June 5, 2014
By Joe Maniscalco
New York, NY – With a new contract agreement between the United Federation of Teachers and the de Blasio administration finally struck this week, Comptroller Scott Stringer said on Wednesday, that the city now has a blueprint for future agreements with all 152 of its municipal unions that it can actually afford.
The comptroller’s office estimates the cost of the newly-established contract pattern to be $19.6 billion over the next seven years. That number includes wages and salaries, as well as pension costs in the final two years of the new package.
That hefty figure falls to a more manageable $7.3 billion, however, when certain monies already set aside and projected heath care savings are factored in.
“Let me just say up front that the administration has made the assumption that all of the contracts with city workers – the 152 municipal unions, including those in the covered agencies like NYCHA and HHC – will follow the economic pattern of the UFT settlement,” Stringer said.
According to the comptroller, New York City now actually has an opportunity to use the flexibility that the structure of the new agreement provides, to build a "cushion” in case the recovering economy stalls down the line.
“This elongated labor agreement actually gives us the opportunity to sock away money because we’ve identified revenues that are higher than the executive’s,” Stringer said.
The structure of the labor agreement pattern looks at “settled” workers who already reached a deal with the city during the last round of contract negotiations – and “unsettled” workers who did not.
Under the blueprint, unsettled workers will catch up to settled workers through a combination of lump sum payments and 2 percent annual raises.
The comptroller is confident that the city won't have to grapple with any budgetary gaps during the current fiscal year or the one after that. Gaps, however, are forecast for 2016 through 2018. But the comptroller’s office maintains that those anticipated shortfalls will be “manageable.”
“I’m here to tell you that we believe the budget is balanced,” Stringer said.
Targeted health care savings are critical to the overall labor agreement pattern, and the comptroller admits they are “aggressive.” The 1.3 billion in targeted healthcare savings outlined for 2018, for instance, represents over 17 percent of the total projected costs for that year.
“There is no doubt that the city’s health care system is inefficient,” Stringer said. “What we have here now, is, obviously, labor, incentivized to identify savings, [and] a mayor who has to protect the integrity of the four-year financial plan.”
The de Blasio administration has structured health savings targets so they are contractually enforceable – which might mean that workers could end up shouldering more of their healthcare costs.
In an effort to carve out greater savings and generate more revenues elsewhere, the comptroller’s office is advocating a 10-point plan that includes collecting the Campaign for Fiscal Equity funds that the state still owes the city; pushing the DOE to claim hundreds of millions of dollars in federal Medicaid funds for Special Education services; securing the city’s share of the $8 billion federal Medicaid waver; ending the annual budget dance, and advancing member item reform.
While Stringer said that the overall economy is improving, almost 70 percent of the new jobs created last year were in low-wage industries.