Scene at the Queens Library (photo: Ed Reed/Mayor's Office)
Three years after Bill de Blasio promised universal pre-kindergarten in his mayoral campaign, New York City alone has more enrolled preschoolers than any other state except for Georgia. The city’s free Pre-K For All program received interest from 6,500 families on its first day of accepting applications in 2014. Now more than 68,000 children are enrolled in the rapidly expanding initiative.
Ninety-two percent of parents surveyed by a city-contracted research firm rate the Pre-K For All program as good or excellent, citing educational and behavioral benefits for their children. Years of research has found high-quality preschool programs to be especially beneficial to children of low-income families, children with disabilities, and children of color, since all often face learning gaps when entering kindergarten. Though there is concern about pre-K gains being lost by third grade, the de Blasio administration is attempting to run a program and larger education system that sets and keeps students on a stronger trajectory.
While the main focus of pre-K has been and will be student learning and development, a universal pre-kindergarten program also has significant potential benefits for working parents and the economy. It is a secondary positive that Mayor de Blasio and his team don’t often cite, but have referenced on several occasions over the years.
“Every child, regardless of their family’s means or the zip code they call home, will have access to a life-changing early education,” de Blasio said at a press conference on the first day of this school year, in September. “Because of Pre-K for All, tens of thousands of children will do better in school, be more likely to graduate high school, and be better prepared for college and beyond.”
UPK was de Blasio’s number one campaign pledge and a key cog in his promise to create more equity in New York City. The more immediate economic benefits for parents and the economy also stand to help shrink the socioeconomic and opportunity gaps that the mayor has targeted.
The pre-K program is “saving parents money and helping them work,” de Blasio stated in a press release urging families to apply to pre-K early this year, but only after saying that “This is one of the best choices any family will ever make for a child.” At several press conferences, though, de Blasio has mentioned this secondary benefit of the UPK program, stressing parents’ ability to save on child care expenses, find a job, or pick up more work hours.
In 2012, Pew Research Center found that New York was the most expensive state for four-year-old and school-age child care. “The average family saves $10,000 per year in childcare costs through the free Pre-K for All program,” the de Blasio administration says. For low-income families, the elimination of this financial burden is especially significant.
Middle-income families also benefit from UPK because they don’t qualify for federally funded programs like Head Start, and are still unable to afford tuition for private preschools or child care. Some have questioned if the city should be subsidizing upper-middle- or upper-class families’ pre-school costs by making the additional grade universal.
“If a family needs to cover child care for the day from 9 a.m. to 6 p.m., even if pre-K is only from 9 a.m. to 3 p.m. and they have to pay for after care, it still defrays the cost,” said Katie Hamm, Senior Director of Early Childhood Policy at the Center for American Progress.
The Center for American Progress found that before the city’s UPK program existed, more than one-third of New York families waitlisted for child care assistance lost their jobs or were unable to work. A similar study in Los Angeles reported that a lack of affordable and reliable child care forces working parents to face lost hours and wages and low employment rates, which is estimated to cost L.A. County almost $600 million in economic activity every year.
The report also states that working mothers are disproportionately affected when there are no viable child care options. As Los Angeles preschools face steep funding cuts, the report estimates that the loss of affordable preschool seats will cause 6,000 working mothers to give up about 1.5 million work hours, costing them an annual total of $24.9 million in lost wages, or $4,150 per working mother.
With consistent child care, mothers are twice as likely to keep their jobs, according to research by the Institute for Women’s Policy Research. Another study suggests that government-funded preschool programs could increase the employment rate of mothers by 10 percent.
“Enabling more women to work by improving access to child care can help mitigate the gender wage gap and reduce a mother’s likelihood of going on public assistance,” wrote Center for American Progress researchers in a report on preschool and working mothers.
A working mother and Bushwick resident, Rocio Espada, says she was able to keep her job because of New York City’s pre-K program. Espada is a member of advocacy group Make the Road New York and a single mother of four children. She worked at a restaurant to support her family while her youngest daughter was enrolled in public preschool.
“Without public pre-K, I would’ve had to stay home with her or found a way to pay a babysitter,” Espada said in a phone interview. “Public pre-K is the best thing the city government has done so far. It’s a big relief.”
