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DEPARTMENTOF EDUCATION

FY09 ExecutiveBudget

Preliminary

June 23, 2008

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FY09 Executive Budget Overview

> $21.05 Billion in Total Funding

Inclusive of Pension and Debt Service at $3.5Billion

> Funding Sources

City (includes intra-city funds): $10.5 Billion

State: $8.7 Billion

Federal: $1.8 Billion

Other Categorical: $51 Million

The New York City Department of Educations FY09 Executive Budget climbs toover $21 billion in FY09, which is up $8 billion since FY02.

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The chart below highlights the year over year increase by UA.

FY09 vs FY08 budgets by UA

$ in thousands

FY08 and FY09 Budget as of FY09 Executive Budget

Program Area UA's PS OTPS Total PS OTPS Total

GE Instruction & Schl Ldrshp 401/402 $5,413,807 $653,911 $6,067,718 $5,521,266 $720,226 $6,241,492 $173,774

SE Instruction & School Ldrshp 403/404 1,065,371 4,839 1,070,210 1,385,390 6,143 1,391,533 321,323

Regional & CW Instruc and Op Admin. 415/416 206,862 25,469 232,331 196,736 21,096 217,832 (14,499)CW SE Instruction & School Ldrshp 421/422 672,582 24,615 697,197 685,656 23,415 709,071 11,874

SE Instructional Support 423/424 221,455 170,851 392,306 209,978 153,251 363,229 (29,077)

School Facilities 435/436 401,077 163,249 564,326 388,077 137,628 525,705 (38,621)

Pupil Transportation 438 1,016,525 1,016,525 1,068,988 1,068,988 52,463

School Food Services 439/440 188,415 198,593 387,008 188,167 221,473 409,640 22,632

School Safety 442 204,086 204,086 214,086 214,086 10,000

Energy & Leases 444 398,611 398,611 436,699 436,699 38,088

Central Administration 453/454 163,518 224,786 388,304 161,962 198,987 360,949 (27,355)

Fringe Benefits 461 2,153,146 2,153,146 2,283,441 2,283,441 130,295

SE Pre-K Contract Payments 470 622,650 622,650 653,496 653,496 30,846

Charter/Contract/Foster Care Payments 472 595,345 595,345 673,771 673,771 78,426

NPS and FIT Payments 474 63,894 63,894 60,673 60,673 (3,221)

Categorical Programs 481/482 1,251,927 671,278 1,923,205 1,279,509 636,074 1,915,583 (7,622)

Collective Bargaining 491 22,396 22,396 70,251 70,251 47,855

TOTAL (Excluding pensions/debt service) $11,760,556 $5,038,702 $16,799,258 $12,370,433 $5,226,006 $17,596,439 $797,181

FY09FY08 FY08 vs

FY09

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FY09 Executive Budget Overview

> New City Revenue = $243 million

Net $129 million without the surplus roll adjustment of$112 million and factoring in the decline of intra-cityfunding of $2 million

Increase is after Program to Eliminate the Gap (PEG)

> New State Revenue = $608 million ($644 with pension needand charge-backs)

Net $535 million without PreK, building aid funding andcharge-backs

> Other Categorical and Federal Revenue = -$53 million

The Departments budget is up almost $800 million in operating funds in FY09bringing its total operating budget to $17.6 billion.

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$809 millionin non-discretionar

Costs Increases

Despite New Funding, Budget ReductionsAre Needed

> Needs have outpaced our new revenues

> A large part of our new revenues are restricted and cannot be usedto cover our needs

We understand it is difficult to comprehend why budget reductions are necessarywhen we have millions in new revenue.

$774million

$664

million

NEW NYC SCHOOL REVENUES

$963

million

NEW NYC SCHOOL COSTS

GAP$299m

$774million

$664

million

NEW NYC SCHOOL REVENUES

$664

million

NEW NYC SCHOOL REVENUES

$963

million

NEW NYC SCHOOL COSTS

$963

million

NEW NYC SCHOOL COSTS

GAP$299m

$129 million City

$154 millionin public commitments

and necessary improvementsto DOE operations

$535 million State

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$963 million of Costs by UABelow is a summary of the needs by UA. Details can be found in the appendix.As you can see, most of these funds are going to schools.

