Through the 1990s, New York City’s per student public school revenues and expenditures were below the national average if adjusted for the cost of living using the modest method I prefer (see the end of the prior post). In Fiscal 2002, however, NYC’s spending per student was $10,882 in cost of living-adjusted $2005, above the national average of $10,084. Unfortunately, the city’s public school revenues per student were only $9,435 at the time, well below the national average of $9,879, as the city borrowed with abandon and kept taxes low during former Mayor Giuliani’s second term. With Mayor Bloomberg making education a top priority, by FY2005 an additional breakthrough had occurred as the city’s revenues per student, adjusted for the cost of living, reached $11,564 that year, above the national average of $10,339. That, I suppose is good news. Almost everything else I discovered about changes between FY 2002 and FY 2005, however, is bad news, with much of it based on decisions made before FY 2002, or subsequently by former Governor Pataki and the New York State legislature. Through FY 2005 Mayor Bloomberg’s fiscal imprint was, in reality modest.
A summary of FY 2005 public school revenues and expenditures per fall 2004 student, along with the inflation-adjusted percent change from FY 2002, is attached. Data is provided by detailed category for the United States, New York State, Upstate New York, New York City, and the Downstate Suburbs, along with an additional column of data for the latter three areas adjusted for the cost of living. The table prints on one page; the data for FY 2002 is below and is not set to print.
This is my first time attempting to reorganize the Census Bureau’s detailed individual unit public education finance data into a usable table, so don’t quote me to the dollar on summary-level figures. The Bureau excludes some sub-categories from the total based on various criteria, and while I was able to follow some of it by referencing the technical documentation and survey form, my totals are a few dollars off from those in the Census Bureau’s PDF report. For example, payments to private schools, a substantial budget item in New York City (for special education students, who I guess the UFT does not mind going elsewhere), are excluded from per-capita calculations because the students are. I suspect I am off due to payments by one school district for children educated in another, which would be double counted otherwise. No matter. The detailed categories are unaffected by such considerations, and in any event the differences are small.
The data show that from FY 2002 to FY 2005, total revenue per student (adjusted for inflation) soared 22.6% in New York City, almost entirely as a result of a 43.9% increase in local revenue per student. Nationally, total revenue per student rose just 4.7% in inflation-adjusted dollars during this time. New York City’s federal revenue per student also rose by a substantial 39.0%, in part due to increased generosity toward the city by the rest of the country since 9/11, but since the federal government accounts for just a small share of total education revenues, the importance of this was modest. New York City’s state revenues per student rose 3.6%, adjusted for inflation, from FY 2002 to FY 2005, more than the 1.7% for the Downstate Suburbs and 2.6% in Upstate New York. But that is only because enrollment fell in the city while rising elsewhere. Data from the New York State Department of Education shows a decline in the city’s share of education revenues post-9/11, although more recent data released as part of Governor Spitzer’s budget proposal indicates a subsequent rise.
While Mayor Bloomberg was having city residents and businesses kick in more revenues, raising taxes to do it, total expenditures per student did not rise nearly as much. In fact the city’s total expenditures per student rose just 5.2%, adjusted for inflation, from FY 2002 to FY 2005. In the Downstate Suburbs, in contrast, spending rose by 7.5% more than inflation. During the late 1990s and early 2000s, as implied above, the city borrowed extensively for capital projects, repairs, and other things in order to keep taxes low. Already deep in debt after FY 2002 and facing a fiscal crisis, New York City cut capital spending per student per 46.1% from FY 2002 to FY 2005. But the amount it had to pay for previous borrowing increased, with interest payments per student doubling. In the rest of New York State, which either has newer buildings and less of an accumulated deterioration problem, or has capital expenditures primarily funded by state aid, interest expenses increased far less from FY 2002 to FY 2005.
Nor was the 5.2% increase in spending per student in the city primarily for things a New York City public school student might actually see. New York City’s instructional wages and salaries per student rose only 2.5% adjusted for inflation from FY 2002 to FY 2005, limiting the city’s ability to either attract and retain teachers through higher inflation-adjusted pay or reduce class size through by hiring more of them. While the timing is uncertain, it seems that the amount of money the teachers earned in FY 2002 preceded any increases under subsequent contracts agreed by Mayor Bloomberg, as a tentative agreement on his first contract was not signed until June 10th of 2002. If anything, that year’s teachers’ wages were depressed by a long prior period of working without a contract, with retroactive pay deferred into Mayor Bloomberg’s administration – during a fiscal crisis. That is one of many “off the books” debts accumulated during the 1990s boom years. Similarly, instructional wages were depressed in FY 2005 by a wage freeze during an unresolved contract, signed in October of that year with retroactive payments in FY 2006. Thus, the two years are comparable.
“Instructional employees” also include teachers’ aides, whom the Mayor sacked en masse after assuming control of the New York City Schools. And although some of the savings from that measure (and from the elimination central and local school board administrative staff) was used to pay for non-instructional parent coordinators, non-instructional wages and salaries increased just 3.7% more than inflation from FY 2002 to FY 2005. If education is primarily about people – parents, teachers, and support staff – actually on the job, there was little gain in the FY 2002 to FY 2005 period.
