New York City Schools Can Once Again Keep Rainy Day Funds

07/06/2011 10:32 am ET | Updated Sep 05, 2011

In a reversal of a relatively new policy, the new chancellor of New York City Schools is again allowing New York principals to add savings from one year to the next year's budget. But this benefit only applies to those that perform well on the city's annual school progress reports, The New York Times reports.

In February, then-Chancellor of schools Cathleen Black announced that schools would no longer be able to roll over money they saved in their so-called rainy day funds. If they didn't spend the money, the city would seize half of what the schools had left.

Facing severe backlash from schools and subsequent discussions with Mayor Michael Bloomberg, officials from the New York Department of Education compromised to take 30 percent of leftover funding instead, the New York Daily News reported.

Working with tight budgets and foreseeing potential budget cuts from the city last year, principals saved more than $80 million to buffer possible cutbacks.

Under new chancellor Dennis Walcott, schools that earn above a "C" on their progress reports can roll over the full balance of their rainy day funds from the 2011-12 school year into the following year. The rollover is, however, capped at $44 per student, according to The Times. Schools that earn a "D" or "F" on their progress reports can keep their savings if they are able to convince the Education Department why they deserve the money despite low scores.

Black's rollover policy is in effect until the end of the upcoming school year.