Federal COVID aid provided a temporary influx of billions of dollars to New York City and State agencies to support pandemic response and recovery efforts. This page covers CBC’s work on the expiration of federal funding, the resulting fiscal cliffs for city and state programs, the Department of Education budget, MTA financial stability, and the need for long-term structural budget planning.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
The City and the DOE should identify priority programs funded by expiring federal pandemic aid and be transparent about whether the DOE plans to replace the one-time federal funds with recurring City and State resources or to shrink or end the programs.
The City and the DOE should evaluate and modify DOE programs and initiatives to prioritize those that deliver maximum impact to the target populations.
The City and the DOE should consider per-student spending and recognize that declining enrollment could yield flat or reduced total spending.
The City and the DOE should diligently manage the impact of enrollment declines in individual schools with appropriate changes in funding and staffing to ensure the smoothest possible continuity and equity of services.
Key Data
In December 2025, the CBC reported that the MTA's multi-year financial plan relied on $2.1 billion in one-time resources, which included $600 million expected from FEMA for COVID-related expenses budgeted at $200 million annually from 2026 through 2028.
In July 2024, the CBC noted that fiscal year 2025 All Funds spending grew by only 0.6% due to a $5 billion year-to-year drop in federal aid, which was primarily driven by expiring COVID funding.
In February 2024, the CBC highlighted a $675 million federal-funds fiscal cliff for fiscal year 2025, which primarily impacted Department of Education programs, including $95 million for Pre-K Special Education and $60 million for Community Schools.
In September 2023, the CBC reported that New York State school districts received $11.4 billion in temporary federal COVID aid under the ESSER program, with $7 billion allocated to New York City.
In a November 2022 testimony, the CBC noted that New York City was slated to receive over $25 billion in federal COVID-19 relief funds from all sources, with around $19 billion already spent through the end of fiscal year 2022.
The MTA's financial plan relies on $600 million in anticipated Federal Emergency Management Agency (FEMA) reimbursements for pandemic-related expenses, budgeted at $200 million annually from 2026 through 2028. However, these funds remain uncertain as the MTA has unsuccessfully sought to collect them since 2020, posing a risk to the agency's long-term fiscal stability.
Key Data
$600 million
— The total amount the MTA expects to receive from the Federal Emergency Management Agency (FEMA) for COVID-related expenses incurred during the pandemic.
$200 million
— The amount of FEMA reimbursement budgeted annually for 2026, 2027, and 2028.
The fiscal year 2025 budget reflects a $5.0 billion year-to-year drop in federal aid, primarily due to the expiration of COVID-19 funding. This reduction in federal support has necessitated shifting programs previously supported by federal COVID aid to City funds, impacting the overall fiscal balance.
Key Data
$5.0 billion
— Year-to-year drop in federal aid in the fiscal year 2025 budget, primarily due to expiring COVID funding.
Total New York City Department of Education expenditures are projected to decrease by $269 million in fiscal year 2025, a change driven primarily by a $2.4 billion reduction in federal COVID aid. While federal aid to the department surged to a peak of $5.5 billion in fiscal year 2022, it has since declined to $4.6 billion in fiscal year 2024.
Key Data
$2.4 billion
— decrease in federal COVID aid for fiscal year 2025
$2.1 billion
— federal aid to the Department of Education in fiscal year 2020
$2.8 billion
— federal aid to the Department of Education in fiscal year 2021
$5.5 billion
— federal aid to the Department of Education in fiscal year 2022
$4.2 billion
— federal aid to the Department of Education in fiscal year 2023
$4.6 billion
— federal aid to the Department of Education in fiscal year 2024
All-funds spending has increased by 19.9 percent, or $19.0 billion, between fiscal years 2020 and 2025, even as most COVID-related federal aid has expired. Despite a $4.9 billion reduction in federal aid between fiscal years 2024 and 2025, total spending is projected to decrease by only 0.4 percent, or $500 million.
Key Data
$19.0 billion
— All-funds spending increase between fiscal years 2020 and 2025.
19.9 percent
— All-funds spending increase between fiscal years 2020 and 2025.
$4.9 billion
— Decrease in federal aid between fiscal years 2024 and 2025.
$500 million
— Decrease in all-funds spending between fiscal years 2024 and 2025.
0.4 percent
— Decrease in all-funds spending between fiscal years 2024 and 2025.
$12.7 billion
— Forecasted federal aid in fiscal year 2024.
New York school districts received a significant $11.4 billion infusion of temporary federal COVID aid, which has been utilized alongside state funds to support school budgets. While this extraordinary federal support provided a temporary financial cushion, it is being phased out, with extraordinary federal aid dropping to zero in the 2024-25 school year.
Key Data
$11.4 billion
— The amount of temporary federal COVID aid received by school districts.
$1.1 billion
— The amount of extraordinary federal aid from the CARES Act used to offset planned State school aid in the 2020-21 school year.
$2,481 million
— The amount of extraordinary federal aid allocated in the 2023-24 school year.
$0
— The amount of extraordinary federal aid projected for the 2024-25 school year.
Federal COVID aid was utilized to initiate or expand recurring programs that may eventually require permanent City funding, contributing to the current fiscal pressure. This reliance on temporary federal support for ongoing expenses complicates the budget outlook as the City faces significant projected gaps.
New York City faces a significant fiscal cliff as programs previously supported by temporary federal COVID aid, particularly within the Department of Education, now require permanent funding or face potential elimination. To address this shortfall and ensure long-term stability, the City must prioritize essential services and either fully fund these programs or transparently scale back operations.
Recommendations related to Federal COVID Aid
The City should fully fund underbudgeted and fiscal cliff programs—many of which were previously supported by federal COVID aid—to the extent resources are available, or explicitly identify which ones will be shrunk or eliminated.
To increase transparency and stabilize the budget, the City should prioritize and fund effective and impactful programs while shrinking or eliminating those that are less critical, particularly as federal COVID aid expires.
The City Council should ensure that its proposals for added or modified spending are affordable based on fully funding or reducing the current set of planned programs, rather than relying on temporary federal COVID aid.
Key Data
$675 million
— Federal-funds fiscal cliff primarily for Department of Education programs.
$61 million
— Missing funding for administrative costs at the City’s nonprofit contractors currently funded with federal COVID aid.
$95 million
— Funding for Pre-K for All Special Education programs currently supported by federal COVID funds.
$86 million
— Funding for mental health support currently supported by federal COVID funds.
$60 million
— Funding for Community Schools currently supported by federal COVID funds.
$13 million
— Funding for bilingual education expansion currently supported by federal COVID funds.
New York City faces a significant fiscal cliff as temporary federal COVID-related funding expires, necessitating difficult decisions regarding the continuation of programs like 3-K expansion and Summer Rising. The City must prioritize effective initiatives and reallocate resources to maintain essential services while scaling back or eliminating those with less impact.
Recommendations related to Federal COVID Aid
The City needs to make hard choices about programs currently supported by temporary federal COVID-related funds that are soon to be unfunded.
The City should prioritize effective programs to ensure essential services continue despite the expiration of federal aid.
The City should shift other funds to support effective programs while eliminating or scaling back those that are less impactful.
Key Data
$96 million
— Shortfall for the City's summer-school program, Summer Rising, in fiscal year 2024.
$700 million
— Fiscal cliff at the Department of Education increasing to this amount in the next fiscal year.
$945 million
— Citywide fiscal cliff starting in fiscal year 2026 due to the expiration of federal COVID funds.
New York City faces a significant fiscal cliff as recurring expenses, previously supported by temporary revenue sources like federal COVID aid and record Wall Street bonuses, now exceed available funding. To address projected budget gaps reaching up to $13.8 billion, the city must prioritize impactful programs, improve operational efficiency, and manage staffing levels to ensure long-term fiscal stability.
Key Data
$2.5 Billion
— Amount of programs, including housing vouchers and education for 3-year-olds, that were funded and grown using federal Covid aid and a temporary tax revenue surge.
New York faces looming budget gaps projected to reach $9 billion next year and $22 billion structurally, driven by unsustainable spending growth and the exhaustion of one-time revenue sources like federal COVID aid. To ensure fiscal stability, the state must restrain spending in major programs like Medicaid and education instead of relying on tax increases or reserve depletion.
New York State's school spending has reached a record $85.8 billion, yet the impact of billions of dollars in temporary federal pandemic aid remains unclear due to a lack of transparent reporting on its effectiveness. To address future budget gaps, the state should improve performance monitoring and better target school aid to high-need districts rather than continuing to fund wealthy districts that can already afford a sound basic education.
Recommendations related to Federal COVID Aid
The State should reduce or reallocate aid to wealthy school districts to help stabilize the State’s ongoing finances and better target aid to high-need districts.
The State should implement a comprehensive performance management system for school districts that uses robust metrics to track activities and results, identifies and spreads best practices, and appropriately holds districts accountable.
