Labor costs in New York City and State encompass the wages, benefits, pensions, and overtime pay provided to public employees, as well as the expenses associated with construction and transit operations. This page covers CBC’s work on collective bargaining, municipal workforce productivity, pension and benefit reform, overtime management, and prevailing wage mandates.
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..
Implement additional operating efficiencies in collaboration with labor by modifying work rules, increasing employee availability, and sharing the benefits of additional operational flexibility and higher productivity to cut costs while supporting competitive wages.
The Administration should implement a savings plan that streamlines operations, reduces duplication, phases out lower-impact programs, leverages technology to automate manual processes, and increases productivity in collaboration with labor unions.
The new administration should shift vacant positions across agencies and units based on needs and eliminate excess vacancies.
The City should also give civil service tests and call lists more quickly to speed up hiring and encourage top applicants to seek City employment.
City managers and labor unions should work together to identify work rules that constrain operations and can be modernized or eliminated to increase efficiency.
The Mayor should pursue a collaborative relationship with labor that recognizes their shared interest in a thriving city and a sustainable, efficient municipal government that provides good careers for its employees.
The incoming administration should work with labor to share the fiscal benefits of increased efficiency to fund raises that otherwise may not be affordable, while bringing City spending in line with revenues.
Key Data
In January 2026, the CBC noted that rebidding New York City's health insurance plan was reported to yield $1 billion in savings.
As of December 2025, labor expenses comprised 62% of the MTA's total spending, and each percentage point increase in collectively-bargained annual raises above the assumed 2% would cost the MTA $150 million in the first year.
In November 2025, the CBC noted that New York City's budget assumed annual wage raises of just 1.25% for the next round of collective bargaining, which is below historical patterns.
In September 2025, the CBC reported that New York City's construction labor costs are 10% higher than San Francisco's and double Houston's, while projects using at least some nonunion labor are 20% to 30% less expensive than fully union-built projects.
In October 2024, the CBC reported that enacted Tier 6 pension rollbacks increased State and local costs by $438 million in the first year, driven largely by changing the final average salary calculation from five years to three years, which cost $377 million annually.
New York City's fiscal challenges stem from excessive spending growth, which requires operational improvements like aligning staffing with workload and reforming overtime management to ensure long-term sustainability. Rather than raising taxes, the City should focus on productivity, service redesign, and workforce collaboration to balance the budget while maintaining essential services.
Recommendations related to Labor Costs
Agencies should identify efficiencies based on aligning staffing and workload, streamlining administrative functions, leveraging technology to automate manual processes, and eliminating or redesigning programs that have not demonstrated effectiveness.
Persistent growth in overtime spending presents an opportunity for thoughtful reform through improved management, civilianization, and technology.
The City should expand operational flexibility and modernize job titles to improve productivity.
The City should pursue gainsharing arrangements that allow employees and residents alike to benefit from greater productivity.
New York City faces significant fiscal strain, requiring a shift toward relentless management, accountability, and reform rather than tax increases to address budget gaps. Modernizing labor relations, redesigning work processes, and seeking relief from costly state mandates like class size requirements are essential steps to improve government efficiency and service delivery.
Recommendations related to Labor Costs
The City must update 20th Century labor relations, technology, and bureaucratic processes to meet 21st Century needs.
The Mayor should partner with municipal unions to redesign work processes and broaden worker responsibilities, then share the gains.
The Mayor should request relief from Albany’s class size mandate that costs the City $1 billion, partly to support high-performing schools serving low-need students.
Key Data
$1 billion
— Cost to the City of Albany’s class size mandate.
19 percent
— Increase in City spending since 2023.
$120 billion
— The City's total budget size.
$15 billion
— Amount lower City spending would be today had it kept pace with inflation since 2017.
$2.3 billion
— Amount the City spent more than it received over the past three years.
$8 billion
— The estimated budget gap facing the City.
New York City faces a significant budget gap approaching $8 billion, necessitating a strategic review of programs to prioritize high-impact services and curb spending growth that has outpaced inflation. To address these fiscal challenges, the city must modernize operations, improve labor productivity, and pursue cost-saving measures like rebidding health insurance plans and repealing restrictive mandates.
Recommendations related to Labor Costs
The City should leverage technology, modernize outdated operations, and work with labor to boost productivity.
The spending plan should reflect the reported $1 billion in savings from rebidding the City’s health insurance plan.
The State should repeal the class size mandate, which restricts the Mayor’s flexibility and drives higher spending that widens the budget gap.
Key Data
$8 billion
— The estimated fiscal year 2027 budget gap facing New York City.
$14.5 billion
— The amount by which city spending would be lower today if it had tracked inflation.
$1 billion
— The projected savings from rebidding the City’s health insurance plan.
The Metropolitan Transportation Authority faces significant long-term fiscal risks, including potential labor cost increases that could exceed the 2 percent annual wage growth assumed in its financial plan. To maintain fiscal stability, the agency must negotiate contracts that improve operational flexibility and productivity while managing rising expenses.
Recommendations related to Labor Costs
Implement additional operating efficiencies in collaboration with labor by modifying work rules, increasing employee availability, and sharing the benefits of additional operational flexibility and higher productivity to cut costs while supporting competitive wages.
Key Data
62.0 percent
— Labor expenses account for 62.0 percent of total spending in the 2025 Adopted Budget.
$150 million
— Each percentage point of wage increases above the assumed 2 percent would cost $150 million in the first year and compound annually.
