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More Low-Wage Workers Become Their Own Bosses


special
Photo by Carla Murphy
Apple Eco-Friendly Cleaning co-owners regularly meet at member Luz Maria Arias' fourth floor walkup in Jackson Heights.

In 2006, Teresa Perez and 14 other immigrant women began meeting at the Center for Family Life in Sunset Park to launch an employee-owned housecleaning business. Together, they called it SĂ­ Se Puede. The name was a nod to immigration reform protests then popping up across the country but in Brooklyn, it doubled as a sales pitch to flush homeowners in neighboring Park Slope: We Can Do It!

Within four years, SĂ­ Se Puede’s worker-owners, many of whom did not speak fluent English, tripled their wages to as much as $25-an-hour. Last year's open house to recruit new members drew over 90 applications for 13 spots. The company, now with 37 worker-owners, has grossed $1.6 million.

So, can SĂ­ Se Puede's success be replicated? City Council Speaker Christine Quinn hopes so.

In an October speech widely reported as a balancing act between business interests and the then-ascendant Occupy Wall Street movement, Quinn, a likely mayoral candidate in 2013, pledged funding to the Center for Family Life to incubate three new worker cooperatives per year in low-income neighborhoods. It is welcome support; there are fewer than 20 such co-ops in the city.

Organizers say there should be more. Worker coops, they maintain, create living wage jobs and, in partnership with food, housing and credit union cooperatives, have the potential to transform high-poverty neighborhoods.

For that to happen, though, significant barriers, not least, access to capital, must be overcome. Lack of information is another huge problem, says attorney Ted De Barbieri, who advocates for community development organizations through the Urban Justice Center. Supporters readily admit the average straphanger does not have a clue about what a worker cooperative is or how it functions, much less that employee-ownership can raise wages.

Changing Workers' Lives

What is certain at this nascent stage is that worker cooperatives transform owners' lives.

"I was able to grow my ambition," Perez said through a translator. "Before, I'd say I can't study but now I say, 'I would like to go to school.' Now, I think of things like that."

The most well-known cooperative in New York City is probably the Park Slope Food Coop. It is the largest of its kind in the nation, and by co-founder and general manager, Joe Holtz’s estimate, people join for a sense of community as much as for the cheapest organic tomatoes in the five boroughs.

Worker coops, which started organizing through the NYC Network of Worker Cooperatives in 2009, are slightly different. Economic and social justice motivates many of their owners.

In the south Bronx, Green Worker Cooperatives creates jobs, "as a response to high unemployment and decades of environmental racism." In Brooklyn and Queens, former day laborers formed Apple Eco-Friendly Cleaning to escape buyer whims at la parada, a decade-old, all-weather corner at the intersection of Marcy and Division where women line up for work every day. Take the Brooklyn-Queens Expressway farther south and factory workers fed up with standing eight-hours-a-day, are meeting weekly to create Golden Steps, which specializes in non-medical elder care.

“These are the new generation of worker coops," said Vanessa Bransburg, coop coordinator at the Center for Family Life. "Even if you don’t know how to write you can join."

Benefits and Costs

From California to Maine, over the last 15 years low-wage workers have steadily organized employee-owned small businesses. The trend counters a common perception that coops are products of middle-class enclaves like Park Slope.

At national coop conferences, Bransburg said, her Sunset Park contingent stands out among largely white, male crowds: "We typically require translation and childcare."

If labor exploitation initially pushes workers into forming coops, those that stay do so because of an intense commitment to the welfare of the group. It is this orientation toward consensus, not profit that distinguishes the worker coop model from traditional businesses. Along the way, worker-owners discover and develop an enviable set of skills, not least, patience and conflict resolution.

"It's very difficult to get along with 20 to 30 people, each one having different opinions," SĂ­ Se Puede vice president Catalina Rodriguez said through a translator. "You have to be very open."

Listening and a willingness to compromise, as well as the courage to enforce established rules, benefit Rodriguez. Before forming SĂ­ Se Puede, Rodriguez earned $8 an hour to clean homes. Invariably however, homeowners also expected her to care for children and prepare meals, and Rodriguez was in no position to object. She received no pay for overtime. Now, she said, "I manage my own time and for four to five hours of cleaning, I earn up to $120."

After a year in operation, the owners of Apple Eco-Friendly Cleaning earn more money than could be had for the few hours they would work after long waits at la parade. But getting there and the time demands -- six months of twice daily meetings for about five hours --whittled down interest from 20 women to the current five who often meet in the Jackson Heights living room-bedroom-office of member, Luz Maria Arias. It is a strong reminder: Worker coops are not easy.

"Not everyone wants to become an entrepreneur or face the responsibility of being an owner," said day labor organizer Ligia Guallpa. She cautions against well-meaning nonprofits inserting bodies into pre-packaged companies and industries. Instead, the impetus should come from the workers. During Guallpa's weekly support meeting for women working at la parada, some of them asked for her help in forming the company.

Finding Funding

Excluding the salaries of Bransburg and Guallpa, neither SĂ­ Se Puede nor Apple Eco-Friendly Cleaning required much up-front funding. Members pooled their money to get the little that they did need.

But for many if not most worker-coops, access to capital has been a persistent issue -- and one that limits coops to come-as-you-are sectors like cleaning or childcare.

Most banks do not recognize the coop model. Even if they did, "service-industry workers typically don't have the wealth or assets that banks traditionally look to for collateral," said Carmen Huertas-Noble, an associate professor at CUNY School of Law and founding director of its community and economic development clinic.

As a result, worker cooperatives typically attach to community-based nonprofits. Others also seek funding from local credit unions or the National Consumer Cooperative Bank based in Washington, D.C.

Other funding sources may be emerging, though. In addition to Quinn’s $150,000 pledge, the United Nations recently launched a global campaign declaring 2012 the year of the cooperative. And in December, U.S. Rep Chaka Fattah of Pennsylvania will introduce a bill to help grow coops nationwide.

At the neighborhood level, SĂ­ Se Puede and Apple Eco-Friendly Cleaning are encountering a new challenge: competition. SĂ­ Se Puede has experience but Apple’s owners mix their own non-toxic cleaners, a competitive advantage that opens another exciting prospect for 50-year-old Arias.

"Maybe we’ll become millionaires by making products and not cleaning!" she said in Spanish, to laughter from her four co-owners. They are huddled around their other office, a four-top in Starbucks.

"Look, dreaming doesn’t cost anything," Arias says, with a deep shrug. "This is America."

Carla Murphy is a freelance journalist and graduate of the CUNY journalism school.

As Poverty Increases, Budget Cuts Tatter the Safety Net


bloomberg
Photo by Spencer Tucker, New York City Mayor's Office
Mayor Michael Bloomberg celebrated the work of his Center for Economic Opportunity in 2007, but in the years since poverty in New York has increased.

New figures confirm that poverty is increasing in New York City. 


What is the city's response? Budget cuts. Less than two weeks after 
the U.S. Census Bureau reported that the city's poverty rate jumped to 
20.1 percent in calendar year 2010, Mayor Michael Bloomberg's budget 
director demanded that all city agencies, including education and uniformed 
services, immediately plan to cut 2 percent for the remaining eight months of this fiscal year and 6 percent next year.

Yet a series of reports make it clear that even without the latest round of cuts, poverty agencies -- facing rising need and falling resources -- 
cannot maintain services.
 In fact, the Mayor's Management Report for fiscal year 2011, released in mid-September and not generally known for highlighting 
bad news is 
full of bad news. A companion report from the mayor's Office of 
Contract Services and a new Independent Budget Office fiscal brief on children's servicesprovide further evidence that the agencies can't meet their stated goals.

But the mayor in his own press release for the management report ignored all that saying simply: "The data show that city agencies continue to provide the high-quality services that New Yorkers have rightly come to expect."

Falling Short

The U.S. Census report in September not only noted the overall poverty 
rate rising to 20.1 percent in 2010, up from 18.7 percent in 2009, but that the rate for families with children headed by single mothers 
in New York City reached 41.1 percent last year, up from 38.8 percent in 2009. The mayor responded: "When the economy slows down, there are fewer jobs. … People pay less, tip less, whatever. That certainly filters all the way down." But he added, "The city has one of the strongest safety nets in the country."

The safety net in some agencies, though, looks torn.

TheAdministration for Children's Services itself notes in the Mayor's Management Report that 
there was a 20.2 percent decline in children in at-risk families receiving contract 
preventive services in 2011, 
compared to 2010 (down from 29,945 children served to 23,881). The 
decline, Children's Services reports, was "due to continuing pressures on preventive services."

The new fiscal brief from the Independent Budget Office paints a larger picture of what has happened at Children's Services. Between 2000 and 2011 the agency shifted its emphasis from placing children in foster care to providing preventive 
services and therefore minimizing foster care placements. The shift 
"contributed to a 54 percent reduction in the number of children in 
foster care and a 28 percent increase in the number of children receiving preventive services while remaining in their homes," the 
report says.

Then came the recent budget cuts. "Because spending on 
preventive programs is discretionary, these services compete with other programs for scarce city dollars," the budget office explained. 
This has led to a 25 percent reduction in the number of children receiving services over the last two years.

The cuts are counter-productive in fiscal terms. A family preventive 
services slot, according to Children's Services, costs an average of $10,000. On the 
other hand, "the average cost of keeping a child in foster care 
averaged $49,000 in 2010," the budget office notes.

The report goes on to explain the problems that providers face -- and will face in the future -- as budget pressures make funding uncertain. For instance, in early 2010, the mayor wanted to eliminate 3,000 preventive care slots. The City Council 
restored funding for 2,900 slots, but for only one year, fiscal 2011. Then in May 2011, the mayor continued funding for those 2,900 slots for the current 2012 fiscal year "and provided enhanced funding for 
2012 and later years." Yet, the brief continues, "significant risks" remain "as long as the 
majority of preventive services are considered discretionary by the 
state."

"Budget constraints” have also caused cutbacks in another crucial part of the city's safety net for children: daycare. According to the 
Mayor's Management Report, total enrollment in subsidized childcare has dropped from 106,761 in 2007 to 98,643 in 2011, a 7.6 percent cut. In the most recent year, 2010 to 2011, 3,603 slots were 
lost. The elimination of childcare vouchers for 3,716 children between 2010 and 
2011 was, according to Children's Services, "driven primarily by a reduction in 
voucher resources." In addition, staffing at the agency has dropped by 1,712 in the past three years to 6,213, a 21.6 percent reduction.