To balance the budget, the State should rein-in spending growth, with poorly targeted school aid serving as a reasonable option for spending control.
The State should build a robust system for analyzing the use of extraordinary federal pandemic funding to increase the likelihood that significant spending on education produces commensurate results.
New York’s aid allocations, performance, and programming should be prioritized for proactive improvement.
Key Data
$11.4 billion
— Total amount of ESSER funds received by New York.
$7.0 billion
— Amount of ESSER funds allocated to New York City.
$2.481 billion
— Amount of extraordinary federal aid in the 2023-24 school year.
$3.751 billion
— Amount of extraordinary federal aid in the 2022-23 school year.
-33.9%
— The year-over-year percentage decline in extraordinary federal aid.
New York State Budget Fiscal Year 2024 Major Actions and Fiscal Risks As of First Quarter Update New York City Fiscal Year 2024 Adopted Budget and Outlook
The Metropolitan Transportation Authority's budget faces a long-term structural gap that will reemerge once federal pandemic aid is exhausted by 2029. To ensure future financial stability, the agency must implement operational reforms, such as one-person train operations and negotiated work rule changes, to align spending with recurring revenues.
Key Data
$1,785 Million
— Local benefit of federal COVID aid in 2023.
$902 Million
— Local benefit of federal COVID aid in 2024.
$1,028 Million
— Local benefit of federal COVID aid in 2025.
$650 Million
— Local benefit of federal COVID aid in 2026.
$650 Million
— Local benefit of federal COVID aid in 2027.
$600 Million
— Local benefit of federal COVID aid in 2028.
New York City utilized an unprecedented $13.0 Billion in federal COVID aid to significantly boost spending in fiscal years 2022 and 2023, rather than using the funds as a bridge to restructure operations for long-term sustainability. As this federal support is depleted, the city faces a fiscal cliff, necessitating additional savings plans to avoid service cuts or tax increases.
Key Data
$13.0 Billion
— The unprecedented influx of federal COVID aid that allowed the City to significantly boost spending in fiscal years 2022 and 2023.
8.3%
— The increase in All funds spending, including federal COVID aid, in fiscal year 2022.
6.1%
— The increase in All funds spending, including federal COVID aid, in fiscal year 2023.
The expiration of non-recurring federal COVID aid and other one-time funding sources has created significant fiscal cliffs, leading to projected budget shortfalls of $6.8 billion in fiscal year 2025 and $10.0 billion by fiscal year 2027. To address these widening gaps, the city must prioritize essential programs and increase operational efficiency rather than relying on temporary revenue boosts.
Recommendations related to Federal COVID Aid
The City should immediately start to prioritize essential programs, increase its operational efficiency, speed up critical hiring, and shrink lower impact programs to address the fiscal cliffs created by the expiration of federal COVID and City money.
The City should be shifting existing vacancies to where they are needed, not adding new positions, to manage the budget gaps exacerbated by the loss of federal COVID aid.
The City should make every effort it can immediately and include additional savings in the Adopted Budget to prepare for the fiscal reality following the end of non-recurring federal COVID aid.
Key Data
$6.8 billion
— Projected future shortfall in fiscal year 2025 when adding the costs of underbudgeted programs and programs funded with one-time federal COVID and City money.
$10.0 billion
— Projected future shortfall in fiscal year 2027 when adding the costs of underbudgeted programs and programs funded with one-time federal COVID and City money.
$2.2 billion
— Amount of fiscal year 2023 programmatic spending not included in the fiscal year 2024 budget, which was bolstered by non-recurring federal COVID aid.
NYCHA's rent collection rate dropped significantly during the pandemic, leading to over $450 million in arrears and necessitating a plan to return to pre-pandemic collection levels. While one-time state aid may be appropriate, long-term stability requires operational improvements, federal support for tenant vouchers, and structural reforms to reduce costs.
Recommendations related to Federal COVID Aid
Any one-time state aid provided to NYCHA should be conditioned on the authority devising and implementing a plan to return its rent collection rate to pre-pandemic levels.
The federal government should support NYCHA by increasing funding for Tenant Protection Vouchers and providing procurement flexibility.
NYCHA should fix its deteriorating buildings through the Rental Assistance Demonstration (RAD) and the Preservation Trust, improve property management, and increase productivity through collective bargaining changes in its labor agreements.
The State should help NYCHA reduce costs by reforming the Scaffold Law and increasing the Preservation Trust’s unit cap when needed.
Any aid provided to NYCHA should be offset by savings found elsewhere so it does not exacerbate the State’s long-run fiscal instability.
Key Data
90 percent
— NYCHA's rent collection rate prior to the pandemic.
65 percent
— NYCHA's rent collection rate after the pandemic began.
$450 million
— The amount of rent arrears accumulated by NYCHA residents.
59,811
— The number of households that requested rent decreases between March 2020 and February 2022.
35 percent
— The portion of occupied units that requested rent decreases between March 2020 and February 2022.
$15 billion to $20 billion
— The estimated range of the State's structural deficit.
New York City received $7.0 billion in federal pandemic education aid to support response and recovery efforts, with $3.0 billion spent in fiscal years 2021 and 2022 and the remaining $4.0 billion to be spent through fiscal year 2025. As these non-recurring funds taper off, the Department of Education faces significant fiscal cliffs, with estimated gaps of $321 million in fiscal year 2025 and $556 million in fiscal year 2026 for programs currently reliant on this temporary aid.
Recommendations related to Federal COVID Aid
The City and the DOE should identify priority programs funded by expiring federal pandemic aid and be transparent about whether the DOE plans to replace the one-time federal funds with recurring City and State resources or to shrink or end the programs.
The City and the DOE should evaluate and modify DOE programs and initiatives to prioritize those that deliver maximum impact to the target populations.
The City and the DOE should consider per-student spending and recognize that declining enrollment could yield flat or reduced total spending.
The City and the DOE should diligently manage the impact of enrollment declines in individual schools with appropriate changes in funding and staffing to ensure the smoothest possible continuity and equity of services.
Key Data
$7.0 billion
— Total federal education aid received by New York City since December 2020 to support pandemic response and recovery.
$3.0 billion
— Amount of federal pandemic education aid spent in fiscal years 2021 and 2022.
$4.0 billion
— Remaining federal pandemic education aid to be spent through fiscal year 2025.
$321 million
— Estimated fiscal cliff for programs currently funded by non-recurring federal pandemic aid in fiscal year 2025.
$556 million
— Estimated fiscal cliff for programs currently funded by non-recurring federal pandemic aid in fiscal year 2026.
$2.0 billion
— Amount of non-recurring federal pandemic aid budgeted for fiscal year 2023.
The New York City Department of Education faces a fiscal cliff as $7.0 billion in federal COVID-19 pandemic aid, of which $2.7 billion was spent in fiscal year 2022, begins to expire. This loss of one-time funding necessitates transparency regarding whether the City will replace these resources with recurring funds or discontinue the programs they currently support.
Recommendations related to Federal COVID Aid
The City should identify priority programs funded by expiring federal COVID-19 pandemic aid and be transparent about whether it plans to replace the one-time federal funds with recurring City and State resources or shrink or end the programs.
Key Data
$243 million
— The decrease in federal COVID-19 pandemic aid contributing to the fiscal year 2024 budget reduction.
$2.7 billion
— The amount of federal COVID-19 pandemic aid spent by the DOE in fiscal year 2022.
$7.0 billion
— The total amount of federal COVID-19 pandemic aid available in fiscal year 2022.
$321 million
— The estimated fiscal cliff in fiscal year 2025 resulting from expiring federal funds.
$556 million
— The estimated fiscal cliff in fiscal year 2026 resulting from expiring federal funds.
The Metropolitan Transportation Authority faces a significant structural budget deficit as temporary Federal COVID Aid is exhausted and ridership remains below prepandemic levels. To address this fiscal cliff, the authority must pursue operational efficiencies, labor contract reforms, and congestion pricing rather than relying on tax increases.
The Metropolitan Transportation Authority has relied on $7.7 billion in federal COVID-19 aid to cover recurring annual structural deficits through 2024. To avoid a future fiscal cliff, the authority must use this remaining federal support to implement efficiency-focused operating reforms and restructure its long-term debt.
Recommendations related to Federal COVID Aid
The MTA should seize the opportunity and runway created by federal aid to implement efficiency-focused operating reforms and—to the extent possible—restructure its long-term debt, which would reduce its structural deficit before the region’s critical transit system risks falling off the fiscal cliff.
The MTA should adopt a multi-year phase-in plan starting with efficiencies under the purview of management, followed by implementing changes collectively bargained with labor over time to address the structural deficit.
Key Data
$7.0 billion
— of American Rescue Plan Act (ARPA) federal stimulus funds proposed to cover deficits through 2024.
$700 million
— of Federal Emergency Management Agency (FEMA) reimbursement funds proposed to cover deficits through 2024.
