school aid revenue as a source for city collective bargaining agreements sends the wrong message to Albany lawmakers: Once again the city is attempting to supplant city tax levy funding with state funds. During the Campaign for Fiscal Equity appeals process, when the Governor, the Senate, and the Assembly are floating various methods of restructuring state funding for school districts, our concern is that efforts at supplanting will only encourage even more onerous "maintenance of effort" legislation.

Upon reflection, a far more restrictive Stavisky-Goodman law may be the least of the possible consequences of state funding of city collective bargaining agreements. At the beginning of the 20th century, it took a fierce political battle to stop the New York State legislature from setting teacher’s wages, but this tradition is still prevalent in other states. By pegging increases in state operating aid to labor settlements, you may be changing the political dynamics of education budget negotiations in Albany for many decades to come. The final state budget agreement only goes to the printer after the Governor and suburban and rural legislators have a copy of the state school aid computer runs. If city collective bargaining outcomes become dependent on state school aid, a fourth party may become ascendant in school aid negotiations. In the past, you have successfully curbed attempts by the legislature and the governor to override the city’s collective bargaining policies. Your budget proposal, if adopted, would seem to invite further attempts.

The political dynamics will be changed in other ways. In many states, policies flow from education department regulations, but our state legislators shape day-to-day school practices through education law. Legislators’ micro management over New York City schools will only increase if they perceive themselves as saddled with the responsibility for funding collective bargaining salary increases. Since no other school district’s collective bargaining agreements will depend so directly on state school aid increases, the New York City school district will continue to be singled out for separate treatment by future governors and legislatures.

Two other Executive Budget proposals deserve your further consideration in light of the impact they might have on the state level:

Elimination of Pay-As-You-Go Facilities Funding
New York City could be disadvantaged by a short-term strategy to move $80 million in Board of Education pay-as-you-go facilities projects into the Capital Budget. As a matter of policy, EPP has always supported capital funding for new construction and major repairs. This is not the time, however, to reduce Building Aid payments to the New York City Board of Education. As you may know, Governor Pataki has proposed a series of initiatives for Building Aid. EPP supports the Governor’s effort to better target Building Aid to New York City. On the other hand, his recommendation to disallow Aid for buildings where there has been insufficient maintenance could make most city projects ineligible for Aid. Though the Governor will probably not succeed this year, at some point in the future Building Aid will be curtailed because of the problem of escalating payments, mostly going to school districts outside of the city. School districts in the rest of the state will be arguing for future "save-harmless" Building Aid funding levels. We strongly urge your budget staff to review the Governor’s proposals as well as the recommendations of the Regents and to evaluate the best way to protect the Board of Education’s level of Building Aid funding in light of potential changes in this important funding stream for the city’s Capital Budget.

Privatization of SURR Schools
The withdrawal of $80 million in funds from SURR schools unless they are put under private management will increase the odds that these schools will be closed. Because of the complexity of issues involved in contracting for private management and services, EPP has no overall policy on privatization. In the past, we have been critical of the lack of competitive bidding for school bus contracts and the ever increasing costs of transportation. On the other hand, we have advocated contracting out of purchasing of supplies and some of the functions of the Division for School Facilities. EPP sees no valid rationale, however, for contracting out the management of SURR schools. We are not aware of any track record by for-profit and not-for profit agencies in turning around very low-performing schools. The Chancellor’s District has had the most success in getting schools removed from the state’s list of Schools Under Registration Review and in securing dramatic year-to-year increases in test outcomes. Part of this success is due to an added investment of $1 million, on average, per school. These turnaround efforts are closely monitored by the State Education Department, and strict timelines now exist for measuring improvements in Commissioner’s Regulations. If schools do not improve within 3 years, they are closed. We urge your staff to review these regulations to re evaluate whether 1) funding should be withdrawn from these schools and 2) whether these lowest-performing schools are suitable candidates for privatization. EPP urges you to rescind this proposal because, should it be adopted, the end result will be that fewer schools will be removed from the SURR list.

In closing, EPP must state for the record our opposition to your continuing policies of underfunding New York City schools. The FY ‘01 cut of $88 million and FY ‘02 underfunding of contracts and services, estimated by the Board of Education at $120 million, has helped to keep New York City’s per-pupil expenditures in the bottom one-third of all school districts in the state. The rest of the school districts with similar per-pupil expenditures are all in rural, low-cost areas of the state. The robust economy of the city could have helped more school children meet the higher state testing standards. Realistically, EPP does not expect your education funding policies to change in your last year in office, but we strongly urge you to reconsider your Executive Budget recommendations for collective bargaining funding, pay-as-you-go facilities funding, and SURR school funding. Should even one of these proposals survive, they will have unintended consequences that will usher in even more state oversight over the city’s public education system.

Sincerely,

Noreen Connell, Executive Director
Marilyn Braveman, Chairperson

CC City Council Speaker Peter F. Vallone