The strain appears within the offices of agencies dealing with low-income New Yorkers. Ten years into the Bloomberg administration, the Human Resources Administration blames delays in registering its $606 million human-services contract -- only 62 percent were sent to the city comptroller on time, vs. 97 percent on time in 2008 -- on the "implementation of multiple new automated tracking 
and management systems," a lot of contracts with similar start dates
and the "implementation of new business procedures."

The Mayor's Office of Contract Services' annual Agency Procurement 
Indicators report for fiscal 2011, also released in September, shows human services contract delays extend to several other human services agencies. The Administration 
for Children’s Services, Office for the Aging, youth, homeless services, and various health agencies "continue to face significant 
challenges in their efforts to register contracts in a timely manner, 
as they simultaneously confront major budgetary constraints in the 
human services sector."

Average lateness in registering contracts in these agencies "increased 
to 41 days in fiscal 2011 compared to 27 days in fiscal 2010." One result: Cash-flow loans from a city fund for human-service contractors who start or continue services in spite of not having a registered contract jumped from $29 million to $43 million in the past year.

Who Funds the Safety Net


The Mayor's Management Report also shows that whatever strength the city's safety net retains stems primarily not from the city, but 
from federal and state funding and mandates. For instance, the number 
of New Yorkers receiving city-administered cash assistance from the Human Resource Administration's basic assistance program has actually fallen by 1.4 percent since 2007, from 360,700 to 355,600 in 
2011.

At the same time, the enrollment numbers in the federal food stamp and 
Medicaid programs have grown dramatically. From 2007 to 2011 the 
number of New Yorkers receiving food stamps (funded by the federal 
government) has grown by 67 percent, from 1.1 million to 1.8 
million. The city administers the program and has received an award for 
its role in expanding food stamp enrollments.

The number of New Yorkers enrolled in public 
health insurance programs, including Medicaid, (funded by city, state, and federal 
governments) has grown by 14 percent, from 2.56 
million to 2.91 million.

Yet the Mayor's Management Report shows that overall city, state and 
federal spending on social services has remained essentially flat for the 
past three years, ranging from $8.3 billion in 2009, $8.5 billion in 
2010, to $8.1 billion in 2011 (numbers not adjusted for inflation).


Budget Cuts and the Schools

The Department of Education differs from several of the human service agencies because of its nearly $2 billion increase in spending over 
the past three years. Its budget now totals over $19 billion in a $66 billion city budget. Despite that, 
problems are obvious even in the good-news Mayors Management Report.

School class size increased in grades kindergarten through eight by an average of 1.6 
students per class. In the crucial early elementary grades, average 
class size rose by 2.2 students.

As scaling back in the city's capital budget has slowed school construction, the number of new class seats has dropped in just one year, from 18,525 in 
2010 to 3,684 in 2011. The percentage of elementary and middle school students in schools that exceed capacity increased to 24 
percent in fiscal 2010, up from 20 percent in 2008. (Many 2011 results are not yet available.) Thirty one percent of elementary schools 
exceeded capacity in 2010, up from 26 percent in 2008.

The department's convoluted management of student 
achievement data in the Mayors Management Report makes it difficult if not impossible to 
judge the educational impacts of the past three years of cuts. From 2008 to 
2010 the four-year high school graduation rate improved from 56.4 percent to 61.0 percent, and the rate for students with disabilities 
improved from 22.5 percent to 27.9 percent.
But from 2008 to 2011 the percent of students in grades three to eight 
meeting or exceeding standards in English language arts declined from 
57.6 percent to 43.9 percent. In math the percent declined from 74.3 
percent to 57.3 percent.

The department blames the achievement declines in grades three to eight on changes in state's method for scoring standardized tests, but achievement indicators crafted by the department itself also show 
declines. For instance, the percentage of schools receiving As or Bs 
on the department's own "School Progress Reports" dropped from 79.0 
percent in 2008 to 62.3 percent in 2010.

In another department-created indicator, the percent of schools with "Well Developed or Proficient on 
Quality Reviews" dropped from 94.7 percent to 84.1 percent between 2010 and 2011. The 
management report explains, "This change reflects a higher standard of 
school performance for schools to meet … to ensure all schools are 
ready for the increased challenge of the Common Core Learning 
Standards."

The city recently laid off some 672 school aides, but mayoral threats to lay off teachers have been abandoned. It should be noted, however, that through resignations and attrition, school staffing from 2008 to 2011 fell by 6,059 or 4.3 
percent. This decisions by the mayor and his school chancellors to not fill these vacant position is of course the main reason for increasing class size.

What Next?

The round of budget cuts now underway could prove to be much more challenging to agencies and service beneficiaries and could face
more challenges from the City Council and New Yorkers. Put simply, the two city management reports and the Independent Budget Office's report on one human service agency together suggest that city agencies are stressed and that poor New Yorkers are not getting the level of services they did three or more years ago.

The new tack in the budget-cutting directive -- demanding across the 
board cuts, with no exceptions -- is especially troubling. The evidence in these reports is that the cuts are already disproportionate. School kids, children at risk, working mothers, poor seniors -- they are the ones experiencing reduced services.

As two earlier public finance columns illustrated, the Bloomberg administration's efforts on poverty issues have been limited 
to pilot programs and a push for private, philanthropic action. These new reports suggest that this is not a time for promoting and administering charity but for taking a hard look at the public policies and 
 programs that are losing any battle against poverty in New York 
City.


Glenn Pasanen, who has taught political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001.

Workforce Program Helps People Find Jobs, Not Careers


 workforce1

"Thank you for calling Workforce1," begins the recorded greeting. "Your success begins here."

If you called, you live in New York City and are one of an estimated 600,000 city residents who need a job.

Many lack an advanced education, a professional network and financial resources. With these handicaps, they must find work in the most competitive job market in decades, in one of America’s most competitive cities. And so thousands of them -- 387,661 people in 2010 -- will try and find employment through work-related education, job training and employment services -- assistance known as workforce development. For them, the workforce development system is a lifeline to the job market and employment.

For many workers, the lifeline falls short. It simply cannot overcome the shortage of employment, or provide work paying a decent wage. Workforce development may offer a path to employment – but not to the middle class.

A Network of Programs

Workforce1, as well as any single organization can, represents workforce development in New York. But it is only a small part of the city's diverse workforce development system, which technically is not really a system. It's more a collection of independent programs that operate, in a thousand different ways, with the shared intention of helping businesses fill their labor needs and New Yorkers get jobs. It is a collection of nonprofits, public and private colleges, local businesses, unions, and a number of city, state, and federal organizations that provide, fund, and oversee work related programs.

The Department of Small Business Services (which contracts Workforce1), the Human Resources Administration and the Department of Youth and Community Development contract out the majority of public services to providers. These providers -- and there are thousands of them -- operate in every borough as a bridge between workers without work and businesses with jobs.

Workforce1 has offices in all five boroughs, each managed by a nonprofit, for-profit or educational institution that won a competitive contract. These centers prepare and connect New Yorkers with job opportunities, but the priority is jobs placement, the connect part.

The first stop for job seekers is a two-hour introductory session delivered by a career advisor like Gwendolyn Gladden. It's like a class for the jobless. Standing in front of 30 jobseekers wearing a neatly ironed power suit, Gladden lectures with a mix of hope and realism. "Don’t come with that old tired energy," she said. "Come with that enthusiasm. Today is the day I find employment."

She reminds the class it takes three months to find a job –- and only if they treat finding a job like a job. Yes, she said, $80,000 salaries exist, but not everyone can get one. And some of the students may have to change professions. After all, Gladden did.

After 20 years in the health care industry she lost her job. So she came to Workforce1 four years ago. Now a career advisor, she helps those who sit where she once sat.

A majority of the jobseekers receive general assistance on how to navigate the job market and ace an interview. They get help on resume building, interview prep, career assessment, counseling and access to job listings.

Those who qualify may receive more substantial and specific training at one of Workforce1’s three sector-oriented centers.

The city’s total workforce development expenditure is $1.36 billion, with $615 million coming from city revenues and the rest from a variety of sources including Congress under the Workforce Investment Act. Federal funding for Workorce1 has decreased from about $62 million in 2006 to just over $36 million this fiscal year.

Because of budget cuts, the Individual Training Grant voucher program, which provided funding for some specific skills training, has been temporarily suspended. This has affected the Transportation and Industrial Center in Queens, which provided Computer Numerical Control machinist training. The Long Island City Health Center'sparamedic and emergency medical technician programs also have been suspended due to the funding problem.

The Job Gap

Workforce development began seriously with the 1960s War on Poverty. The system trained entry-level workers and "more or less threw them over the wall and hoped they landed in a job," said Paul Osterman of MIT's Sloan School of Management. Now the city, like Workforce1, follows a demand driven strategy: work with businesses, learn what jobs are or will be available, and train people for those jobs.

The problem, though, is the available jobs. Some economists like to compare the American economy to the letter U -- some high-income jobs on the top, a lot of low-income jobs on the bottom, and a hole where middle-income jobs used to be. One System for One City, the city’s state of the workforce development system report, found, "As a tentative recovery began in 2010, employment growth occurred both in high paying sectors like finance and insurance and professional services, and typically low paying sectors like health care, retail, and accommodation and food services."

The recession has obviously led to a jobs deficit. But even if thousands of new jobs are created, middle-paying manufacturing jobs are unlikely to return from the grave. The job market will likely continue to be “U” shaped, which means lots of low-wage jobs that help New Yorkers survive on the ragged edge of the economy with little chance of escape. There is a good jobs deficit.

Of course, many decent middle-paying jobs exist. But less educated workers, typically those in the workforce development system, are unlikely to get them. Where are all the Good Jobs Going? a recent book on job quality in America, stated, "Good jobs are not disappearing for everyone, but they are largely disappearing for less-educated workers." Only 9 percent of the people who used the city's public workforce system in 2010 had a college degree.

A Job, Not a Career

Businesses benefit from the workforce development system, says Matt White, assistant commissioner of policy and planning from Small Business Services, because it connects them to qualified job candidates in a quick and cost-effective way.

Some job seekers benefit by finding work. But the quality of that work concerns some experts.

The average job placement from the workforce development system pays $10 to $11 an hour, according to James Parrott, deputy director and chief economist of the Fiscal Policy Institute. That might be tolerable if placements led to promising careers. But Parrott says upward mobility is not likely. "My sense is that the majority of job placements don't have significant advancement opportunities," he said.

With so many people needing jobs, the focus has to be on placement as opposed to getting people on a career ladder, Ester Fuchs, a professor at Columbia University who helped create the city's workforce development strategy, said. The program, she added, had to concentrate on "short term training as opposed to the long-term career training."

