Labor contracts in New York City and the Metropolitan Transportation Authority govern the wages, benefits, and work rules for the public workforce that provides essential city and transit services. This page covers CBC’s work on collective bargaining, municipal and transit overtime spending, health and welfare benefit structures, productivity improvements, and work rule modernization.
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 effort to increase flexibility should be significantly expanded to identify changes in work rules and job titles that increase the efficiency of City operations, providing needed savings to offset the costs of raises, while increasing salaries and improving career paths.
The City should be implementing a growing, multiyear Program to Eliminate the Gap (PEG) in the Executive Budget to offset these multi-billion-dollar collective bargaining costs.
The City should take great caution not to add economic costs to other contracts if remote work options vary.
The monitor should increase focus on identifying and advocating for long-overdue work rule reforms, broader job descriptions, and fringe benefit savings to boost productivity and bring operations in line with industry standards.
The monitor should utilize its authority to ask the HUD Secretary to abrogate labor contracts if they are impeding compliance and reasonable efforts to renegotiate or amend them have failed.
Key Data
In February 2023, the CBCNY estimated that if the tentative District Council 37 agreement set the pattern for all other municipal unions, the raises would cost approximately $16.2 billion more than budgeted over the contract period, widening the fiscal year 2027 budget gap to $10.6 billion.
In March 2022, the CBCNY noted that the Preliminary Budget for Fiscal Year 2023 took a fiscally prudent step by removing $500 million in annual illusory labor savings that had been included in previous financial plans without a clear path to achievement.
In November 2021, the CBCNY reported that the City provides employee and retiree health benefits with no premium-sharing in most cases, with costs totaling nearly $7.2 billion a year and generating a $122 billion long-term fiscal liability for other postemployment benefits (OPEB).
In May 2021, the CBCNY reported that represented MTA employees pay 2% of their salary for health insurance, which covered approximately 9% of average premiums in 2019, whereas non-represented staff pay an average of 18% of their premium costs.
In February 2020, the CBCNY evaluated the ratified contract with the MTA's largest union, TWU Local 100, which provided compounded 9.8% wage increases costing more than $1 billion through 2023, adding $16.5 million to the MTA's four-year budget gaps.
Mayoral candidates were surveyed on their labor relations priorities, specifically regarding the negotiation of broader job titles and flexible work rules to enhance productivity and reduce costs. The responses highlight varying approaches to balancing labor protections with the need for fiscal efficiency and modernized city operations.
Recommendations related to Labor Contracts
Negotiate changes—such as broader job titles or more flexible work rules—to increase productivity, reduce ongoing costs, and fund raises.
Implement a program to hold City agencies accountable for retroactive contracts and late payments.
Support actions to reduce uniformed overtime, such as a hard overtime cap, the elimination of unlimited sick leave, or the exclusion of most overtime earnings from pension calculations.
Require City employees to contribute to their health insurance premiums.
Implement cost sharing or benefit reductions to restrain the City’s cost of retiree health benefits.
Key Data
$682 Million
— Estimate of annual overtime underbudgeting embedded in the FY2026–FY2029 plan.
$758 Million
— FY2025 overtime underbudgeting.
$1.1 Billion
— FY2024 uniformed‑agency overtime budget that was fully spent in 7 months.
The Metropolitan Transportation Authority must modernize its labor contracts and work rules to improve service reliability and financial stability, including updating shift-picking processes and transitioning retirees to Medicare Advantage plans. By addressing outdated attendance patterns and expanding One Person Train Operation, the agency can better manage operating costs and adapt to post-pandemic ridership demands.
Recommendations related to Labor Contracts
The MTA and labor should implement contract changes to improve employee attendance levels, which would affect few workers while improving service and cutting overtime costs.
The MTA should expand One Person Train Operation (OPTO) to modernize operations and utilize investments in signals and new subway cars.
The MTA and labor need to modernize how transit workers pick the time and location of their shifts to enable the MTA to modify service more quickly and allow workers to pick their schedules more efficiently.
The MTA and TWU should switch retirees to a high quality Medicare Advantage plan to restrain ballooning health care costs without reducing benefits.
The MTA and labor should adopt more creative and flexible work assignments and scheduling to improve service and allow the MTA to adapt to riders’ needs.
Key Data
19
— The average number of days worked annually by subway and bus workers has shrunk by 19 over the last two decades.
50 million
— Nearly 50 million subway and bus customer trips in 2022 were canceled because of crew shortages.
$400 million
— The MTA plans to save $400 million by increasing its own productivity.
$1.1 billion
— The Payroll Mobility Tax on New York City businesses was raised by $1.1 billion to narrow future budget gaps.
$165 million
— City support of paratransit was increased by $165 million.
$15 billion
— Drivers will pay $1 billion to support $15 billion in infrastructure investments.
The Metropolitan Transportation Authority's financial stabilization plan relies too heavily on New York City taxpayers and lacks necessary contributions from labor-related productivity improvements. To ensure long-term fiscal health, the plan should incorporate operational reforms requiring labor agreement and include a recurring state contribution rather than placing the burden primarily on the city.
Recommendations related to Labor Contracts
Productivity improvements, including changes in MTA operations that require agreement from labor, should be at least half of the plan.
The MTA should pursue changes in labor agreements to unlock productivity savings while maintaining the ability to provide quality service.
The MTA should align outdated practices with industry benchmarks, which requires agreement from labor, to achieve necessary savings.
Key Data
$2.9 billion
— Potential annual savings from operational reforms identified by the commission.
$400 million
— The MTA's increased plan for annual operational efficiencies.
$100 million
— The MTA's previous plan for annual operational efficiencies.
The tentative contract agreement with District Council 37 provides reasonable raises but creates a significant financial challenge, with additional costs totaling $16.2 billion over the contract period if applied to all unions. To manage the resulting budget gaps, which are projected to reach $10.6 billion by fiscal year 2027, the City must implement productivity savings and exercise caution regarding additional economic costs in future negotiations.
Recommendations related to Labor Contracts
The effort to increase flexibility should be significantly expanded to identify changes in work rules and job titles that increase the efficiency of City operations, providing needed savings to offset the costs of raises, while increasing salaries and improving career paths.
The City should be implementing a growing, multiyear Program to Eliminate the Gap (PEG) in the Executive Budget to offset these multi-billion-dollar collective bargaining costs.
The City should take great caution not to add economic costs to other contracts if remote work options vary.
Key Data
$16.2 billion
— The amount the tentative agreement would cost more than currently budgeted over the contract period if it sets the pattern for all other unions.
$10.6 billion
— The projected City budget gap in fiscal year 2027 following the tentative agreement.
$6.4 billion
— The projected City budget gap in fiscal year 2025 following the tentative agreement.
$9.1 billion
— The projected City budget gap in fiscal year 2026 following the tentative agreement.
$2.5 billion
— The additional spending required in fiscal year 2023 above funds already in the budget.
$2.3 billion
— The additional spending required in fiscal year 2024 above funds already in the budget.
New York City faces significant long-term fiscal challenges, including the potential for substantial budget gaps driven by future collective bargaining agreements and other economic risks. To ensure future stability and preserve essential services, the city must prioritize improving the quality and efficiency of its operations rather than assuming its fiscal situation allows for increased recurring spending.
Key Data
$800 million
— Estimated increase in budget gaps in the first year resulting from annual employee raises of three percent.