$ in thousands

UA UA Description Total

401/402 GE Instruction & Schl Ldrshp 364,923$

403/404 SE Instruction & School Ldrshp 102,533

415/416 Regional & Citywide Instruc and Op Admin. 1,750

423/424 SE Instructional Support 92,397

435/436 School Facilities 5,003438 Pupil Transportation 22,500

439/440 Food 10,000

444 Heat, Light, Power, Leases 10,000

453/454 Central Administration 33,793

461 Fringe 69,467

470 Special Ed PreK - Pass-thru 47,258472 Charter Schools/School Age SE Contracts - Pass-thru 126,000

491 CB Reserve 48,000

NA Pension Set Aside for Formerly Reimbursable Funds 30,000

963,625$

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$299 million of Savings by UA$299 million of savings were identified, of which $200 million were taken from non-school budgets. Please note that 401/402 includes school budgets as well as

school supports and services that reside outside of school budgets.

$ in thousands preliminary figures

401/402 GE Instruction & Schl LdrshpSchool Budgets (99,000)Purchasing Efficiencies (25,000)Deferred purchasing of hard-cover textbooks/phased-in implementation of new social studies curriculum (10,100)Eliminate allocations for phase-outs (3,130)Reduce ELL reserve allocation (maintaining commitment) (4,000)Revise purchasing calendar by one week (10,000)Capture uncollected food money (5,000)Eliminate computer repairs for equipment older than 5 yrs (2,627)

Negotiated reduction in contracted computer support costs (515)Increase response time for network harware maintenance (231)Reduce NYC Early Literacy Learning program (181)Reduction Children First Intensive funding (2,450)Reduce Quality Reviews by transitioning in-house and changing frequency for some schools (1,300)Reduce periodic assessments and associated professional development contracts (1,410)401/402 (164,944)

415/416 Regional & CW Instruc and Op Admin. (6,949)

435/436 School Facilities (21,000)

439/440 Food (1,000)453/454 Central Administration (24,538)

461 Fringe (10,000)

470 Special Ed PreK - Pass-thru (33,000)

472 Charter Schools/School Age SE Contracts - Pass-thru (12,000)

NA Revenue (14,000)

TBD Adjustments to budgeted allocations from OMB (12,000)

(299,431)$

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> Of the $51 million, over $30 million from non-school budgets

> Additional PEG of $215 million was reduced to $104 million

> Department was provided with over $104 million in new needs

$299 million of Savings vs PEGsThe $180 million reduction in FY08 plus another $248 million reduction in FY09totals to the $428 million PEG figure in the FY09 Executive Budget.

Since the Executive Budget, we have identified an additional $51 million togenerate $299 million in savings.

$ in millions

FY08 PEGIncremental

PEG inFY09

FY09 PEG

School (part of $324 million PEG) (100)$ (80)$ (180)$

Non-School (part of $324 million PEG) (80) (64)$ (144)Non-School ($104 million PEG) (104)$ (104)

(180)$ (248)$ (428)$

Incremental PEG in FY09 (248)$Proposed Savigs for FY09 (299)$

Additional Savings to Fund Needs (51)$

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Promises KeptThe Campaign for Fiscal Equity settlement last year committed New York City tocontribute $2.2 billion over 4 years. As you can see from the chart below, we are

on track to meet this target by FY11.

$ in billions and as of the FY09 Executive Budget

> City operating funds include all PEGs

> City operating funds assume all new expenses are self funded so expensesequal revenues

FY07 FY08 FY09 FY10 FY11Increase

Since FY07

City Operating Funds $6.8 $7.0 $7.3 $7.8 $8.4 $1.6

City Pension $1.6 $1.9 $2.1 $2.3 $2.3 $0.8City Debt Service $1.1 $1.5 $1.1 $0.7 $1.4 $0.2Total City Funding $9.5 $10.5 $10.5 $10.8 $12.1 $2.6

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Appendix

Details on $963 million of Needs by UA

Details on $299 million of Savings by UA and PEG

$963 million = $809 million vs $154 million

School Budget Process

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Details on $963 million of Needs by UA

$ in thousands

UA Need Total

401/402 Collective Bargaining 191,440$401/402 Support School Phase-outs and Closures 30,000401/402 School Level Funding for Fair Student Funding Student Attributes 26,700401/402 Incentive Pay for UFT Members 25,000401/402 School Reserve (special ed and other adjustments) 20,000

401/402 New Schools 13,000401/402 Principal Training 10,000401/402 Scoring of ELA/Math Exams 10,000

401/402 Multiple Pathways to Graduation Expansion 6,588

401/402 PreK Full Day Expansion (including custodial costs) 5,000401/402 OMS (scanning project) 5,000401/402 School Funding for Transfers 4,000401/402 Children First Intensive (previously privately funded) 2,784