2 percent
— The Financial Plan assumes 2 percent annual wage increases for the next round of collective bargaining.
2017
— Actual wage increases have exceeded 2 percent per year since 2017.
New York City's budget faces significant pressure from unsustainable spending and underbudgeting, necessitating a strategic approach to labor management and operational efficiency. The administration should modernize collective bargaining agreements and streamline hiring processes to align staffing with actual needs while controlling costs.
Recommendations related to Labor Costs
The Administration should implement a savings plan that streamlines operations, reduces duplication, phases out lower-impact programs, leverages technology to automate manual processes, and increases productivity in collaboration with labor unions.
The new administration should shift vacant positions across agencies and units based on needs and eliminate excess vacancies.
The City should also give civil service tests and call lists more quickly to speed up hiring and encourage top applicants to seek City employment.
City managers and labor unions should work together to identify work rules that constrain operations and can be modernized or eliminated to increase efficiency.
The Mayor should pursue a collaborative relationship with labor that recognizes their shared interest in a thriving city and a sustainable, efficient municipal government that provides good careers for its employees.
The incoming administration should work with labor to share the fiscal benefits of increased efficiency to fund raises that otherwise may not be affordable, while bringing City spending in line with revenues.
Key Data
19,302
— Number of full time and 'full-time equivalent' vacant positions in the City as of June 2025.
$682 Million
— Amount of uniform overtime underbudgeting in the fiscal year 2027 budget.
1.25 percent
— Annual raise assumption for the next round of collective bargaining included in the current budget.
100-plus
— Number of collective bargaining agreements that contain antiquated provisions the City should change.
The proposed legislation A2747A/S2536A would mandate prevailing wages for off-site custom fabrication of building components, which would significantly increase the costs of state and locally funded capital projects. By forcing off-site producers to adopt local wage standards, the bill threatens to eliminate the cost savings and efficiency gains currently achieved through modular and prefabricated construction methods.
Recommendations related to Labor Costs
The Governor should veto A2747A/S2536A to prevent the unnecessary expansion of prevailing wage requirements to off-site custom fabrication.
The State should allow the City and State to continue to use off-site custom fabrication without prevailing wages when it would reduce the time or cost of a capital project.
Key Data
20 percent to 50 percent
— Modular building can accelerate project delivery by this amount.
up to 20 percent
— Modular building can reduce costs by this amount.
$1 million
— Cost per structure for prefabricated public restrooms.
$3.5 million
— Cost per structure for a typical park bathroom built fully on-site.
30 percent
— Public subsidy threshold of total costs that triggers prevailing wage requirements for covered projects.
Seventeen proposed bills would increase public employee pension and benefit costs for New York State and local governments without providing additional services or offsetting savings. These measures, which include expanded disability and death benefits, would impose significant financial burdens on taxpayers outside of the standard budget process.
Recommendations related to Labor Costs
The Governor should veto the 17 bills because they increase costs to New York State and local governments outside of the budget process without enhancing public services.
The Governor should reject the eight bills that expand eligibility and/or pension benefits for public employees, as these create long-term financial liabilities.
The Governor should veto the nine bills that enhance disability and/or death benefits for public employees, as these expansions increase public costs without providing additional services.
Policymakers should avoid granting targeted benefit enhancements, as this increases costs and may encourage further expansions that also increase costs to the public.
Key Data
$30.0 million
— Immediate costs estimated for 12 of the bills with complete fiscal notes.
$18.1 million
— Annual costs thereafter for 12 of the bills with complete fiscal notes.
$5.9 million
— Annual cost of S6486/A6942, which reduces the length of service requirement for Tier 3 members of the Unformed Sanitation Force and Uniformed Correction Service.
$3.9 million
— Annual cost of S4727/A5861, which reduces the length of service requirement for Tier 3 members of the New York City Fire Pension Fund.
$4.9 million
— First-year cost of S5083/A5898, which provides an in-service death benefit for retirement-eligible members of NYSLRS employed as State-paid judges or justices.
$4.2 million
— Annual cost of S6640/A6784, which extends the 'death gamble' benefit to Tier 4 and Tier 6 Special Plan transit members of NYCERS.
The MTA faces a structural budget gap exceeding $800 million annually, which could worsen if labor contract raises exceed 2% per year. To address these financial challenges, the agency must pursue work rule changes during upcoming union negotiations to increase productivity and operational flexibility while ensuring fair wage increases.
Recommendations related to Labor Costs
The MTA and its unions should pursue work rule changes that increase productivity and operational flexibility during upcoming contract negotiations to support fair wage increases.
Labor should be a partner in efforts to find recurring operating efficiencies to help close the MTA's structural budget gap.
Key Data
2%
— The threshold for annual labor contract raises that, if exceeded, could contribute to the growth of the MTA's budget gaps.
$500 million
— The amount of recurring operating efficiencies the MTA has identified over the past several years.
$800 million
— The amount by which the MTA's structural budget gap exceeds annually.
New York City's construction costs are among the highest in the world, driven significantly by high labor expenses, restrictive work rules, and complex regulatory requirements. To increase housing production, the city and state must modernize building codes, reform prevailing wage mandates, and repeal the Scaffold Law to reduce the financial burden on developers.
Recommendations related to Labor Costs
The City and State should better balance the trade-off between prevailing wage requirements and production to ensure new residential development remains financially feasible.