$3.5 billion
— of federal COVID aid proposed to retire long-term debt and generate recurring savings.
$3.9 billion
— in savings from 2024 through 2028 that would result from restructuring and defeasing long-term debt.
New York City has received over $25 billion in federal COVID-19 relief funds, yet the lack of a robust tracking system makes it difficult to determine the impact of these investments. Furthermore, the city has used this one-time aid to fund recurring programs, creating a fiscal cliff of at least $1 billion by fiscal year 2026 that threatens future budget stability.
Recommendations related to Federal COVID Aid
The City should establish a robust tracking system that identifies funds, lists supported programs, specifies goals, and provides performance metrics.
The Mayor should establish a COVID Federal Aid Tracking Working Group to identify critical metrics for evaluating the use of relief funds.
The City should closely assess how best to allocate the remaining $6.2 billion in funds and provide transparent information about program goals and benchmarks.
The City should release a list of programs that will be underfunded when the federal aid is depleted.
The City should quantify the shortfall in funding by program and clearly state whether the program will be ended or continued with reallocated resources.
Key Data
$25 billion
— Total federal COVID-19 relief funds received by New York City.
$19 billion
— Amount of federal COVID-19 relief funds spent through the end of fiscal year 2022.
$6.2 billion
— Remaining federal COVID-19 relief funds to be spent over the next three years.
$1.1 billion
— Federal fiscal cliff identified for fiscal year 2026.
$4.1 billion
— Projected fiscal year 2025 budget gap if fiscal cliff programs are continued without reallocation.
$5.1 billion
— Projected fiscal year 2026 budget gap if fiscal cliff programs are continued without reallocation.
New York State has received $11.4 billion in federal COVID-19 education relief funds, which are being used to boost per-pupil spending but are temporary and should be focused on addressing pandemic-related learning loss. While these funds provide a significant short-term increase, school districts must prioritize using these non-recurring resources for student achievement rather than supporting recurring programs.
Recommendations related to Federal COVID Aid
School districts should use non-recurring federal COVID-19 relief resources to address pandemic impacts and learning loss, rather than supporting recurring programs.
The State should track how districts are using the massive influx of federal COVID aid to improve student achievement, reverse learning loss, and narrow disparities.
Key Data
$11.4 billion
— Total federal Elementary and Secondary School Emergency Relief (ESSER) funding allocated by the State.
$3.8 billion
— Estimated federal COVID-related education aid spending for the 2022-23 school year.
$1,515
— Average per-pupil federal COVID-related aid for the 2022-23 school year.
$2,382
— Per-pupil ESSER spending in New York City, which is in the fifth wealth decile.
$1,979
— Per-pupil ESSER spending in the lowest-wealth decile.
$191
— Per-pupil ESSER spending in the wealthiest decile.
New York City's fiscal year 2023 budget obligations total $104.7 billion, reflecting a 3.7 percent decrease from the previous year largely driven by a $9.9 billion reduction in federal aid. While City-funded spending grew by a record 7.7 percent, this increase was partially offset in the prior year by federal fiscal relief estimated between $500 million and $1 billion.
Key Data
$9.9 billion
— The amount by which federal aid declined from fiscal year 2022 to fiscal year 2023.
$500 million and $1 billion
— The estimated range of federal fiscal relief in fiscal year 2022 that, when adjusted for, reduces the City-funded spending growth rate.
New York State's Unemployment Insurance Trust Fund faces an $8.1 billion debt to the federal government, largely due to the unprecedented job losses during the COVID-19 pandemic. While the state has options to address this debt, including using federal aid or state revenues, lawmakers must balance the need for employer tax relief against the potential diversion of funds from other public programs.
Recommendations related to Federal COVID Aid
The State should pay off the debt over time with higher tax rates, which is the standard practice.
The State could partially accelerate repayment of the debt using State revenues.
The State could rapidly pay off the debt using State revenues, which would provide immediate tax relief to employers.
Lawmakers should tap higher-than-expected tax receipts and unallocated federal aid to repay the debt more quickly.
Longer term, lawmakers should consider reforming the UI system to ensure it is better equipped to meet claims during economic downturns and not be forced to borrow from the federal government regularly when a recession occurs.
Key Data
$8.1 billion
— The amount New York owes to the federal government for unemployment insurance as of June 7, 2022.
$6.5 billion
— The total UI benefits paid out in New York in the second quarter of 2020.
$110 million
— The amount of interest New York accumulated for the federal fiscal year 2022.
$2.65 billion
— The balance of New York's UI Trust Fund in February 2020, prior to the pandemic.
$530 million
— The total UI benefits paid out in New York in the fourth quarter of 2019.
New York City faces a potential fiscal crisis due to a combination of budget gaps, rising labor costs, and the expiration of temporary federal COVID-19 aid that currently funds ongoing programs. To avoid future service cuts or tax increases, the city must prioritize recurring funding for essential programs, increase productivity, and bolster its reserves rather than relying on one-time federal relief for long-term expenses.
Recommendations related to Federal COVID Aid
The executive budget should address the budget’s fiscal cliffs where ongoing programs are funded with nonrecurring city and federal COVID-19 funds.
Any program prioritized to continue must be supported by recurring funding rather than temporary federal COVID-19 aid.
The city must avoid shifting programs funded by temporary federal COVID-19 aid to city funds, as this will further bust a budget that already has gaps.
Key Data
$900 million
— Fiscal cliffs next year where ongoing programs are funded with nonrecurring city and federal COVID-19 funds.
$2 billion
— Fiscal cliffs by fiscal year 2026 where ongoing programs are funded with nonrecurring city and federal COVID-19 funds.
$0 is the size of the New York State budget deficit in each year of New York State’s five-year Executive Budget financial plan, as proposed by Governor Kathy Hochul. The Governor’s budget proposal balances the budget in each of the next five years, an unprecedented level of fiscal stability for…
The NYPD's fiscal year 2022 operating budget saw a $533 million reduction in city funding, which was offset by $500 million in federal COVID-related aid. This federal support is temporary, lasting only one year, after which city funding levels are expected to return to approximately $5.1 billion annually.
Key Data
$500 million
— The amount of federal COVID-related aid used to replace a portion of the NYPD's fiscal year 2022 operating budget.
$533 million
— The reduction in the City-funded portion of the NYPD's fiscal year 2022 operating budget.
New York City faces a significant fiscal challenge as COVID-related federal aid, which was intended to be non-recurring, begins to decrease starting in fiscal year 2023. Agencies must develop clear strategies to taper these funds and transition programs currently supported by federal aid to recurring funding sources before the fiscal cliff arrives in 2026.
Recommendations related to Federal COVID Aid
City agencies should have clear plans for how to taper federal funds over the next few years.
The Executive Budget should propose a plan to start to transition recurring programs currently supported by federal aid to recurring funding.
Key Data
$1.3 billion
— Amount in recurring programs that will lose their funding in fiscal year 2026 due to the federally funded fiscal cliff.
$375 million
— Federal aid used to support the 3K program through fiscal year 2025.
$77 million
— Federal aid used to support the Journey Home street homeless program through fiscal year 2025.
$62 million
— Federal aid used to support non-profit indirect rate reimbursement through fiscal year 2025.
New York City's fiscal year 2023 budget shows a 3.7 percent decrease in total spending compared to the previous year, largely driven by a $9.9 billion reduction in federal COVID-related aid. While total spending fell, city-funded spending grew by 7.7 percent, a rate that would have been lower if not for the significant fiscal relief provided by federal aid in the prior year.
Key Data
$9.9 billion
— Decline in federal aid from fiscal year 2022 to fiscal year 2023.
$4.0 billion
— Decrease in All Funds spending from fiscal year 2022 to fiscal year 2023 due to a decline in federal COVID-related funds.
$500 million and $1 billion
— Estimated federal fiscal relief in fiscal year 2022 that offset City Funds.
New York City faces a looming fiscal cliff as over $1.3 billion in programs currently supported by federal COVID-related funding are set to expire by fiscal year 2026. The city must strategically review these expenditures to ensure recovery efforts are sustainable without relying on temporary federal resources.
Recommendations related to Federal COVID Aid
The Administration should review federal COVID-related spending to ensure resources strategically support the City’s recovery without creating unsustainably-funded programs.
The City should take additional steps in the Executive and Adopted Budgets to address the city and federal fiscal cliffs.
Key Data
$1.3 Billion
— Amount of programs funded with federal monies that will dry up in fiscal year 2026.
New York City's allocation of $12.9 billion in federal COVID-related aid was not strategically designed, creating a future fiscal cliff of up to $4.1 billion by using non-recurring funds for recurring expenses. The administration should reprogram these funds to improve their impact and ensure they are used exclusively for non-recurring programs.
Recommendations related to Federal COVID Aid
The administration should reprogram federal COVID-related aid to improve its impact and ensure it funds only non-recurring programs.
