Windfall or Whipsaw: Will Funds from A Microsoft Settlement Help Cushion School Budget Cuts?

New York City schools may soon learn what it feels like to discover that a rich uncle you didn’t even know left you a tidy bequest.

Amid a torrent of bad budget news in recent weeks, New York City schools could soon come into some money as New York State Education Department gets ready to disburse uncollected settlement funds from a 2005 class-action suit against Microsoft Corporation.

“This winter, NYSED expects to launch the New York State School Technology Voucher Program (NYS-STVP) that makes funds available from a previous Settlement Agreement between New York State consumers and Microsoft Corporation,”  explains a memo from the NYSED. While the state also promised to post details of the voucher program on a new website by January, no details have yet been released.

Technorati close to the New York City Department of Education say that New York State, one of the last states to distribute leftover funds from the class-action settlement, will have about $87 million to give to schools in the form of technology vouchers that can be used to purchase hardware or software. They say details of the plan could be announced today in conjunction with the second-annual Digital Learning Day.

“That’s how Boston bought all their teachers laptops, with the Microsoft settlement,” says a computer expert who works with the city’s public schools.

The voucher program, which can be used for purchases during this school year and next, is reserved for high-poverty schools defined as those where at least 50 percent of the student body is enrolled in a free or reduced-price lunch program for the 2011-2012 school year.

The money will come via a so-called “Cy Pres” provision, a legal doctrine that allows states to take funds from a class-action settlement that have gone unclaimed by consumers and allocate them to a group with comparable needs—in this case high-poverty schools.

The voucher program may be especially welcome news for the hundreds of New York City schools that are part of a four-year old experiment known as the Innovation Zone; the izone schools learned in December that New York City lost its bid for $40 million in Race-to-the-Top funding, which was aimed at rewarding schools that promote “personalized learning,” including those in the izone.  At schools like Global Technology Preparatory, a Harlem Middle School and one of the original izone schools, the loss of the RTTT bid and other budget cuts has set off a scramble for funding to maintain its mission, including the ability to provide one laptop for each student.

Of course, the technology vouchers won’t offset the loss of as much as $450 million in both state funds and further Race-to-the-Top grants that New York City is expected to loose for failing to arrive at an agreement with the United Federation of Teachers on a new teacher evaluation system. Yesterday, however, New York City parents, represented by attorney Michael Rebell, filed a lawsuit against Governor Andrew Cuomo and Education Commissioner John B. King, Jr. for unconstitutionally withholding $250 million in education funding in the teacher evaluation dispute.

Rebell had represented the Campaign for Fiscal Equity when it won a ruling, six years ago, to force New York State to increase funding for high poverty schools. “I am outraged that New York City students are being victimized as pawns in a power struggle between the ‘grown-ups’,” said Rebell. “I think this is a clear violation of the CFE decisions, as well as the due process and equal protection guarantees of the New York State constitution. We have requested that the law allowing the State to impose this $250 million penalty on our children be declared unconstitutional and invalid, and we are seeking a quick ruling and a preliminary injunction to make that happen.”

Unless the funding is restored, the consequences for New York City schools could be dire. An internal memo at one New York City school network warns principals: “in September you may receive significantly lower funds ($4000 per child for a regular ed student) which will impact on your hiring.”

In addition, the cuts have led to an erosion of some of the budget autonomy granted to principals under Chancellor Joel Klein. “We will need to cancel the Deferred Program Planning Initiative that allows you to roll money into the following fiscal year to fund pedagogical staff and programs,” wrote Chancellor Dennis Walcott in a January 28 email, detailing the budget implications from State aid reduction. The program, which was reserved for principals whose schools received a Grade of “C” or better, was designed to give principals the ability to plan for the longer term.

And just as an inheritance often comes with strings attached, New York City principals may find that they will have to use the technology vouchers to comply with new mandates. Preliminary details of the voucher program appeared in a memo focusing on technology purchases intended to support New York State’s Common Core Learning Standards. Referring to the new Common Core assessments, which will be conducted as computer-based tests (CBT) by PARCC (Partnership of Assessment for Readiness for College and Careers), the NYSED memo states:

Although the Board of Regents has not yet determined whether to adopt the PARCC assessments when they are available, both the New York State and PARCC assessments will be implemented with the support of technology. The New York State assessments will phase in CBT over time, beginning with field tests as soon as the 2013-14 school year. The PARCC assessments are being designed for computer-based administration. See below for a summary of upcoming CBT opportunities.

Since both the New York State and PARCC assessments will require CBT, schools and districts should establish goals and plans that guide decisions on how many and what types of technology devices to purchase prior to the 2014-15 school year.

The only clear winners are the testing companies and technology vendors.

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