401/402 ELL Summer School Funds 2,000401/402 CSA Bonus 2,000401/402 Additional G&T Classes 2,000401/402 Out of School Time Expansion 2,000401/402 Assessments (Science, Summative and Periodic) 3,388

401/402 Miscellaneous Needs Under $1 million each (e.g. translation funding, vision screening, dual language books) 2,023401/402 Fitnessgram 1,000401/402 New schools onto HSST system 1,000

364,923$

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Details on $963 million of Needs by UA contd

$ in thousands

UA Need Total

403/404 CTT Growth 64,390$403/404 Self Contained and SETSS SPED Growth 19,700403/404 Collective Bargaining 13,043403/404 Autistic Spectrum Disorder Expansion 5,400

102,533$

415/416 Collective Bargaining 1,750$

421/422 Collective Bargaining 22,125

423/424 Related Services 50,000$423/424 Medicaid Revenue Shortfall 17,000423/424 Collective Bargaining 3,143423/424 Miscellaneous Needs Under $1 million each (e.g. translation funding, vision screening, dual language books) 130

70,273$

435/436 Facilities 5,000$435/436 Collective Bargaining 3

5,003$

438 Transportation 18,000$

438 GPS 4,50022,500$

439/440 Food 10,000$

444 Heat, Light, Power, Leases 10,000$

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13/2013$ in thousands

Details on $963 million of Needs by UA contd

UA Need Total

453/454 OSEPO Enrollment RFP 9,000$453/454 Per Diem Arbitrators to clear backlog of Administrative Trials Unit Cases and TPU attorneys 6,000453/454 Miscellaneous Needs Under $1 million each (e.g. translation funding, vision screening, dual language books) 5,387453/454 Special Ed System (SESIS) 5,000453/454 Other IT 3,400453/454 Talent Initiatives 2,290453/454 CEC Elections 1,940

453/454 Collective Bargaining 496453/454 Assessments (Science, Summative and Periodic) 280

33,793$

461 Fringe 69,467$

470 Special Ed PreK - Pass-thru 47,258$

472 Charter Schools 70,000$

472 School Age SE Contracts - Pass-thru 56,000$

491 CB Reserve 48,000$NA Pension Set Aside for Formerly Reimbursable Funds 30,000$

963,625$

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14/2014

Details on $299 million of Savings by UA andPEG

$ in thousands

UA Cut Total Cut PEG Additions PEG Title401/402 General Education and School Leadership

Capture uncollected food money (5,000) (5,000) Food EfficienciesDeferred purchasing of hard-cover textbooks and phased-inimplementation of new social studies curriculum

(10,100) (10,100)

Eliminate allocations for phase - outs (3,130) (3,130) - Hiring Freeze and Other AdministrationEliminate computer repairs for equipment older than 5 years (2,627) (2,627) School Based DIITEliminate NYC Early Literacy Learning family literacy program (181) - (181)Increase response time for network hardware maintenance (231) (231) School Based DIIT

Negotiated reduction in contracted computer support costs (515) (515) School Based DIITPurchasing efficiencies (25,000) (23,000) (2,000) Purchasing EfficienciesReduce Children First Intensive funding (2,450) (2,450)Reduce ELL reserve allocation (maintaining commitment) (4,000) (5,000) 1,000 Reduce ELL Reserve AllocationReduce periodic assessments and associated professionaldevelopment contracts

(1,410) (1,000) (410) Periodic Assessment

Reduce Quality Reviews by transitioning in house and changingfrequency for some schools

(1,300) - (1,300)

Revise purchasing calendar by one week (10,000) (10,000) Reduction in OTPS Expenditure415/416 Regional and CW Instructional and Op Administration

Other PS field reductions (335) (335) Hiring Freeze and Vacancy Reduction ProgramReduce staff across Integrated Service Centers (5,792) (5,000) (792) Central & Field AdministrationRestructure family engagement support staff (821) (821) Hiring Freeze and Vacancy Reduction Program

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15/2015

Details on $299 million of Savings by UA andPEG contd

$ in thousands

UA Cut Total Cut PEG Additions PEG Title435/436 School Facilities

Infrastructure and facilities reductions (21,000) (20,000) (1,000)Facility Efficiencies/Repairs & Maintenance/Facility& Infrastructure Reduction

439/440 Food

Reduce staff at small (less than 100 meals served/day) summerschool sites

(1,000) (1,000)

453/454 Central Administration

Convert contracted DIIT consultants to full-time employees (500) (500) Hiring Freeze and Other AdministrationDecrease the number of contracted IT consultants and consultantovertime spend in Applications group (1,980) (1,980) Hiring Freeze and Other Administration