Key Data
$5.9 billion
— allocated in State and Local Recovery Funds from the American Rescue Plan in the May 2021 Executive Budget for Fiscal Year 2022.
$7.0 billion
— allocated in federal COVID-related education aid in the May 2021 Executive Budget for Fiscal Year 2022.
$1.3 billion to $4.1 billion
— future fiscal cliff created by using non-recurring federal aid for recurring costs.
2026 is the year the MTA will likely have spent all of its one-time COVID-19 federal aid, and when the MTA will have to address the estimated $2.5 billion annual structural operating deficit which that aid is now covering. At an event with CBC Trustees, MTA Chair and CEO Janno…
New York City expects to receive over $22 billion in federal COVID-19 aid between fiscal years 2020 and 2025, yet current reporting mechanisms fail to provide the transparency and accountability needed to manage these funds effectively. A robust, publicly accessible tracker is necessary to detail program goals, performance metrics, and spending, alongside a citywide management system to ensure these resources maximize their impact on residents.
Recommendations related to Federal COVID Aid
The City should create a robust public tracker to support diligent management, ensure funds have maximum impact, and allow the public to hold government accountable.
The Administration should implement a citywide performance management system in which leaders and managers participate in a structured process to regularly review data and identify problems.
The Mayor should establish a COVID Federal Aid Tracking Working Group, including representatives from the Office of Management and Budget, the Comptroller’s Office, and other key stakeholders to develop the overall framework.
The tracker should include the appropriate funding streams, identify the programs being funded, and include performance goals and metrics for program inputs, outputs, outcomes, quality, and efficiency.
Public entities should collaborate with experts from nonprofit and private organizations and fiscal monitors to identify the right metrics and design the access tools and presentation format.
Key Data
$22 billion
— The amount of COVID-federal aid the City expects to receive between fiscal year 2020 and fiscal year 2025.
$16.5 billion
— The total federal aid in the New York City budget for fiscal year 2022.
$5.9 billion
— The amount of American Rescue Plan State and Local Recovery Funds (ARP SLRF) that should be prioritized for tracking.
$7.0 billion
— The amount of Education Stabilization Funds from both the ARP and the Coronavirus Response and Relief Supplemental Appropriations Act (CRSSA) that should be prioritized for tracking.
$700 million
— The amount of expected American Rescue Plan State and Local Recovery funds not currently reflected in the November 2021 financial plan.
$251 million
— The amount the City is directing to special education, including afterschool and Saturday programs.
New York State faces a potential fiscal cliff as temporary federal COVID-19 aid expires, with approximately $3.5 billion in recurring program spending currently supported by these funds. To ensure long-term stability, the state must identify recurring savings and manage the $13 billion in one-time federal school aid to avoid drastic service cuts when these resources are exhausted.
Recommendations related to Federal COVID Aid
The State should start to identify recurring savings that should grow to $3.5 billion annually by fiscal year 2025 to ensure that drastic service cuts are not required when the federal funds are exhausted.
The State should deposit any receipts above the current projections to these funds, and other spending priorities should be funded by reallocating planned uses of State funds and federal aid.
To ensure that this massive increase in school aid has the commensurate impact on student learning, the State should use a rigorous performance management process to oversee school aid spending.
The State should take steps to improve the program’s fiscal stability and outlook by charging the Transformation Team to identify Medicaid efficiencies, program improvements, and savings, especially as fiscal issues will continue when temporary federal funding lapses.
The Governor should vigorously support the MTA to improve the efficiency of its operations to stave off future service cuts, tax increases, or extraordinary fare increases that will emerge when federal aid runs out.
Key Data
$3.5 billion
— Recurring program spending supported by federal aid in fiscal year 2025 that creates a fiscal cliff.
$13 billion
— One-time funds for New York’s schools provided by the American Rescue Plan and other federal COVID aid sources.
$2 billion
— Structural imbalance in the MTA operating budget that will emerge when federal aid runs out.
$15 billion
— Annual tax receipts shortfalls projected last January due to the pandemic.
New York City faces an annual federal fiscal cliff of $1.3 billion to $4 billion starting in fiscal year 2025 as temporary COVID-19 aid expires. To ensure long-term fiscal sustainability, the incoming administration must restructure the budget and workforce to rely on recurring revenues rather than non-recurring federal funds.
Recommendations related to Federal COVID Aid
Mayor-Elect Adams should proactively take steps to restructure the City’s budget and workforce to be fiscally sustainable with recurring City revenues.
The incoming administration should support a 3 percent to 5 percent Program to Eliminate the Gap or PEG to address the fiscal challenges.
Mayor-elect Adams should work with the municipal unions to leverage the next round of collective bargaining agreements to make changes allowing the City to be more productive.
Key Data
$1.3 billion to $4 billion
— The annual federal fiscal cliff that will arrive starting in fiscal year 2025 with the depletion of federal COVID-aid.
The city must ensure that the $13 billion in federal COVID aid is used effectively by publicly reporting detailed data on revenues, expenditures, and program outcomes. Additionally, the administration needs to plan for long-term budget stability as this temporary pandemic funding for programs like 3-K education eventually expires.
Recommendations related to Federal COVID Aid
The administration should make public detailed data on federal COVID revenues, expenditures and program activities and outcomes to ensure $13 billion in COVID federal aid has impact.
The administration should track and report whether federal COVID funds are accelerating achievement and reducing disparities regarding pandemic-related learning loss.
Key Data
$13 billion
— The total amount of federal COVID aid that the administration must ensure has a measurable impact through public reporting of revenues, expenditures, and outcomes.
New York City is expected to receive $21.1 billion in COVID-related federal aid through fiscal year 2025, yet the current plan fails to leverage these funds to restructure operations for long-term fiscal sustainability. Instead of using these one-time resources to support temporary, targeted programs, the city is using them to fund recurring expenses, creating a significant fiscal cliff in future years.
Recommendations related to Federal COVID Aid
The City should spread federal aid over multiple years to provide time to restructure spending to be sustainably supported with recurring revenues.
The City should avert unnecessary service cuts.
The City should support temporary, targeted programs that address hardships of the pandemic and recession and promote the city’s recovery, focused on areas not supported by the federal and State programs to ensure maximum impact without duplication.
The City should not fund recurring programs with these non-recurring revenues, since that creates the need to either identify recurring funding streams or eliminate services in the future.
The City should publicly provide data on the use and impact of federal funds.
The incoming Administration should identify programs that are not sufficiently strategic and beneficial, end them and freeze associated hiring, and then reallocate those federal funds to more beneficial uses.
The Administration should determine which recurring programs to phase out and which to shift to recurring funding.
The Administration should make public detailed data on federal COVID revenues, expenditures, and program activities, including indicators of outputs and outcomes.
Key Data
$21.1 billion
— Total COVID-related federal aid expected by New York City from fiscal year 2020 through fiscal year 2025.
$5.9 billion
— Amount of Local Recovery Funds from the American Rescue Plan that the City has flexibility in allocating.
$7.0 billion
— Federal aid allocated for reopening schools and addressing learning loss in elementary and secondary schools.
$2.1 billion
— Amount of planned budget reductions reversed by the City's plan.
$1.3 billion
— Amount of federal aid supporting recurring programs, including education for 3-year olds.
$2.7 billion
— Amount of federal aid supporting potentially recurring programs that will develop constituencies and expectations the programs continue.
New York State's reliance on non-recurring federal American Rescue Plan aid to support recurring programs creates a $3.5 billion fiscal cliff by fiscal year 2025 once these funds are exhausted. To ensure long-term fiscal stability, the state must improve financial transparency, adopt Generally Accepted Accounting Principles, and identify strategies to reduce out-year budget gaps.
Recommendations related to Federal COVID Aid
The State should identify actions to reduce the existing out-year gaps, avoid the fiscal cliff, and bolster reserves needed to mitigate the inevitable next downturn.
The State should retain flexibility in how it will reduce future budget gaps, including restraining new aid growth for wealthy districts since that is preferable to other alternatives to meaningfully control spending.
The State should improve budgeting and financial reporting, including foregoing fiscal maneuvers, making clear how any accounting practices affect spending growth, budgeting and reporting in accordance with GAAP, and presenting timely adopted financial plans and quarterly financial plan updates.
Key Data
$3.5 billion
— The projected fiscal cliff in fiscal year 2025, representing the gap between available funding and planned spending once federal aid is exhausted.
$12.7 billion
— The amount of American Rescue Plan (ARP) federal fiscal relief the State received in May 2021 to be disbursed over four years.
$7.3 billion
— The total amount of federal fiscal relief that offset costs in fiscal year 2021, including Medicaid, COVID Relief Funds, and school aid.
$3.4 billion
— The amount of enhanced Medicaid funding received as federal fiscal relief in fiscal year 2021.
$2.7 billion
— The amount of COVID Relief Funds used to offset costs in fiscal year 2021.
$1.2 billion
— The amount of school aid used as a federal offset in fiscal year 2021.
