Last week, Mayor Zohran Mamdani ordered every New York City agency to find 2.5 percent in savings for the next four fiscal years. That would mean nearly $1 billion a year from the Department of Education’s record $38.6 billion budget.
Where should the department look for cuts? In our recent Manhattan Institute brief, we describe all the inefficiencies dragging down the DOE––and where the savings can be found.
Finally, a reason to check your email.
Sign up for our free newsletter today.
Start with administrative bloat. Since 2003, the New York City school system has lost 215,000 students, a 21 percent decline. Yet, central administration salary spending——the human resources department, finance officers, and technology staff––has grown steadily, from $186 million in 2010 to $261 million last year.
A system that serves substantially fewer students needs a smaller bureaucracy. A 10 percent reduction in head count––about 228 positions––would save $26 million alone on base salaries. A more serious 20 percent cut, through consolidating overlapping divisions, could generate close to $50 million in savings.
Then there’s non-personnel spending, meaning what the administration buys from outside vendors, such as contracts, consultants, technology, and other supplies. The city spent $187 million in fiscal year 2025. Returning to 2013 spending levels, when the system had more students than today, could save another $60 million.
Mamdani’s budget also relies on procurement savings. But those savings can materialize only if the city makes vendors compete as contracts expire. The DOE spends nearly $13 billion a year on outside vendors, in areas including busing, custodial services, food, technology, professional development. Yet last year only about 13 percent of its newly registered contracts were competitively awarded. Increasing that proportion would save the department $1 billion a year, according to the mayor’s own campaign projections.
Another place to look for savings is the city’s special education system. Last school year, the city set aside $1.3 billion for “Carter cases”—legal claims in which families win reimbursement for private school tuition after the DOE fails to provide lawfully mandated services for their children. (The Supreme Court affirmed this right in two cases, the latter of which—Florence County v. Carter (1993)—gives Carter cases their name.) The Carter bill is expected to rise to $1.54 billion this year.
The price tag keeps growing because the city is failing to provide services to students in need. In 2024–2025, nearly 12,000 students received none or only some of their mandated services. More than 23,000 preschoolers also entered the evaluation pipeline. Only 53 percent got services arranged within the legally required 60-day window. These failures make lawsuits inevitable.
The resultant costs are substantial. The average Carter-case settlement last year was $101,757 per student, more than three times what the city spends on a general-education student.
If the DOE takes a closer look at what disability categories, neighborhoods, and service gaps tend to drive private placements, it can fix failing programs and set a measurable target for bringing students back to public schools, thereby reducing Carter-case expenditures. Returning even eight students to an appropriate, less restrictive public program would save half a million dollars per year.
Another area where the city can save is consolidating schools and eliminating “hold harmless” policies, which keep funding stable for schools that lose enrollment. Presently, 134 public schools are projected to enroll fewer than 150 students in 2026–27, making most of them financially unviable. Yet the city continues to fund these schools at the same levels, a policy that has cost almost $1.9 billion over the past few years; it accounts for $290 million in this year’s budget alone. The city could save more than $100 million with a consolidation plan that brings newly merged schools into line with citywide average spending.
In recent years, the biggest driver of increased spending has been the implementation of the class-size law, which sets maximum class-size limits in city public schools. The Independent Budget Office has estimated that the law will cost between $1.6 billion and $1.9 billion to implement.
Mayor Mamdani has negotiated a delay of the law’s implementation with Albany, but New Yorkers need a more stable solution, not a temporary fix. The mayor should seek a permanent exemption from the law for high-performing, high-demand schools. This would allow the city to continue running its best schools efficiently and avoid reducing seats in these schools—which inevitably would lead to lower enrollment.
“Every dollar we save by making government work better is a dollar we can put toward services New Yorkers can rely on,” Mamdani has said. We agree. That project should start with the agency that spends the most while failing the students who depend on it. The savings are there to be achieved; all that is needed is the political will.