Deferred bandwith upgrades to schools (4,500) (4,500) - School Based DIITEliminate educational housing contracts (385) (100) (285) Central & Field AdministrationOther PS/OTPS cuts across Central Offices (11,059) (11,059) Central & Field AdministrationPBX (phone) maintenance costs shifted to central offices (100) (100) Central & Field AdministrationReduce cost of admissions publications (1,193) (1,190) (3) Central & Field AdministrationReduce funds for LEARN internship program (750) - (750)Reduce HRA (Human Resource Assistants) spend (225) (225) - Central & Field Administration

Reduced contracted advertising spending for teacher recruitment (500) (500) Hiring Freeze and Other Administration

Reductions to NYC Teaching Fellows cohort, tuition and stipends (2,747) - (2,747)

Savings from telecom vendors through re-negotiated ratereductions

(600) (600) Central & Field Administration

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16/2016

Details on $299 million of Savings by UA andPEG contd

$ in thousands

UA Cut Total Cut PEG Additions PEG Title461 Fringe

Fringe savings (estimate based on staff reductions) (10,000) (10,000) Fringe470 Special Ed Pre - K - Pass-thru

Cash management efficiencies (33,000) (33,000) - Lower Accrual Reserve472 Charter Schools/School Age SE Contracts - Pass-thru

Cash management efficiencies (12,000) (12,000) - Lower Accrual ReserveOther

NA Improved revenue claiming operations (14,000) (14,000) RevenueTBD

Adjustments to budgeted allocations from OMB (12,000) (12,000)Grand Total of Non School Cuts (200,431) (166,413) (34,018)

401/461 General Ed Instruction and School Leadership (99,000) (81,724) (17,276)Grand Total of School Cuts (99,000) (81,724) (17,276)

Grand Total (School + Non School Cuts) (299,431) (248,137) (51,294)

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$963 million - $809 million vs $154 million

$ in thousands

$809 million

Increased Staff Costs $ 381,467

Collective Bargaining 232,000Fringe 69,467CB Reserve 48,000Pension Set Aside for Formerly Reimbursable Funds 30,000CSA Bonus 2,000

Pass-throughs Special Education School Age, SpecialEducation PreK Contract Schools and Charters

173,258$

School Age SE Contracts - Pass-thru 56,000

Special Ed PreK - Pass-thru 47,258

Charters 70,000

Special Education Growth (related services, classroom

growth)151,090$

Related Services 50,000CTT Growth 64,390Self Contained and SETSS SPED Growth 19,700Medicaid Revenue Shortfall 17,000

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$963 million - $809 million vs $154 million

$ in thousands

$809 million contd

School Funding and Programs $ 56,700

Support School Phase-outs and Closures 30,000School Level Funding for Fair Student Funding Student

Attributes26,700

Transportation, Facilities, Food, Leases and Energy 43,000$

Transportation 18,000Facilities 5,000Food 10,000

Heat, Light, Power, Leases 10,000

Out of School Time Expansion 2,000$

CEC Elections 1,940$

Total 809,455$

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$963 million - $809 million vs $154 million

$ in thousands

Increased Staff Costs $ 25,000

Incentive Pay for UFT Members 25,000

School Funding and Programs $ 72,980

School Reserve (special ed and other adjustments) 20,000New Schools 13,000Scoring of ELA/Math Exams 10,000Multiple Pathways to Graduation Expansion 6,588

Autistic Spectrum Disorder Expansion 5,400School Funding for Transfers 4,000Assessments (Science, Summative and Periodic) 3,668Children First Intensive (previously privately funded) 2,784

Miscellaneous Needs Under $1 million each (e.g., translationfunding, vision screening, dual language books)

7,540

Necessary Investments in IT Projects 28,900$

Special Ed System (SESIS) 5,000GPS 4,500OMS (scanning project) 5,000Fitnessgram 1,000Other IT 3,400

OSEPO Enrollment RFP 9,000New schools onto HSST system 1,000

$154 million

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$963 million - $809 million vs $154 million

$ in thousands

Leadership and Staff Development 12,290$

Talent Initiatives 2,290Principal Training 10,000

Cost Avoidance Initiative 6,000$

Per Diem Arbitrators to clear backlog of Administrative TrialsUnit Cases and TPU attorneys

6,000

PreK Full Day Expansion (incl custodial costs) 5,000$

Additional G&T Classes 2,000$

ELL Summer School Funds 2,000$

Total 154,170$

$154 million contd