New York schools are receiving $11.4 billion in one-time federal pandemic aid over four years, which must be managed carefully alongside state funding to ensure results and fiscal stability. To avoid future budget cliffs, funding should be targeted toward districts with the greatest needs while implementing stronger performance measurement and reporting standards.
Recommendations related to Federal COVID Aid
The State should set goals, track performance, evaluate initiatives, and adjust programs and spending as necessary to ensure students benefit from the federal and state funding increase.
The State should focus funding on districts with the greatest need, and reduce aid and aid increases to wealthy districts to address the greatest educational needs and stabilize the State’s finances.
The Legislature, Governor, and Comptroller should work together to ensure that all recurring and one-time federal aid is tracked and reported in detail.
Districts should ensure that both recurring aids and one-time federal aids are carefully accounted for and publicly reported.
Key Data
$11.4 billion
— The amount of one-time federal pandemic aid available to schools over four years.
$3.5 billion
— The size of the fiscal cliff the State will face once extraordinary federal aid is depleted.
$2.9 billion
— The increase in State school aid from school year 2020-21 to 2021-22.
$2.5 billion
— The amount of State aid received by 168 districts that already have sufficient local and recurring federal funding to finance a sound basic education.
At this time last year, New York State estimated that tax receipts would fall short of pre-pandemic estimates by $15 billion annually on average, totaling $60 billion over four years. Receipts, however, have been much stronger than expected. By April 2021, the State reduced its four-year tax receipt shortfall estimate by 80 percent, to $11.8 billion. Over the four-year period, the State also will receive at least $21.1 billion of targeted and general federal fiscal…
The Metropolitan Transportation Authority's financial outlook has improved due to the American Rescue Plan and higher-than-expected revenues, though a long-term structural deficit remains. To address this, the agency must prioritize operational efficiency, expedite congestion pricing, and focus capital investments on essential state-of-good-repair projects.
Recommendations related to Federal COVID Aid
The MTA should improve the efficiency of its operations to address the structural budget shortfall.
The MTA should continue its policy of regular biannual fare and toll increases to help adequately and appropriately fund its operations.
The City should continue to implement and ensure full uptake of Fair Fares as a key companion policy to assist low-income riders.
The MTA should expedite the implementation of congestion pricing, which remains urgently needed.
The MTA should focus its investment on the highest priority state of good repair and normal replacement work and make publicly available its project schedules and costs.
Key Data
$6.5 billion
— Additional aid delivered by the American Rescue Plan (ARP).
$2.5 billion
— The long-term structural deficit the MTA may face annually once federal funds are exhausted.
$8.0 billion
— The cumulative cash shortfall through 2024 forecasted in the February 2021 Financial Plan.
$300 million
— Potential additional FEMA reimbursement assuming 2021 expenses are similar to those in 2020.
$379 million
— COVID cleaning expenses planned for 2021.
$80 million
— Increase in FEMA funds for 2020 expenses by eliminating the local match.
New York City received $15 billion in additional federal aid, but the budget utilized these funds for recurring programs, creating a significant fiscal cliff once the aid is depleted. It is essential that the city tracks this spending in detail with clear metrics to ensure program goals and results are achieved.
Recommendations related to Federal COVID Aid
The City must track federal spending in detail, including metrics for program goals and results.
The City should address the looming fiscal cliff created by using federal funds for recurring programs to ensure long-term fiscal sustainability.
Key Data
$15 billion
— Additional federal aid received by New York City.
$1.3 billion to $4.0 billion
— Annual amount of recurring programs funded by federal aid, creating a fiscal cliff.
The federal government has provided over $1 trillion in loans and $100 billion in grants to support small businesses during the COVID-19 pandemic, but New York City's proposed recovery programs risk duplicating these existing efforts. To maximize the impact of recovery funds, the City should prioritize identifying and filling gaps in federal and state support rather than creating redundant programs.
Recommendations related to Federal COVID Aid
The City should focus on filling gaps left by federal and State programs rather than creating duplicative initiatives.
The City must identify potential gaps first by determining which businesses are eligible for existing programs and whether those programs meet their needs.
The City should avoid potential redundancies when finalizing program eligibility to maximize the value of its efforts.
The City should consider whether increasing efforts to help businesses access federal support is a more efficient use of resources.
The City should clearly identify where federal and State programs do not provide sufficient support to ensure its resources provide the most value.
Key Data
$1 trillion
— Total amount in federal loans provided to support businesses damaged by the COVID-19 economic crisis.
$813 billion
— Total appropriation for the Paycheck Protection Program (PPP) following the American Rescue Plan Act.
$207 billion
— Total value of 3.8 million Economic Injury Disaster Loans (EIDL) made by the SBA as of May 6, 2021.
$30 billion
— Total value of 350,500 Paycheck Protection Program loans received by New York City businesses.
$28.6 billion
— Total funding for the Restaurant Revitalization Fund (RRF) created by the American Rescue Plan Act.
$100 billion
— Total amount in federal grants provided to support businesses damaged by the COVID-19 economic crisis.
New York City received $6 billion in flexible federal aid to support its recovery, but current plans for these funds fail to strategically address the sectors and communities that suffered the greatest losses. Instead of using temporary federal grants to expand city payrolls or long-term programs, the city should focus these resources on restoring 500,000 lost private sector jobs and addressing critical health, housing, and safety challenges.
Recommendations related to Federal COVID Aid
Federal relief monies should not be used to expand the city payroll and long-term program commitments.
City priorities such as Universal Pre-K and appropriate reimbursement for human services agency contracts should be part of the baseline budget funded by sustainable city tax revenues not by temporary federal grants.
Federal aid from the American Rescue Plan (ARP) should be concentrated on strategic interventions designed in partnership with industry and nonprofit groups with a focus on restoring 500,000 lost private sector jobs, preparing workers and students for re-employment, sustaining cultural organizations and small businesses through a period of prolonged recovery, and addressing the health, mental health, homelessness, and public safety challenges that have been exacerbated by the pandemic.
The administration and City Council should adopt a process for greater transparency and consultation with affected industries on how ARP funds are invested to leverage the strongest and fastest recovery.
Key Data
$6 billion
— The amount of flexible federal aid provided to New York City to support recovery from the pandemic.
$98 billion
— The total value of the proposed Executive Budget that leaders urged to be amended.
500,000
— The number of lost private sector jobs that strategic interventions should focus on restoring.
New York City plans to use nearly $16 billion in federal aid to increase its municipal workforce headcount, reversing the decline seen during the pandemic. Given projected annual budget gaps nearing $5 billion, the city should prioritize strategic hiring and operational restructuring over expanding the total workforce size.
Recommendations related to Federal COVID Aid
The City should not increase the size of its workforce despite the infusion of federal funds.
The City should use federal aid and current vacancies as an opportunity to hire strategically to reallocate workers to where they are necessary.
The City should restructure operations to prioritize efficient service delivery that benefits all New Yorkers.
The City should continue to reduce actual headcount, albeit more slowly, rather than reversing course to increase both actual and authorized headcount.
Key Data
$16 billion
— The amount of federal funds infused into the City, which the City plans to use to increase its authorized headcount.
$5 billion
— The approximate annual budget gaps projected for fiscal years 2023 to 2025, including unspecified labor savings.
4.1 percent
— The amount the City's workforce shrank between April 2020 and February 2021.
13,364
— The number of positions by which the City's workforce shrank between April 2020 and February 2021.
319,100
— The target actual headcount the City plans to reach by the end of fiscal year 2022.
5,235
— The number of positions the City plans to restore in fiscal year 2022 using federal aid.
The COVID-19 pandemic has severely impacted the Metropolitan Transportation Authority's finances, with projected costs reaching $25 billion between 2020 and 2024. While federal aid from the American Rescue Plan provides a temporary bridge through 2023, the agency must implement operational reforms—such as productivity improvements and health care savings—to address its long-term structural fiscal imbalance.
Recommendations related to Federal COVID Aid
The MTA should implement operation and maintenance productivity improvements to align with national peer benchmarks.
The MTA should expand one-person train operation (OPTO) on subways to reduce the need for conductors.
The MTA should implement proof-of-payment fare collection on commuter rail lines to reduce the need for conductors.
The MTA should increase active employee premium cost-sharing for health insurance to match non-represented staff levels.
The MTA should apply the State’s current health care cost-sharing agreement for retired New York State employees to its own retired workforce.
Key Data
$25 billion
— Estimated cost to the MTA from the COVID-19 pandemic and recession over the 2020-2024 period.
$14.5 billion
— Amount of federal aid used to close near-term budget gaps since July 2020.
$2.9 billion
— Potential annual savings from implementing the proposed operational reforms by 2024.
$2.4 billion
— Projected MTA budget shortfall in 2024.
13,000
— Number of full-time positions the proposed reforms would reduce by 2024.
20 percent
— Level of transit ridership below 2019 levels expected in 2024.
