The Free Money Pit

02.16.2005 | Harry Siegel | Urban Affairs | 1 Comment
Since this essay first appeared in last Wednesday’s Observer, Judge DeGrasse has ruled, as predicted below, that the city’s schools are owed over $20 billion in capital and operating aid, without specifying whether the city should contribute any of these funds.   —The Eds


Gotham’s political establishment is euphoric about the recent state supreme court victory of the Campaign for Fiscal Equity, and is now awaiting Judge Leland DeGrasse’s decision, due any day, that will likely compel the state to put billions into the city’s public schools. In the court of public opinion, the plaintiff’s name was enough to make this little less than a civil rights struggle, with a Times editorial deeming the expected windfall “a crucial reform.” And who among us is against equal opportunity and fiscal equity for public school children? But in the upside down world of New York, the case has nothing to do with equity, and the money is more likely to prove the straw the breaks the state’s fiscal back — and brings the city down with it — than it is to have much effect on education.

The New York courts have already ruled that there is no constitutional guarantee of equal spending between districts, and huge disparities occur all over the state, even between wealthy districts. Rather, the cause of action was a ruling that the city’s schools failed to provide “a sound basic education,” a term often attributed to the state’s constitution, but in fact an interpretation of Article IX, Section 1, which reads “The legislature shall provide for the maintenance and support of a system of free common schools, wherein all the children of this state may be educated.” Nonetheless, many of the city’s schools fail to meet any reasonable interpretation of the court’s standard. The question is, will more money change that?

According to the Independent Budget Office, city school spending increased by $3.7 billion or more than 40% from 1998 to 2003 with no appreciable education benefits, and at over $12,000 per student (the courts found a much lower number by discounting pension payments and debt service, numbers which rendered accurate comparisons to other municipalities’ school spending tenuous at best), the city spends far more than the national average. Part of the problem is the schools system is set up as more of an employment scheme than an educational establishment. Pay is based almost entirely on seniority, so adding money to the system just adds to the paychecks of the same teachers who all sides agree are failing to provide many city children with much of an education. Teachers barely work 1,000 hours a years in exchange for a decent salary, summers off and excellent benefits and pension plan. We all instinctively associate teachers’ interests with students even after 40 years of the union separating the two by pushing hard for reduced responsibilities and greater pay.

Manhattan Institute Senior Fellow and City Journal Contributing Editor Sol Stern argues that “The state should have explained that it’s no big secret that New York City schools are lousy and inadequate and not providing a sound basic education, but that money isn’t the remedy. There are lots of schools getting by quite well, you have to ask why others aren’t, and what’s wrong with the school system.” Far from pushing for changes, though, the mayor has fought against accepting any accountability that might come with the money, either in terms of how it’s spent or the results it produces.

Bloomberg insists that the CFE funds are critically needed, yet has fought to keep the city from city contributing any of the $5.6 billion in additional funds he’s requesting for the operating budget over the next four years (the state will also likely issue bonds to pay for about $9 billion to improve schools infrastructure, which are badly in need of both expansion and repair), arguing that the city is already taxed to the hilt. The state funds would be a political coup for the city, with Bloomberg reaping billions in an election year without having to account take the political hit of further raising taxes, cutting services or issuing debt. But while New Yorkers might take these billions as free money at first glance, we supply more than 40% of the state’s tax revenues, so that even if the state pays it all, the CFE money will further raise the burden on already over-taxed Gothamites.

With the city facing a projected budget hole of more than $2 billion in the coming fiscal year, the mayor is warning of “a perfect fiscal storm” on the city’s horizon should state arbitrators grant cops, firefighters and teachers large raises, the MTA proves unable to pay for badly needed capital projects, and the city required to put even a few hundred million into the CFE settlement. The mayor’s budget, though, prepares for none of these contingencies.

And things could be even worse than Bloomberg’s dire prediction. The state, facing a projected $6 billion gap of its own, is no shape to bail us out, even before spending the CFE funds, which Pataki’s budget proposal conveniently ignores. It won’t take much to find ourselves in an unprecedented dual fiscal crisis, with the city and state each pulling the other down.

No one expects DeGrasse, a Denny Farrell appointment, to buck the city’s political establishment and stop the gravy train just as its pulling up to the station, but Stern warns that this payout will hardly end the matter: “An adequacy decision opens the door to plaintiffs in other districts claiming they were not getting an adequate education.” Gothamites will, of course, be paying our 40% to fund those decisions as well. This free money may cost us dearly, while doing little to improve our schools.



Harry is no less brilliant than he was 5 years ago I see. But why can't he be contacted via email? Is this his attempt to avoid a barrage of messages from wanton, Partisan groupies? You know the type: the ones willing to divest themselves of their undergarments...for just one well-turned phrase, just one magnificent display of his infamous wit, just one astute observation on New York's frayed social fabric. Honestly..I'd just like to get in touch with Harry. I'd like to know that he prospers in all things even as his intellect prospers. I'm just someone he used to know....someone who once thought of him as a good friend. An email address would be appreciated, by me and by the fan-club. Thank you.
02.21.2005 | Jeannine

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