"Demand is so high now," Fuchs said. "The general view is that we have to serve the large numbers of people who are looking for employment. And we have to work with the business who are offering jobs."

The situation, by some measures, has improved. Workforce1’s median wage of job placements increased from $9 an hour in 2009 to $10 in 2010, and 75 percent of those jobs were full-time. "We developed an expertise there," said Andrew Campbell, Brooklyn’s Workforce1 Deputy Director. Now there is a mission to place workers in jobs that pay an hourly wage of $15 or more.

The Money Crunch

Any gains, though, could be threatened by budget cuts. Parrott, White and Osterman agree that without more funding the workforce system is unlikely to help workers advance into middle paying jobs. Lack of money "hurts advancement opportunities for customers," said White. Osterman put the need for funding bluntly: "Peoples' lives and careers are at stake, and these programs are important."

Bloomberg wants to expand Workforce1, despite funding cuts, and hopes to achieve 40,000 new job placements in 2012. The city reported 24,701 Workforce1 job placements last fiscal year, up from 17,218 in 2007. Recently, however, those numbers were called into question.

Seedco, a nonprofit, runs both the Upper Manhattan and Bronx Workforce1 centers. "In at least 400 cases in three months, [staff members at a job center] had taken the history of jobless clients, changed dates and salaries, and claimed past employment as a job found, " Michael Powell of the Times wrote. In response, the city invalidated 44 percent of this year's Seedco job placements. The investigation is ongoing.

Fake jobs aside the question remains whether the proposed 30,000 or 40,000 jobs will be good jobs? Or will they be for part-time cashiers making little more than minimum wage at a new tourism center that thrives because the dollar is weak?

The lack of skills among many job seekers and the shortage of good jobs create a grim picture. But as Sydney Fuller-Jones of Boston, who has a job and still qualified for welfare services once said, "Any is plenty in the land of none."

Council Acts to Rein in Contracts


Little Pakistan
Photo by Kirk Kitell
Science Applications International Corp., or SAIC, the main contractor on the CityTime project, has some 41,000 employees at locations around the world, including this one in Texas. An executive with the company has been charged with taking more than $5 million in kickbacks on the project.

(This article was updated on Thursday afternoon to reflect the mayor's comments.)

The idea that private companies can do much of what government does and do it better and cheaper has taken a battering in New York City over the past few years.

News accounts and prosecutors have detailed mind-boggling cost overruns on the CityTime project. A shadowy company whose owner was having an affair with a top Department of Education official allegedly bilked the department out of millions of dollars. And so on.

Yesterday the City Council stepped into the fray. By a unanimous vote the it passed a bill sponsored by Councilmember Darlene Mealy that would subject city contracts to a kind of cost benefit analysis and require agencies to publicly disclose what services they plan to contract out in the coming year.

The Contract Boom

Last year, according to the council, the city spent more than $10 billion on private contractors. This amount will go up by about 6 percent this year –- far more than the city budget overall. As Gotham Gazette reported this spring, the contract budget has grown by more than 70 percent during the Bloomberg administration. While social service contracts – many with nonprofits – account for the largest chunk of city contracts, the biggest increase has come in professional service contracts, which mushroomed from $357 million in fiscal year 2003 to nearly $1.5 billion projected for this year.

Against this backdrop -- to say nothing of cost overruns and corruption -- that contract budget became a point of contention during last spring's contract talks. City Councilmember Robert Jackson for one repeatedly questioned why the administration was increasing contracts at the same time it was threatening to lay off teachers.

Municipal employee unions, notably DC 37, the city's largest municipal employee union, have balked at taking tasks away from their members and giving them to private often non-union companies.

The administration has said it needs specialized outside expertise, and some officials – notably former Deputy Mayor Stephen Goldsmith -– have argued that private contractors can deliver service more cheaply than city workers.

The Costs of Privatization

The council bill -- Intro 624 -- takes direct aim at that contention.

Before a city agency could extend, renew or enter into a contract worth more than $200,000 it would have to analyze whether the contract results from displacement of city workers or would displace city workers. If the study determines some city workers would lose their jobs, the agency must then look at the benefits and costs of contracting out the work and submit that analysis to the city comptroller, who reviews city contracts.

In addition, after receiving bids, the agency would have to analyze the costs and benefits of the contract and tell the council, the comptroller and union officials why the contract makes sense for the city. The council can hold a hearing on the contract in question.

More generally, every year the administration must submit a contracting plan for every city agency. Along with boosting transparency, this provision is seen a possible aid to small and minority contractors who would have more advance warning of upcoming city contracts, giving them time to prepare possible bids.

Announcing the measure, Quinn portrayed it as a money-saving move. While privatizing government work has been seen as a cost-cutting measure, Quinn said in many cases, sending public work to private companies actually increases costs. The bill, he said, "will make sure that we are checking on whether we are saving New Yorkers money every time we consider contracting out."

Council, though, has gone down this path before. In 1990, it passed Local Law 35 requiring similar analyses of contacts. But, as Quinn put it, "the implementation of that law has not lived up to its promise." She noted that in the more than 20 years since, only two costs analyses have been conducted -- two during the Giuliani administration and zero under Bloomberg.

The new version -- 624 -- hopes to close loopholes that enabled the last two mayors to dodge the requirement.

Waste, Fraud and Abuse

To many New Yorkers the biggest concern about city contracts has been high costs and low performance.

Only last week, the city's special commissioner of investigation for the Department of Education found that Future Technology Associates, a firm the city hired to do computer work on school purchasing, payroll and finance systems, had overcharged the city by at least $6.5 million.

Earlier in September, the New York Times reported that the cost of a contract for a computerized personnel system for the city had increased by more than five fold with the work far from complete.

And then, of course, there is CityTime, the $63 million project whose costs rose to more than $720 million, amid what prosecutors charged was corruption and fraud. Already five people have been indicted in connection with that one.

Asked whether the council bill would help avoid such abuses, Quinn expressed some doubt.

"I hardly imagine that in an analysis you would have a column of estimated criminality involved," she said.

But, she added, the increased disclosure and transparency could help warn city officials of cost overruns and other contract problems.

"This piece of legislation is only the beginning," she said. "Oversight is a very important piece, one that is for a different piece of legislation."

On to the Mayor

During the disputes over contracts, Mayor Michael Bloomberg has shown no sign of retreating from his reliance on them. And over the past months he has defended some of the most problematic ones. At one point he said the city did a pretty good job" on CityTime. And in response to questions from the Times about the problems with the personnel system known as Nycaps, a mayoral spokesperson said both it and CityTime are now "fully functioning systems used daily by thousands of city employees."

Bloomberg says Wednesday that he opposes the a law passed by the City Council . WNYC's Bob Hennelly reports the mayor says the bill will cripple the city's ability to be more efficient.

"To put impediments to us getting the best deal for the taxpayers particularly during this economy is something we can not tolerate. We are just not going to have this bill," Bloomberg said. "This also is probably unconstitutional."

With the council voting unanimously for the bill, it seems it could easily override any mayoral veto -- the kind of showdown that Quinn has rarely allowed to happen during her tenure. If -- as he implies -- Bloomberg takes the issue to court, it could set the stage for the dispute between the mayor and the council over contracts to drag on for years.

As Deficits Loom, City Faces More Cuts


bloomberg
Photo by Edward Reed
In May, Mayor Michael Bloomberg announced a budget that relied almost exclusively on cuts to erase a budget gap. With more red ink on the horizon, will he do the same this year?

If it's September, it must be time for Mayor Michael Bloomberg and his budget office to start cutting spending by city agencies. The current, fiscal 2012 budget that was adopted less than three months ago projects a $4.6 billion deficit for the next fiscal year. A year ago, facing a much smaller projected deficit for the next year -- $3.7 billion -- the mayor began a series of cutbacks that eventually reduced spending by $1.1 billion.

If there was any doubt about fiscal prospects, recent reports from the state Financial Control Board, the state comptroller and the city comptroller dispel them. These grim reports from fiscal monitors and recent studies from the Independent Budget Office, however, also suggest some new ways the mayor could fill budget gaps.

The key reality facing the mayor is that, unlike in recent years, there is no sign that the city will have a substantial budget surplus at the end of this year. Without something like last year’s $3.7 billion surplus, and with deficits averaging $4.8 billion over the next three years, the city's fiscal future looks "problematic" to the Financial Control Board and "challenging" to the state comptroller. Put a bit more dramatically, the board says, "The city's ability to avoid contentious expenditure reductions will be tested."

Expenditures and Other Fiscal Uncertainties

Over the last three years, the mayor has shown a certain political genius in avoiding "contentious" responses to his 10 packages of budget reductions. To accomplish this, he has very effectively used his extraordinary discretionary powers to make modifying the city budget a year-round -- rather than once-a-year -- process, with little opposition from the City Council.

The impact of 10 consecutive reductions is equally extraordinary. The State Financial Control Board totaled the effects: The $1.1 billion cut in 2011 was preceded by cuts of $1 billion introduced in fiscal year 2008, $2.1 billion in 2009, and $1.1 billion in 2010. Add them together and that means that the current $66 billion city budget is $5.3 billion smaller than it would otherwise be.

The fiscal monitors are not in the business of telling the city how to balance its budget, but they do a good job of explaining how the mayor balances the budget and at noting the fiscal uncertainties the city faces. The uncertainties include questions about projected out-year budget deficits, collective bargaining, pension costs, workforce cuts and the use of reserve funds.

The New Reality

In explaining why the city faces an ominous budget outlook, the state comptroller analyzes what actual revenues come in during a fiscal year and what actual spending occurs during that year. For instance, in spite of the cuts of more than $3 billion introduced in 2008 and 2009, "spending exceeded current-year resources by about $2.4 billion in FY 2009 and $2.1 billion in FY 2010." Those budgets were balanced only by using surpluses accumulated from previous years.

In FY 2011 the report estimates that, because of unanticipated revenues from an improving economy, current-year spending exceeded current-year revenues by only $303 million. The report goes on to say, "For FY 2012, however, we project a current-year deficit of $4.4 billion, reflecting the city's heavy reliance on nonrecurring resources accumulated in prior years to balance the budget."

The Financial Control Board suggests what the mayor should do next: "The task for the city will be to manage the FY 2012 budget in a way to start to build a surplus to the level achieved in FY 2011." In other words, the mayor should continue the same early-year and mid-year budget cutting he has made into a near science.