New York City received significant federal COVID-related aid totaling over $7.6 billion for education and over $5.5 billion in flexible funding between fiscal years 2021 and 2025. These funds support various initiatives, many of which are recurring or potentially recurring, creating a significant potential fiscal gap in future budgets when this temporary federal support expires.
Key Data
$7,629.2 Million
— Total new federal COVID-related aid for the Department of Education from fiscal years 2021 to 2025.
$5,572.4 Million
— Total new flexible ARP federal COVID-related aid from fiscal years 2021 to 2025.
$1,101 to $3,466 Million
— The potential fiscal gap for education funding in fiscal year 2026.
$1,382 to $4,070 Million
— The potential fiscal gap for flexible ARP aid initiatives in fiscal year 2026.
$4,759.6 Million
— Total funding allocated to school reopening initiatives within the Department of Education budget.
$2,900.2 Million
— Total funding allocated to fiscal relief initiatives within the flexible ARP federal aid budget.
New York has received billions in federal aid for pandemic recovery, yet lacks a comprehensive performance management system to track how these funds are spent and their actual impact. Implementing a statutory framework for transparency and accountability is essential to ensure these resources effectively support education, economic relief, and long-term fiscal health.
Recommendations related to Federal COVID Aid
The State should embrace a comprehensive performance management system to manage the influx of federal aid.
New York should enact by statute a ten-point framework to promote consistency in reporting across agencies, authorities, and administrations.
The State should fully and regularly inform the public about how federal funds are flowing, to whom, how efficiently, and their impact on the economy and long-term budget.
Key Data
$212 billion
— The size of the State budget that includes billions of dollars of new federal aid.
$12 billion
— The amount of federal aid allocated for direct fiscal support.
$14 billion
— The amount of federal aid allocated for schools.
$4 billion
— The amount of new tax increases annually supporting the State budget.
The next New York City Comptroller will play a critical role not only in holding the next Administration and agencies accountable, investing and managing five pension funds with $248 billion in assets, and partnering in $13 billion City debt issuance, but also in spotlighting and promoting New York City’s fiscal…
The Executive Budget for Fiscal Year 2022 fails to leverage $15 billion in federal aid and increased tax revenue to stabilize the City's fiscal future, instead using funds for recurring programs without identifying necessary efficiencies. This approach leaves significant budget gaps of roughly $5 billion annually for fiscal years 2023 through 2025, creating future fiscal cliffs that the next administration will be forced to address.
Recommendations related to Federal COVID Aid
The City should be implementing a regular, reasonably sized Program to Eliminate the Gap (PEG) to help prioritize programs, improve quality, and identify savings.
The City should be budgeting regular deposits into its newly established Rainy Day Fund to improve fiscal stability.
The City should have spread the federal money more evenly over a few years to allow time to restructure spending to increase efficiency and preserve services.
The City should identify efficiencies that could generate the resources to support recurring programs over time, preventing them from falling off future budget cliffs.
Key Data
$15 billion
— Amount of additional federal aid provided to the City.
$5 billion
— Estimated annual budget gap in fiscal years 2023 to 2025 when unspecified labor savings are removed.
$1 billion
— Amount of annual labor savings carried in fiscal years 2023 through 2025 that lacks identified recurring spending reductions.
$1.6 billion
— Amount the City reversed its plan to use from the Retiree Health Benefits Trust to balance the budget.
$200 million
— Amount the City is increasing its general reserve in fiscal year 2022.
5,000
— Number of additional staff the City plans to add, reversing recent progress in shrinking the workforce.
New York City is set to receive over $15 billion in federal pandemic aid, which should be used to support recovery and long-term fiscal stability rather than funding new recurring programs. The City should spread these funds over multiple years, prioritize efficient government services, and ensure transparent reporting on how these resources are utilized.
Recommendations related to Federal COVID Aid
The City should prioritize spreading federal aid over multiple years to support needed services and provide time to restructure spending.
The City should focus on averting unnecessary service cuts while using the time to restructure spending to be sustainably supported with recurring revenues.
The City should prioritize supporting temporary, targeted programs that address hardships of the pandemic and recession and promote the City’s recovery, focused on areas not supported by federal and State programs.
The City should avoid not funding new recurring programs with these non-recurring revenues to prevent creating a fiscal cliff.
The City should ensure accountability by publicly providing data on the use and impact of federal funds.
Key Data
$1.9 trillion
— The total value of the American Rescue Plan Act of 2021 passed by Congress.
$15 billion
— The total amount of new federal resources the City is poised to receive.
$6 billion
— The amount of unrestricted American Rescue Plan aid the City is set to receive.
over $2 billion
— The amount of Federal Emergency Management Administration (FEMA) reimbursement the City is expected to receive.
$375 million
— The amount of additional federal Medicaid assistance the City is expected to receive.
nearly $7 billion
— The amount of education aid flowing through the State from both the American Rescue Plan and the December 2020 stimulus bill.
New York City has received at least $5 billion in additional federal aid, which provides a fiscal glide path that eliminates the need for layoffs through June 2022. Rather than using these funds to finance expensive early retirement incentives, the city should manage its workforce through natural attrition and avoid a fiscally destabilizing rehiring spree.
Recommendations related to Federal COVID Aid
The city should use its fiscal glide path rather than engaging in a rehiring spree made possible by the fiscal relief of the federal fund infusion.
The city should manage services, finances, federal money, and the government workforce well to ensure it is in a better position to serve New Yorkers and weather any future shocks.
The city should flatly reject the opportunity to offer early retirement incentives because the city’s partial hiring freeze is already working to shrink the size of the workforce.
Key Data
$5 billion
— Amount of additional federal aid the city will receive, which guarantees no layoffs through June 2022.
$110,000
— Average cost to the city for every person who takes the early retirement incentive.
$110 million
— Total cost for every 1,000 employees who take the early retirement incentive, spread over 4 years.
The influx of federal aid from the American Rescue Plan has significantly improved New York's fiscal outlook, providing enough revenue to restore previously planned spending cuts without needing to raise income taxes. Because these federal funds are temporary, the state must use the next two years to restructure its spending to ensure long-term sustainability once the aid is depleted.
Recommendations related to Federal COVID Aid
To address the gaps that will exist and grow when the federal funds are depleted, the State should use the next two years to restructure spending to be more sustainable.
Key Data
$12.6 billion
— Direct federal funding provided to the State through the American Rescue Plan.
$9 billion
— Additional federal aid provided for elementary and high schools.
$6 billion
— The 'worst case' assumption of additional federal aid from the American Rescue Plan included in the Executive Budget.
New York City is set to receive over $5 billion in American Rescue Plan funds and $1.15 billion in FEMA reimbursement, which provides a critical opportunity to stabilize the city's finances. These federal resources should be used to cover pandemic-related costs and temporarily backfill revenue shortfalls while the city implements long-term structural budget reforms.
Recommendations related to Federal COVID Aid
The City should support COVID-19 response expenditures not covered by FEMA.
The City should fund additional costs and supports necessitated by the pandemic, such as expenditures related to school re-opening or test and trace efforts.
The City should temporarily backfill shortfalls in tax revenues due to the pandemic, appropriately with a post-federal support fiscal stability plan.
The City should support residents and businesses negatively affected by the pandemic and recession, to the extent resources are available and only if needed on top of American Rescue Plan investments.
If federal aid is sufficient and flexible, the City should spread these funds over multiple years to support a glide path toward stability as the economy and tax revenues recover.
Federal aid can be used to temporarily fill budget gaps while long-lasting changes are negotiated and implemented.
Key Data
$5.6 billion
— Estimated direct federal aid from the American Rescue Plan Act of 2021.
$1.15 billion
— Additional Federal Emergency Management Agency (FEMA) reimbursement for COVID-19 related expenditures.
$5.3 billion
— Projected budget gap for fiscal year 2023 that federal funding is sufficient to cover.
over $5 billion
— Total American Recovery Plan funds available to the City.
The American Rescue Plan provides a historic opportunity for New York to stabilize its finances by spreading federal funds over several years to restructure government operations rather than funding new programs or ongoing expenses. By utilizing these resources to avoid tax increases and implement efficiency initiatives, the state and city can address structural deficits and preserve essential services without relying on long-term federal support.
Recommendations related to Federal COVID Aid
The state and city should spread federal funds over the next several years to balance budgets and provide time to restructure government in ways that preserve services and increase fiscal sustainability.
The influx of federal aid should not support new programs or ongoing expenses to avoid creating fiscal cliffs.
The state should eliminate unproductive economic development programs and temporarily change financing of some capital programs to narrow future budget gaps without raising taxes.
The city must not use the funds to reverse the progress made shrinking the workforce.
The city should over two years phase in efficiency initiatives, totaling 3 to 5% of city-funded agency spending.
Key Data
$1.9 trillion
— The total value of the federal aid package provided to the state and city.
more than $25 billion
— The amount of federal funds that will erase more than 40% of the state's pandemic-related revenue shortfall.