Espada found that public preschool was the best option for her daughter because she was not only taken care of while Espada had to work, but she was also beginning her education and learning how to interact with other children. Using babysitters or private child care does not have the same educational benefits for children. At the same time, many are eagerly waiting to more formally measure how much academic and social impact pre-K is having on the children who participate.
While the city has indeed enrolled almost 70,000 four-year-olds in pre-K, as of this past fall more than 6,000 are still in full-time child care instead, according to the Independent Budget Office. This care is provided through vouchers given to families with young children receiving cash assistance and participating in work training programs or qualifying low-income working families. The vouchers can be used for the child care option of the family’s choice, which lack the educational foundation that comes with preschool.
After criticism that the initial expansion of UPK focused on wealthier families, the city has focused outreach on low-income families, like those eligible for vouchers. Last year, children from low-income families accounted for more than half of the program’s enrollment. In a phone interview, Department of Education Deputy Chancellor Josh Wallack said the program will continue expanding until it can offer a seat to every child in New York City and give all families access to educational child care.
While the pre-K program continues to grow, the city has contracted Metis Consulting Group, Westat research firm, and researchers from New York University to track how the program is benefiting children and parents. Part of their research will include the economic well-being of families and their ability to participate in the workforce. With the second school year of the expanded pre-K program almost complete and enrollment for the third year continuing, more data is becoming available.
Many will be watching not only for metrics from those hired to track UPK, but for students’ third grade test scores - state standardized tests in English Language Arts and math begin in third grade - especially the comparison between UPK participants and nonparticipants from the same year or prior years.
The city and DOE view quality early childhood education as an investment in the public school system as well as an important aspect of developing the economy, Wallack said.
“Pre-K itself is an investment that the city is making in our children that will go on to help build the city going forward,” Wallack said. “It’s an investment that we’re making in the economy of New York City, both because of the immediate effects of helping families participate in the workforce, but also in helping a whole generation of students do even better in school and then go on to participate in the economy of New York City in the next generation.”
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by Carmen Russo, Gotham Gazette
@GothamGazette @carmenjrusso
photo via nyc.gov
In his State of the City address on February 4, Mayor Bill de Blasio announced a major new transportation project: a “state-of-the-art” streetcar that will run the waterfront on a 16-mile route between Sunset Park in Brooklyn and Astoria in Queens. This Brooklyn-Queens Connector, or the BQX, has drawn a somewhat mixed response. The de Blasio administration quickly publicized support from a variety of business and civic leaders, elected officials, and several transportation advocates. Some transportation experts and residents of the neighborhoods where the BQX will run remain skeptical.
De Blasio hailed it as another key step in fighting inequality by offering more mass transportation to underserved New Yorkers, especially those in the public housing complexes near the route. It would also be a project the city would control itself, unlike the MTA, a state agency that runs the trains and buses. One immediate question, of course, was ‘who’s going to pay for it?’
On February 16, the administration offered up more details in a media release that included the line “Self-financed streetcar line would generate 28,000 jobs and over $25 billion in wages and economic activity for New Yorkers.” A key phrase being “self-financed.”
The project is estimated to cost about $2.5 billion, which the city will raise through a method of value capture and creation unlike the usual procedure of financing capital projects. Instead of selling municipal bonds to borrow money and paying those off from city revenues, as is done for capital funds, the city will create a non-profit entity -- likely a Local Development Corporation (LDC) -- which will then issue tax-exempt bonds to raise funds. This debt will be paid by “capturing” the increases in property taxes of existing real estate and new developments along the streetcar corridor. In effect, the plan is that BQX will pay for itself with the revenue it creates.
Although LDCs are non-profit entities that are usually set up by private individuals and businesses interested in developing their communities, the city can also set up LDCs like the Hudson Yards Infrastructure Corporation (HYIC) and give them bond-issuing authority to raise funds.
Private LDCs often receive support from the New York City Economic Development Corporation (EDC), a city-run nonprofit organization that promotes businesses and economic growth. For instance, the Greenpoint Manufacturing and Design Center LDC has received more than $4.4 million since 2014 from the City Council and the Brooklyn Borough President through EDC to convert an auto parts warehouse into a multi-tenant manufacturing center.