$2.5 billion
— Estimated increase in budget gaps in the third year resulting from annual employee raises of three percent.
To address the Metropolitan Transportation Authority's structural operating deficit of at least $2.5 billion, leadership must collaborate with labor unions to implement efficiency reforms and modernize work rules. Achieving significant savings will require changes to labor contracts, especially given that New York City Transit's subway facility maintenance productivity is 44% lower than the national median.
Recommendations related to Labor Contracts
The MTA's leadership and labor unions should work together, using the collective wisdom of management and workers, to identify and phase in efficiency reforms that involve changes to labor contracts.
Key Data
44%
— Lower productivity of New York City Transit subway facility maintenance work compared to the national median.
The New York City Housing Authority remains under federal monitorship, yet the monitor has failed to leverage its authority to reform labor practices or collective bargaining agreements that contribute to high operational costs. Despite spending $1.2 billion on implementation since 2018, the authority continues to struggle with poor living conditions, with 42 percent of households reporting three or more maintenance deficiencies.
Recommendations related to Labor Contracts
The monitor should increase focus on identifying and advocating for long-overdue work rule reforms, broader job descriptions, and fringe benefit savings to boost productivity and bring operations in line with industry standards.
The monitor should utilize its authority to ask the HUD Secretary to abrogate labor contracts if they are impeding compliance and reasonable efforts to renegotiate or amend them have failed.
Key Data
$1.2 billion
— spent by the New York City Housing Authority through calendar year 2021 on agreement implementation.
42 percent
— of New York City Housing Authority households that report three or more serious maintenance deficiencies.
$32.1 million
— in total payments made to the monitor and its sub-contractors through May 6, 2022.
500
— additional staff the New York City Housing Authority is required to hire to provide an adequate level of service for the proposed work order reform project.
$359 million
— in costs related to developing and implementing pillar area action plans during the previous year.
310 days
— average response time for the New York City Housing Authority to complete repairs as of April 2022.
Modernizing contractual differentials, work rule changes, and consolidating welfare benefits are identified as potential areas for efficiency savings within the city budget. Additionally, the city maintains a significant number of vacant full-time positions, with over 18,500 vacancies remaining after recent reductions.
Recommendations related to Labor Contracts
The Executive Budget should include efficiency savings from centrally managed services, including modernizing contractual differentials, work rule changes, and consolidation of welfare benefits.
Key Data
7,000
— Number of vacant full-time positions eliminated in the Preliminary Budget.
26,000
— Number of vacant full-time positions in the City as of December 31, 2021.
18,500
— Number of vacant full-time positions remaining after accounting for headcount adjustments.
New York City faces expiring municipal labor contracts for over 100 bargaining units, requiring the city to either find new resources or implement efficiencies to fund future raises. With annual raises of 2% over three years costing $1 billion in fiscal year 2023 and growing to $2.5 billion by fiscal year 2025, the city must address these costs without relying on illusory labor savings.
Recommendations related to Labor Contracts
Agencies should work with labor to change work rules to increase efficiency, streamline work processes, and consolidate like functions across agencies.
The City should either remove the unspecified labor savings from the financial plan or identify specific actions to achieve them.
Any future collective bargaining increases would need to be fully funded with new resources or by implementing efficiencies that offset the costs.
Key Data
$500 million
— Unspecified labor savings included in the November 2021 Financial Plan annually beginning in fiscal year 2023.
$200 million
— Attrition savings included in the November 2021 Financial Plan annually beginning in fiscal year 2023.
18
— Number of actions identified that could reduce labor costs, including premium sharing for health insurance or work rule changes.
$1 billion
— Cost of annual raises of two percent over three years in fiscal year 2023.
$2.5 billion
— Cost of annual raises of two percent over three years in fiscal year 2025.
The incoming administration must negotiate labor contracts that prioritize fiscal sustainability by offsetting raises with productivity gains and modernizing outdated work rules. By collaborating with municipal unions to reform benefit structures and streamline operations, the city can ensure long-term financial stability while maintaining competitive employment.
Recommendations related to Labor Contracts
The City should work with labor to change work rules to optimize collection routes, increase flexibility in collection frequency to align with the amount of waste to be collected, and modernize labor differential payments to incentivize higher productivity under current collection procedures.
City managers and labor should identify and work to change work rules in collective bargaining agreements (CBAs) that date back decades and limit the City’s ability to operate efficiently.
Especially in light of the City’s fiscal stress, raises should be funded through savings from productivity gains rather than increasing City expenditures.
The City should also bring health and welfare benefit costs to sustainable levels, which requires negotiating changes with municipal labor unions.
Consolidating the more than 100 separate welfare funds managed by various unions could provide comparable or better benefits at lower costs, due to administrative economies of scale and group purchasing power.
Key Data
$7.2 billion
— The City’s annual costs for employee and retiree health benefits, which have grown an average of 4.2 percent per year since fiscal year 2014.
4.2 percent
— The average annual growth rate of the City’s health and welfare benefit costs since fiscal year 2014.
$122 billion
— The City's long-term fiscal liability for other postemployment benefits (OPEB), of which retiree health benefits comprise about one-third.
100
— The number of separate welfare funds managed by various unions from which most employees and retirees receive benefits.
The MTA can achieve long-term fiscal sustainability by implementing operational reforms, including productivity improvements in facility maintenance, bus operations, and conductor staffing, alongside health care benefit adjustments. These measures could yield up to $2.9 billion in annual savings and reduce the workforce by nearly 13,000 positions by 2024.
Recommendations related to Labor Contracts
The MTA should implement one-person train operation (OPTO) on subways, which would reduce the need for train conductors and bring agency operations in line with national peer systems.
The MTA should implement proof-of-payment on commuter rail, which would require significantly fewer conductors and yield significant savings.
The MTA should increase active employee premium cost-sharing for health insurance to the 18 percent level paid by non-represented employees.
The MTA should implement a value-based health plan redesign to achieve target savings of approximately 12 percent of projected health spending.
The MTA should improve subway facility maintenance productivity by changing overnight maintenance practices and investing in track crossovers and signals.
The MTA should increase bus speeds through a combination of network redesign, all-door bus boarding, and bus priority treatments.
Key Data
$2.9 billion
— Total annual savings from the proposed operational reforms.
13,000
— Total workforce reduction by 2024 resulting from the proposed reforms.
$981 million
— Annual savings by 2024 from improving subway facility maintenance productivity.
$512 million
— Annual savings from conductor operating reforms, including OPTO and proof-of-payment.
$263 million
— Annual savings by 2024 if retired MTA employees contributed to health care premiums at the rate of retired State workers.
$270 million
— Annual savings by 2024 from a value-based health plan redesign.
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,…
New York City faces a $1 billion labor savings target to address its fiscal crisis, which can be achieved by reforming health insurance premium sharing, welfare funds, and work rules codified in labor contracts. These changes would allow the city to avoid layoffs while bringing compensation packages in line with other public employers.
Recommendations related to Labor Contracts
The City should work with the MLC to consolidate welfare funds to leverage economies of scale for prescription drugs and other medical benefits.
The guaranteed return on the fixed return fund should be sharply reduced through State legislation.
The City should seek State legislation to eliminate the VSFs and have the assets transferred to the main pension funds.
The City could make four firefighters the standard staffing for engine companies.