$5.9 billion
— The amount of extra funds the state could have on hand by the end of fiscal year 2023 if it adopts the budget without proposed personal income tax increases.
4%
— The projected decline in property tax revenues for the city due to hard-hit real estate sectors.
$5 billion
— The amount of the city's projected annual budget gaps in the future.
$7 billion
— The amount of federal funds the city is slated to receive from the new package and enhanced FEMA reimbursement.
The American Rescue Plan offers a critical opportunity to stabilize New York's finances and support essential services, provided the funds are used to address pandemic-related needs while improving government efficiency. To ensure long-term fiscal health, the state and city must avoid tax increases and focus on structural improvements rather than relying on temporary federal aid.
Recommendations related to Federal COVID Aid
The key is to use the federal money wisely—to support covid-related needs and spread aid over time while taking clear action to increase government efficiency.
The State and City can take care of New Yorkers’ vital needs and stabilize government finances, and critically, do this without raising taxes.
The State and City must implement improvements in government efficiency, effectiveness and quality over the long run to avoid kicking their fiscal reckoning down the road.
Federal aid should be used as a bridge to a stable shore where recurring revenues are sufficient to support the critical services New Yorkers want and need, but not so high they risk driving away residents and business.
The state has received billions in federal aid and expects more, rendering the Governor's request for extraordinary budget powers to unilaterally revise spending plans based on federal aid receipt unnecessary. Instead of granting such authority, the state should ensure transparency regarding fiscal year 2021 withholdings and provide clear details on proposed spending reductions.
Recommendations related to Federal COVID Aid
Omit from the Enacted Budget the midyear budget modifications authority tied to receipt of federal aid, as the Governor and Legislature should convene to adjust the State’s spending plan if federal aid is not received.
Omit the COVID-19 Extraordinary Relief Fund controlled by the Executive from the Enacted Budget, as these revenues should be subject to standard budget negotiations and enactment.
Provide transparency of the fiscal year 2021 withholdings and repayments by agency or recipient, and provide similar detail for the final proposed 5 percent spending reductions.
Manage State Operations spending within amounts appropriated for specific, clearly identified purposes by the Governor and Legislature in the budget, rather than allowing the Division of the Budget to transfer appropriations.
Key Data
$700 million
— Withheld payments in calendar year 2020, representing roughly one quarter of all withholdings.
$628 million
— Total transportation withholdings, of which a large portion is listed as non-statutory transit operating aid.
$426 million
— Amount withheld from and to be repaid to the Metropolitan Transportation Authority.
$98 million
— Amount cut from the Metropolitan Transportation Authority in fiscal year 2021, pending receipt of federal aid.
New York State should utilize federal aid to balance the budget, support critical non-recurring needs, and correct long-term fiscal imbalances rather than supporting recurring spending. The state should leverage these funds to bridge fiscal stability while avoiding tax increases and unnecessary spending cuts.
Recommendations related to Federal COVID Aid
The State should use known and assumed federal aid to balance the budget, support critical non-recurring needs, and correct long-term fiscal imbalances.
Federal funds in excess of immediate needs should be used to provide temporary economic relief to business and people affected by the recession.
The State should not use federal funds to support recurring spending, including new ongoing programs, as this would exacerbate long-run fiscal problems when the aid is depleted.
If the aid is sufficient and flexible, the State should spread it over time, leveraging it as a bridge to fiscal stability.
The State should use federal aid wisely to stabilize the State’s finances in both the near and long term.
Key Data
$12.6 billion
— Amount of direct federal aid current drafts in Congress would provide to New York State.
$10.6 billion
— Amount of federal aid current drafts in Congress would provide to local governments.
$5.5 billion
— Amount of federal aid provided to the State for elementary and secondary education since March 2020.
$5.1 billion
— Amount of Coronavirus Relief Funds provided to the State since March 2020.
$4.5 billion
— Amount of enhanced Medicaid funding provided to the State since March 2020.
$1.5 billion
— Amount of likely additional enhanced Medicaid funding the Executive has not yet included in the Financial Plan.
Managing the City’s fiscal crisis well will be a critically important duty of the next Mayor and a primary determinant of how the city survives the current crisis, and ultimately thrives in the future. Managing NYC’s Fiscal Crisis: A CBC Mayoral Candidate Forum featured a 10-minute conversation with each candidate,…
The MTA's financial stability relies heavily on federal COVID relief, including a $4 billion aid package and FEMA reimbursement for emergency expenses. While this aid helps delay service cuts and fare increases, long-term fiscal health requires further structural adjustments and careful management of these federal resources.
Recommendations related to Federal COVID Aid
The MTA must determine whether to use federal aid to reduce future budget gaps or to reverse previously identified plans, such as planned service reductions or converting short-term debt into long-term debt.
While enhanced cleaning is justified and will be reimbursed by FEMA through September 2021, there may be merit to adjusting the spending in the long run.
Key Data
$4 billion
— Amount of aid delivered by the federal COVID relief bill.
$220 million
— Amount budgeted for FEMA reimbursement in 2021 in the November and December plans.
$300 million
— Planned FEMA receipt after the local 25 percent match was waived.
$500 million
— Potential actual FEMA receipts in 2021 if full retroactive aid is delivered.
$20 billion
— Amount promised by the Biden Administration for transit.
$30 billion
— Amount promised by the concurrent resolution passed by the House and Senate for transit.
New York State faces significant budget gaps exacerbated by the pandemic, which are being addressed through a combination of federal aid, tax increases, and spending reductions. To avoid relying solely on tax hikes, the state should consider alternative strategies like financing capital projects with debt and pausing unproductive economic development spending to maintain fiscal stability.
Recommendations related to Federal COVID Aid
To avoid adding to already high outstanding debt levels, the State should focus its capital investments on the most critical projects during this period.
If the State reduces its planned capital disbursements by 10 percent and finances up to 50 percent of the remaining paygo capital spending with debt, it would save $1.6 billion in fiscal year 2022.
A 50 percent reduction in proposed economic development capital spending plus financing 50 percent of the remaining paygo spending with debt would yield another $713 million in fiscal year 2022.
The State should smooth the year-to-year fluctuations in aid to avoid a sudden drop-off.
The overall distribution approach should focus on directing aid to high need districts and reducing aid to wealthier districts.
Key Data
$4.3 billion
— December federal aid package provided for schools.
$1.5 billion
— Enhanced federal Medicaid matching funds provided through the continuation of the federal emergency declaration.
$2.5 billion
— Additional pandemic response funding and reimbursement that offset State costs.
$350 billion
— Proposed federal COVID response package for aid to state, local, and tribal governments.
$6 billion
— Additional unrestricted federal aid assumed in the Executive Budget.
$15 billion
— Desired federal aid presented as a 'fair funding' case.
New York State and City face massive budget gaps totaling $73.3 billion over four years, and while federal aid is necessary, it will not be enough to resolve these fiscal challenges. Leaders must urgently develop and implement credible fiscal stability plans to address the remaining multi-billion dollar shortfalls that will persist even with significant federal support.
Recommendations related to Federal COVID Aid
State and City leaders should act with urgency to develop and implement credible fiscal stability plans.
Key Data
$73.3 billion
— State and City budget gaps total over four years.
$60.1 billion
— The most recent State financial plan projects a four-year deficit.
$13.2 billion
— The November 2020 Financial Plan projects a four-year gap for New York City.
$6.6 billion
— The City expects to receive this amount in federal funding in fiscal years 2020 and 2021.
$10.6 billion
— Gap closing measures the City would still need to implement through January 2024 if federal aid provides a similar share of relief as the Great Recession.
$57 billion
— Gap closing actions the State and City would still need to implement if federal aid relieves the same portion of gaps as in the Great Recession.
While federal aid is necessary to address the current fiscal crisis, it should be viewed as a temporary bridge rather than a permanent solution to the city's budget problems. Spending must be restrained to sustainable levels to ensure the city can recover and grow once federal support is exhausted.
Recommendations related to Federal COVID Aid
Spending should be restrained to a level that is sustainable when the economy recovers and federal aid is depleted.
The City should acknowledge that federal aid will only be a bridge and that this bridge must land on a stable shore, rather than relying on a bailout to solve budget problems.
Key Data
$3.8 billion
— fiscal year 2022 budget gap that the City needs to close in the Preliminary Budget
60 percent
— of the annual savings in the November 2020 Financial Plan that do not recur
0.35 percent
— of City-funded spending represented by the fiscal year 2023 savings
$1 billion
— in annual labor savings in fiscal years 2022 to 2024 that the Administration has made no progress achieving
The Metropolitan Transportation Authority faces a $15.9 billion budget gap through 2024, necessitating urgent federal aid to avoid drastic service cuts and layoffs. To address this fiscal crisis, the agency must prioritize operational efficiency, including labor collaboration, while carefully managing debt and service adjustments.