The city is nowhere near setting up the nonprofit -- officials are currently courting public opinion and further assessing the BQX proposal -- but a similar structure was used under Mayor Michael Bloomberg for the redevelopment of Hudson Yards on Manhattan’s West Side. HYIC was set up in 2005 to raise funds by issuing $3 billion in bonds for projects including the extension of the 7-train subway line and building green spaces from West 30th to 42nd Street between 10th and 11th Avenues. This is an analogous example of how the BQX will be funded and built.
“As imagined, there would be no new taxes,” said an official from EDC. “This project will make it so that value of properties will go up so property taxes will go up nominally. Property taxes sliced off the top would be funnelled towards debt service.” In other words, increased property tax revenue is used to pay back the bonds.
The EDC official added that there will be revenue through property taxes on new development along the corridor.
Two key mechanisms of value capture are tax increment financing (TIF), which seems to be planned for BQX, and payments in lieu of taxes (PILOT). TIF is formulaic while PILOT is discounted payments negotiated with developers instead of regular property taxes. The administration has not clarified yet whether they will use both tools.
In the case of Hudson Yards, HYIC garners revenue chiefly through PILOT, Tax Equivalency Payments (TEP), which are property taxes collected by the city from new development in the area, and District Improvement Bonuses paid by private developers for the right to build additional density, among other sources.
City officials have not yet provided a detailed funding plan or fully explained why they are choosing value capture, which may have advantages in that it doesn’t add to existing capital debt, but also risks leading to higher costs that take longer to pay off. This was apparent in the years after the Hudson Yards project began. By 2014, the city had paid about $439 million to service HYIC debt owing to shortfalls in projected revenue. That’s added onto the millions in cost overruns that the city also had to bear. The city had signed an Interest Support Agreement to service HYIC debt in the case of revenue shortfall.
“There can be risks,” said George Sweeting, deputy director of the Independent Budget Office, a nonpartisan publicly-funded budget watchdog. Sweeting pointed out the disconnect between when the investment is made and when the city can start capturing value and making payments, since development doesn’t happen overnight. That’s why, in the case of Hudson Yards, the city agreed to pay off part of the debt directly from its general fund in the form of interest support payments and HYIC raised additional revenue by selling developers the right to create additional density.
“It depends on how fast you think development will occur,” Sweeting said. “Some of where the [streetcar] is going has significant development already,” he added, noting that land along the waterfront has already become more valuable in recent years. “You might not be able to attribute [further growth] to the BQX.”
With the traditional model of capital funding, Sweeting said, the city can “cross-subsidize” using other resources to pay off debt. That’s not necessarily the case with a dedicated value-capture scheme. “It can take longer to pay back,” he said.
Bridget Fisher, associate director of the Schwartz Center for Economic Policy Analysis at The New School, highlighted many of the risks in value capture funding in a report from July. Looking at the Hudson Yards redevelopment project, she sought to dispel the “myths” of self-financing.
“Like Hudson Yards, describing these projects as self-financing is a rhetorical tool that can be misleading,” Fisher told Gotham Gazette. “There’s nothing magical about value capture. It’s still debt and it’s still expensive. It’s a decision to go outside the municipal bond market that adds cost, but the city’s still on the hook for the cost.”
These bonds, issued by a nonprofit rather than the city directly, are also in a “legal limbo,” she said, since they’re not backed by the city but by an entity created by it. Adding to that, bond buyers receive higher interest rates because the bonds are not directly backed by the city, but still have the security of knowing the city will pay them back. “It does pay for itself,” Fisher said, “but all capital projects pay for themselves. They’re paid for with debt and debt is paid back with profits.”
“The question to me is, why choose a route that’s more expensive when you have the capacity to do it through the normal city capital budget, which also has democratic checks and balances?” Fisher added.
There is an advantage to the mechanism, depending on your budgeting perspective. The city has a constitutionally mandated debt limit and value capture funding does not add to it. “It preserves the general obligation debt capacity for other important projects,” Sweeting said.
According to a report by New York City Comptroller Scott Stringer, the city’s debt limit in fiscal 2016 was $85.18 billion. As of July 1, 2015 (start of the 2016 fiscal year), the city’s outstanding debt counted towards the debt limit was $57.43 billion, leaving $27.76 billion in debt-incurring power for the city. For fiscal 2017, the city’s debt is about $72 billion, owing to capital plan additions in this year’s budget.
“The only pro,” said Fisher, “is that in an environment hypersensitive to spending, local officials can provide growth opportunities and still maintain a rhetoric of fiscal discipline.”