The City should be given the flexibility to shift at least half of the ALS ambulances to a one paramedic, one EMT staffing model.
The City should not continue to pay teachers full salary unless they are actively in the classroom providing instruction.
Key Data
$1 billion
— Recurring savings target from negotiations with labor unions.
$1.1 billion
— Savings in fiscal year 2021.
$1.8 billion
— Savings in fiscal year 2024.
$1.2 billion
— Annual value of the taxpayer-provided TDA guarantee.
$1.1 billion
— Uniformed overtime in fiscal year 2019.
$100 million
— Skilled trades overtime in fiscal year 2019.
New York City faces a $1 billion labor savings target that can be achieved by modernizing labor contracts, including implementing health insurance premium sharing and reforming work rules. These changes would help the city navigate its fiscal crisis while avoiding widespread layoffs by aligning compensation and benefits with those of other public and private employers.
Recommendations related to Labor Contracts
The City should implement health insurance premium sharing for employees and retirees to align benefits with other public and private employers.
City leaders should consolidate welfare funds to leverage economies of scale for prescription drugs and other medical benefits.
The City should seek State legislation to eliminate Variable Supplement Funds and have the assets transferred to the main pension funds.
The guaranteed return on the tax-deferred annuity (TDA) fixed return fund should be sharply reduced through State legislation.
The City could reduce overtime for skilled trades and uniformed employees through the implementation of overtime caps.
The City should be given the flexibility to shift at least half of the ALS ambulances to a one paramedic, one EMT staffing model.
The City could make four firefighters the standard staffing for engine companies.
The City should standardize work hours to a forty-hour work week for all employees.
The City should eliminate the Absent Teacher Reserve (ATR) as a permanent, paid assignment.
The City should reform productivity differentials for sanitation workers to ensure they are only given for measurable improvements in cost-effectiveness.
Key Data
$1 billion
— The recurring savings target from negotiations with labor unions in the Fiscal Year 2021 Adopted Budget.
$1.2 billion
— The estimated annual value of the taxpayer-provided guarantee for the tax-deferred annuity (TDA) fixed return fund.
$1.1 billion
— The amount of uniformed overtime in fiscal year 2019.
$13,356
— The average amount of non-overtime "other pay" for sanitation workers in fiscal year 2019.
$9,300
— The annual cost to the City for health insurance for an employee with no dependents in fiscal year 2021.
$23,000
— The annual cost to the City for health insurance for an employee with dependents in fiscal year 2021.
The Metropolitan Transportation Authority faces a severe fiscal crisis exacerbated by the pandemic, necessitating a strategy that prioritizes operational efficiencies, including renegotiating labor agreements to address work rules and compensation. To ensure financial stability, the authority must balance service levels with ridership demand while reconsidering fare and toll policies to generate necessary revenue.
Recommendations related to Labor Contracts
The MTA should pursue greater efficiencies to lower operating expenses, which in large part require working collaboratively with labor unions.
The new financial plan should include additional efficiencies from operational changes, most of which require changes in union agreements about work rules and compensation.
The new financial plan should set a substantial target for savings from negotiations with the major unions.
Workers and their union representatives should collaborate in revising work practices so that the MTA’s financial survival, and their job security, is protected well into the future.
Even better structured and targeted arrangements should be developed for mass transit operations and be extended to the commuter railroads regarding labor-management committees.
Key Data
$500 million
— Annual savings sought from the Transformation Plan, which includes measures to reduce spending by better managing staff levels and overtime.
$8.4 billion and $12.6 billion
— Estimated operating shortfall for 2020 and 2021 after accounting for federal aid.
$700 to $800 million
— Annual cost for COVID-19 related cleaning, testing, and private protective equipment (PPE) expenses in 2020 and 2021.
The new labor contract for the Metropolitan Transportation Authority's largest union increases compensation by 9.8 percent, costing over $1 billion through 2023 and adding $16.5 million to the agency's four-year budget gap. While the agreement includes some savings initiatives, the agency must secure further workrule changes and establish clear productivity targets in future negotiations to ensure financial stability.
Recommendations related to Labor Contracts
To keep the financial plan impact neutral, the agreements should include greater savings, including workrule changes, to offset the impact of these increased costs.
The labor-management productivity committees established in the TWU contract should establish productivity targets and provide public quarterly reports on savings to ensure accountability.
The MTA should not miss the opportunity to include workrule changes in other collective bargaining agreements.
Similar committees should be established with other unions if workrule changes are not directly negotiated in the other collective bargaining agreements.
Key Data
$1 billion
— Cost of compounded 9.8 percent wage increases through 2023.
$129 million
— Amount wage increases exceed the MTA's November 2020-2023 Financial Plan.
$64 million
— Cost of non-wage benefits over four years.
$16.5 million
— Net costs added to the MTA's four-year budget gaps.
Between fiscal years 2014 and 2019, New York City's budget grew by $19 billion, driven by new programs, service expansions, and rising costs for salaries, overtime, and contracts. Collective bargaining agreements and an 11 percent increase in the municipal workforce significantly contributed to this expenditure growth, highlighting the need for greater spending restraint.
Key Data
$4.8 billion
— The increase in full-time salaries and wages from $18.0 billion in fiscal year 2014 to $22.9 billion in fiscal year 2019.
11 percent
— The expansion of the full-time municipal workforce from 271,767 to 300,442 employees between fiscal years 2014 and 2019.
$1.8 billion
— The total cost of overtime in fiscal year 2019, which grew at an average rate of 4.4 percent from $1.4 billion in fiscal year 2014.
$10.0 billion
— The total amount of pension contributions in fiscal year 2019, which grew from $8.3 billion in fiscal year 2014.
Proposed legislation A7749/S6208 would mandate costly employee protection provisions in New York City school bus contracts, effectively locking in higher expenses by requiring the retention of specific staff based on seniority and pay. This bill should be vetoed to allow the city to maintain necessary flexibility in procurement and negotiation to secure savings for taxpayers.
Recommendations related to Labor Contracts
The Governor should veto A7749/S6208, which would impose costly restrictions on school bus contracts in New York City by codifying contract components that the courts struck down.
It is critical that the City maintain flexibility to procure and negotiate pupil transportation contracts and secure savings for future taxpayers.
This costly and ill-advised bill should be rejected.
Key Data
$1.4 billion
— Annual cost of New York City pupil transportation.
CBC Vice President Maria Doulis says MTA managers, riders, and drivers will all be making sacrifices through job cuts, fare hikes, and congestion pricing, so it’s only fair labor contributes as well: “The MTA’s demands reflect the fact that more needs to be done with the workforce in order to…
Establishing non-exclusive commercial waste zones in New York City would significantly reduce vehicle miles traveled while maintaining competition and service quality among carters. This model allows the city to enforce higher labor, safety, and environmental standards through contract requirements while avoiding the risks associated with exclusive service zones.
Recommendations related to Labor Contracts
The City should implement a non-exclusive commercial waste zone program to maintain competition and service quality among carters.
The City's request for proposals should include detailed performance metrics to be tracked and made publicly available for robust program evaluation.
The City should use contract requirements to implement standards for vehicle emissions, safety and training, and labor standards within the commercial waste industry.
Key Data
50 percent
— Reduction in vehicle miles traveled (VMT) expected from moving to a zone model.