Recommendations related to Federal COVID Aid
The MTA requires urgent federal aid to address its dire fiscal situation.
The MTA should focus on improving the system’s operating efficiency to mitigate the need for drastic service cuts and layoffs.
The MTA should seek collaboration with labor to act as active partners in generating necessary savings.
The decision to convert short-term debt to long-term debt should only be made after determining how much federal aid will be received over the next few years.
Key Data
$15.9 billion
— Total budget gaps faced by the MTA between 2020 and 2024.
$4.5 billion
— Amount in gap-closing initiatives the MTA has begun implementing.
9,000
— Number of layoffs that would accompany the proposed service cuts.
$1 billion
— Potential savings from bringing bus operations and subway maintenance efficiency in line with other large systems.
$200 million
— Annual savings possible by equalizing employee and retiree health benefit contributions to those of State employees.
$2.9 billion
— Amount the MTA will borrow through the Federal Reserve’s Municipal Liquidity Facility to balance the budget.
The Metropolitan Transportation Authority faces a $16.2 billion budget gap through 2024 due to the pandemic, necessitating both federal financial assistance and difficult internal cost-cutting measures. To maintain operations until ridership and economic activity recover, the agency must implement operational efficiencies, forgo new hiring, and re-evaluate its capital program and service levels.
Recommendations related to Federal COVID Aid
The MTA should work with the labor force to implement additional savings by increasing the efficiency of operations, and reducing overtime and employee benefits costs.
The MTA should forego new headcount, as the planned increase of 776 positions and $250 million in personnel costs is not affordable.
The MTA should rescope the capital program to focus on projects that preserve the system’s state of good repair and reduce future maintenance expenses.
The MTA should optimize service to match ridership patterns and support critical needs of the economy.
The MTA should increase tolls by a greater percentage than the currently planned 4 percent increase in 2021.
Key Data
$16.2 billion
— Cumulative budget gap for the MTA from 2020 through 2024.
90 percent
— Decrease in subway and bus ridership experienced by the MTA by April.
$567 million
— Estimated cost of new COVID-related cleaning for the MTA in 2020.
$5.1 billion
— Anticipated shortfall in MTA fare and toll revenue in 2020.
$1.6 billion
— MTA tax revenue shortfall in 2020 due to reduced economic activity.
776
— Number of new positions included in the MTA's fiscal year 2021 financial plan.
New York City closed significant budget gaps in fiscal years 2020 and 2021 by utilizing $1.9 billion in federal aid, alongside reserves and expenditure reductions. While additional federal support is appropriate, the city must prioritize recurring spending cuts and avoid relying on long-term borrowing to address ongoing fiscal imbalances.
Recommendations related to Federal COVID Aid
The City should not turn to long-term borrowing to address an imbalance in revenues and expenditures, as borrowing should be a last resort.
While additional federal aid would be appropriate and in line with support given to localities in prior recessions, the City should prioritize identifying recurring spending reductions rather than lobbying for long-term borrowing authority.
The City should undertake a thorough review of agency programs and operations to identify recurring savings, reduce the City’s workforce through attrition, and implement recurring labor savings.
Key Data
$1.9 Billion
— Total federal aid used to close the gaps in fiscal years 2020 and 2021.
$2.5 Billion
— Amount the City expects to receive in FEMA aid as reimbursement for pandemic response costs.
$742 Million
— Federal funding used to close the gap through the enhanced Federal Medical Assistance Percentage (FMAP).
$793 Million
— Federal funding used to close the gap through the U.S. Coronavirus Aid, Relief, and Economic Security (CARES) Act.
New York faces a $58 billion budget gap over the next four years, necessitating difficult choices to reduce spending and balance the budget amidst the economic downturn. While federal aid provides some relief, the state must implement a transparent plan to close the $8 billion annual gap by reducing school aid to wealthy districts, eliminating unproductive economic development spending, and avoiding reliance on accounting shifts.
Recommendations related to Federal COVID Aid
The state should prioritize reducing school aid to wealthy districts to help close the $8 billion budget gap exacerbated by the pandemic.
The state should finance capital projects with bond proceeds rather than on a pay-as-you-go basis to manage the current fiscal crisis.
The state should eliminate unproductive economic development spending to address the projected $58 billion budget gap.
The state should walk back tax policy expenditures to help balance the budget during the current economic downturn.
The state's budget plan should not rely on fiscal maneuvers and accounting shifts that have obscured spending growth and exacerbated budget pressures.
Key Data
$58 billion
— Projected budget gaps facing the New York State budget over the next four years.
$8 billion
— Annual amount of unidentified budget balancing actions assumed in the state's spending targets.
$726 million
— Additional federal Medicaid funding expected as of July 1, which offsets a portion of planned state actions.
$1 billion
— State agency spending reductions included in the gap-closing plan.
The MTA faces a severe fiscal crisis due to the COVID-19 pandemic, with operating budget shortfalls estimated between $8.4 billion and $12.6 billion for 2020 and 2021. While federal aid is a necessary component of the solution, the authority must also pursue internal efficiencies, prioritize capital projects, and reconsider fare and toll policies to manage its financial future.
Recommendations related to Federal COVID Aid
The MTA should pursue greater efficiencies to lower operating expenses, which in large part requires working collaboratively with labor unions.
The MTA should prioritize planned capital investments to lower debt service costs, including postponing expansions and possibly slowing accessibility improvements.
The MTA should optimize service levels by continually adjusting capacity to current demand and safety requirements.
The MTA should revise fare and toll policies to seek more revenue from fares and to raise tolls proportionally more than fares.
The MTA should borrow for operating expenses only as a last resort to sustain vital services during the crisis period.
Key Data
$8.4 billion and $12.6 billion
— Estimated operating budget shortfalls for 2020 and 2021.
$3.8 billion
— Amount of federal aid already received by the MTA.
$3.9 billion
— Additional federal aid requested by the MTA for 2020.
$4.5 billion to $8.7 billion
— Cumulative 2020-2021 operating budget deficit assuming $3.9 billion in new aid.
$64 billion
— Total capital commitments planned for the next five years.
$742 million
— Cumulative debt service savings from prioritizing capital projects.
New York City's fiscal year 2021 budget reflects the economic crisis caused by the pandemic, with total spending declining due to a reduction in federal aid compared to the previous year. The city's financial plan relies on achieving $1 billion in labor savings and implementing agency-specific reductions, such as a $350 million cut in police overtime, to maintain flat city-funded spending.
New York State utilized $1.2 billion in federal aid to offset a $1.2 billion reduction in state-funded school aid, maintaining total school aid levels despite a broader $8 billion reduction in local assistance spending due to the COVID-19 pandemic. The state is encouraged to prioritize funding for districts lacking sufficient local resources to meet sound basic education standards while reevaluating the distribution of school aid to account for student need and district wealth.
Key Data
$1.2 billion
— The amount of increased federal aid used to hold total school aid flat in the Enacted Budget.
$1.2 billion
— The amount by which the State Enacted Budget decreased State-funded school aid.
$8 billion
— The amount by which the State will reduce fiscal year 2021 local assistance spending.
The City's fiscal year 2021 budget relies heavily on non-recurring federal aid and reserves to cover shortfalls, creating a precarious financial situation. With significant budget gaps projected for future years, the reliance on temporary funding sources fails to provide a long-term solution to the fiscal crisis.
Recommendations related to Federal COVID Aid
The City will need to address significant outyear gaps with fewer reserves.
With just $100 million in the general reserve to hedge against risks like lower federal aid, additional spending cuts may be needed.
The City must identify a long-term solution to the fiscal crisis, as the current strategy relies on short-term measures like tapping reserves.
Key Data
$4.4 billion
— The amount by which non-City funds are projected to decline in fiscal year 2021, reflecting the absence of expected one-time federal aid.
$5.0 billion
— The projected budget gap for fiscal year 2022.
$4.5 billion
— The projected budget gap for fiscal year 2023.
$4.9 billion
— The projected budget gap for fiscal year 2024.
$100 million
— The amount in the general reserve available to hedge against risks such as lower-than-expected federal aid.
New York State faces significant revenue shortfalls due to the pandemic, with potential losses estimated between $4 billion and $34 billion. To manage this, the state should utilize emergency federal aid, such as the potential $4.5 billion in Medicaid relief, to offset lost tax revenue while avoiding tax increases and maintaining a "bare bones" budget.
Recommendations related to Federal COVID Aid
Appropriately use emergency federal aid to replace lost tax revenues due to economic decline or to support the pandemic response.
Ensure that emergency federal aid does not substitute for the structural reforms to the State Medicaid program needed to close the pre-existing gap.
Quickly enact a “bare bones” budget that supports the estimated pandemic response need while limiting other spending.
Do not consider tax increases at this time, as New York's already high taxes risk the state's competitiveness.
Plan for the fact that the budget will need to be revised in the coming months as more information becomes available about the economic impacts of the pandemic and federal responses.