The State should repeal New York’s exceptional Scaffold Law and adopt the liability standards used in every other state in the country to reduce insurance costs.
The City could align construction codes and regulations with best practices from other global cities to allow the use of materials that require fewer labor hours to install.
The City could encourage efficient and innovative technologies like off-site production and modular housing to boost productivity.
Key Data
10%
— New York's labor costs are this much higher than San Francisco's across all types of development.
40%
— New York's labor costs are at least this much higher than in Chicago or Los Angeles.
23%
— Affordable housing projects with prevailing wage requirements cost this much more to build.
20% to 30%
— Projects that use at least some nonunion labor are this much less expensive than union-built projects.
7%
— The Scaffold Law increases total development costs by at least this amount.
Prohibiting one-person train operation would cost the Metropolitan Transportation Authority up to $10 million annually, while implementing the practice systemwide could save $442 million each year. Maintaining current staffing requirements for train operations prevents the transit system from adopting modern, cost-effective efficiencies used by major global subway networks.
Recommendations related to Labor Costs
The Governor should veto A4873/S4091, which would prohibit the Metropolitan Transportation Authority from using one-person train operation.
The state should leave operational strategies and decisions to management as the best, most flexible path to high-quality service at the lowest cost.
State laws should focus on ensuring agencies are high performing and transparent, and that management is accountable.
Key Data
$442 million
— Estimated annual savings from using one-person train operation systemwide.
$10 million
— Estimated annual cost of ceasing one-person train operation on the A, G, M, 5, and shuttle services.
New York City's total on-board headcount reached 306,248 at the end of fiscal year 2024, marking a 1% increase from the previous year. The Department of Education and the Police Department accounted for 62% of this total, despite experiencing declines in their respective staffing levels between fiscal year 2019 and 2024.
Key Data
306,248
— Total on-board headcount at the end of fiscal year 2024.
62%
— Share of City on-board headcount comprised by Department of Education and Police Department employees in fiscal year 2024.
3,072
— Increase in on-board headcount from fiscal year 2023 to fiscal year 2024.
New York State is increasingly enacting 'sweeteners' and rolling back Tier 6 pension reforms, which significantly increase public sector labor costs without providing commensurate service improvements. These legislative actions add billions of dollars in new pension liabilities and hundreds of millions in annual costs to state and local government budgets.
Recommendations related to Labor Costs
State lawmakers should cut the sweetener habit and should stick to a healthy Tier 6 diet as enacted over a decade ago.
Governors should veto sweeteners that are enacted outside of the budget or collective bargaining processes.
Lawmakers should maintain the valuable Tier 6 reforms, which continue to offer generous defined benefits for public employees.
Key Data
$438 million
— Total first-year annual cost of enacted Tier 6 reform rollbacks.
$4.3 billion
— Increase in the net present value of pension benefits for current members due to enacted changes.
$1.5 billion
— Annual price tag of just one proposed Tier 6 rollback.
$19.8 million
— Immediate cost of 11 sweetener bills identified for veto in 2024.
$377 million
— Annual cost increase to State and local governments from changing the final average salary calculation.
$61 million
— Annual pension contribution cost increase to State and local governments from changing the minimum vesting period.
New York State is considering 12 bills that would expand pension, disability, and death benefits for public employees, which would increase costs to taxpayers without providing additional services. These legislative proposals, which lack offsetting savings, would add at least $90.1 million in immediate costs and millions more annually.
Recommendations related to Labor Costs
The Governor should veto 12 bills that enhance benefits and increase costs to New York State and local governments outside of the budget process.
Veto S8472-A/A8918-A, which would establish a 20-year retirement plan for members of the regional state park police, environmental conservation officers, forest rangers, and university police officers.
Veto S6141-B/A6508-B, which would provide additional retirement benefits for Suffolk County correction officers.
Veto S8855/A9646, which would allow current and future employees represented by the United Federation of Teachers serving in New York City Board of Education Retirement System titles to join or transfer into the New York City Teachers' Retirement System.
Veto S7498-A/A7572-A, which would allow certain Tier 4 members in New York City Employees’ Retirement System and NYCBERS automotive plans with 30 or more years of service to receive a service retirement benefit calculated under the Tier 4 basic plan.
Veto S7128-B/A7681-A, which would grant current New York City FIRE Pension Fund members a five-year window to purchase prior time as an NYPD cadet.
Veto S7462-B/A10529, which would allow retired members of the New York State Teachers' Retirement System to suspend their retirement, return to work, and have the option of a benefit recalculation.
Veto S8408/A9084, which would extend the 'death gamble' benefit to retirement-eligible members of the NYSLRS who are employed by New York State as correction officers and security hospital treatment assistants.
Veto S7567-A/A9143, which would provide an in-service death benefit for retirement-eligible members of the NYSLERS who are employed as State-paid judges or justices of the Unified Court System.
Veto S7224-B/A7563-B, which would extend the death gamble benefit to transit Tier 4 and Tier 6 Special Plan member of the NYCERS.
Key Data
$90.1 million
— Immediate costs for eight of the bills.
$16.9 million
— Annual costs for eight of the bills.
$70.3 million
— First year cost for S8472-A/A8918-A for past service costs.
$6.6 million
— Annual cost for S8472-A/A8918-A.
$5.5 million
— First year cost for S6141-B/A6508-B for past service costs.
$10.4 million
— First year cost for S8408/A9084 for past service costs.
