Cutting the City's Budget

( Michael Appleton / Mayoral Photo Office )
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Announcer: Listener-supported WNYC Studios.
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Brian Lehrer: Brian Lehrer on WNYC. As you've heard over the last few days, Mayor Adams is asking all city agencies for 5% budget cuts to help pay for asylum-seeker services. We'll use this as an opportunity to take a close look at the city budget, what agencies actually spend what on what for your hard-earned tax dollars, whether asylum-seeker services are really costing the 5% that the mayor says and what 5% off the top could mean for different New Yorkers. Here's the mayor on Saturday saying, basically, this means you.
Mayor Adams: For the better part of the year now, I have been clear that these costs will impact every city service. The simple truth is that longtime New Yorkers and asylum seekers will fill these potential cuts and they will hurt.
Brian Lehrer: Mayor Adams on Saturday. Get out your calculators if you want to keep score at home, as with me now for a mildly wonky but vital conversation about the city budget and these proposed cuts is Andrew Rein, president of the Citizens Budget Commission, a non-partisan, non-profit New York City budget watchdog group. He's previously made proposals to help the city financially through the pandemic, help the MTA see how to balance its budget, been associate director of the Centers for Disease Control at the federal level and the New York City Health Department here.
Like any good budget analyst, his college degree was in philosophy. Wait, what? Okay, he's also got a master's in urban policy and management from The New School. He released an analysis on Sunday that said less than half the $12 billion deficit the mayor is forecasting is actually from asylum-seeker expenses. Andrew, thanks for coming on. Welcome to WNYC today.
Andrew Rein: Well, Brian, thanks for having me.
Brian Lehrer: I see from your report that you don't buy that most of the 5% deficit the mayor projects is from asylum-seeker services. What's the big picture then as you see it before we look at some of the details of which New Yorkers will feel the pain the most?
Andrew Rein: Right, thank you. It's good to be able to clarify this for your listeners. The budget gap, in other words, the difference of spending that we're planning, for example, for next year versus the revenues that are coming in, depending on whose number you pick, could be up to $13 billion. Let me just break that apart. It's $13 billion on the high-end. Comptroller Lander has $9.8 billion.
No matter how you slice it, it is a huge number, which is why we said the mayor is right to start on the savings, but let's put in perspective. The budget gap on paper is $5 billion that the city already projects. What it doesn't include in there is the fact that we have been spending $2.6 billion of one-time money, both federal COVID aid and city money that came in from good Wall Street years a couple of years ago, on recurring programs.
We're spending special education, pre-K expansion, FHEPS vouchers. We're budgeting them one year at a time using one-time money. You have to add that to the budget gap. Five goes up to seven and a half and then the city traditionally underbudgets for police overtime and special education, which is why we got to eight and a half billion. Then the question is how much will asylum seekers cost?
If you take the mayor's estimate of $6.1 billion, you get up to that $13 billion. Both the state and city controller have both re-estimated revenues and spending and asylum seekers, but that's why they're in the $9.5 billion to $10 billion range. No matter how you slice it, we have a large problem, but it's between 30% and 40% of asylum seekers. We had an underlying problem before that. It's not just the asylum-seeker problem, though that really causes extreme fiscal stress on the city.
Brian Lehrer: All right, so that's a good starting point. Here's a perhaps surprising clip from yesterday's show. You just singled out Department of Education programs at the top of your list of things that are now being expanded without the recurring revenues to pay for them. Yesterday's show, we had the schools chancellor, David Banks, and he said, basically, they'll handle it when I asked if taxes should be raised on the wealthiest New Yorkers to help keep school funding steady. Listen.
David Banks: Our New York City schools have a budget of $37.5 billion, and yet 51% of the kids can't read and haven't been reading for quite some time. While this is, it remains a funding issue for us. It also remains an issue about vision and implementation of things that work because I can give you $100 billion. If you don't know what you're doing or you have the wrong playbook, the amount of money you're bringing in won't matter. I'm trying to put in the right vision and the right plan so that the money that we do have is spent expeditiously and is also spent in a way that is effective.