58 percent
— Overall VMT reduction provided by an exclusive zone model.
86 percent
— Portion of potential VMT reduction that could be achieved through non-exclusive zones.
20
— Number of zones proposed in the commercial waste zone program.
3 to 5
— Number of carters proposed to serve each zone in a non-exclusive model.
The Metropolitan Transportation Authority faces a severe financial crisis, with projected cash deficits reaching nearly $1 billion by 2022, necessitating a shift in labor contract negotiations. To stabilize finances, the authority should freeze total labor costs, condition wage increases on productivity gains or benefit contribution adjustments, and reform work rules to improve operational efficiency.
Recommendations related to Labor Contracts
The MTA should revise the assumption that all represented workers will receive 2 percent wage increases annually and instead condition any pay increases on generating offsetting savings.
The authority should increase employee health care contributions of represented workers to levels similar to the non-represented workforce to defray a significant share of the $1.4 billion health and welfare expense.
State legislation should be passed to change pension benefits for prospective employees, such as increasing member contribution rates or changing benefit calculations, to reduce long-term costs.
Management and labor should set productivity goals and collaboratively develop an agenda of collective bargaining changes that would allow both sides to achieve these goals, such as incentives for maintenance shops.
New collective bargaining agreements should change work rules to make scheduling more flexible, such as reducing penalty payments for bus operators and allowing management to schedule split runs for subway train operators.
Key Data
$976 million
— Projected annual cash deficit in 2022.
$10 billion
— 2019 labor costs, representing nearly three-fifths of the MTA’s operating budget.
$84,955
— Median earnings for MTA workers in 2017.
$496 million
— Potential annual savings from increasing subway maintenance productivity to the median for selected U.S. systems.
$444 million
— Potential annual savings if MTA bus productivity matched the median for selected U.S. systems.
$86 million
— Potential savings if the Long Island Rail Road matched the total productivity of Metro-North.
7.42% is the compounded salary and wage increases for members of DC37, the City’s largest municipal union for civilian workers, under a new contract that sets the pattern for negotiations with other labor unions. NYC Labor Commissioner Bob Linn joins the podcast to discuss this deal, the dynamics of negotiating…
Uniformed overtime spending at the Fire Department and Department of Correction remains high, with excessive costs driven by factors like high absenteeism and current sick leave policies. Addressing these fiscal challenges requires negotiating work rule changes in upcoming labor contracts rather than relying solely on hiring or spending caps.
Recommendations related to Labor Contracts
The City and municipal unions must negotiate work rule changes in the next round of labor contracts to address the root causes of excessive overtime.
Management and labor must come to the table to develop better strategies to control uniformed overtime costs.
The City should implement a comprehensive strategy and changes to the sick leave policy, which currently grants unlimited sick time to uniformed employees, to address high absenteeism.
Key Data
$1.2 billion
— Total uniformed overtime earned in fiscal year 2016.
$19,400
— Average overtime earned per uniformed employee in fiscal year 2016.
53 percent
— Portion of the uniformed workforce earning overtime pay in excess of 20 percent of base salary in fiscal year 2016.
$272 million
— Uniformed overtime spending at the Fire Department in fiscal year 2017.
$240 million
— Uniformed overtime spending at the Department of Correction in fiscal year 2017.
7 percent
— Absence rate for sick leave and line-of-duty injury leave at the Fire Department in the first four months of 2018.
Labor expenses for the MTA's commuter railroads have grown at an average annual rate of 3.7 percent, significantly outpacing regional inflation, while management faces the challenge of negotiating with 21 different bargaining units. To address these rising costs and inefficiencies, the MTA needs to prioritize productivity reforms and standardize work rules across its railroads during future collective bargaining negotiations.
Recommendations related to Labor Contracts
The MTA should standardize work rules across the two railroads to help generate savings, such as implementing split-shift scheduling for LIRR crews.
MTA management should begin identifying its agenda for improved productivity in advance of upcoming collective bargaining rounds.
The MTA must secure commitments to increase productivity in future labor agreements, rather than focusing solely on wage increases.
Key Data
$172 million
— Potential annual savings from aligning LIRR per-mile operating costs with Metro-North.
$13 million
— Potential annual savings from applying split-shift work rules to LIRR crews.
21
— Number of different bargaining units with which MTA management must negotiate.
3.7 percent
— Average annual growth rate of labor expenses at the commuter railroads over the past five years.
17 percent
— Total wage increases provided in the 2014 six and one-half year contract.
5 percent
— Total wage increases included in the 2017 28-month agreement with the LIRR's two largest unions.
The School Bus Grant Program, which provides salary and benefit support to firms lacking employee protections for seniority and pay, should be rejected because it circumvents competitive bidding and increases taxpayer costs. Instead, pupil transportation contracts should be rebid to foster competition and generate savings to offset the costs of restoring these labor protections.
Recommendations related to Labor Contracts
The City Council should reject the School Bus Grant Program, which circumvents the public procurement process.
The de Blasio Administration should find savings in pupil transportation, which will cost $1.1 billion in fiscal year 2018.
All new school bus contracts should be awarded with an eye toward realizing savings in the costs of pupil transportation.
The contracts should be rebid with the goal of generating savings to offset the increased costs incurred from the restoration of the EPPs.
The City should prioritize finding savings in pupil transportation as it increases investigation and oversight of major city services.
Key Data
$42 million
— Cost to extend the School Bus Grant Program for fiscal year 2018.
$1.1 billion
— Projected cost of pupil transportation in fiscal year 2018.
$1.2 billion
— Annual cost of pupil transportation.
$28 million
— Cost of the School Bus Grant Program in its first year, fiscal year 2015.
$136 million
— Total four-year cost of the School Bus Grant Program.
$400 million
— Savings achieved by rebidding contracts without EPPs.
The Project Labor Agreement between the New York City Housing Authority and the Building and Construction Trades Council, which aimed to reduce costs and increase resident employment, requires an independent evaluation of its actual impact on operations and budget before any renewal decision is made. This assessment should specifically analyze the agreement's effect on capital repair speed, project costs, and the actual participation of public housing residents in union apprenticeship programs.
Recommendations related to Labor Contracts
The city should conduct an independent evaluation of the PLA's impact on NYCHA's budget and operations, including speed and quality of work and cost of renovation and rehabilitation projects.
The evaluation should examine the extent to which NYCHA residents have participated in BCTC pre-apprenticeship and apprenticeship programs annually since the PLA went into effect.
A review should commence immediately in order to have the results prior to making a decision on renewal.
Key Data
3 percent
— Projected savings in labor costs from the Project Labor Agreement.
100 to 120
— Number of union apprenticeship positions the BCTC would provide annually for NYCHA residents.
New York City's capital construction projects are significantly impacted by state-mandated prevailing wage laws and the use of Project Labor Agreements, which influence both labor costs and managerial flexibility. Renewing these agreements and reforming contracting rules could improve cost-effectiveness and project management efficiency for future capital investments.
Recommendations related to Labor Contracts
The City should renew its Project Labor Agreements to reduce labor costs and improve managerial flexibility.
City leaders should advocate for changes to contracting rules that increase costs and impede efficient construction management.
The State should repeal the Wicks Law to allow for more efficient construction management.
The City should expand its toolbox for effective contracting, including the latitude to award construction contracts on a “best value” basis.