The Metropolitan Transportation Authority's proposed 2025-2029 capital plan requires trimming to a more achievable level to address a structural budget gap that will exceed $1 billion by the end of the decade. To support financial stability, the agency must reduce fare evasion and secure labor's partnership in increasing productivity.
Recommendations related to Labor Costs
The MTA must reduce fare evasion, and labor must be a partner to increase productivity; both are essential to stabilize the operating budget and provide the capacity to finance debt.
The city's adopted budget fails to account for the full recurring costs of essential labor, including overtime and prevailing wages for shelter security and school nurses, by funding them on a year-to-year basis. This practice obscures the true scale of future budget gaps and risks the long-term sustainability of city services.
Recommendations related to Labor Costs
The City must include the full recurring costs of overtime in the budget to ensure fiscal accuracy.
The City must include the full recurring costs of prevailing wages for shelter security and school nurses in the budget rather than funding them one year at a time.
The City should adopt a transparent, accurate budget that fully funds planned services and identifies those that will shrink.
The proposed expansion of Tier 6 pension benefits would impose a significant financial burden, costing state and local governments nearly $400 million annually. This unfunded mandate would further increase public employee pension contributions by $320 million in the coming year, exacerbating existing fiscal stress.
Recommendations related to Labor Costs
The proposed change to Tier 6 pension benefits, which will cost the State and local governments in New York nearly $400 million per year, is unnecessary, expensive, and should be rejected.
Key Data
nearly $400 million
— Annual cost to the State and local governments in New York for the proposed change to Tier 6 pension benefits.
$320 million
— Increase in pension contributions for public employees next year due to the proposed Tier 6 benefit change.
Personnel costs at the New York City Housing Authority reached $1.5 billion in 2023, accounting for half of the agency's public housing operating budget. Despite rising labor expenses, which increased 7 percent per unit to $760 per month, recent collective bargaining agreements failed to include necessary reforms to improve productivity or reduce overtime.
Recommendations related to Labor Costs
Negotiate savings, boost productivity, and modernize property management through collective bargaining.
Improve management effectiveness and efficiency, and publicly track progress and impact.
Key Data
$1.5 billion
— Personnel costs in 2023, which accounted for half of the public housing operating budget.
7 percent
— The increase in labor costs on a per-unit basis from 2022 to 2023.
New York City's fiscal year 2025 preliminary budget faces a $3.6 billion shortfall, driven by chronic underbudgeting in areas like uniformed overtime and various city-funded programs. To achieve fiscal stability, the city must implement additional savings plans, prioritize impactful programs, and engage in close collaboration with labor to manage costs effectively.
Recommendations related to Labor Costs
To increase transparency, deliver critical services, and stabilize the budget, the City should prioritize and fund effective and impactful programs, shrink or eliminate less critical and effective programs, and increase efficiency, which will require hard choices, diligent management, and close collaboration with labor.
The City should implement an additional PEG in the Executive Budget and shrink or eliminate programs that the available resources cannot fully support.
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.
The Administration should continue with its original plan to implement a PEG in the Fiscal Year 2025 Executive Budget.
To be fully transparent, the budget should include funding for all planned programs and acknowledge that under- and un-funded programs will shrink or end.
Key Data
$800 million
— The total amount of chronic underbudgeting, which includes $655 million for uniformed overtime and $145 million for mandated MTA subsidies.
$1.1 billion
— The fiscal year 2024 overtime budget for uniformed agencies that was fully spent in just seven months.
$324 million
— The amount by which the overtime budget of the four uniformed agencies is still likely below what will be needed.
$666 million
— The amount added to the budget to rectify underbudgeting of overtime at uniformed agencies and the City’s subsidy to the Metropolitan Transportation Authority.
New York City faces significant budget shortfalls that require prioritizing cost-effective services and operational efficiency rather than raising taxes or depleting reserves. Addressing these fiscal challenges necessitates collaborative efforts with labor to reform work rules, job titles, and benefit structures to ensure services are delivered efficiently.
Recommendations related to Labor Costs
The city must engage in collaborative discussions with labor to implement agreed-upon changes to work rules, job titles, health insurance and other benefit structures to deliver services efficiently.
New York City faces a significant budget gap exacerbated by recent collective bargaining agreements that added $16 billion in costs through 2027 without corresponding productivity increases. To address this, the City must engage labor unions to implement necessary changes to work rules, job titles, and benefit structures to improve service efficiency and fiscal sustainability.
Recommendations related to Labor Costs
The City must secure agreed-upon changes to work rules, job titles, health insurance, and other benefit administration structures to deliver services efficiently.
Future collective bargaining agreements must include offsetting productivity increases to help pay for the added costs of raises.
Key Data
$16 billion
— The amount of added costs through 2027 resulting from recent collective bargaining agreements that lacked offsetting productivity increases.
New York State should veto 20 proposed bills that would expand pension, disability, and death benefits for public employees, as these measures increase public costs without providing offsetting savings or improved services. These legislative additions, which follow similar benefit sweeteners enacted in the previous budget, impose significant immediate and long-term financial burdens on state and local governments.
Recommendations related to Labor Costs
The Governor should veto the 20 bills that enhance pension and benefit costs for public employees outside of the budget process.
Policymakers should reject legislation that increases public labor costs without providing offsetting savings or improved services.
The state should avoid granting targeted benefit enhancements that encourage further expansions and increase long-term public expenditures.
Key Data
$50.7 million
— Immediate cost of 14 bills with fiscal notes.