Brian Lehrer: Schools Chancellor David Banks here yesterday. Andrew, are you surprised by that answer? It's something we usually hear from conservative politicians, I might say. Education doesn't need more money to help kids succeed. It needs to spend it more wisely. Are you surprised to hear that from a New York City Schools Chancellor?
Andrew Rein: Well, what I'm glad to hear is the focus, twofold, one, on using dollars wisely and thinking about the outcomes. The other is, pedagogically, what do you do to get to those outcomes? It's interesting. State school aid with the fully funding of foundation aid, plus pandemic one-time money from the Feds are adding statewide $40 billion over five years. The question is, are we going to get results?
In New York City, we did a recent analysis showing that per-student spending, because of increased aid and declines in students, obviously, the migrant crisis reverses that a little, but per-student spending is at $38,000 on the path to $42,000, $44,000 per student. The question is, are we using that money the best way in getting the results? We all know that there's nothing more important than getting good results for our kids.
Brian Lehrer: Your report, and you were going into a little of this before, cite some specific education department budget increases this year. At least this is the way it was described in a New York Post article I saw quoting your report. $184 million new this year to expand pre-K special ed, $78 million for more afterschool and summer programs, $84 million for mental health support.
Andrew, I don't think you'd argue against the fact that those are core needs of New York City kids that a lot of people say are not sufficiently funded. I could take calls all day from parents of special-ed kids who say the programs are insufficient. We got one yesterday on the availability of afterschool programs, which the kid couldn't find an open slot for in Brooklyn. We know about mental health services post-pandemic and that need, so why single out items like those?
Andrew Rein: Well, I think we haven't singled those out. What we're talking about is how to provide and prioritize the core services that all New Yorkers need. You're talking about students, of course, some of the most important New Yorkers and our future and their future and the future of our world. The question is, what are the priority services and how do we deliver them well? I do think people need to step back at times because we've all had experiences with government. Frankly, private sector as well, where we get something and it's not very good.
We have to focus on delivering quality services and allocating our resources among them. I think that's what the chancellor's talking about. I think you're right. Summer programs, very important, especially reversing learning loss and social and emotional wellness retreats during the pandemic. Mental health services, all these are important. The question is, what is the right mix so the kids learn and are supported in the right way? At $38,000 a student, can we both deliver those services well and allocate those resources where they're going to have the most impact? We need those performance management systems to do that well.
Brian Lehrer: Chancellor Banks may have surprised some listeners with that $37 billion annual figure, which also means that the schools are more than a third of the city budget. By far, the biggest piece. Isn't that typical for city budgets around the country?
Andrew Rein: I were a little higher. I believe we're doing some comparative analysis now. What's interesting is our third is also among of probably the largest budget in the country. Not just because we're larger, but we actually spend more on more services here and we have a local Medicaid share and everything like that. It really is very significant. In fact, statewide, we spend twice the average per pupil in the country.
New York City's actually even more than that. Certainly, we have needs. The question again is how to allocate it and get the most out of it. It's interesting when we talk about the budget cuts and this is what's the nuance. This is a huge budget with a lot of different lines. One of the savings programs last time and there's probably more to be had this time was that they were expecting, projecting, and budgeted for health insurance costs to go up 9%.
Well, hold on a second. Nothing else was going up 9% in health insurance costs in the city. They brought it down to a little over 6%. They could probably bring it down a little more. That actually was a budget savings, which affected no programs, no benefits for teachers or anybody else working at the Department of Education. That's why the scalpel going through the city budget is the best way to figure out where we can save without affecting services.
Brian Lehrer: When Banks says the schools could be more efficient if it's not by cutting special ed and afterschool and mental health, where do you think they can find it with the least impact on New York City kids if you've drilled down that deeply at the Citizens Budget Commission?
Andrew Rein: Well, let's come back to your point about special ed because there's no question and there have been various studies about how well children are being served, but we have a system because the Department of Education has historically not served these people well inside. We have people challenging because they have a right to get their IEP services challenging, then legally winning a case. These are called Carter Cases.