“There is no absolute right or wrong,” said IBO’s Sweeting. “There are a lot of considerations to take into account -- how much new development there will be, the time between when you make investments and development will occur, and how you structure the value capture.”
For the City Council members whose districts will be served by the BQX, funding is just one of the many concerns about the project. Council Member Carlos Menchaca represents Sunset Park, at one end of the line, and Council Member Costa Constantinides represents the other end, Astoria.
“As we get more thoroughly through the process, there’s a lot of questions that have to be answered in my mind both on financing and the actual route and how it’s going to affect the communities,” Constantinides told Gotham Gazette shortly before an unrelated hearing at City Hall.
He intends to be a strong voice throughout the process, he said, and wants to be part of the LDC when it is set up. So far, he believes the city is taking the right approach to community outreach and seeking input on the project - EDC held its first BQX visioning session in Astoria on Monday night. “That is a welcome change from when we used to have a mayoralty that would dictate to us how things were going and we’d have to respond,” Constantinides said.
The Council member sees the potential in value capture funding, but also the risks. “I just wouldn’t want to see residents that are further away from the site…One, two, three-family homeowners that live two blocks from where this would potentially be...to see them get crushed by some sort of increase in their taxes would just not be where I was at,” he said. For homeowners, additional property value can be a great thing, but if you do not intend to sell in the near term, making larger property tax payments based on new assessments can be challenging.
Menchaca reiterated these concerns. “I want to make sure that residents of affected neighborhoods like Sunset Park and Red Hook have a leading voice at the beginning of the process and in a way that determines the exact details and impact of the project,” he said in a statement. He emphasized that the BQX could provide relief to “transit deserts” like Red Hook and create better mass-transit for the growing manufacturing zone in Sunset Park. But he recognizes that it could also contribute to gentrification and displace existing residential and commercial tenants.
“We've all seen ‘it will pay of itself’ projects fail to live up to expectations or have unintended consequences,” he added. “The impact of BQX – including the financial impact – must be studied carefully in public with residents at the center of the conversation.”
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by Samar Khurshid, senior reporter, Gotham Gazette
@samarkhurshid @GothamGazette
Mayor de Blasio at a town hall (photo: Demetrius Freeman/Mayor's Office)
Over the last few weeks, facing the spectre of multiple investigations, Mayor Bill de Blasio has repeatedly stressed that he, his administration, and his allies operate ethically. “We hold ourselves to the highest standards of integrity,” the mayor has said repeatedly as reporters have questioned him about allegations of impropriety in his fundraising operations.
In support, the mayor has regularly referred to the city’s internal mechanisms for ensuring such behavior.
“Our Conflict of Interest Board, our Department of Investigation, all the different tools that we have here in the city that create accountability have gotten stronger and stronger, and we have the most rigorous campaign finance system in the country,” he told reporters at a press conference on April 13. It was not the only time the mayor has referenced the threesome in place to help keep government officials on the straight and narrow and reduce the influence of money in politics.
As the mayor has cited the training the Conflict of Interest Board delivers to city employees and the guidance he and his team sought from it while engaging in their fundraising, as well as the work of the Department of Investigations, the city’s annual budget process has been unfolding.
The season has shifted from the preliminary to the executive budget iterations, with a final deal between de Blasio and the City Council due by the July 1 start of the next fiscal year. As the mayor has touted both COIB and DOI, he has had an opportunity to put money where his mouth is, so to speak, while his administration has also had the chance to weigh in on pending tweaks to the city’s campaign finance system that include reducing the impact of donation bundlers who have business before the city. There are currently limits on how much entities with business before the city can donate to candidates. (A federal investigation is reportedly focused on whether donors to a nonprofit aligned with the mayor received favorable city action. Nonprofits face no donation limits.)
During a preliminary budget hearing in March, COIB representatives told City Council members that the agency was significantly underfunded and thus unable to retain good staff or complete its mandated trainings.
DOI on the other hand, had no complaints as its budget was already ballooning, with Commissioner Mark Peters simply left to explain how he is using the additional millions.
When the mayor released his executive budget on April 27, both COIB and DOI saw bumps in funding, though for COIB funding is still not where board officials or City Council members want to see it.