$30.3 million
— Annual cost of 14 bills with fiscal notes.
$1 million
— Immediate cost of 6 benefit sweeteners included in the Fiscal Year 2024 Enacted Budget.
$12.2 million
— Annual cost of 6 benefit sweeteners included in the Fiscal Year 2024 Enacted Budget.
$23.4 million
— Immediate past service cost for S4972/A5136, which extends Tier 6 pension calculations.
$12.2 million
— Immediate past service cost for S5653/A5679, which allows early retirement for uniformed court officers.
The Metropolitan Transportation Authority faces significant labor-related expense risks, including higher-than-budgeted overtime costs and the need to achieve operational efficiency savings. To address these fiscal challenges, the agency must work with labor partners to implement work rule changes and identify productivity improvements that could yield up to $2.9 billion in savings.
Recommendations related to Labor Costs
The MTA should work with labor partners to implement work rule changes to achieve up to $2.9 billion in operational savings.
The MTA must continue to identify ways to increase productivity and reduce costs to mitigate potential budget gaps.
The MTA should closely monitor the implementation of operational efficiency savings to ensure it does not fall short of planned savings related to labor and other expenses.
Key Data
$175 million
— Projected payroll savings due to lower-than-budgeted headcount.
$200 million
— Amount of higher-than-budgeted overtime that offsets projected payroll savings.
$2.9 billion
— Potential operational savings identified from benchmarking productivity to other transit systems.
$140 million
— Estimated amount by which overtime will exceed budgeted levels in 2024.
The City faces a widening fiscal gap of $10.6 billion for fiscal year 2025, necessitating a strategic review of program efficiency and service priorities. To preserve critical services while managing costs, the City must collaborate with labor to implement necessary changes to work rules and job titles.
Recommendations related to Labor Costs
Services will be best preserved if the City works with labor, making changes as needed to work rules and job titles, with a focus on maintaining high-quality critical services while reducing costs.
City leaders should take significant steps to reduce costs by working with labor to improve efficiency while sparing critical services.
Key Data
$150 million
— Potential savings from consolidating welfare benefit funds without cutting actual benefits.
New York City faces a significant fiscal cliff with projected budget gaps reaching up to $13.8 billion, driven by years of expanded programs and unfunded union raises. To stabilize the budget, the city must prioritize program efficiency, manage headcount smartly, and collaborate with labor to improve service delivery.
Recommendations related to Labor Costs
Many of the best ideas will likely come from management and labor collaborating to change processes and enhance workers’ skills.
The mayor’s office should take a hard look at staffing and performance, and make nuanced decisions to ensure city government can function well.
City headcount should be managed smartly.
Key Data
$16 billion
— The amount added to the budget for city and union raises that was not identified as funded.
50%
— The increase in city-funded spending over the past decade.
15%
— The total percentage of savings city agencies were directed to prepare for across three rounds of cuts.
The Metropolitan Transportation Authority faces significant fiscal risks regarding future labor costs, as the current financial plan assumes annual employee raises of 2 percent after 2026. If future labor contracts exceed this assumption, the agency will face budget gaps, with each additional percentage point increase in raises costing approximately $100 million annually.
Key Data
$100 million
— The annual cost impact of each additional percentage point increase in employee raises.
2 percent
— The annual employee raise rate assumed in the MTA budget after 2026.
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 faces a long-term structural budget gap that threatens its financial stability, driven in part by rising labor costs and collective bargaining agreements that exceed budget projections. To address these fiscal challenges, the agency must implement operational reforms, such as one-person train operations and flexible work rules, to align service levels with current ridership demands.
Recommendations related to Labor Costs
The MTA should implement one-person train operation (OPTO) on subways, an industry standard practice that would increase efficiency and save $442 million annually.
The MTA should reduce the cost of commuter rail services by verifying fare payment at turnstiles or with proof of payment systems, which would save nearly $300 million per year.
The MTA should reduce maintenance and operating costs by targeting peer benchmark levels, a move that could save up to $1.6 billion annually.
The MTA should negotiate work rule changes with labor unions to allow the agency to adjust schedules and services to meet shifting rider needs.
Key Data
$442 million
— Annual savings from expanding one-person train operation (OPTO) systemwide.
$300 million
— Annual savings from reducing the cost of commuter rail services by verifying fare payment.
$1.6 billion
— Potential annual savings from meeting benchmark maintenance and operations levels.
$330 million
— Annual amount by which the cost of the Transport Workers Union (TWU) Local 100 collective bargaining agreement exceeds budgeted raises.
$765 million
— Estimated amount by which the cost of the TWU deal would exceed the budget in the first three years of the contract.
The Metropolitan Transportation Authority faces rising operating expenses, with labor costs projected to exceed the budget by $330 million annually by 2026 if the tentative union agreement is adopted. To maintain fiscal stability, the agency must implement productivity improvements and operational efficiencies, such as expanding one-person train operations and modifying shift parameters.
Recommendations related to Labor Costs
The MTA and union leadership should implement changes to increase productivity and flexibility, including expanding One-Person Train Operation, increasing worker availability, and modifying shift parameters and job duties.
The MTA and union leadership should collaborate to work smarter to ensure all stakeholders contribute to a strong MTA that supports the region’s economy and New Yorkers’ quality of life.
The MTA and union leadership should pursue more actions to increase efficiency that offset costs beyond what has been publicly reported in the tentative agreement.