The City should seek the authority to pursue public-private partnerships to achieve savings across both capital and operating budgets.
Key Data
3 to 15 percent
— Savings achieved on 213 project contracts through Project Labor Agreements.
$300 million
— Estimated capital budget savings over four years from Project Labor Agreements.
200 percent
— Amount by which mandated prevailing wages exceeded mean hourly wages in the New York City metropolitan area for some titles and trades.
25 percent
— Increase in the cost of housing construction caused by prevailing wage mandates.
Uniformed overtime spending has grown significantly, driven by factors like fixed post staffing, absenteeism, and restrictive labor contract provisions. To control these costs, the City should establish a labor-management committee to negotiate work policy reforms, such as capping sick leave and modifying overtime rules.
Recommendations related to Labor Contracts
The City should establish a uniformed labor-management committee as part of the next round of collective bargaining in order to reduce uniformed overtime spending.
The City should adopt a system in which routine sick leave usage is accrued and capped, similar to the system for civilian employees.
The City should change certain work rules, such as eliminating overtime for travel to alternate work locations and guaranteed minimum overtime hours.
The City should institute a per employee cap on overtime hours or overtime earnings, as exists for civilian employees.
The City should cap or eliminate overtime earnings in calculating final average salary for pensions, though this would require State legislative approval.
Key Data
$1.4 billion
— The City has increased overtime expense in the Adopted Fiscal Year 2018 budget to this amount.
$1.7 billion
— Fiscal year 2016 overtime spending, which is equal to 8 percent of the City's spending on salaries.
$1.8 billion
— As of June 2017, overtime spending for fiscal year 2017 was projected to be this amount.
$19,400
— Uniformed overtime payments averaged this amount per employee in fiscal year 2016.
$1.2 billion
— For fiscal years 2015 and 2016, uniformed overtime costs have been roughly this amount a year.
$509 million
— Current projections put the fiscal year 2017 overtime budget at this amount over the adopted amount.
The program providing grants to school bus transportation companies to maintain employee wages and benefits should be discontinued, as it undermines the integrity of the City's competitive bidding process. These supplemental payments to contractors, which have been renewed for a third year, set a troublesome precedent for other vendors seeking similar contract enhancements.
Recommendations related to Labor Contracts
The administration should discontinue the program providing grants to school bus transportation companies to maintain the wages and benefits of certain employees.
Between fiscal years 2012 and 2017, New York State labor contracts negotiated under Governor Cuomo featured a mix of zero-percent wage increases, lump-sum payments, and percentage-based raises across various public employee unions. These agreements reflect the specific compensation adjustments applied to different bargaining units during that period.
Key Data
$2,625
— Wage increase for PBANYS in 2012.
$775
— Lump sum payment negotiated for several unions in 2014.
2%
— Standard wage increase negotiated for most unions in 2015 and 2016.
1.50%
— Wage increase for NYSPIA and NYSPBA in 2017.
New York City's teachers' retirement system guarantees a 7 percent investment return on a tax-deferred compensation plan, costing taxpayers $1.2 billion annually due to the gap between this guarantee and market rates. This arrangement, which creates significant financial risk and taxpayer subsidies, should be reformed by eliminating the current plan or converting it to market-based investment options.
Recommendations related to Labor Contracts
The most direct way to make the change would be to eliminate the TDA and transfer its assets and participants to OLR’s plan.
A more gradual change would be to require only newly hired teachers to use the OLR plan, but to reform the TDA plan serving current teachers and retirees.
The fixed income option should be converted to choices comparable to those offered in the OLR plan – a government bond fund and a corporate bond fund with returns based on prevailing interest rates.
Key Data
$1.2 billion
— Excess interest payments at taxpayer expense in fiscal year 2015.
7.0 percent
— Guaranteed interest rate on the TDA fixed fund option for most participants.
$18.7 billion
— Amount of money in the fixed fund in 2015.
36 percent
— Taxpayer subsidy as a percentage of the total taxpayer contribution to the TRS QPP in 2015.
The Metropolitan Transportation Authority faces significant financial uncertainty as most of its unionized workforce contracts expire in 2017, with potential wage increases threatening to deplete cash reserves. To mitigate these risks, the agency should consider reviving initiatives that offset wage hikes with productivity improvements or work rule changes to maintain stable labor costs.
Recommendations related to Labor Contracts
The MTA should revive the Net-Zero Labor Initiative to offset wage increases with work rule changes or productivity improvements.
The MTA should seek reductions in OPEB funding obligations by requiring current and future retirees to share the cost of health insurance premiums.
MTA leadership should continue and intensify its efforts to identify and implement efficiencies to manage labor costs.
Key Data
$14 billion
— The MTA's total OPEB liability as of March 31, 2016.
$892 million
— Cumulative increase in payroll expense over the financial plan period if arbitration results in 3.7% annual wage increases.
$1 billion
— Potential savings through 2020 if the MTA revives the Net-Zero Labor Initiative.
$608 million
— The cost of OPEB Current Payment listed in the 2017 financial plan.
$84 million
— Increase in payroll expense in 2017 if arbitration results in 3.7% annual wage increases.
$233 million
— Cumulative increase in payroll expense over the financial plan if wages increase 2.45% annually.
New York State's retiree health insurance benefits are significantly more generous than private and public sector norms, costing taxpayers $1.3 billion in fiscal year 2016 with projections to reach $1.7 billion by 2020. Adopting the Governor's proposed reforms to Medicare reimbursements and premium subsidies would generate $42 million in annual savings by 2020 and reduce the state's $63 billion long-term unfunded liability by over 25 percent.
Recommendations related to Labor Contracts
The Legislature should adopt the Governor’s Executive Budget proposal to reduce growing retiree health insurance costs.
The State should end reimbursement for the Income Related Monthly Adjustment Amount (IRMAA) to align with federal policy and stop subsidizing higher-income retirees.
The State should freeze reimbursement for the regular Medicare Part B premium at the 2015 rate of $105 monthly.
The State should moderately reduce the premium subsidy for retirees with less than 30 years of service, while retaining current subsidies for those with at least 30 years.
Key Data
$1.3 billion
— Cost for benefits for approximately 140,000 eligible retirees and their dependents in fiscal year 2016.
$1.7 billion
— Projected cost for retiree health benefits by fiscal year 2020.
$6 million
— Annual savings from ending reimbursement for the Income Related Monthly Adjustment Amount (IRMAA).
$1 million
— Savings in fiscal year 2017 from freezing reimbursement for the regular Medicare Part B premium.
$25 million
— Estimated savings in fiscal year 2020 from reducing premium subsidies for retirees with less than 30 years of service.
$42 million
— Annual savings by fiscal year 2020 from the Governor's proposed reforms.
The New York City Fire Department faces a significant mismatch between its traditional resource allocation, which prioritizes firefighting, and its actual workload, which is dominated by medical emergencies. To address this, the department should pursue strategies such as adjusting ambulance staffing models, increasing medical training for firefighters, and fundamentally reorganizing service delivery through collective bargaining.
Recommendations related to Labor Contracts
The FDNY should apply again to the NYC-REMSCO for permission to change ALS ambulance staffing to one paramedic and one EMT, which would yield about $5 million in savings.
The FDNY should increase the medical training of firefighters so they can handle more situations without reliance on a separate ambulance and its staff.