The Unknowns of Collective Bargaining

But there are many other uncertainties this year, including contract negotiations with city workers. The mayor's current three-year wage freeze, for instance, has freed up labor reserve funds for balancing the current budget.

The question is how long the mayor can keep the freeze on. According to the state comptroller's report, more than 90 percent of the city workforce is working without a collective bargaining contract. And the adopted budget includes funding for only a 1.25 percent annual wage increase for three years following the expiration of the three-year wage freeze.

Since the three-year freeze and proposed minimal raises for the following three years are still being negotiated, the state comptroller points out, "If instead wages were to rise at the projected inflation rate during the six-year period without any offsetting savings, costs would increase by $1.5 billion in FY 2012, $1.6 billion in FY 2013 and reach $2.7 billion in FY 2015."

The teacher's negotiations present more uncertainty. The state comptroller notes that the city "has yet to conclude an agreement with the United Federation of Teachers for the previous round of bargaining." That means that in FY 2009 and 2010, while other civilian employees received 4 percent annual increases, the teachers had no increase. Instead, the labor reserve funds for teachers again went to budget balancing.

Negotiations between the teachers union and the city, with the help of a mediator, continue, but a settlement apparently is not imminent. The state comptroller concludes, "A retroactive agreement similar to those negotiated by the city's other unions for those years would increase costs by $1.7 billion in FY 2012 and by $900 million annually thereafter."

Pension Costs

Another uncertainty is the projected cost of city pensions. Costs have increased dramatically beginning in fiscal 2003 after the "state enhanced benefits, and pension fund investments fell short of expectations," according to the state comptroller. The city currently estimates pension costs, which averaged about $1.4 billion a year in the 1990s, will be $8.4 billion in fiscal 2012, increasing to $8.7 billion in 2015.

In anticipation, the city in its four-year financial plan set aside $1 billion a year in a reserve fund. But it's not clear it will need that fund this year.. Nor, on the other hand, is it clear $1 billion will be enough.

The Retiree Health Benefits Trust

To balance budgets recently, Bloomberg has tapped into the Retiree Health Benefits Trust Fund -- to the tune of $672 million in the current budget. The fund was set up by the mayor several years ago to set aside money for the city to cover its accrued liability for future post-employment retiree benefits, including health benefits. That liability, according to the state comptroller, reached $75 billion as of fiscal 2010. (The city has been paying these benefits on a pay-as-you-go basis.)

The state comptroller and Financial Control Board, object to what the mayor is doing. "The city, to its credit, deposited $2.5 billion in the Retiree Health Benefits Trust during the last economic expansion to fund these costs," the state comptroller says, "but it has begun to draw down these resources to help pay current operating expenses. … The state comptroller believes the city should avoid using these resources to help balance the budget."

The Financial Control Board agrees: "It is unfortunate that the city has continued to reduce the trust over the last two fiscal years to cover investment losses incurred in prior years while [post-employment benefit] liability continues to grow at a constant high rate."

Yet this fund, which now holds about $2 billion, remains a tempting resource for an administration reluctant to find new and recurring tax revenues and that regularly uses ad hoc, non-recurring revenues for budget balancing.

Workforce Cuts and Consequences

Cutting the size of the city workforce has also helped balance the budget. The fiscal 2012 executive budget in May reduced staffing by more than 9,000 positions. However, the City Council reversed some of those cuts. The state comptroller estimates that the final budget eliminates 5,475 slots in fiscal 2012, including 2,655 positions in the Department of Education.

Originally, the mayor wanted to eliminate 6,166 schools jobs, including 4,166 teachers. But the negotiated restoration of 4,666 education jobs should not mask the loss for the school system. Many of the restored positions, for instance, are funded for only one year.

The state comptroller notes that in fiscal 2012 the schools will have 7,000 fewer teachers than in fiscal 2009, and another 1,200 fewer in fiscal 2013. The effect? "Class sizes are expected to continue to rise, and other services, such as after-school programs, may be reduced," his report says.

Contracting

The fiscal monitors also touch on some management areas where potential savings could help budget balancing. One is the rapidly growing contracting budget, which emerged as a point of contention during last spring's budget talks. The state comptroller notes the "heightened scrutiny because of the increasing amounts spent on [contracted] services, and instances of waste and fraud." This, of course, is undoubtedly a reference to the scandal surrounding the City Time contract, which continues to unfold.

Spending on contractual services rose by nearly 75 percent between fiscal 2001 and fiscal 2010. It then totaled $10.6 billion, or 16.3 percent of the 2010 budget. According to the state comptroller, the 2012 budget is slightly less -- $10.5 billion for contractual services -- although that could grow as the city receives federal and state grants later in the year.

The three largest areas are education-related: payments to private special education and charter schools ($2.2 billion), student transportation ($1.1 billion), and direct professional education services ($845 million). The Independent Budget Office has noted that, as school budgets have been cut, school contracting has increased.

Overtime

The city could also save some money by reducing overtime costs, now over $1 billion a year. Uniformed agency overtime alone, including civilian personnel, reached $963 million in fiscal 2011, according to the Financial Control Board. That's $240 million more than the city projected at the beginning of the fiscal year.

The board says the current four-year financial plan "grossly underestimated" future overtime costs. The city comptroller estimates the city's overtime projection for fiscal 2012 is $210 million less than it will ultimately be. If he is correct, the city would have to fund the extra costs during the fiscal year, adding yet another uncertainty to mid-year budget balancing.

Tax Revenue Options

As the mayor begins his mid-year -- or earlier -- modifications in the current budget to meet next year’s $4.6 billion deficit, there is no indication he is willing to address tax revenues. But as the reality of yet another $1 billion to $2 billion mid-year cut in agency services unfolds, it might be time to do just that.

The Independent Budget Office's Budget Options is an excellent source of practical expenditure-saving and tax-revenue programs. One of the more familiar ones is a restoration of higher personal income rates for joint tax filers with incomes above $200,000. New top rates of 4.013 percent and 4.264 percent (affecting only 7.8 percent of city resident tax filers) would still be much lower than the top rates in effect from calendar 2003 through 2005 and most of the 1990s, yet produce an additional $450 million in fiscal 2012.

In a recent web blog the budget office noted that the city's biggest tax, the property tax, will bring in $17.6 billion in fiscal 2012, about 42 percent of city tax revenue. But it would generate $13.5 billion more were it not for "the slew of [property] tax exemptions."

Most of these exemptions, of course, go to government property and religious property, and so are untouchable.

Some exemptions, however, could be challenged. Perhaps the most outrageous case is Madison Square Garden, which has not paid any property tax for decades, costing the city $15.1 million in lost revenue in this year alone. The Independent Budget Office points out that a case can also be made that some private institutions -- health facilities, foundations, charitable organizations, and private schools, colleges and universities -- could negotiate voluntary payments (called payments in lieu of property taxes, or PILOTs). Many do that in other cities.

In other words, the mayor need not simply announce yet another autumn round of agency downsizing and lost services. He has a chance to address alternative strategies that could minimize such cuts: Management reforms and a willingness to find new, equitable tax revenues would be good places to start.



 Glenn Pasanen, who has taught political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001.

As Deficits Loom, City Faces More Cuts


bloomberg
Photos by Spencer T. Tucker
In August, Mayor Michael Bloomberg, shown here with Schools Chancellor Dennis Walcott, announced private philanthropists -- including himself -- would pick up the tab for the January 2012 Regents tests.

In the face of extreme budget cuts and tough times, Mayor Michael Bloomberg recently has turned to private donations to fill some high-profile budget holes. Last month, Bloomberg announced that six private donors -- himself included-- would each donate $250,000 to reinstate a round of state standardized testing that had been eliminated because of budget cuts.

"For thousands of our students, taking the Regents exams in January will mean the difference between graduating and not graduating," Bloomberg said at the time. "I've always believed that you can either complain about your problems or do something to fix them -- in New York City, we choose the latter."

In this high-profile use of outside funding to provide a core service in the public schools, many education experts see more than just a last-minute save.

"From a systemic point of view, this is a very worrisome pattern in New York and around the country,” said Michael Rebell the executive director of the Campaign for Educational Equity at Teachers College, Columbia University. Rebell, who critiqued the decision in a New York Times op-ed last month that lambasted states for leaving public schools in New York and around the country without adequate funding.

Private money in the public service doesn't stop at education. Increasingly, donations fund all sorts of programs -- parks, social welfare initiatives and museums, to name a few. While some praise the philanthropy, others question the lack of funding by government and the increased influence these often-unnamed donors may have on policy and decision-making.

Plugging Holes

In his announcement, Mayor Bloomberg emphasized the importance of a long-term solution for funding the January Regents, as the donations will only cover the 2012 tests.

Rebell says the one year reprieve from budget cuts could hurt prospect for solving the schools’ funding issues in the long-term. Private donations like this alleviate pressure points, but they don’t fix the problem, Rebell said.

"It takes the attention and the pressure off the need for adequate public funding of public education," he said. If the donors had not stepped in, he added, "People might have been up in arms when they saw graduation rates go down."

From a government standpoint, the funding also poses a risk, said Charles Brecher, the executive vice president and director of research for the Citizens Budget Commission, a government watchdog group. "What do you do if it disappears? What if that money goes away?" he asked.

Philanthropic Muscle

Brecher, who is also a professor at New York University's Wagner School of Public Service, published a study in 2007 that tracked how private donations leverage public funding to the parks.

Many parks have non-profits, such as the Prospect Park Alliance, that augment their park's public funds. Donations to the nonprofits are usually given with a stipulation that public funding will be maintained to certain levels, allowing donors to use their philanthropic muscle to preserve public funding -- even in times of budgetary crisis. Brecher said this often leaves "parks without Fifth Avenue and Central Park West as neighbors" with less public funding and comparatively limited funds.

"It's always good to have extra resources," Brecher said, but "it's best done when it doesn't distort what otherwise would have been done with the public money."

In many cases, the private funds influence use of public funds as well. Officials see a donor giving money to cover 80 percent of the cost of a new skating rink, say, and then ante up the remaining 20 percent, even if that money might have ben better spent on a playground. In education, some critics have charged that school districts like New York City's have embraced smaller, themed high schools, not because they are necessarily a good idea but because funders such as the Gates Foundation have poured so much money into them. Gates himself has expressed disappointment in the result

"They say 'don’t look a gift horse in the mouth' – don't ask questions to someone who is giving money -- but in some instances you want to look the gift horse in the mouth," Brecher said.

Last month, Bloomberg announced a $30 million donation from his own foundation -- and a matching one from hedge fund manager George Soros -- to fund a new initiative aimed at young black and Latino men.