Key Data
$330 million
— Annual labor costs are projected to be roughly $330 million more than budgeted by 2026 if the tentative Transport Workers Union pattern is adopted system-wide.
3.3 percent
— The MTA’s operating expenses are projected to increase at 3.3 percent per year from 2023 to 2026 due to added labor costs.
NYCHA's financial instability is exacerbated by high labor costs, including ballooning per-unit labor expenses and rising overtime spending that has increased 55 percent since 2018. To address these fiscal challenges, the City must prioritize negotiating productivity gains and structural labor reforms in upcoming collective bargaining agreements rather than simply subsidizing wage increases.
Recommendations related to Labor Costs
The City should seek to reform work rules, broaden job descriptions, reduce fringe benefit costs, and implement other operational changes to boost productivity and bring NYCHA’s operating costs in line with those of other property managers.
NYCHA should negotiate savings and increase productivity through collective bargaining.
Key Data
$710
— NYCHA's monthly labor costs per unit in 2022, which is nearly six times what private landlords spend.
$152 million
— Total overtime spending by NYCHA in 2022, which increased 3 percent despite efforts to reduce it.
55 percent
— The increase in NYCHA's overtime spending since 2018.
$146 million
— The projected City collective bargaining subsidy for NYCHA in fiscal year 2023, equivalent to 10 percent of the 2022 personal services budget.
$35 million
— The estimated first-year increase in NYCHA's personal services budget if unions follow the pattern established by the District Council 37 contract.
$191 million
— The estimated fifth-year increase in NYCHA's personal services budget if unions follow the pattern established by the District Council 37 contract.
The Metropolitan Transportation Authority must modernize its labor practices and work rules to contain operating costs and adapt to post-pandemic ridership demands. By updating shift scheduling, expanding one-person train operations, and reforming retiree health care benefits, the agency can achieve necessary efficiencies while supporting fair salary increases for its workforce.
Recommendations related to Labor Costs
Contract changes to fix plummeting employee availability would affect few workers while improving service and cutting overtime costs.
It is time for the MTA to expand One Person Train Operation (OPTO), which other systems embraced decades ago.
A modern, online system would enable the MTA to modify service more quickly and allow workers to pick their schedules more efficiently and flexibly.
The MTA and TWU should follow the lead of New York City and its recent contract negotiations by switching retirees to a high quality Medicare Advantage plan.
More creative and flexible work assignments and scheduling will improve service and allow the MTA to adapt to riders’ needs.
Key Data
19
— Average number of days worked annually by subway and bus workers shrunk by 19 over the last two decades.
50 million
— Subway and bus customer trips in 2022 canceled because of crew shortages.
$1.1 billion
— Increase in the Payroll Mobility Tax on New York City businesses.
$165 million
— Increase in city support of paratransit.
$400 million
— Savings the MTA will achieve by increasing its own productivity.
$300 million
— One-time taxpayer infusion provided to the MTA.
The NYPD's fiscal year 2024 budget significantly understates labor costs, specifically regarding overtime and collective bargaining agreements, by approximately $1.6 billion. These unrealistic budget projections fail to account for historical spending patterns and the financial impact of recent labor contracts, necessitating more accurate fiscal planning.
Recommendations related to Labor Costs
Budgeted overtime should reflect reasonable expectations given management, policy, and history.
The City should ensure the NYPD budget includes the full costs of collective bargaining agreements to avoid understating spending.
The City should provide sufficient funding for overtime rather than relying on unrealistic budget projections that are hundreds of millions of dollars too low.
Key Data
$1.6 billion
— The amount by which the fiscal year 2024 budget is projected to be short due to underbudgeted labor costs.
$817 million
— The projected total overtime spending for the NYPD in fiscal year 2023.
$900 million
— The estimated increase in member compensation in fiscal year 2024 resulting from the PBA collective bargaining agreement.
$300 million
— The estimated cost to extend the PBA collective bargaining agreement pattern to the remaining NYPD uniformed force in fiscal year 2024.
$452 million
— The fiscal year 2024 overtime funding set in the executive budget, which is considered well below historical trends.
$1.4 billion
— The estimated cost for retroactive payments covering fiscal years 2018 through 2023 for PBA members.
New York City faces significant future budget gaps, yet the current budget adds new positions despite already having 23,000 vacancies. To ensure fiscal stability, the City should prioritize shifting existing vacancies to essential areas and increasing operational efficiency rather than expanding headcount.
Recommendations related to Labor Costs
The City should be shifting existing vacancies to where they are needed, not adding new positions.
The City should immediately start to speed up critical hiring to address operational needs.
The City should increase its operational efficiency to manage labor costs and avoid service cuts.
Key Data
23,000
— Number of existing vacancies in the City.
$41 million
— Cost of prevailing wages for shelter security.
$900 million
— Annual savings from the agency Program to Eliminate the Gap (PEG).
The NYC Department of Buildings has seen its budget and staffing grow significantly over the last decade, with 80 percent of its spending now dedicated to personal services and employee compensation. Despite this growth, the agency continues to struggle with high vacancy rates and staffing challenges, which may impact its ability to maintain essential oversight functions like inspections and plan reviews.
Recommendations related to Labor Costs
The Department of Buildings must prioritize improving hiring to address vacancy rates, especially as the first year of compliance with Local Law 97 nears.
The Department of Buildings should increase the audit rate of professionally certified jobs to ensure buildings are compliant with relevant codes and to protect workers and residents.