The FDNY should require EMT qualifications for new applicants for firefighter jobs, which would also effectively create a career ladder for advancement among the EMS staff.
The FDNY should implement new and more nimble staffing arrangements that must be negotiated through collective bargaining to better align resources with service demands.
The FDNY should subsidize the training for all current firefighters to increase the number of personnel trained as EMTs.
Key Data
$5 million
— Estimated annual savings from changing ALS ambulance staffing to one paramedic and one EMT.
$1,200
— Estimated cost per person to subsidize EMT training for all current firefighters.
8 percent
— Percentage of uniformed personnel that would require training to have at least one firefighter on each engine company trained as an EMT.
$39,370
— Starting salary for firefighters, excluding overtime and other differentials.
$76,488
— Firefighter salary after five years, excluding overtime and other differentials.
$31,931
— Starting salary for EMTs, excluding overtime.
The City and the Municipal Labor Committee agreed to save $3.4 billion on health insurance costs between fiscal years 2015 and 2018, but current savings are largely attributed to lower-than-expected premium increases rather than structural changes. To achieve real, permanent savings, the City should pursue initiatives like reducing emergency room utilization and improving chronic disease management rather than relying on projected growth rates.
Recommendations related to Labor Contracts
Initiatives should "bend the cost curve" and achieve recurring savings for City taxpayers.
Savings should be counted clearly and honestly, excluding lower national health care inflation or temporary premium freezes.
The City should pursue initiatives such as reducing emergency room utilization and improving chronic disease management to meet savings targets.
The City should establish premium-sharing with employees and retirees to help bend the cost curve.
The City should reduce per enrollee utilization of services to achieve recurring savings.
The City should lower provider payments through lower fees for service, higher deductibles, or higher copayments.
Key Data
$2.6 billion
— Cost of the City's health insurance plan in fiscal year 2005.
$5.3 billion
— Cost of the City's health insurance plan in fiscal year 2015.
6.7 percent
— Portion of the 2015 budget comprised by health insurance costs.
$3.4 billion
— Total savings target agreed upon by the City and the Municipal Labor Committee between fiscal year 2015 and 2018.
$1.2 billion
— Savings credited to the Municipal Labor Committee agreement in the November modification.
2.89 percent
— The City's actual health insurance rate increase for fiscal year 2016.
New York City could save $96 million annually by renegotiating the sanitation workers' contract to increase route efficiency, expand automated collection, and eliminate unproductive bonuses. These reforms would allow for a 10 percent reduction in the sanitation workforce through attrition while maintaining service standards.
Recommendations related to Labor Contracts
The City should promote flexibility in service arrangements to meet neighborhood needs, including altering the frequency of refuse collection and redesigning routes.
The City should expand the use of automated trash collection by increasing the use of one-worker, automated trucks to reduce injury rates and improve productivity.
The City should eliminate “unproductive” productivity bonuses that are currently paid for meeting tons per truck-shift targets and for dumping on shift, as these are largely determined by route characteristics rather than worker behavior.
The City should diversify its snow removal workforce to include other public employees, private contractors, and retired DSNY employees to reduce reliance on sanitation workers for year-round staffing.
Key Data
$96 million
— Annual savings from implementing three short-term reforms: promoting flexibility, expanding automated collection, and eliminating productivity bonuses.
$72 million
— Annual savings from redesigning routes to increase the average amount of refuse collected per truck-shift from 10 to 12 tons.
$20 million
— Annual savings from expanding the use of one-worker, automated trucks from 8 percent to 18 percent.
$4 million
— Annual savings from eliminating "unproductive" productivity bonuses.
10%
— The percentage reduction in the sanitation workforce that could be achieved through attrition over two years.
$153,594
— The average annual compensation cost per DSNY worker in fiscal year 2012.
Proposed legislation to provide grants for higher wages and benefits to school transportation employees would undermine the integrity of the city's competitive bidding process. Adopting these supplementary payments would require reducing funding for other municipal services to cover costs that exceed the terms of existing, legally binding contracts.
Recommendations related to Labor Contracts
The City Council should reject proposed legislation that would provide grants to pay higher wages and benefits to certain school transportation service employees than those required by the City's contracts with the private bus companies that employ them.
The City should not adopt the proposed measure to provide supplementary payments to contractors, as it is an ill-advised measure.
NY1 The tentative agreement between Mayor Bill de Blasio and the city's teachers union cleared a significant hurdle Friday, but some budget watchdogs are questioning whether a key provision of the deal, to cut health care costs, will actually work.
The municipal workforce is aging, with over one-third of experienced employees eligible for retirement within five years, necessitating a shift in hiring and compensation strategies to attract younger talent. Updating civil service rules and collective bargaining agreements to include more flexible, portable retirement benefits is essential to modernize the workforce and improve job mobility.
Recommendations related to Labor Contracts
City leaders should reconfigure the City’s compensation and hiring practices to attract a young and skilled workforce.
The City should offer more flexible retirement options to encourage job mobility.
The City should implement a defined contribution retirement plan to allow for quick vesting and portability of benefits.
City leaders should convene a task force to analyze city operations and staffing.
The City should update civil service rules and collective bargaining agreements to reflect modern expectations about work.
Key Data
23%
— Percentage of the City’s municipal workforce over age 55 at the end of fiscal year 2012.
19%
— Percentage of the City’s municipal workforce eligible for retirement with full benefits at the end of fiscal year 2012.
15%
— Percentage of the City’s municipal workforce that will be eligible for retirement within five years.
2%
— Percentage of the total workforce that retired in a given year since fiscal year 2007.
$65,299
— Median salary of a City employee in fiscal year 2012.
$34,019
— Median salary of the average New Yorker in fiscal year 2012.
The fiscal year 2015 preliminary budget increases annual reserves from $300 million to $600 million to address the financial risks associated with settling expired municipal labor contracts. This adjustment provides a buffer against potential costs arising from these outstanding agreements.
Key Data
$300 million
— The amount of annual reserves set aside in future years of the financial plan prior to the increase.
$600 million
— The amount of annual reserves set aside in future years of the financial plan after the increase to mitigate risks from the settlement of expired municipal labor contracts.
New York City faces a significant fiscal challenge as all municipal labor contracts have expired, with no budgetary reserves set aside to cover potential wage increases. The financial risk of awarding retroactive pay is substantial, as each 1% raise increases operating costs by approximately $300 million annually, potentially opening a $7 billion budget gap.
Recommendations related to Labor Contracts
The city should adopt a more holistic approach to contract negotiations that considers reforms to health insurance, salaries, work rules, productivity, and cross-agency collaboration.
Policymakers must recognize that the financial risk of awarding retroactive pay grows substantially as contract end dates become more distant, threatening to upset budget balance.
The city must account for the fact that no budgetary reserves exist to pay for any wage increases for the 2010-2013 round of bargaining, making any settlement a direct threat to fiscal stability.
Key Data
$300 million
— The annual increase in operating costs for every 1% raise awarded to the city workforce.
$3.5 billion
— The estimated cost of retroactive pay in fiscal year 2014 if previous patterns are followed.
$7 billion
— The size of the budget gap that would immediately open in fiscal year 2014 if labor settlements are reached.
$3.7 billion
— The cost of providing 2% wage increases to the entire workforce for the 2010-2013 round of collective bargaining.
