Sunday, July 5, 2020

Where is DOE stashing $400 million in savings from cancelled busing this year?

Ever since April, when I saw that the DOE was asking the Panel for Educational Policy to approve  retroactive extensions of the busing contracts for March costing $180M,  to be automatically renewed in April for about the same amount, I've been concerned about why they were intent on spending these funds despite the fact that there has been no school busing since March 15, when schools were closed due to the pandemic.

The waste involved was even more astonishing, considering that the DOE will be facing big budget cuts next year, which will severely hamper the ability of NYC schools to provide the health and safety protections as well as educational and emotional support that students will need.

The DOE argued that, for some reason, they were obligated to renew the busing contracts through the end of the year, but would only pay 85%, as they apparently get 15% savings on snow days.

This didn't make any sense to me, given that these were contract extensions, with no legal obligations to renew.  Moreover, in most such contracts there is a provision called "force majeure" meaning the contract could be rendered null and void in case of a real emergency, including an epidemic.  
Sure enough, the City Controller wrote a letter to the DOE on April 17, pointing this out and asking, "Given the extreme budgetary pressures faced by the City amid the COVID-19 pandemic, it would seem contrary to all sense of fiscal prudence that the City would continue to pay for services that can no longer be rendered for the remainder of the school year. Every dollar must be leveraged to respond to our current public health crisis and to offset other proposed cuts to city schools."
The next thing I knew, DOE had taken the vote to extend the busing contracts for March and April off  the PEP agenda, and they haven't reappeared since.  Neither has there been any mention of extending the contracts for May or June.
And yet there are no DOE budget savings from busing listed in the final adopted budget documents on the OMB website for FY 2020, though $50 million is listed in savings for FY 2021, because of cancelled busing for summer school classes.
Assuming $180 million per month in savings, for the three and a half months the schools were shut from March 15 through the end of June, that could total as much as $540 million.
However, the DOE did not immediately stop paying the bus companies in mid-March -- even though the PEP never voted to renew their contracts for that month or the month of April. 
According to the Daily News, the DOE did not stop paying the bus companies until the first week in May, and then apparently stopped reimbursing them for the busing that never happened in April; that's also when the bus drivers stopped getting paid by the bus companies as well. 
I looked up what the savings have been on CheckbookNYC, a handy website run by the NYC Comptroller's office that tracks spending by city agencies.  
Sure enough, DOE spending for student transportation in May amounted to only $879,000 and $5.4 million in June, compared to $124.7 million in Jan., $  154.4 million in Feb.,  $121.7 million in March, and $141.1 million in April.  
Interestingly, payments from April 1-15 were nearly $136 million, but far less during the second half of the month,  at only about $6 million, which was after the Comptroller sent his letter on April 17 and Sue Edelman did a story on the controversy on April 18 in the NY Post.
In any case, with the average DOE monthly spending on busing per month for January, February and March of about  $134 million, the savings from  cancelling the contracts for April, May and June should total nearly $400 million.  Yet this amount is nowhere reflected in the OMB documents for DOE savings for this year, which instead list unspecified savings in all categories of only $200 million for FY 2020-- and which should include energy, leases, supplies, consultants, professional development, and more, which likely experienced considerable reductions since schools were closed in mid-March.
More mysteries: 

1- Why was the PEP asked to approve emergency busing extensions of $180 million for March when the most spent on busing in any month, according to CheckbookNY anyway,  is only about $154 million?  
2- Why did the DOE spend anything for busing in May and June?
3- When the June expenses of more than $5 million are examined closely, the vast majority of payments went to companies that transport Yeshiva students.  Yet Yeshivas, like public schools, are supposed to be closed.  The usual payments to these companies (which are not even included in the contracts that the PEP votes upon) cost the DOE about $5 million per month, according to CheckbookNYC, which is between three and four percent of the DOE's total spending on busing in a normal month.  
Yet for the months of May and June, the percentage spent on Yeshiva bus companies ballooned to 71-72% of the total amount DOE spent on busing, with nearly $4 million paid to these bus companies on June 29 alone.  Why did these payments continue and indeed increase in June?

There may be a perfectly logical reason for all this, and if readers have an explanation, please propose it in the comments box below. In any case, the lack of transparency around this issue is distressing, with the City Council apparently allowing DOE to stash away at least $400 million.  Instead of accounting for these savings which might have prevented the cuts to staffing and essential programs next year, these funds can now presumably be used on consultants, to sustain the DOE's inflated bureaucracy, or anything else. 

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