Rather than wages, it was employee benefits spending that soared in the FY 2002 to FY 2005 period, by 40.3% more than inflation for instructional employees and 48.3% more than inflation for non-instructional employees. Some of that added benefits spending was to pre-fund pensions, and provide benefits, for those actually providing education during those years. The majority, however, was to offset the rising cost of health benefits for those retired or about to retire, to pay for a huge pension enhancement passed by the state in 2000, which applied retroactively to those already retired, and to make up for pension contributions in the late 1990s and early 2000s that would have been inadequate even if the 2000 enhancements had never occurred.
In other words, more of the educational services paid for by these added employee benefits expenditures were received before Mayor Bloomberg took office, and paid for afterward. If, that is, rising employee benefits may be traced to any educational services at all. Certainly already-retired employees who receive ever-higher health care funding, and received a retroactive pension enhancement in 2000, did do any retroactive additional or better teaching. And given the city’s difficulty hiring qualified and motivated teachers (not to mention police officers), it certainly appears that workers discount the value of employee benefits expenditures, which they do not see when they are working, relative to wages, which increased little.
So Mayor Bloomberg did not raises taxes and increase local education funding to improve the schools from FY 2002 to FY 2005. He did so to prevent a catastrophic decline in the funding available for actual classroom education, as more and more money was diverted to priorities already set by Mayor Giuliani, Governor Pataki, the state legislature, and successive contracts negotiated by the city’s public employee unions. Indeed, a big increase in spending with virtually none of it going to those actually doing work, who therefore might continue to feel cheated, resent management, have limited motivation and demand more, might be considered the best of all possible worlds from a public employee union point of view. From the point of view of others, who complain about Mayor Bloomberg increasing “spending” and taxes, the best of all possible worlds would have been a reduction in resources for teaching in FY 2005 sufficient to offset all the costs deferred from prior years.
Bloomberg and the City Council chose otherwise, and unlike in the mid-1990s, when my generation was making decisions for its children, that catastrophic reduction in education resources did not occur. So let’s look at instructional spending per student in NYC in FY 2005, relative to other places. One finds that total instructional spending per student was $10,332 in New York City, or $7,708 when adjusted downward for the higher cost of living here, or 45% higher than the national average of $5,306! New York City’s instructional spending per student, in fact, was nearly as high as the $8,004 per student in the Downstate Suburbs (similarly adjusted for the cost of living) and the $8,126 per student in Upstate New York. Higher employee benefits spending, at $2,092 per student for NYC compared with $1,014 nationally, is a big part of the reason. Employee benefits spending per student was also sky-high in the Downstate NY Suburbs and Upstate New York; in New Jersey, such spending likely appears to be low only because it was deferred though inadequate pension contributions and raiding the pension funds to pay retiree health benefits.
Yet adjusted for the cost of living, New York City’s instructional wages per student, at $4,787, were still 30% higher than the national average of $3,679. And that is an under-estimate. Instructional spending that wasn’t for wages or benefits was also higher in NYC than the national average, with lump sump payments to charter schools prominent here (you didn’t think that $830 per student was spent on teaching materials did you?) Presumably those schools pay wages and benefits as well. Despite above average total spending on instructional wages, however, public employment and payroll data from the Census Bureau shows NYC instructional employees earned only 12.8% more than the national average in March 2005; given that the average private sector worker (excluding Finance and Insurance) earns about 33% more than average Downstate, the city’s teachers could be considered relatively underpaid. Did New York City have more, worse-paid teachers? If so, then why are its class sizes considered so high?
There are three possible ways to square these contrasting facts. The most optimistic explanation is that while New York City’s teachers didn’t earn much in March, the need for additional summer instruction for the city’s many high-needs children pushed up their annual pay more than elsewhere in the country. Another explanation is that smaller class sizes in special education, and additional non-classroom instructors for children with special needs, absorb all the extra money. My view is that at most this accounts for some of it.
A third is that New York City teachers spend a higher share of their time outside the classroom than those in the nation as a whole, requiring higher class size for a given number of teachers, or more teachers to achieve a given class size. While successive contracts have added minutes to the workday, they have not, to my knowledge, increased the share of that day spent supervising children in a classroom. And indeed, the teachers’ union recently proposed a reduction in the number of periods teachers in low-performing schools with disadvantaged children have to teach, in lieu of higher pay for teaching there.
Let’s put the numbers in perspective. Imagine, as I have done on this blog previously, an alternative education model in which teachers are hired to instruct neighborhood children in their homes. Looking at New York City’s $10,332 in instructional expenditures per student alone, such teachers could be paid nearly $125,000 (plus inflation from then to now) to cover their wages, benefits, and teaching supplies for a class of 12. Young children at home, spouse has benefits, and interested in a lighter workload? How about about $62,000 for a class of six? And remember, that’s just what is supported by NYC instructional spending; non-instructional spending is on top of that.
The data on instructional spending per student, therefore, imply that even adjusted for the cost of living, and given increases since FY 2005, there may be enough money sloshing around the NYC public schools to provide a decent education for New York City’s children, with average or lower class size, and average or higher teacher pay. Unfortunately, as of FY 2005 the state, past administrations, and public employee unions had arranged for an above average share of that money to go to the past and the retired. With state funding per student still below average in NYC, despite the city’s higher share of state tax payments and higher need student population, Mayor Bloomberg was only able to shift priorities on the margin as of FY 2005. Those marginal changes will be discussed in my next post on non-instructional spending.