The city then supports students outside in private schools. At an average, I believe at around 100,000 a pop. Hold on a second. What can we do there? This is not about reducing services to those kids. The question is we have the economy of scale in a city this size with this many students to contract out in group to bring back some of those students. How can we serve them well? That is actually an incredible growing area and incredible hundreds of millions of dollars.
The question is, can we serve these students well inside or contracting on groups? Yes. There's no question there's money to be saved there as well. You're right. You comb on food and transportation and then you look at classroom services because that's where the learning happens. What else is happening in the school? What else is happening in the district? What is happening at Central? You also can look at even critical services like special education and say, "How can we do it better?"
Brian Lehrer: Listeners, we can take calls, texts, and tweets for Andrew Rein, president of the Citizens Budget Commission, non-profit, non-partisan, outside watchdog group on Mayor Adams' 5% budget cut orders and related budgetary issues. Call or text 212-433-WNYC or tweet @BrianLehrer. I wonder if anybody who is a city employee right now wants to call in and help us report this story.
What would a 5% budget cut mean for your agency and the New Yorkers it serves? Call and make your case that this would be harmful to New Yorkers and can't just be done with efficiencies. The mayor has said no layoffs, so this is not about making city workers lose their jobs. These are 5% budget cuts that the mayor is after without thinning out the staffs at all, so 212-433-WNYC.
If you are an agency head who wants to call in under a pseudonym so you don't get in trouble with your boss at city hall, [chuckles] you can do that. If you're a line worker who isn't maybe as worried about that at any city agency, what kind of conversations have you started having internally about 5% budget cuts and what they would mean to your agencies and the New Yorkers they serve or anybody else with a question or a comment?
212-433-WNYC, 212-433-9692. I should have said text or call that number or tweet @BrianLehrer. Andrew, we've been talking about the schools so far. That is, by far, the biggest piece of the city budget, about 35%. Police and law enforcement or public safety generally, maybe including the jails department, are always a source of debate. What percentage of the budget do they make up combined?
Andrew Rein: Well, public safety is around 17% of the budget. When we're talking about $112 billion, we're talking verging on $20 billion. Now, there is no question, and I will say your point about city workers is great. I was a city worker in charge of a budget and we did 14 rounds of PEGs. I want to be clear with everyone. This is hard work. This means everyone collaborating, management and frontline workers, as well as management and labor to do this.
I'm interested to hear because having been through 14 rounds of PEGs, and I think we did them well and preserved services and made choices and priorities, it's interesting that it is such a heavy lift, but public safety is one of those areas. The mayor singled out uniformed services over time in the budget director's PEG letter for savings.
Brian Lehrer: You mentioned that earlier before that the city underbudgets for police overtime. By that, you mean they put a certain amount of money in the budget, but then police overtime exceeds that, so then the city has to find the money somewhere?
Andrew Rein: Yes. Year in and year out, the actual spending on uniformed overtime has exceeded the budget. Year in and year out, periodically, this administration, prior administrations have said, "We're going to control uniformed overtime." Almost everyone has failed almost every time. Last year's uniformed overtime is around $700 million. This year in the budget, they've shaved that by $200 million already. They need to control it in a variety of ways. It is possible, but it's never been done. The mayor hopefully will use this opportunity to prove that he can divert from the past.
Brian Lehrer: Where does the money come from for something like that? If there's X dollars in the budget, but then police overtime goes to X plus a hundred million, where does that money come from? Because I think another thing that's a basic that our listeners may not realize is that, unlike the federal government, the city has to balance its budget every year, right? This is one of the things they're debating in Congress. The Republicans want to balance budget, amendment to the Constitution, or a law. The city has that. It has to balance its budget every year. It can't go into debt, or tell me if that's wrong, to pay its operating expenses.