The city added $22.5 million dollars in public funding for the program to the City Council budget at the last minute, as well, alarming many City Council members who complained that they hadn’t been alerted to the change in the budget or included in the discussion.

Queens Councilmember Peter Vallone Jr. now is looking into possible legislation that would prevent such late in the game additions to the budget.

"I have no problems with private money for public programs," Vallone said, "but I'd just voted on a budget without more police officers, and we were on the cusp of closing firehouses. Yet after the budget was passed, there was an announcement for a program that had millions of dollars and no public oversight at all," he said.

Bloomberg's announcement came less than a week after the council approved its budget. "If Bloomberg was able to find that money, then we should have been able to direct it to more police officers if we saw fit," Vallone said.

Brecher said the funding for the initiative exemplifies how private donations affect the city's allocation of public funds. "In this instance, it probably did affect the priority setting process," he said.

The $22.5 million addition was included in the final, printed $66 billion budget that was given to City Council members, but Vallone said it is "impossible to be aware of last minute additions in a massive document like that."

Marc LaVorgna, a spokesman for the mayor, said that while the initiative's public funding was added at the end of the budget process, "the council was notified that we were seeking to add dollars for this program into the budget and the program was printed in the budget."

He said that the presence of the private money in the deal had "zero to do with" the public funding of the program, adding that "the City Council changes literally hundreds of millions of dollars in the budget at the 11th hour every single year."

The Poor Get Poorer

Private donations often leave those in poorer areas with even fewer resources than they might have otherwise had.

In public schools, parent teacher associations have long been sources of private funds. When services are cut, fundraisers and private donations fill out the budget. But in poorer areas, where donors are scarce, the services remain un-funded and can face cuts.

This inequality is "totally inconsistent with any concept of [public] schools," and often unconstitutional, Rebell said. (Most state constitutions have a provision that guarantees an education, though exactly what that means in practice is often debated.)

The private funding also has an effect because upper or middle-class parents --the people at "the forefront of political advocacy" – then are not affected by cuts and so are less likely to complain about them, Rebell said. The people who are hurt -- those in low-income communities -- are less able to make their concerns known. If more affluent parents have "found a way to satisfy their needs, it’s not going to come to the floor," Rebell said. "Its well-known that low-income people don't have the articulation or organization skills to protest it themselves."

Vallone, however, would rather have the money donated than not.

"We’re not living in John Lennon's imaginary world," he said. "We're living in a world where very few people would donate if their kids wouldn’t see the results."

Can Obama's Plan Erase New York's Jobs Deficit?


special
Photo by Marsmet45

The package of job creation and stimulus measures proposed by President Barack Obama last week is welcome medicine for an ailing economy. If adopted, the president's plan will boost job growth and help reduce unemployment that has stayed high despite the fact that the Great Recession of 2008-09 was deemed to have come to an end in June 2009. The president's plan is an important step in the right direction, particularly after a summer of political preoccupation with the long-term federal budget deficit, and it is likely the most that can be done given the current makeup of the Congress.

The effects of that crisis are being deeply felt in New York. Twenty-six months into the "recovery," over 600,000, or one in every seven, New York City workers is unemployed, under-employed or has given up looking for work. While there has been improvement in some economic indicators for the city, job growth has been too weak to put a meaningful dent in the continuing unemployment. The city's overall under-employment rate tops 15 percent, for blacks it's 22 percent, for young black men it's 40 percent.

New York's Numbers

The reported decline in the unemployment rate -- which includes only people actively looking for work -- is deceptive. People who would like to work but have given up on finding a job in this labor market are no longer counted as unemployed. If these discouraged workers were counted, New York City's unemployment rate in July 2011 would have been 10.1 percent, about 1.5 percentage points higher than the official 8.7 percent unemployment rate for that month.

These and other indicators of the continuing "unemployment crisis" in the city and state are documented in the latest edition of The State of Working New York. Long-term unemployment, the report finds, is at record levels for the nation and for New York. Half of those unemployed in New York City and elsewhere around the state have been out of work for more than six months, and 29 percent have been jobless for a year or more.

A great deal of political energy has focused on the federal budget deficit, but the deficit that matters most for many New Yorkers is the "jobs deficit." To bring New York state's unemployment rate back to where it was before the recession, New York would need 512,000 additional jobs today.

Hundreds of thousands of New York families are struggling to make ends meet and to keep a roof over their heads. Worker skills are eroding, and the likelihood that tens of thousands of long-term unemployed workers will never productively re-enter the work force increases with every passing month. Our economy is squandering the productive labor of unemployed men and women on a colossal scale, and our homegrown small businesses that depend on local sales are put in jeopardy because the unemployment crisis deprives them -- even more than other businesses --of customers with money in their pockets.

The Weak Recovery

This is the weakest recovery from a recession since the 1930s. Following other recessions since World War II, the real Gross Domestic Product (GDP) grew an average of 5.4 percent in each of the first two years of the recovery. In the two years of this recovery, annual GDP growth has been less than half the average, only 2.5 percent per year. The housing collapse, consumer demand dampened by unemployment, and state and local government budget cuts all contribute to this record weakness.

New York lost fewer net jobs in the 42-month period from the start of the national recession in December 2007 through July 2011 than 40 other states around the country. This is largely because the housing bubble of 2003-to-2007 bypassed upstate New York and the unprecedented taxpayer bailout of the finance sector saved several of the largest New York-based banks and securities firms from catastrophe.

Partly driven by the profit rebound among Wall Street firms but also by gains in many major sectors, New York state ranked second among all states in both real state GDP growth and total personal income growth in 2010. The Empire State recorded a 5.1 percent real GDP gain, second only to North Dakota, and a 4.1 percent total income gain, second only to New Mexico.

Yet this "good news" has done little to help most New Yorkers. The state has seen its employment rate -- the ratio of those holding a job to all working age people -- continue to decline during the recovery, dropping from 57.3 percent at the end of 2009 to 56.9 percent in the first half of 2011.

New York state has re-gained 118,000 of the 316,000 payroll jobs lost during the recession, or 37 percent. Fourteen of the 18 major sectors of the state's economy lost jobs during the recession, but only two (other services and management of companies) have completely made up recession losses. The two sectors that lost the most jobs -- manufacturing and construction -- continued to lose jobs, but at a much slower pace through June 2011.

In the first half of 2010, New York City had gained jobs faster than the nation, but since then the city's job growth has been about the same as for the nation overall.

Government is the only sector that has lost more jobs during the recovery than during the recession. Over the past three years, New York has lost 54,000 jobs for teachers and other state and local public servants. That is a greater decline than in any other sector except for manufacturing, with government seeing more jobs lost than finance and insurance, or construction. It is expected that New York's schools opened this fall with 12,000 fewer teachers and other staff than they had last spring.

The problems in the city and state reflect those in the nation as a whole. In the last three or four months, job growth and other economic indicators have slowed so much that more and more economists are talking about the risk of a "double dip recession." It is in this context that the president correctly shifted his focus at the end of summer from the federal budget deficit to the national jobs deficit.

The President's Prescription

The president's $447 billion American Jobs Act proposal includes a range of measures to increase consumer spending, re-hire public school teachers, expand infrastructure investments, and provide tax cuts to businesses to spur hiring. Some of it continues current programs that expire at the end of this year, like federally funded extended unemployment benefits. Others enhance remedies currently in place like Obama's proposal to up the individual payroll tax cut from 2 percent to 3.2 percent. (See the box below for the main components.)

Image: Gotham Gazette

Click on the image for a larger version.

The proposed American Jobs Act is a little more than half the size of the American Recovery and Reinvestment Act (ARRA), the $787 billion stimulus legislation crafted by Obama's presidential transition team and House Democrats and passed by Congress in February 2009, with not a single House Republican voting in favor.

With the House Democrats' loss of their majority in the 2010 midterm elections, the united opposition of the House Republicans is now a real impediment to the making of coherent economic policy. The jobs act, for example, includes far less money than the recovery act to provide relief to state and local government budgets, and proportionately relies far more on tax cuts. The $35 billion proposed in the jobs act for state and local governments to re-hire teachers and first responders will help to reduce the negative impact that state and local job cuts are having on the recovery. The current bill, though, does not include an increase in the federal Medicaid share that was the main form of state fiscal relief in the recovery act.

In another important difference, well over half -- 57 percent -- of the jobs act funding takes the form of tax cuts; in the recovery act, tax cuts accounted for about 37 percent of the total. Even though most economists believe that direct spending provides more economic stimulus bang for the buck than do tax cuts, the president has likely crafted a package heavy on tax cuts to try to win Republican support.

Mark Zandi of Moody's Analytics and an economic advisor to 2008 Republican presidential nominee John McCain, has written that, if enacted, the Obama jobs plan can add 1.9 million jobs and 2 percentage points to GDP growth next year. While Zandi thinks this would keep the economy from sliding back into recession, it would only cut the unemployment rate by one percentage point.

Of course, passage of the act is by no means certain. Zandi and conservative economist Doug Holtz-Eakin believe that key parts of the jobs proposal like the payroll tax cuts, the unemployment insurance extension and some of the infrastructure proposals may garner enough Republican votes to pass. There is also the possibility that conservative interests will refuse to support any meaningful part of the jobs act based on a cynical political perspective that their electoral success in 2012 depends on keeping unemployment high.

What New York Can Do

New York cannot escape the adverse effects of the extremely weak national economy. Whether or not the major elements of the American Jobs Act are enacted, New York policy-makers can do several things to boost jobs and the state's economic future:

  • Restore the commitment to having one of the nation’s best educational systems from public schools where all the state's children can receive a sound basic education through a high-quality and affordable public higher education system;
  • Revamp regional economic development to put the priority on creating good jobs and to make decisions on subsidies to businesses more transparent and accountable as well as consistent with a coherent regionally based economic strategy;
  • Provide technology assistance to advanced manufacturing across the state to support good-paying, high-skilled jobs and foster innovation; and
  • Adequately fund transportation infrastructure needs, and exploit the potential of the nation’s largest mass transportation network to promote advanced transit-related manufacturing. (A conference promoting the idea of expanded transit-related manufacturing in New York will be held at the Brooklyn Navy Yard on Sept. 27.)

If New York cuts state income taxes on the wealthiest by $5 billion in 2012 as it is set to do, it will have to make budget cuts that will further damage the precarious recovery and exacerbate the unemployment crisis. Keeping New York's current income-tax surcharge on high-end taxpayers after it is set to lapse in 2012 would make a huge difference in staving off job cuts for state and local government employees, including school teachers and educational support staff. Greater reliance on a progressive state personal income tax, an expanded circuit breaker to provide property tax relief, and closing corporate tax loopholes will benefit all New Yorkers with a more evenly shared tax burden.