$30 million
— The cost of a one percent raise for members of the Patrolmen’s Benevolent Association.
300,000
— The number of people employed by the municipal government in New York City.
Negotiating expired municipal labor contracts presents a massive fiscal challenge for the next mayor, as the city lacks reserves to cover potential retroactive pay raises. These settlements could cost the city over $7 billion in one-time payments and nearly $3 billion in annual recurring expenses, necessitating either sharp tax increases or significant spending cuts.
Key Data
$72 billion
— The total size of the city's budget, of which personnel costs make up more than half.
$7 billion
— The potential one-time cost to the city's fiscal year 2014 operating budget if retroactive pay is granted.
10%
— The portion of the operating budget in fiscal year 2014 that would be consumed by the one-time cost of retroactive pay.
$3 billion
— The amount of future recurring costs annually if retroactive pay is granted.
Binding arbitration under the Taylor Law often hinders good-faith collective bargaining by allowing unions to bypass negotiations and secure generous awards that ignore a municipality's fiscal health. Reforms are needed to strengthen the position of local governments, including stricter decision criteria and a clear definition of a locality's ability to pay for contract costs without raising taxes or cutting services.
Recommendations related to Labor Contracts
Revise the binding arbitration law to strengthen localities' position to incentivize union leaders to negotiate.
Give arbitrators more guidance in making determinations and assure that the process, once invoked, moves expeditiously.
Include time limits and deadlines that avoid the uncertainties and risks arising from delayed, retroactive wage awards.
Establish new, more specific decision criteria that place greater emphasis on the fiscal condition of local governments.
Define "ability to pay" as the capacity of a locality to pay all costs of the imposed contract from recurring resources without increasing taxes, making service cuts, or employing fiscal gimmicks.
Key Data
4.5%
— Wage increase awarded to New York City police officers for the 2004-2006 contract.
5%
— Wage increase awarded to New York City police officers for the 2004-2006 contract.
2%
— Proposed limit on annual raises in localities that meet a definition of 'fiscally distressed'.
Port Authority of New York and New Jersey police officers receive compensation that is more generous than most other regional law enforcement agencies, driven by higher base salaries and more extensive supplemental pay. Future collective bargaining agreements should aim to narrow these disparities by aligning officer compensation with that of other large urban police departments in the region.
Recommendations related to Labor Contracts
The next contract for PANYNJ officers should make progress in aligning their pay to that of officers in large urban departments in the region.
The specific terms should be set by collective bargaining, but the result should be hourly rates that are much closer to those of their counterparts in the region served.
The next contract with the PANYNJ officers should make progress in narrowing the disparities by moving them closer to the pay received by officers in other large urban departments in the region.
Key Data
1,700
— The current size of the PANYNJ police force.
$406 Million
— The PANYNJ's 2012 budget allocation for the Public Safety Department.
$372 Million
— The amount allocated for personal service items within the PANYNJ's 2012 Public Safety Department budget.
$83.99
— The hourly pay rate for PANYNJ senior officers in 2009.
$103,500
— The maximum combined base and longevity pay for PANYNJ officers in 2009.
$16,458
— The average overtime earnings for all PANYNJ officers in 2009.
The Metropolitan Transportation Authority faces significant financial constraints, necessitating a 'net-zero' wage increase for transit workers to avoid further fare hikes or service reductions. Any potential wage growth should be offset by productivity improvements, such as work rule changes, or by increasing employee contributions toward health insurance and pension costs.
Recommendations related to Labor Contracts
The award should include work rules changes that will produce savings that allow for enhanced maternity benefits and the accelerated installation of clear partitions for buses.
A more ambitious award could provide for small wage increases, not to exceed inflation, funded by additional productivity concessions or added employee responsibility for health insurance costs: implementing premium-sharing, increasing the contribution toward retiree health insurance, or ending the partial Medicare Part B reimbursement.
The MTA’s proposals for work rule changes deserve serious consideration.
A greater priority should be placed on the safety of TWU employees and on accelerating the installation of the clear bus partitions.
Applying the pattern of a three-year wage freeze appears reasonable given the superior salaries of TWU employees relative to transit workers in other systems and the low contribution that TWU employees now make toward the cost of their health insurance coverage.
Key Data
$140,176
— Average annual compensation for New York City Transit heavy rail vehicle operators in 2010.
$120,908
— Average annual compensation for New York City Transit bus vehicle operators in 2010.
$95,295
— Average annual compensation for New York City Transit heavy rail vehicle maintenance in 2010.
$125,259
— Average annual compensation for New York City Transit bus vehicle maintenance in 2010.
$42,800
— Median wage for all occupations in the New York City area in 2010.
$720 million
— Projected savings from the MTA's 2010 efficiency program in 2012.
The current system of multiple, independent union welfare funds for municipal employees is inefficient and lacks accountability, leading to unnecessary administrative costs and inconsistent benefit management. Consolidating these benefits under the City's health insurance plan and implementing a centralized cafeteria plan for non-health benefits could save taxpayers approximately $146 million annually.
Recommendations related to Labor Contracts
The varying and inefficient package of drug, dental and optical benefits provided by the multiple welfare funds should be replaced by a standard set of benefits included under the City’s health insurance program.
A new centralized plan should be developed to provide non-health related benefits through a centralized cafeteria plan.
New standards should be set to improve accountability for any remaining union welfare fund expenditures, including placing limits on allowable administrative expenditures and establishing reserve requirements.
Key Data
$1 billion
— Annual City payments to union welfare funds.
$146 million
— Total annual savings from consolidating health and administrative benefits.
$12.7 million
— Estimated annual administrative savings from consolidating welfare funds.
$90 million
— Estimated savings from pharmaceutical spending through the use of formularies.
81
— Total number of welfare funds operated by unions for New York City employees.
$3.7 billion
— Cost to the City for health insurance benefits in fiscal year 2010.
New York City could avoid layoffs and service cuts by adopting the labor contract template established by the State's recent agreement with the Civil Service Employees Association. Implementing these measures, including wage freezes, furloughs, and employee health insurance contributions, would generate over $1.4 billion in savings for the 2012 fiscal year.
Recommendations related to Labor Contracts
The City should extend the wage freeze to a third year to achieve $388 million in savings in 2013.
The City should implement a five-day furlough for all municipal employees to save $400 million in 2012.
The City should require city employees and retirees to contribute to health insurance premiums to save $735 million.
The City should adopt the State’s long-standing policy for retiree premium-sharing to save an additional $290 million in fiscal year 2012.
City leaders and the Municipal Labor Committee should consider these labor contract changes seriously to avoid relying on temporary fiscal gimmicks.
Key Data
$3.8 billion
— Five-year savings from the State agreement if adopted by all State employees.
$1.4 billion
— Potential savings for New York City in fiscal year 2012 by following the State template.
$388 million
— Savings in 2013 from extending the wage freeze to a third year.
$400 million
— Savings in 2012 from a five-day furlough for all municipal employees.
$735 million
— Savings from requiring city employees to contribute to health insurance premiums.
$915 million
— Savings from health insurance contributions by 2015.
New York faces a $9 billion budget gap that is projected to grow to $14.6 billion in 2012, necessitating a reduction in spending across school aid, Medicaid, and public employee compensation. Because public employee contracts are set to expire on March 31, 2011, state leaders must negotiate savings to address the state's fiscal realities.