Andrew Rein: You're exactly right. Set up after the fiscal crisis in the '70s was a set of budget-making and budget-balancing laws that have served all New Yorkers well by making sure we don't get into deep trouble and so we do have a balanced budget requirement. It's interesting. It's like a household budget. In the beginning of the year, you might think you know what's going to happen, but you spend more on some stuff. You spend less on other stuff.
Hopefully, you have a little cushion around in case you're spending more on more stuff than less on less stuff. The city, in $112 billion budget, you can imagine. Sometimes you can't fill a position as quick as possible. There's money that was budgeted that's not spent. Sometimes you can't get a contract out. Sometimes it saves money. Sometimes like police overtime or another program.
When I was at the health department, we did anti-tobacco advertising, which wasn't budgeted, but we thought it was important. We found money to do that. There's always some give-and-take all the time. The city also budgets, and I put a quote around that, "a general reserve and capital stabilization reserves" over $1 billion this year, $1.5 billion that it doesn't allocate to any programs in case it needs it for just such a contingency.
If it doesn't need it, there is a mechanism to roll it forward. One of Bill de Blasio-- and I'll give him credit for this. One of his great successes was increasing the standard of $300 million a year to $1 billion or even higher of that general reserve. That is the single place where the city just puts a general pot of money in case there are needs. Quite frankly, there often are some needs and some underspending in other places.
Brian Lehrer: Listener text, "I am a city worker who provides legal services as an attorney. I provide highly valuable work to the city that saves us money every year and protects the public fisc. My salary is already absurdly low. Compared to what I could make in the private sector, I continue to work for the city because of my love of the city and my love of serving its citizens. Unfortunately, statements like the one that the mayor made put me in a situation where it's untenable to continue my job in a way that allows me to support my family and would force me into the private sector."
That's one listener. Another listener texts, "Well, let me tell you what no layoffs means under this administration. Yes, nobody is being let go, but nobody is being replaced either. A lot of city workers have left because of five-days-a-week attendance, meaning they've been called back to the mayor for full-time in-person, including those who retired. Nobody was hired to replace them." Is that an accurate statement, Andrew?
Andrew Rein: In general, so it's interesting. The workforce hit a high of 327,000, which is incredible amount given the history in the end of fiscal year 2019 and through attrition, through the pandemic, and continuing to this day in this tight labor market and with the other challenges mentioned. We have attributed down to under 300,000. It is right that we have a smaller workforce than we've had in a while.
Not necessarily historically the smallest, but we've shrunk a good amount. In terms of controlling spending, 50% of the city spending is on its workforce with salaries and fringe benefits. Obviously, that's an important point. If you're trying to make sure you can afford the services, you want to make sure you can afford the workforce. I do think that there are places in the city right now where there are vacancies that are critical service to individuals.
Food stamps. We've heard about the turnaround time or to businesses and permitting and buildings. We've heard there are places in the city that are actually understaffed and are not delivering services that New York and New Yorkers need. The key is to figure out where you need people, hire them, and where you can find efficiencies and shrink those places. Attrition is a very blunt instrument as is a blanket across-the-board hiring freeze, which, with exceptions, the mayor talked about in this budget letter.
It would be much better to have a much more nuanced view of where we need to deliver services, where New Yorkers need those services and hires strategically, and where we can be more efficient. The city is in a very challenging position in this competitive labor market. We have inefficient, slow hiring processes. We need to compete for the best workers and they need to reform those processes.
Brian Lehrer: Listener texts, "No, the mayor said 15% in 5% increments. My wife is a city worker," writes this listener, "and they are all very worried." Let's clarify that number because I've been talking about the top headline number that's been making news where the mayor said 5% budget cuts that all the agencies have to prepare by November. If you look deeper, it's three rounds of 5% budget cuts, totaling 15% budget cuts. Is that between now and next July at the end of this fiscal year?
Andrew Rein: What the PEG directive said is the agencies by October 6th for the November modification have to deliver 5% proposals, which I want to clarify. It doesn't mean that the city will take them and put them into the budget, but that is what is required from the agencies. The directive also says to be prepared to submit the same level. 5% in January and 5% in April. Cumulatively, depending on how they calculated, 14.3% to 15%, those would be on an annualized basis and would kick in. They are above and on top of each other.