Unemployment insurance benefits have been a lifesaver for tens of thousands of New York families during and following the economic downturn. Yet, the state's unemployment system has not been updated in over a decade and has fallen behind nearly every other state in the extent to which it replaces lost wages. New York’s average weekly unemployment benefit of $304 replaces only 26 percent of the average weekly wage, putting New York in 48th place compared to other states.

New York should link its economic policies to raising wage levels so that workers can start to bridge the wage-productivity gap and provide a modest boost to consumer spending and job growth. New York could raise the state minimum wage in stages to restore the purchasing power of its low-wage residents. The wage now currently is worth 26 percent less than it was in 1970. Eighteen states and the District of Columbia have minimum wages higher than New York’s $7.25 minimum. For its part, New York City could expand its living wage ordinance to companies receiving significant city economic development assistance.

Taken together, these measures represent important steps to increase jobs and begin to counter the substantial income disparities that have built up in New York and elsewhere in the U.S. over the past 30 years.

James Parrott is deputy director and chief economist of the Fiscal Policy Institute (www.fiscalpolicy.org). He has been studying and writing about the New York economy for over a quarter century.

Public Cuts, Private Reluctance Could Slow Growth in Green Jobs


green jobs
Photo courtesy Association for Energy Affordability
In weatherization classes, trainees learn building science theory as well as hard skills, such as how to seal building cracks and apply insulation.

Back in 2009, as the country was in the thick of an economic calamity, President Barack Obama pumped $5 billion into the Weatherization Assistance Program to help mostly low-income families improve their homes' energy efficiency. New York's program, which receives funding from the U.S. departments of Energy, and Health and Human Services, spent $65.8 million this year to help households throughout the state weatherize their homes for maximum energy efficiency. And last week, Gov. Andrew Cuomo signed a bill that should create more green jobs by allowing homeowners to finance energy enhancement through their utility bills.

With unemployment seemingly stuck at more than 9 percent nationally, the green jobs sector could provide a rare bright spot. Government has tried to give it a boost. And with New York City home to approximately 900,000 buildings, it would seem to offer plenty of opportunity for New Yorkers to get work in the weatherization field, while simultaneously helping the city reduce its carbon footprint.

Those in the weatherization industry, though, say the private sector still has not caught up with the opportunities produced as a result of state and city policy. Meanwhile, the recent deficit reduction compromise and other budget cuts threaten government funded energy and job programs, leading some to question when environmentally friendly jobs will fulfill their promise.

A Silver Bullet?

Obama has frequently said that investments in the "green economy" -- services and industries that produce or use renewable materials -- will help revitalize the country's overall economy. During the recession and the slow recovery, the green jobs sector has created crucial employment opportunities in areas such as recycling, clean energy production and manufacturing and deployment of green cleaning products. In New York, federal and state funding for the weatherization program provides jobs for people who might otherwise be out of work and helping lower-income people save money on heating and cooling their homes.

It has also helped create work for people who find it particularly difficult to find jobs – those who have been in prison.

John Valverde, director of the Green Career Center at the Osborne Association, said his organization helps the formerly incarcerated reenter the workforce as productive citizens. It runs a weatherization program, sending participants to Solar One and the Association for Energy Affordability -- both nonprofits -- for green training.

"We realized that with energy efficiency benchmarking and upgrades stipulated by the Greener, Greater Buildings Plan, we could design a training program to match the basic carpentry and electrical training the formerly incarcerated learn in correctional facilities, thereby providing skills participants could learn quickly rather than over four years in college," Valverde said.

Ismail Ocasio, manager of training development at Solar One in Long Island City, said that trainees are taught building science theory to help them understand buildings' energy flow. They then learn the hard skills, such as how to electrically retrofit a building, air seal cracks and apply cellulose (recycled newspaper) into walls.

The Fortune Society, which also works with former prisoners, said it increasingly emphasizes skills such as weatherization to reflect changes in the job market. "We've offered training for jobs in the social services sector, but we want to build out a 'hard skills' model so that our participants can find jobs in the growing green sector," said Stanley Richards, senior vice president of program.

Into Crawlspaces and Attics

The term "green jobs" tends to summon up images of a technician attending to a gently turning wind turbine in a sprawling green field under a deep blue sky. But the reality is not quite so picturesque.

"Weatherization work is not sexy work," said Valverde of the Osborne Association. "The graduates from our green training programs have to work in the heat and cold in crawlspaces, basements and attics caulking windows and insulating."

Nelson Cordova, who was imprisoned for 14 years, graduated from Osborne's weatherization training program. He earns about $20 per hour working in Yonkers, commuting two hours each day to and from Brooklyn.

"It's hard work, especially in the heat wearing a Tyvek suit to protect me from grime and dirt," said Cordova. But he said he feels good when he helps low-income elderly homeowners save money on their energy bills. “I'm just so happy I'm making a living after prison," he said.

Valverde said he thinks the program will pay numerous dividends. "Many of our candidates come from high crime areas in the Bronx, Brooklyn and Poughkeepsie" that, he said, are also "subject to environmental injustices such as toxic landfills and toxic emissions from heavy truck usage. The promise of weatherization work and green jobs is that they provide the mechanism to produce leaders in the community so that they give back to rather than harm the community, and at the same time do work that’s positive for the environment."

Osborne has graduated about 200 students from its weatherization-training program since March 2010. According to Valverde, the organization has a 58 percent job placement rate thanks to a network of contractors.

Osborne offers a wage subsidy to help persuade private contractors to hire the graduates, paying 75 percent of the graduate's wages for the first three months of work. Valverde said that the incentive has helped to cultivate relationships with contractors, who continue to employ Osborne graduates after the three months.

The organization also provides career coaching services, networking events and business classes, and runs a listserv to inform graduates of job openings or union apprenticeships.

Where the Jobs Are

Despite these and other efforts, green jobs still account for a small percentage of the work in New York City. As of 2010, research by by Lesley Hirsch, director of the New York City Labor Market Information Service at the CUNY Graduate Center, found, 75,000 "green workers" worked in four industries here: construction trades, building services, professional services and component manufacturing. In every one, the green jobs account for a very small percentage of total employment. For example, Hirsch notes that 137,840 people work in building services, but only 28 percent (37,940) are green workers. But she noted that that number should grow as city legislation sets energy efficiency benchmarks and requires upgrades.

Jobs also should be created when the state's funding becomes available for the Green Jobs-Green New York program to provide homeowners and commercial properties $13,000 and $26,000 in loans for retrofitting.

Devashree Saha, senior policy analyst at the Brookings Institution credits the New York State Energy Research and Development Authority with committing $22 million since 2008 to train 13,000 New Yorkers in 40 different training centers throughout the state.

Her report Sizing the Clean Economy, found that the New York metropolitan area leads all major metro areas in the country in the number of green jobs, with 152,034 as of 2010. Of course, one reason for that is that New York in the nation’s biggest city. Because her team used a broader definition of green jobs than Hirsch did, the city's mass transit system leads the green jobs pack with 60,000 workers out of the total.

For green jobs to really gain a foothold the private sector needs to jump on the weatherization bandwagon. Saha noted the business incubator model that has helped spawned clean energy companies in the city could boost such effort. Two firms -- Rentricity and Sollega, both owe their starts to the NYC Accelerator for a Clean and Renewable Economy housed at Polytechnic University.

A Murky Future

The role of the private sector could be particularly vital in the light of federal spending cuts and tight state and local budgets.

Obama wanted $320 million for the Weatherization Assistance Program. The House Energy and Water Appropriations Subcommittee wants to drastically reduce the budget to only $33 million, according to Rebecca Stewart, projects coordinator for the National Association for State Community Services, which helps states reduce poverty.

Stewart noted that the national weatherization program may well go belly-up if the cuts make it through the Senate. "This year's funding is $174.3 million, but the combination of losing ARRA [American Recovery and Reinvestment Act] funding come March 31, 2012 and a 2012 budget of $33 million would effectively dismantle the program," she said.

Meanwhile a few green businesses are starting to expand – and create jobs for people who might otherwise not have work.

Gary Grecco, owner of EnergyPro Insulation in Staten Island, said since he started doing weatherization work three years ago business has grown 20 percent annually. He participates in the Enhanced Home Sealing Incentives Program offered by the National Grid, which pays homeowners for the cost of completing an energy audit of their homes done by a private contractor.

Greco has yet to hire someone who is formerly incarcerated and has graduated from a workforce development training program, but said he would consider it in certain circumstances. "If I have a job in an affluent section in Staten Island I will not send someone formerly incarcerated because that person may not relate to the homeowner. But I will send that person if the work is in a low-income area," he said.

Jim McDaniel, vice president of operations at Prospect Development and Construction in Brooklyn, said his company already employs four weatherization workers who have received help from the city's Department of Youth and Community Development. As to whether he would hire a former prisoner, McDaniel said he would consider it "as long as the person showed interest and worked hard, because I believe in second chances."

Bloomberg Poverty Policies Cut the Public, Boost the Private


cash transfer
This mother in the Philippines received money – known as a conditional cash transfer – to keep her children in school and healthy. Mayor Michael Bloomberg has launched efforts to try a similar program in New York, but it’s unclear whether the attempts have done anything to reduce poverty.

In early May, the Bloomberg administration held a kick-off event to celebrate a five-year, $100 million expansion of the mayor's anti-poverty pilots, now called the Social Innovation Fund Learning Network.

Less than two months later, Mayor Michael Bloomberg and the City Council agreed on a budget for fiscal year 2012 that included the 10th consecutive cutback of anti-poverty agencies.

The two events highlight the unreal nature of the Bloomberg administration's approach to fighting poverty. As the mayor continues to expand his privately-funded anti-poverty pilot program, begun in 2006 to other cities, he steadily cuts the budgets of the city's own anti-poverty agencies.

poverty in NYC

His much-heralded private efforts have had little to no effect on poverty in New York and seem unlikely to have any significant impact in the future. Many are modeled on programs in developing countries like Mexico, Colombia, and Bangladesh and involve giving cash to poor people in return for certain behaviors, making sure their children go to school, for example, or taking them to a doctor. While these efforts -- called conditional cash transfers -- have been extensively researched, two recent surveys offer little evidence that such tactics might help the poor in urban America.

