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New York

IBO: City could save money by eliminating principal bonus pay

The Independent Budget Office's latest suggestion for how to cut costs at the Department of Education is to cut a performance pay program for school administrators that the Bloomberg administration convinced the principals union to accept. Since 2007, the department has distributed about $6 million a year to principals and assistant principals on the basis of their schools' progress report scores. Last year, 275 administrators — including some who were under investigation at the time — took home $5.7 million, with individual rewards as high as $25,000,  for principals at the top 1 percent of schools. Department officials said today that this year's bonuses, based on 2011-2012 progress reports, are in the process of being paid out now. In its annual "Options" report listing ways for the city to save funds and raise revenue, the IBO argues that the performance pay might be better off conserved. The annual report is meant to inform city government officials as they head into their final negotiations before adopting a budget for the 2014 fiscal year. The education department, which takes up about a quarter of the city's planned spending, was listed in 14 of the 80 suggestions this year. For each cost-cutting idea, the IBO lists arguments that supporters and opponents might make. For the performance pay idea, the report notes, "Proponents might argue that the more weight that is placed on the Progress Reports, the more incentive there is for administrators and teachers to 'teach to the test' and even to manipulate data. Moreover, the remaining measurement problems in the Progress Reports might imply that the basis for awarding the bonuses is flawed."