The Department of Investigation’s $47.4 million allocation in the executive budget is about $3.2 million more than the preliminary budget of $44.2 million. Over last year’s adopted budget of $30.9 million, that’s a 53.3 percent increase. During his preliminary budget hearing, DOI Commissioner Peters justified the agency’s budget increase, telling the City Council’s Committee on Investigations, chaired by Council Member Vincent Gentile, that the agency has become more proactive and has started to focus on overarching systemic issues that can lead to corruption and ineffectiveness.
“As the City's workforce continues to expand,” said mayoral spokesperson Karen Hinton, “the funding provided in both financial plans will directly support the additional staff required for [DOI] to fulfill its Charter-mandated mission to eliminate fraud, corruption and mismanagement of public fund and policies.”
Mike Bistreich, legislation and budget director for Gentile, said the additional funding would also help alleviate some of the lag in background checks that DOI is supposed to perform.
However, DOI’s budget did not include significant savings, which was a cause for concern for Gentile at the preliminary budget hearing. In response, Peters proposed that 261 investigators at other agencies be moved to DOI’s payroll so their overtime could be paid through federal asset forfeiture funds.
“As investigative staff from other agencies come onboard with DOI through the positions approved in the last financial plans, DOI will be able to cover their overtime with this funding stream,” said Hinton. “In effect, saving City Tax Levy that was previously dedicated to the overtime burden. This has not been fully implemented.” Hinton said that DOI will save at least $1.6 million over the next two years, though, by implementing this for current lease payments and employee overtime.
Peters, it should be noted, has recused himself from one investigation DOI is undertaking into the de Blasio administration, over a suspect lifting of deed restrictions on a former health care facility that will become luxury housing. Peters was de Blasio’s 2013 campaign finance chair. His potential conflict of interest in leading the agency charged with investigating the mayor’s office and other city agencies was the subject of his 2014 City Council confirmation hearing when de Blasio nominated him for the job. He was voted through by a wide margin.
At the Conflicts of Interest Board, which is largely focused on preventing corruption through education and guidance, the funding picture is a bit more grim. Although it receives a $2.32 million allocation in the new executive budget, about $90,000 more than last year’s adopted budget, it is not enough for an agency where the workload in recent years has skyrocketed and staffing has remained relatively flat.
COIB representatives complained at their preliminary budget hearing that the agency struggles to retain staff because of low salaries. Three proposals they made in 2015 for increased funding were rejected by the Office of Management and Budget, they said.
Raising salaries across the board would’ve required less than $200,000, according to COIB officials who testified at the preliminary budget hearing. Instead, the executive budget outlines fiscal 2017 salary increases totaling $22,000, along with an additional $4,000 for training equipment, according to Hinton. Part of the total increase since last year’s adopted budget was due to collective bargaining agreements that have been settled. Hinton pointed out that during Mayor de Blasio’s tenure, COIB has received about $292,000 in additional funding over various budgets.
“I wish it was more,” said Alan Maisel, chair of the Council’s Standards and Ethics Committee, which has oversight of COIB. “With more money, they could always do more -- more trainings in ethics rules, they could send teams out to site locations.”
Since 2010, COIB has been mandated with training city employees in ethics rules every two years. The city has nearly 320,000 employees and COIB has only four full-time staffers, out of a total of 22, who conduct these trainings.
Maisel agreed with the mayor’s assertion that the COIB is a strong accountability agency but insisted that it could do a better job with more staffing and resources. When Gotham Gazette asked if he’d push for more funding in the executive budget negotiations, Maisel said, “I’ve already done my pushing. I don’t know where it’s going to go...Hopefully we can get them to add more money. We’re not asking for a fortune here.”
Council Member Brad Lander, a member of the ethics committee, agrees. “I think it’ll be great to give them a modest amount of additional resources,” he said, noting that COIB budget demands were relatively low, so the $90,000 increase already made this year was significant. But, he added, “I think it’ll be good to give them a little more.”
Executive budget hearings began on Friday with the Committee on Finance, an opportunity for Council members to air any budget concerns with de Blasio’s budget director. The hearing included no mention of the Conflict of Interest Board. There is no specific executive budget hearing for the Committee on Standards and Ethics scheduled. This often happens when Council members decide there is little to discuss around agency allocations.
There is also no executive budget hearing scheduled for the Committee on Oversight and Investigations.
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by Samar Khurshid, senior reporter, Gotham Gazette
@samarkhurshid @GothamGazette