The weak premise that cash-incentive, self-help pilot programs will alleviate poverty in New York City has effectively obscured the real conditions of poverty in the city: unemployment, limited childcare, poor schools and job training, etc.

Certainly the poverty rate shows no signs of abating. After largely neglecting poverty for his first term, Bloomberg announced an anti-poverty initiative in 2006. In the time since, the poverty rate has remained virtually unchanged, with about 20 percent of city residents classified as poor. In 2009, 10.5 percent of New Yorkers lived in deep poverty -- with incomes less than half the poverty level, or below $10,500 for a family of four. At the same time, the wealthiest New Yorkers have become ever richer, giving New York the greatest gap between rich and poor of any major city in the county.

Cutting Public Programs

While the number of poor people has not decreased since the mayor announced his anti-poverty initiative, the funding to get them out of poverty has. The 2012 budget agreed to by the City Council and mayor is, at $66 billion, about $5.2 billion smaller than it would be without those cuts. The city faces real budget problems, but anti-poverty programs are not only not a priority; they are a target.

Determining the impact of these cuts on anti-poverty programs is difficult. The Mayor's Management Report, intended to provides a measure of the effects of such cuts, offers no help. But a simple analysis of cutbacks in the city workforce since the budget reduction began offers some clues.

Agencies that provide basic city services to poor and working class New Yorkers, including education, child care, health, homeless services, housing and parks, have lost a disproportionate number of workers -- 6 percent to more than 26 percent of their staffs. Yet the police department, in contrast, has lost fewer than 3 percent of its uniformed officers, and the corrections department has actually increased its uniformed staffing by over 2 percent.

Changing Headcounts

Uniformed Officers

Agency

Headcount
May 2008

Headcount
(projected)
June 2012

Change

Percent Change

Corrections

8,225

8,404

+179

+2.2%

Police

35,284

34,309

-975

-2.8%

Fire

11,618

10,779

-839

-7.2%

Sanitation

7,580

6,822

-758

-10.0%

Other City Services

Agency

Headcount
May 2008

Headcount
(projected)
June 2012

Change

Percent Change

Education
(Teachers)

97,300

90,367

-6,933

7.1%

Children's Services

7,103

6,529

-574

8.1%

Health and
Mental Hygiene


5,268


4,789


-479


-9.1%

Housing
Preservation & Development

694

536

-158

-22.8%

Parks

6,520

4,791

-1,729

-26.5%

Source: NYC, OMB, Fiscal 2009, Fiscal 2012 Adopted Budgets.

Overall, the city-funded workforce has declined from 269,461 in May 2008 to 253,850 in 2012, a loss of 5.8 percent. Although it is not clear what the savings from this downsizing are, if we assumed $65,000 savings per worker, the savings would be roughly $1 billion a year. Across agencies there is wide variance, both among uniformed workers and among anti-poverty staff. There is certainly no evidence of shared sacrifice.

There is, however, a much greater variance in several agencies that serve poor and working class New Yorkers. The above table shows that headcount cuts ranged from six to 26.5 percent.

The rhetoric of the mayor's privately funded anti-poverty pilots stresses the importance of education, child care, training, and preventive health measures in moving poor youngsters and young adults out of poverty. Yet the mayor's budgets for the city cuts these very services.

For example, even though the new budget saved the jobs of 4,100 teachers the mayor had planned to lay off in 2012, the Department of Education nevertheless has lost nearly 7,000 teachers over the past four years, a 7 percent cutback in the teaching staff. The focus on the threatened layoffs has repeatedly obscured this attrition, a product of not replacing teachers who retire or resign.

These losses, though, have an effect on schools. The Independent Budget Office recently found that average class sizes in grades kindergarten through eight increased for three consecutive years, rising from 23.0 students per class in the 2007-2008 school year to 24.6 in the 2010-2011 school year.

The Administration for Children's Service, which oversees preventive services and childcare services, has lost 8 percent of its city-funded staff in four years, while the health department has lost over 9 percent. The parks department, which has developed job-training and entry-level jobs, has lost more than a quarter of its city-funded positions.

Then there is the Department of Homeless Services. Two time-limited rent subsidy programs have been abandoned. The Coalition for the Homeless estimates it will cost some $370 million to find shelter for those losing their subsidies. Furthermore, staffing in both the homeless services and housing agencies have been cut, by 6 and nearly 23 percent respectively over four years.

Amid these changes, the Coalition for the Homeless' 2011 report found an all-time record 113,553 homeless people -- including 42,888 children -- slept in city-funded shelters in fiscal 2010, a 37 percent increase from fiscal 2002, the mayor’s first year in office.

Taxing the Poor

The revenue side of the budget shows the same bias against the poor. City tax policy is far less progressive today than it was in the 1990s, when the top personal income tax rate was 4.46 percent. From 2003 to 2005 it was 4.45 percent. But in 2006 it reverted to 3.65 percent where it remained as the series of budget cuts unfolded. (The state added a top rate of 3.876 in 2010 for those earning over $500,000.)

Even a partial return to earlier, more progressive top rates – a 4.264 percent rate would have raised $450 million in 2012, according to the Independent Budget Office's Budget Options report. This money could have seriously slowed the cutbacks in education and social welfare programs. But the mayor's only tax revenue initiative in the past four years was to raise the city sales tax -- the tax that most disproportionately hits poor New Yorkers -- from 4.0 to 4.5 percent in August 2009.

The Private Effort

All this stands in sharp contrast to the mayor's focus on anti-poverty pilot programs. This remains essentially a non-governmental effort: funded mostly by the philanthropic Mayor's Fund to Advance New York City, designed and evaluated by MDRC, a national research organization, implemented by non-profit community groups, and managed by the Center for Economic Opportunity, a small unit in the mayor’s office. The pilots will now be introduced in seven other cities as well as New York.

What is the point of those efforts?

A recent New York Times article noted that a large number of Bloomberg administration pilot programs, especially in transportation, were designed to avoid public scrutiny. For instance, a 10-school education pilot, called the Innovation Zone, which emphasizes online learning, is set to expand to hundreds more schools, at a cost of $100 million, in spite of at least one report that warned of negative parent responses.

In 2007, Deputy Mayor Linda Gibbs said the mayor used private funds for his first round of poverty programs "to protect it a little bit from the criticism that we knew would come with the initiative."

More significantly though, the mayor may be turning to private funds because the surviving pilots have little or nothing to do with city policy or programs – and have had little to no effect. They are, rather, a curious attempt to take some very preliminary findings from two decades of narrow economic research on poverty in developing countries and make them relevant in urban America.

Innovation and Evaluation

The intent of the Social Innovation Fund Learning Network, which oversees the projects, is two-fold. It is intended to develop new, promising programs and to evaluate them using a scientific technique developmental economists called randomized control trials. Under this method, some individuals participate in the program and others, the control group, do not. If the programs work, its participants will benefit and those in the control group will not.

On the first score – innovation -- four of the five pilot programs sponsored by the mayor and other private funders in the eight-city network (New York, Cleveland, Memphis, Newark, San Antonio, Tulsa, Youngstown and Kansas City, Mo., ) are hardly groundbreaking.

Jobs-Plus will take job-training services into public housing developments; SaveUSA will show poor families how to save money; the Young Adult program supports internships for young adults; and Work Advance is a sector-focused, skills-building workforce program. They all sound promising, just as they did in the 1960s. It’s the conditional cash transfer program, the Family Rewardspilot, that raises the most doubts. As first tried in Mexico in 1997, mothers were paid if their children attended school regularly. Several other countries, including Colombia, Jamaica and Turkey, have adopted variations of this program.

In the mayor’s 2007-2009 version, this meant paying families and some older students for achieving certain goals, such as school attendance, school graduation, making dental appointments, having health check-ups, etc.

The Scientific Background

The testing of Family Rewards and the other pilot programs will follow the pattern described by economists working in several developing countries. Two recent books provide comprehensive (and readable) reviews of this research over the past two decades: Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty, by Abhijit V. Banerjee and Esther Duflo, and More Than Good Intentions: How a New Economics is Helping To Solve Global Poverty, by Dean Karlan and Jacob Appel.

Their titles suggest the problem of relevance for the mayor's pilot programs. One assumes fighting global poverty in Mexico, India, and Bangladesh is not going to be the same thing as fighting poverty in the Bronx or Kansas City. And indeed the two books have no specific suggestions about how the anti-poverty results in developing countries might apply to urban areas in advanced economies.

The use of the randomized control trials has, nevertheless, proved useful in measuring the success of such programs as micro-lending and micro-saving in developing countries. In fact, MDRC's nearly 400-page evaluation of the mayor’s 2007-2009 Family Rewards program showed the effectiveness of some of the cash incentives, such as for school achievement and seeking preventive health, although "the effects that have been observed so far are generally not large."

But the two books raise a larger question that may help explain why Bloomberg and the private foundations are interested in such a project. Banerjee and Duflo see two competing schools of thought here – two ideologies really. One, represented by the economist Jeffrey Sachs at Columbia, says developing countries need foreign aid to overcome their countries' economic problems. In other words, government is key.

The other side, represented by economist William Easterly at NYU, sees the free market as the answer. For this school, say the two authors, "The best bet for poor countries is to rely on one simple idea: When markets are free and the incentives are right, people can find ways to solve their problems." Changing human behavior is key.

Bloomberg's initiatives seems to arise from a version of the Easterly thinking. They address poverty by focusing on the individual, not by government action. The hope then is that small amounts of money will serve as incentives that empower poor individuals to improve their economic condition.

As for the research itself, Easterly himself cites its limitations. Randomized control trials, he wrote, are "infeasible for many of the big questions in development, like the economy-wide effects of good institutions or good macroeconomic policies. … Embracing RCTs has led development researchers to lower their ambitions."

Bloomberg's embrace of this type of program demonstration is odd not only because it surfaces so late in his tenure and has so little to do with the city’s day-to-day public programs, but also because it incorporates no long-term goal for the city. It may, though, simply indicate his ideological preference for private, not public, answers to public policy issues.

The MDRC evaluationhinted at the anti-poverty project's limitations: "As a short-term intervention layered on top of an already well-developed social safety net, Family Rewards serves as a supplemental program rather than as the core welfare system, as in Mexico and a number of other countries."

The social safety net may be less well developed in 2012 and beyond. But "short-term intervention" and "supplemental program" seem rather modest goals for a national experiment – and for a mayor who has set such lofty goals in other areas, such as public health and environmental sustainability. In any case, in New York, the second stage of Family Rewards has shrunk dramatically. A program that served 2,400 families from 2007-2009 will serve only 600 New York families over the next five years.