The question is, as will all three of them happen, what would be potentially taken? We haven't talked about the fact that some of this is, will the federal and state governments do their fair share for the shared responsibility on asylum seekers? That can change things. Of course, the economy being better than we had hoped could also change things. Yes, the directive does say, do 5% and be prepared for two more rounds of 5%.
Brian Lehrer: By the way, listener texts, "Where does police overtime come from primarily? Is it for security around scheduled events like parades or unscheduled events like protests? If it's for slated events, do the event sponsors have to chip in for NYPD security?"
Andrew Rein: I don't have at my fingertips the allocation, but your listener is exactly right in those different buckets. The other piece that we need to remember is sometimes at the ends of shifts, arrests are made. There's overtime for continuing the booking and these types of things. One of the interesting things is, in the PBA contract, there is a shift of flexibility, clause, and experiments. They need to see, will this actually increase or decrease over time?
Because we do have the parades, we do have end-of-shift, end-around shift special needs, and we do have scheduled needs. The question is, in which place can they control it? Listen, I've heard the mayor talk about, for example, the difference between parade duty and where there's high security and low security. This is where the PD can't be, of course, on an autopilot, "Let's just send police, send police, send police," and assume that the money will come as it has in prior years.
Brian Lehrer: That same listener writes, "Why isn't the NYPD staffed from the outset to handle all of the overtime since it's clearly an annual given?" Another way I could ask that question is, "Why aren't they staffed from the outset so that they don't have to pay overtime, which is more dollars per hour?"
Andrew Rein: It's interesting. The calculation for different types of people of whether overtime is cheaper than more staff can be different. The NYPD police officer fringe benefit costs because of their pensions are actually almost equal to their salaries. In these cases, sometimes overtime is cheaper than actually hiring more people, but it also depends on whether it's a senior officer or a new recruit. The bottom line is we need to use less. We need to schedule better. We need to control it and not have it on autopilot.
Brian Lehrer: Alison in Manhattan, you're on WNYC with Andrew Rein, president of the Citizens Budget Commission. Hi, Alison.
Alison: Hi, Brian. Great show. This is a fabulous show. I love your show. You're amazing. I forgot to tell the screener, but I was a teacher back in the day. It was at least close to 40 years ago. I was surprised at that time how much each kid came to school with the amount of money on their head. It was $10,000 per kid or whatever. I couldn't, as a new teacher, spend that amount of money. I just couldn't find it to spend at that time. I was confused. How much is it now? How much per kid is received from the city? Did he say $38,000?
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Alison: Yes, go ahead.
Andrew Rein: I'm sorry. First of all, thank you for being a teacher. My mother and my sister, both are teachers. Thank you for everything you do every day. It's a tougher job than some people pretend it is. Yes, we're well over $35,000, $36,000, $37,000 a student, but we remember that it doesn't all come to the schools and it doesn't all come to the classrooms.
Brian Lehrer: What does the $38,000 mean? Because that doesn't mean each teacher in the classroom has $38,000 to spend on--
Andrew Rein: For every kid to spend.
Brian Lehrer: Right, or the principals do. There's going to be a privatization advocacy sector out there that says, "Hey, if we're spending $38,000 per student per year, let's give them that much in vouchers and they can each get a relatively expensive private education." What is that $38,000?
Andrew Rein: The majority does go into the classroom, but it's not a vast majority. We have, within the schools, the administrative and the support services. There are pullouts for special subjects, et cetera. Then there are district structures that have oversight and curriculum and pedagogical supports and then there is the central administration. I think we also need to be clear that that money is very different because we have the general education student, which probably we're spending under $30,000.
We have some special-education students ranging, depending on where they are on the system, whether they're in an inclusion class in a regular school, whether they're in a District 75 special-ed school or a Carter Case outside that can range from close to that general education student to $100,000. That $38,000 is a blended rate and it's not for every student, but we do spend when it comes down to it that much per student. Remember, in the classroom, there are spending for the teacher, spending for the curriculum, spending for the books, but we also have food, transportation, support services, pedagogical or not.
