City must balance hold harmless policy against fiscal crisis realities
Sixteen-Year Spending Commitment on School Protection Faces Fiscal Crisis Test
New York City has spent $1.6 billion over the past six years shielding schools from enrollment-related budget cuts. This “hold harmless” policy emerged during the pandemic when federal relief funding was abundant. Even as federal funds dried up and enrollment losses deepened, city officials continued pouring hundreds of millions annually into school budgets to prevent cuts. This year, the city is spending over $388 million on this protection, the largest annual sum since the pandemic began. As Mayor Zohran Mamdani prepares to release his first budget proposal, he must decide whether to continue this costly policy while facing a $7 billion deficit.
Enrollment Decline and the Funding Challenge
New York City public school enrollment has declined more than 8 percent over the past six years, falling to 884,000 students. Enrollment is projected to continue declining. Traditionally, school budgets are tied to student headcount because costs scale with student population. More students require more teachers, more supplies, more bus seats. Fewer students should logically mean lower costs. However, many school costs are fixed. Buildings must be maintained whether enrollment is at full capacity or declining. Central administration costs do not disappear. Pension obligations continue.
Why Cities Implemented Hold Harmless Policies
During the pandemic, New York City officials were flush with federal relief funding. They recognized that schools with declining enrollment after prolonged learning interruptions needed resources to address student trauma, learning loss, and behavioral challenges. Cutting school budgets during recovery made no sense. So city officials protected school budgets even as enrollment fell. Once federal funds dried up, the city continued the practice, believing that schools needed sustained investment. The Citizens Budget Commission, a fiscal watchdog group, has tracked this spending. Over six years, the total protection reached $1.6 billion.
The Equity Argument and the Fiscal Reality
Some budget experts argue that the hold harmless policy should continue. Schools serving lower-income communities may have greater per-student needs. Automatic enrollment-linked cuts could harm the schools that serve families with fewest resources. Other budget experts argue the opposite: allowing school budgets to become detached from enrollment creates inequities between schools. Some schools receive significantly more per-student funding because of enrollment decline rather than student need. This distorts resource allocation and makes it difficult to direct funds to the communities that need them most.
Preliminary Budget Guidance Expected February 17
Mamdani has not yet publicly stated his position on the hold harmless policy. His preliminary budget proposal, due February 17, will reveal the answer. The policy is politically complex because school advocates will strongly oppose any reductions, while fiscal experts argue that maintaining separate funding protection is unsustainable. The schools serving the city’s most vulnerable students have the most to lose if the protection ends. Yet the city’s budget crisis limits resources for other essential services. The preliminary budget proposal will signal where the mayor’s priorities lie. Readers interested in school funding analysis should consult the NYC Department of Education for enrollment and funding data. The Citizens Budget Commission provides independent fiscal analysis. The Education Trust analyzes equity in school funding. Chalkbeat New York covers school policy and finance.