Key Data
80%
— Share of total Department of Buildings spending dedicated to Personal Services (PS) costs for employee compensation in fiscal year 2023.
6.9%
— Annual increase in Personal Services (PS) spending from fiscal year 2014 to fiscal year 2022.
45%
— Increase in on-board total headcount from 1,073 to 1,560 between fiscal year 2014 and fiscal year 2022.
22%
— Vacancy rate for authorized full-time positions as of November 30, 2022.
18%
— Vacancy rate for authorized full-time positions at the Department of Buildings.
$172.9 million
— Amount spent on Salaries and Wages in the fiscal year 2023 adopted budget.
New York City faces significant fiscal challenges, including $17 billion in new labor costs from recent union agreements and projected budget gaps reaching $14.5 billion by fiscal year 2027. To address these issues, the city must prioritize high-impact services and improve government productivity, which has lagged behind the private sector, through measures like overtime caps and operational restructuring.
Recommendations related to Labor Costs
The city must restructure and prioritize high impact services to thoughtfully rein in spending.
The city should consolidate welfare-benefit funds to save $150 million from efficiency and purchasing power.
The city should reduce costs of centralized services by reorganizing operations, streamlining bureaucracy, and leveraging technology.
The city should increase sanitation productivity to save $100 million annually.
The city should implement overtime caps and ambulance staffing changes to achieve additional savings across government.
Key Data
$17 billion
— The cost of employee raises agreed upon by the city and union leadership over five years.
$150 million
— The potential savings from consolidating welfare-benefit funds.
$100 million
— The potential annual savings from increasing sanitation productivity.
12%
— The rise in private-sector productivity over the past decade.
11,386
— The number of vacant positions eliminated by the city's savings plans.
23,000
— The number of vacant full-time positions that are still possible to fill.
New York City's Department of Education faces significant fiscal challenges as enrollment declines while per-student spending rises, exacerbated by the expiration of federal pandemic aid and unbudgeted labor costs. Addressing these issues requires the City to align spending with enrollment trends and prioritize programs that deliver maximum impact to students.
Key Data
$2.1 billion
— Estimated additional spending in fiscal year 2026 if the tentative District Council 37 pattern is extended to all DOE employees.
$6.2 billion
— Total additional DOE spending through fiscal year 2026 if the tentative District Council 37 pattern is extended to all employees.
59%
— Portion of total DOE spending allocated to personnel, including salaries, wages, fringe benefits, and pension contributions.
$1.2 billion
— Additional DOE spending in fiscal year 2023 if labor costs from the tentative District Council 37 pattern are extended to all employees.
New York City faces significant budget gaps reaching $6.5 billion by fiscal year 2027, a figure that excludes rising labor contract costs and other fiscal pressures. To address these challenges, the city must prioritize operational efficiency by making work rules and job titles more flexible while utilizing its 23,000 vacant positions to meet savings targets without layoffs.
Recommendations related to Labor Costs
The City should leverage the PEG to make work rules and job titles more flexible to increase operating efficiency and reduce ongoing costs.
Agencies should utilize the 23,000 citywide vacancies to meet savings targets without resorting to layoffs.
Key Data
$6.5 billion
— Projected budget gaps by fiscal year 2027, excluding unbudgeted labor contract costs and other fiscal pressures.
$8.8 billion
— Estimated funding needed by the City for the current and upcoming fiscal years.
$14.0 billion
— Projected budget gaps by fiscal year 2027, which may exceed this amount.
23,000
— Number of citywide vacancies available to help agencies meet savings targets without layoffs.
NYCHA faces significant financial strain due to high labor costs, including high fringe benefit rates and persistent overtime spending that reached $152 million in 2022. To address these structural issues, the authority must prioritize negotiating savings and increased productivity through collective bargaining alongside other management reforms.
Recommendations related to Labor Costs
NYCHA should negotiate savings and increased productivity through collective bargaining to address high labor costs.
Key Data
$152 million
— Total overtime spending by NYCHA in 2022.
3 percent
— The increase in overtime spending in 2022, despite efforts to reduce it.
40 percent
— The goal set by NYCHA to reduce overtime costs in 2022.
$247 million
— Subsidies from the City budget used primarily to pay salaries.
The tentative contract agreement with District Council 37 is expected to cost approximately $16.2 billion more than currently budgeted over the contract period, widening city budget gaps to $10.6 billion by fiscal year 2027. To manage these rising labor costs, the city must implement productivity savings and exercise caution to avoid adding further economic burdens in future contract negotiations.
Recommendations related to Labor Costs
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.
Absent a collectively bargained effort to identify productivity savings, 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.
As the City negotiates other agreements and works to identify how best to adapt to remote work and flexible schedules, it should take great caution not to add economic costs to other contracts if remote work options vary.
Key Data
$16.2 billion
— Estimated additional cost of the tentative contract agreement over the contract period.
$10.6 billion
— Projected city budget gap in fiscal year 2027.
$2.5 billion
— Additional spending required in fiscal year 2023.
$2.3 billion
— Additional spending required in fiscal year 2024.
$3.2 billion
— Additional spending required in fiscal year 2025.
$4.1 billion
— Additional spending required in fiscal year 2027.
The Fiscal Year 2024 Preliminary Budget reduces 4,300 vacant positions, resulting in estimated savings of $181 million this year and $350 million next year, though over 23,000 vacancies remain. To address future fiscal risks and labor market challenges, the City must initiate a productivity program to restructure services and improve cost-effectiveness.