Brian Lehrer: Sander in Brooklyn wants to give an example of something that might get hurt if there is a 5% budget cut actually implemented. Oh, we lost Sander? Sander's call dropped off. All right, so we're going to get one last call in here from Kitty in Manhattan. Kitty, you're on WNYC. Hi.
Kitty: Brian, I'd like you to backtrack with Andrew and ask him why he skipped over the question of finding money from the billionaires. What about the $98 billion worth Bloomberg, who last year funded a campaign to defeat taxes in Albany on the very wealthy on great wealth? Ask him to backtrack. He's getting money from ordinary people and ordinary taxpayers leading programs and all. Andrew, please talk about the possibility of getting more equitable taxes and money from the 120 billionaires who live in this state and who are not leaving town as is suggested
Brian Lehrer: Kitty, thank you. I think I did see that during the state budget negotiations this year. Your group took a position against raising taxes on the wealthy. For full disclosure, you were in that camp, right?
Andrew Rein: Yes. Thank you, Kitty, for raising it. It's a very important topic on people's minds. I think we need to look it from a couple of different perspectives. We do have a progressive tax system and our wealthiest people do disproportionately. I say "disproportionately," they pay a large share relative to on an individual basis. The millionaires pay 40% of the PIT, personal income tax, in the city. They are paying a lot for services.
The question, you're right, is, "Should they be paying more?" There are a couple of different ways. We actually have the highest personal income tax rate in the nation. The evidence is mixed on how that affects people's location decisions. We're actually doing some work on that now because this is a very important problem because when we think-- and this gets a little wonky, as you said, Brian, at the beginning of the show.
When we think about where we should do redistributive spending in society, it should be at the highest level because all of our social issues, they're societal issues like we talk about the migrant crisis. The question of whether the federal government tax should be a higher rate is a very important question. The key is we are in competition, in effect, for people with other jurisdictions and coming out of the pandemic with remote work with people sometimes being very successful not being in the city.
I think it's an incredibly risky time to say, "Should we raise taxes on the people who are already paying the highest taxes that they would pay anywhere else in the country, especially then exacerbated by the federal solved cap?" It's a very precarious time and we are in competition to do that. Since we do tax the most and spend the most, let's see if there are other ways we can get the best value for our high spending and high taxes to serve our kids, to serve our neediest, and to grow our economy.
Brian Lehrer: Well, since you brought up that competition with other states where people with means who have the ability to move can move to, let's end with this. We've made this comparison before. Ron DeSantis loves to make it that the state of Florida, the state government, over 20 million people in that state, spends about the same per year as the New York City government with its eight million residents.
The state of New York spends more than another $200 billion annually. DeSantis argues New Yorkers are overtaxed. New York leaders say, "We choose not to live with the minimal services that Florida offers. You don't really want to be a citizen there." Do you have a take on what services New York provides to whom that Floridians get if the city budget is the same as that state's state budget?
Andrew Rein: We're doing some work on this comparatively now. It's a little tough because we as a city function at times more like a larger government because we do more in the city, so we're looking to benefit. Our Medicaid program is generally more robust covering more services and more expensive per person. Our education, we do spend much more per student. Higher education is, generally, we're not that out of line. It's interesting.
When we look at the comparison overall, state-local spending, which is where you can do the most legitimate comparisons, which is a struggle but legitimate, we do spend more than Massachusetts, Connecticut, New Jersey, Pennsylvania, California. It's not a comparison like Florida, but we do spend more. I do think New Yorkers should be seeking a good value, a good package deal. People are willing to spend more as long as they get more and we have the great quality of life. If that value proposition starts to turn and we are now an economy where, post-pandemic, we need to think about that, that would not be healthy for New York.
Brian Lehrer: Andrew Rein is president of the Citizens Budget Commission watchdog group. Thank you for joining us.
Andrew Rein: Thank you, Brian, for having us on.
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