Recommendations related to Labor Contracts
Since public employee contracts will expire on March 31, 2011, savings should be negotiated.
New York City spends $1 billion annually on union welfare funds, which suffer from limited accountability, poor financial management, and inefficient benefit delivery. Consolidating these supplementary health and non-health benefits into centralized city programs could generate approximately $146 million in annual savings.
Recommendations related to Labor Contracts
The City should consolidate supplementary health care benefits under the City’s health insurance plan to leverage large-scale purchasing and expertise.
The City should provide non-health related benefits through a centralized cafeteria plan to achieve economies of scale.
The City should improve accountability for any remaining union welfare fund expenditures by setting new standards for administrative costs and reserve requirements, and granting the Comptroller enforcement powers.
Key Data
$1 billion
— Annual City payments to union welfare funds.
$12.7 million
— Estimated annual administrative savings from consolidating welfare funds.
$90 million
— Estimated savings from pharmaceutical spending through the use of formularies.
$146 million
— Total estimated annual gain from consolidating supplementary health benefits.
$254,052,851
— City payments to District Council 37 in 2007.
$250,646,789
— City payments to the United Federation of Teachers in 2007.
New York City faces a $4.1 billion budget gap that necessitates urgent reforms to teacher contracts, including ending indefinite pay for teachers not in classrooms and replacing seniority-based raises with merit pay. Current regulations, such as the "last in, first out" layoff policy and lengthy termination processes for underperforming staff, protect ineffective teachers at the expense of students and taxpayers.
Recommendations related to Labor Contracts
The city should end compensation for teachers who aren't teaching by limiting the "Absent Teacher Reserve" to a six-month period.
The school system must expedite the termination process for unsatisfactory teachers who are currently paid for years while their cases are considered.
The city should use targeted financial rewards to attract qualified teachers in hard-to-fill fields like special education, math, and science.
The city should replace seniority-based pay hikes with merit pay to better incentivize performance.
The city should eliminate the "last in, first out" rule that forces the layoff of the newest teachers regardless of their performance.
Key Data
$4.1 billion
— The size of the city's budget gap necessitating urgent spending reforms.
$100 million
— The annual cost of paying teachers who are not currently teaching.
1,400
— The number of teachers currently paid to be in the "Absent Teacher Reserve."
$74 million
— The annual cost of the "Absent Teacher Reserve."
640
— The number of teachers currently charged with poor performance or other infractions.
$285 million
— The estimated annual savings from ending pay hikes based solely on seniority.
The state's Deficit Reduction Program addresses a $3.2 billion deficit with a $2.8 billion package, though it relies heavily on non-recurring items and falls short of the Governor's target by $400 million. Additionally, a new pension tier was created, but the inclusion of a provision protecting retiree health insurance benefits from unilateral changes limits school districts' ability to manage costs and sets a precedent for other unions.
Recommendations related to Labor Contracts
The Governor and future Governors must stand firm against other employee groups demanding the same benefits regarding the prohibition of the diminution of health insurance benefits for retired teachers.
Key Data
$2.8 billion
— Total value of the Deficit Reduction Program package.
$400 million
— Amount by which the Deficit Reduction Program fell short of the Governor’s proposed target.
$3.2 billion
— Total current-year deficit.
59%
— Share of the final Deficit Reduction Program package comprised of non-recurring items.
40%
— Share of the Governor's earlier proposal comprised of non-recurring items.
Between fiscal years 2000 and 2008, the average compensation cost for a full-time New York City employee grew by 63 percent, reaching $106,743. This rapid increase was driven primarily by a 700 percent surge in pension contributions and a doubling of health insurance costs, significantly outpacing compensation growth in the private sector and other government entities.
Key Data
$106,743
— Average compensation cost per full-time employee in fiscal year 2008.
63 percent
— Growth in the City's average employee compensation cost since fiscal year 2000.
$69,100
— Average pay per employee in fiscal year 2008.
$37,600
— Average fringe benefit costs per employee in fiscal year 2008.
700 percent
— Growth in the City's average contribution for pension benefits between fiscal years 2000 and 2008.
$20,333
— Average contribution for pension benefits per full-time employee in fiscal year 2008.
In order to promote fiscal reform, the Citizens Budget Commission (CBC) convened three separate agenda-setting conferences for key stakeholders in the state budget process in 2007. Each session focused on one aspect of fiscal reform with a goal of identifying specific changes for the coming budget cycle. The expectation is…
New York City's current teacher contract hinders effective education by prioritizing seniority and longevity over performance, while also limiting instructional time through excessive non-teaching assignments. Reforming these labor agreements to include performance-based pay, financial incentives for shortage areas, and increased managerial discretion for principals is essential to improving student outcomes.
Recommendations related to Labor Contracts
Restructure the pay schedule to make a larger share of compensation conditioned on job performance and to de-emphasize longevity and graduate educational credits.
Provide differential pay for teachers qualified for and serving in specific titles that are suitably deemed in a shortage condition, and who also agree to work in those schools facing the greatest difficulty in securing qualified teachers.
Increase teacher time spent on classroom instruction by reducing preparation and administrative periods, eliminating sabbatical leaves for travel and study, and eliminating subsidized time for union activities.
Enhance principals' managerial discretion by modifying seniority rules to allow principals to select teachers for given posts from among multiple candidates with the most seniority.
Key Data
$9,573
— Annual salary increase a teacher can earn through graduate credits under the current contract.
$32,659
— Annual salary increase a teacher can earn due to longevity under the current contract.
43%
— Percentage of teachers in shortage job titles in the 1999-2000 school year.
4,250
— Equivalent number of teachers added to the payroll if non-teaching time is reallocated to instruction.
13.9
— Number of pupils per teacher in New York City public schools.
New York City's municipal labor contracts, which expired in 2000, present an opportunity to improve public service efficiency and quality through performance-based pay and modernized benefits. By restructuring wage policies, health insurance, and pension systems, the city could achieve net savings of $1.4 billion while better aligning compensation with labor market conditions and performance.
Recommendations related to Labor Contracts
Set pay levels in response to labor market conditions, with shortage occupations receiving greater wage increases than those for which there are abundant applicants.
Change work processes in ways that lower the unit cost of services.
Shift the emphasis in pay scales from longevity to performance by adding a merit pay component to wages.
Modernize the health insurance program for municipal workers and retirees by incorporating changes already prevalent in the private sector.
Streamline the administration of fringe benefits provided through union welfare funds and share the savings in administrative costs with the workers.
Restructure the pension system for newly employed workers to provide a defined contribution rather than a defined benefit plan.
Key Data
$1.4 billion
— Net savings to taxpayers from implementing the Commission's recommendations in fiscal year 2004.
$798 million
— Recurring annual cost of pension enhancements added in 2000 outside of collective bargaining.
$150 million
— Cost of well-targeted, one-time 'catch-up' raises for shortage occupations.
$138 million
— Estimated annual savings from five specific changes to Fire Department work rules.
$500 million
— Direct annual savings from requiring premium cost-sharing for municipal health insurance.
$3.7 million
— Annual savings from reducing administrative costs for smaller union welfare funds.
The contract negotiations between the Board of Education and the United Federation of Teachers offer an opportunity to implement reforms aimed at improving public school performance. These collective bargaining discussions serve as a mechanism to address educational outcomes through structural changes in the labor agreement.
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