Last week, Mayor Eric Adams released a first-quarter modification to the current (Fiscal Year 2024) budget, as required by the City Charter. It included well-publicized cuts of roughly five percent to the City-funded portion of all agency budgets, including that of the Department of Education (DOE). Two rounds of similar-size cuts are expected by next spring, producing 15 percent overall reductions this fiscal year.

The November cuts and the upcoming expiration of Federal Covid-related emergency assistance will soon affect school budgets; we’ll take closer looks at those factors in the coming weeks. In the meantime, bear this in mind:

DOE also must begin preparing for significant new costs arising from State-mandated class size reductions. So successive rounds of budget cuts now – which are likely to set perimeters for future spending, too – will make doing that all the more difficult.

Here’s what’s in store, and why.

In September 2022, Governor Kathy Hochul signed legislation imposing caps on class sizes in New York City public schools. (No other school district was covered.) It gives the city a five-year schedule to substantially reduce class sizes in grades K to 12. Achieving that will require hiring thousands of new teachers and, in some cases, constructing or expanding schools to add thousands of seats. While there is considerable uncertainty regarding the ultimate annual cost, it is likely to be well over $1 billion. Expect some of those costs to begin showing up about 19 months from now, in the budget for the City’s Fiscal Year 2026.

Class size reduction has been a goal of advocates for decades, particularly as evidence emerged that academic outcomes improve with smaller classes, most notably in the early grades. The issue was at the core of the historic Campaign for Fiscal Equity (CFE) lawsuit against the State; class size reduction was prioritized in the 2006 State legislation that created the current system of Foundation Aid and that effectively brought the CFE case to a close.

A portion of Foundation Aid is set aside to address six priorities of the Legislature, including class size reduction. For each priority, school districts must prepare a so-called Contract for Excellence (C4E). In the current budget, the City anticipates receiving $756 million through the C4E process, an increase of $215 million from previous years. That’s due, however, to an overall increase in Foundation Aid; the 2022 class size law itself included no new State funds to meet this new State mandate.

The class size law amended previous C4E provisions in several critical ways. Where the old C4E language spoke of average class size, the new language imposes hard caps on enrollments: 20 students per classroom in kindergarten through third grade; 23 in classes or sections in grades 4-8; and 25 per section in grades 9-12. (Special education and pre-K and 3-K classes are excluded.)

In the first year (the current FY 2024), 20 percent of classes must be under their caps; that percentage must increase by 20 percentage points annually for the next four years. As part of the C4E process, the City DOE must develop an annual class size reduction compliance plan, after soliciting community input and securing approval from the United Federation of Teachers and the union representing principals and administrators. The State will withhold C4E funds if the City fails to make adequate class size reduction progress.

The new legislation also requires the City to prioritize reducing class sizes at schools with higher levels of poverty. In reality, however, a school’s poverty rate and other measures of economic need are not good predictors of overcrowding; in fact, the opposite is often true. Aggregate data show an inverse relationship between economic need and the share of classes over the caps. (Of course, there are indeed high-poverty schools with large numbers of over-enrolled classes.) Schools in higher-income areas that are perceived to be high-performing are in demand even if they have larger class sizes.

So, the law may well tug DOE in two opposite directions: It’s supposed to prioritize class reduction in high-poverty schools even as the surest path to meeting the State’s annual progress targets largely runs through schools with over-enrolled classes but lower poverty among its students.

Two principal factors will drive the costs of complying with the new law: the additional teachers needed to staff new classes; and construction of new or expanded schools to provide the necessary classrooms. Estimates of new teachers needed range from 9,000 to 17,000, costing an additional $1.3-$1.9 billion annually.  Adding that many positions to the teaching roster (which currently stands at about 76,000) would likely also require adding to the supervising and support ranks.

DOE estimates that about 1,000 of its roughly 1,500 buildings could accommodate the new class size caps without requiring major construction. The current School Construction Authority five-year capital plan runs through the end of this fiscal year, and predates the new legislation. It includes projects underway (or soon to be) that will provide about 27,000 seats. New capacity needs will largely be incorporated in the next five-year plan, covering Fiscal Years 2025-2029. It will likely be made public early next year.

Bringing all classes to their capped enrollment (or lower) also will require adjustments by principals, community school districts, and the DOE central administration. For example, to cut the number of over-enrolled sections, principals could opt to reduce the number of sections of popular courses. Community districts may also look to re-arrange catchment zones for elementary schools and add program options to encourage parents to choose under-enrolled schools for their children.

Such strategies will come into sharper focus as the pressure to meet class size mandates mounts.