Comptroller’s Fiscal Year-End Analysis Shows City Has Funds to Fully Reverse Cuts to School Budgets and Increase Deposits to Rainy Day Fund

 

Comptroller’s office identifies $800 million in FY22 year-end excess revenues that could be deposited into long-term savings to prepare for economic downturn.

Updated forecast for DOE federal Covid stimulus rollover shows more than enough to cover the $469 million reduction in school budgets.

  New York City Comptroller Brad Lander announced today that his office’s FY22 year-end fiscal review continues to identify sufficient resources to fully cover school budget cuts, while also substantially increasing the City’s Rainy Day Fund to prepare for the possibility of an economic downturn.

“Preparing for the future means both fully funding our schools to help our kids recover from the pandemic and getting our fiscal house in order for the possibility of a recession,” said Comptroller Lander. “Our year-end analysis shows we can do both. There’s no fiscal need to shortchange our kids.”

The Comptroller’s office review found that the City will end the year with $800 million in tax revenues above what was included in financial plan at the time the City’s budget was adopted. These additional revenues were not projected in either the FY22 or FY23 budgets.

Comptroller Lander urges that these excess revenues be placed in the City’s Rainy Day Fund, to prepare to soften the blow of a possible economic downturn. The Mayor and the City Council made significant FY22 deposits of $2.2 billion into the City’s long-term reserves (the Rainy Day Fund, aka the Revenue Stabilization Fund, plus the Retiree Health Benefits Trust fund). This brings the City’s long-term reserves to $6.55 billion, or 9.4% of tax revenues, still well below the 16 percent that the Comptroller’s office projects would be needed to weather the full length of a recession. An additional $800 million would put the City’s long-term reserves above $7 billion for the first time ever. The Comptroller also called for the City to adopt a formal policy for deposits, fund target, and withdrawals.

At the same time, the Comptroller’s office updated its estimate of Federal Covid stimulus dollars allocated to the New York City Department of Education (DOE). As of June 2022, the DOE has spent $2.33 billion of the $3.02 billion in stimulus dollars budgeted. While the DOE can continue to expend through September, the Comptroller’s office estimates that $505.6 million remains yet uncommitted, enough to fully cover the $469 million Fair Student Funding cut from school budgets for FY23. (DOE claims that the amount being cut from individual schools is $215 million, but the Comptroller’s analysis of the actual school budgets shows the gap facing principals is more than double that figure). In total, the City currently has $4.4 billion remaining in federal Covid stimulus aid for education that must be spent by FY25.