Glenn Pasanen, who teaches political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001.

Council Passes Budget, Taking a Bow for Saving Teachers, Fire Companies


new york city budget
Photo by courtesy of the Office of Mayor Michael Bloomberg
City Council Speaker Christine Quinn and Mayor Michael Bloomberg announced Friday night that they had reached a deal on the 2012 budget. The council approved that deal yesterday

As expected, the New York City Council yesterday passed a $66 billion spending plan for fiscal year 2012 that includes no teacher layoffs, keeps all fire companies open and does not raise taxes.

The council did not take its action until shortly after noon Wednesday -- some 16 hours later than originally planned. The vote, though, had essentially been a foregone conclusion since Council Speaker Christine Quinn and Mayor Michael Bloomberg announced an agreement Friday night -- almost exactly at the same time the State Senate passed same sex marriage -- that averted the laying off of 4,100 teachers and the closing of 20 fire companies, all of which Bloomberg had called for in his executive budget.

Council member after council member came to microphone to hail the deal and praise those who had helped craft it -- most notably Christine Quinn. Quinn, a likely 2013 mayoral candidate who gained stature during the budget negotiations, clearly enjoyed the praise.

This is, Quinn said, "not a perfect budget. It would be impossible to have a perfect budget when the city and our tax revenues are still feeling the effects of the recession."

In particular Quinn, Finance Committee chair Domenic Recchia and others applauded the council for reversing what they saw as some of the worst parts of Mayor Michael Bloomberg's executive budget. "There were so many bad things that were averted in this budget," Quinn said, crediting Recchia for much of that. "What we did in this budget was identify areas where the pain was too deep." "When the mayor announced the layoff of 4,1000 teachers, that was devastating news," said Robert Jackson, chair of the education committee. "Considering what the [mayor's] plan was asking, we've come a long way." Yet the deal reached was not without controversy -- and, for some, pain. It will mean some service cuts and an estimated 1,000 city workers will lose their jobs.

Budget Dance Redux

To reverse some of the proposed cuts, the budget, according to the mayor's office, takes advantage of $3.6 billion in funds left over from this fiscal year and $700 million from the Retiree Health Benefit Trust.

Beyond the teachers, the deal restores all or part of a number of programs, many familiar to those who have watched the budget negotiations between the executive and legislative branches in years past.

Most prominently it keeps open the 20 fire companies the administration had sought to shut. This marked the seventh time Bloomberg tried to close fire companies -- and the sixth time he has failed to do so. (He did close six in 2003.)

Many believe the administration thinks the department is too large -- a relic of days when buildings were wood and lacked smoke detectors or sprinkler systems. That said, shutting fire companies is sure to provoke outrage from the surrounding community and form City Council -- as it did this year.

"We are not going to close fire houses in a process that is exclusively driven by the bottom line," Quinn said on the council floor yesterday. But, she added, if people want to have a discussion that is "open and transparent" about response times and changing neighborhood needs "we can have that discussion."

Although some workers at the Administration for Children's Services will lose their jobs and childcare vouchers will see cuts, the budget restores almost $47 million to the agency, including 4,942 childcare vouchers, six childcare centers and 105 child protective workers.

Senior services, which did not fair as badly as many other social services in the mayor's budget, got back about $30 million of what was cut. This includes $3 million for case management, $1 million for meals on wheels, $800,000 for elder abuse programs and $14 million for senior centers and meals.

As usual, cultural organizations and libraries also recouped some of their cuts, with $61 million put back into the budget for the city's four library systems. The council will keep all city pools open -- reversing the planned closure of four -- and adds in $891,000 so people can swim for the full summer season.

"We did all this," Recchia said, "without raising taxes, without going further into our trust fund and most of all we didn't kick the can down the road."

The Pain Remains

Although the budget actually will be larger than the current year's -- $66 billion from last year's $63.1 billion -- it still features a number of cuts. In education, for example, the city will not replace 2,600 teachers who it expects will voluntarily leave the school system this summer, almost certainly class size to increase. While the administration has always dismissed the importance of class size, many advocates and teachers groups maintain that smaller class sizes boost learning, particularly for very young and low-income students.

Schools Chancellor Dennis Walcott has warned schools to expect an average budget reduction of about 2.4 percent -- exact amounts will vary from school to school. In addition to lost teaching positions, this could mean elimination of afterschool programs, tutoring help and parent coordinators in some buildings. Also apparently eliminated: a program to help teacher's buy supplies.

The budget involves some 1,000 layoffs, largely of members of DC 37, the city's largest municipal employee union. In a statement, union president Lillian Roberts assailed the cuts, saying that were it not for "billions .. squandered on 'scandal- ridden' private contracts and [Bloomberg's] failure to collect millions in taxes and fees" the firings and the accompanying service cuts -- would be unnecessary.

In casting the one dissenting vote, Councilmember Charles Barron assailed the budget for laying off as many as 1,200 city workers and for cutting aid to student at the City University.

Explaining his yes vote, Jumaane Williams said he believed the council budget "is better than what we had," but, he continued, "I don’t think it's a celebratory budget." Williams also expressed concern about the cuts in scholarship money.

Some 13 people protesting the cuts were arrested Thursday night when they tried to enter the council's office at 250 Broadway. And during yesterday's vote a small group of protesters twice disrupted the meeting with chants. "No cuts, no layoffs, no compromise," they said before being ushered out.

Dee Knight of New Yorkers Against Budget Cuts said that, while his group was pleased that layoffs of teacher had been averted, the budget still cuts public sector jobs at a time when he said, the city has a $3 billion surplus. In particular, Knight objected to cuts to libraries and the City University. "It's crazy and contemptuous," Knight said.

The Revenue Side

Under law, the city budget must be balanced, a challenge given declining aid from Washington and Albany and rising expenses for pensions and debt service. Almost all the discussion on eliminating any budget gap centered on cutting services rather the increasing revenues.

The budget passed yesterday did up a handful of fees, such as the cost of a taxi inspection. All together, these fees would bring in an extra $8 million. Despite that council Republicans, along with Peter Vallone, opposed some or all of theses measures.

"I don't believe we are in a position where we should be raising fees on anyone," Councilmember Dan Halloran said

The Pork Roll

In approving the budget, the council also OK'd member items -- also known as pork or earmarks -- for 2012. Listed in a document called Schedule C, they fill amounts to 650 pages amd total about $50 million for nonprofit and community groups across the city.

Four members got $1 million or more, according to an analysis by NY1, with Finance Committee chair Domenic Recchia getting to hand out $1.6 million.

The grants include a few thousands dollars to small groups, such as the Committee to Improve Carroll Park in Brooklyn, which got $3,000 to run a concert series for children, Animal Haven, which will get $4,500 to teach kids about animal care, Little League teams and senior centers.

At the other end of the scale, the Metropolitan New York Coordinating Council on Jewish Poverty, which has close ties to Assembly Speaker Sheldon Silver, apparently topped the list of recipients with at least $1.3 million.

In second place, the Daily News reported was the Ridgewood Bushwick Senior Citizens Council with more than $600,000, even though it has been the target of criminal investigations. That -- and allegations surrounding the groups founder, Brooklyn Democratic Party leader Vito Lopez -- was not enough to stop the Brooklyn delegation and Councilmember Stephen Levin, Elizabeth Crowley, Domenic Recchia and Erik Martin-Dilan, from allocating money to the group.

On Again Off Again Layoffs

This year marks the third year in a row that Bloomberg threatened to lay off teachers, only to retreat as the time for the ax to fall neared. Last year he averted the firings by imposing a salary freeze on teachers. Throughout the budget negotiation. he and Schools Chancellor Dennis Walcott adamantly rejected alternatives to the layoffs as the United Federation of Teachers, education advocates and some City Council members insisted the cuts were unnecessary.

In the end, it seems they were correct. The budget averts any layoffs through a combination of moves, including a suspension of teacher sabbaticals in the coming year, allowing teacher with no permanent assignments (those in the so-called Absent Teacher Reserve) to serve as substitutes and cuts to non-teaching programs in the Department of Education. According to the council, in essence, one third of the costs will be borne by the teachers and two thirds by the city. During the session yesterday, a number of members, including Quinn, thanked teachers union president Michael Mulgrew for his role in preventing layoffs.

As Bloomberg called for sweeping teachers cuts this year -- at one point venturing 25 percent of the teaching force would have to be slashed -- some accused him of crying wolf in an effort to get Albany to increase its aid to the city (that didn't work) and to change the last in, first out rule governing layoffs of teaching staff (that didn’t work either).

Now that Bloomberg retreated once again, some have questioned whether he ever was serious.

"Of course, he was bluffing, but we knew that," said Clara Hemphill, director of Inside Schools, told the Wall Street Journal.

Barron said that the layoff had been a "red herring' put forth by a "bully mayor." And in a statement released after the vote, Manhattan Borough President Scott Stringer said, "Let’s be honest -- the threat to lay off teachers was a political ploy from the get-go. "

James Oddo, the leader of the Council Republicans, agreed. "There is a lot of kabuki theater that does on between the mayor and the council" on the budget," he said.When asked earlier in the week whether he had hurt his credibility, Bloomberg reportedly responded with the familiar litany of what he sees as his accomplishments. "If that isn't credibility, I don't know what I could possibly do," he said the reporters.

Bloomberg also said the continued existence of last in, first out prompted him to accept the deal.

"Because we still have LIFO the consequences of laying off there would have been devastating," he said. "It would just not have been fewer people that provide a service; it would have gotten rid of some of the best and brightest that we've been able to attract, and it would also have caused chaos because of all the bumping requirements in the UFT contract."

Wait Until Next Year

The budget leaves a number of issues unresolved. Though the exact numbers vary, current projections see the city facing a deeper budget hole for 2013 than it did this year. In his statement announcing this budget, the mayor already looked ahead to what he forecast as a shortfall of nearly $5 billion for the next fiscal year. The Independent Budget Office foresees a smaller but still considerable budget gap of about $4.1 billion.

Given that teacher layoffs and fire company closing may well be in the mayor's budget next year, along with cuts to libraries and pools, some council members have already begun to call for higher taxes. As soon as the budget passed yesterday, members of the Progressive Caucus introduced a resulting called for the council to endorse extension of the state's millionaires tax.

Gov. Andrew Cuomo and Mayor Michael Bloomberg have opposed such a move and essentially taken the topic off the table. By moving now the members hope to get it back on.

"I hope next year we can stretch these parameters ... and research revenue measures that maybe this year were too late," Williams said. "There must be something better next year."



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