Recommendations related to Labor Costs
The Administration’s planning for its Executive Budget should initiate a productivity PEG (program to eliminate the gap) that tasks agencies with restructuring programs to improve the quality and cost-effectiveness of City services.
The City should prioritize critical services, manage them relentlessly, save for a rainy day, and protect from massive future cuts by restraining spending growth.
The City Council should focus not just on programs that serve New Yorkers today, but on how to mitigate significant future risks to ensure the City has adequate resources to serve New Yorkers in the near future.
Key Data
4,300
— Number of vacant positions reduced in the Fiscal Year 2024 Preliminary Budget.
23,000
— Number of remaining vacancies in the City after the reduction.
$181 million
— Estimated savings from eliminating 4,300 vacant positions in the current year.
$350 million
— Estimated savings from eliminating 4,300 vacant positions in the next year.
New York City faces rising labor costs as health insurance expenses are projected to grow by 8.5 percent annually through fiscal year 2026, necessitating structural changes to benefit plans. Proposed solutions include implementing the Medicare Advantage Plus agreement, introducing premium sharing for employees and pre-Medicare retirees, and consolidating union welfare fund benefits to achieve long-term fiscal sustainability.
Recommendations related to Labor Costs
The City should implement the agreement between the City and Municipal Labor Committee to restrain cost growth and reduce the City’s other postemployment benefit liability.
Introduction 874 should be repealed in whole because this level of benefit specificity should not be codified.
The City and Municipal Labor Committee should undertake a comprehensive review of health and welfare benefits for employees and retirees to reduce costs to more manageable levels.
The City should implement premium sharing for employees and pre-Medicare retirees to help manage labor costs.
The City should pursue the elimination of some or all of the Medicare Part B reimbursement.
The City should pursue the consolidation of union welfare fund benefits.
Key Data
8.5 percent
— The rate at which health insurance costs are budgeted to increase annually between fiscal years 2023 and 2026.
$200
— The approximate monthly premium for retirees who choose to remain in their current Medigap program.
$600 million
— The amount by which the City's annual costs would be reduced by moving to the Medicare Advantage plan.
The New York State Legislature has passed 20 bills that would increase public employee benefits, such as pensions and disability coverage, without providing offsetting savings or adequate fiscal analysis. These measures, which have grown in frequency since 2018, threaten to impose significant, recurring financial burdens on state and local governments.
Recommendations related to Labor Costs
The Governor should veto the 20 bills that enhance benefits and increase costs to New York State and local governments outside of the budget process.
The Governor should veto the five bills that lack fiscal notes, as the absence of a complete fiscal analysis is a sufficient basis for rejection.
The State should avoid granting targeted benefit enhancements that increase public costs and encourage further expansions.
Key Data
$78.6 million
— Immediate costs estimated for 15 bills with fiscal notes attached.
$21.0 million
— Annual costs estimated for 15 bills with fiscal notes attached.
20
— Number of benefit sweeteners passed by the Legislature in 2022.
12
— Number of benefit sweeteners passed by the Legislature in 2018.
$55.6 million
— Immediate past service costs for the proposed 20-year retirement plan for certain State law enforcement positions.
$15.2 million
— Immediate past service costs for the proposed one-year final average salary calculation extension for Tier 6 members.
The Metropolitan Transportation Authority faces a significant structural operating budget deficit that requires immediate efficiency reforms, including adopting industry-standard labor practices like one-person train operation and conductor spot checks. Addressing these high labor costs and productivity gaps is essential to closing the budget gap without sacrificing service or relying solely on tax increases.
Recommendations related to Labor Costs
The MTA's leadership and labor unions should work together to identify and phase in efficiency reforms to labor contracts.
The MTA should adopt one-person train operation, a practice used by nearly all other subways.
The MTA should implement conductor spot checks on commuter trains rather than checking every ticket.
The MTA should initiate an efficiency push as soon as possible, focusing on changes achievable by leadership alone.
Key Data
44%
— The productivity of New York City Transit subway facility maintenance work is lower than the national median.
$100 million
— The size of the MTA's current efficiency plan, which would close only 4% of its budget gap.
The Metropolitan Transportation Authority faces a significant structural deficit exacerbated by rising costs from collective bargaining agreements and other fiscal risks. To achieve long-term stability, the authority should implement efficiency-focused operating reforms and restructure its debt while seeking new revenue sources.
Recommendations related to Labor Costs
The MTA should implement a multi-year phase-in plan starting with efficiencies under the purview of management, followed by implementing changes collectively bargained with labor over time.
The MTA should implement efficiency-focused operating reforms to address the structural deficit, which requires changes to collective bargaining agreements to adopt standard industry operating practices.
Key Data
$100 million
— Annual fiscal risk to the MTA budget attributed to higher collective bargaining costs.
$2.9 billion
— Potential recurring annual savings identified by the Citizens Budget Commission that require changes to collective bargaining agreements.
New York City faces significant fiscal pressure from future collectively bargained raises, which could increase budget gaps by $900 million in the first year and up to $2.5 billion by the third year. To maintain service levels, the City must prioritize improving operational efficiency and eliminating unnecessary positions while continuing to fill critical vacancies.
Recommendations related to Labor Costs
The City should make additional and ongoing efforts to reduce budget gaps, including those driven by future collectively bargained raises.
The City should hire for critical functions while simultaneously eliminating many more, ultimately unneeded, positions.
To preserve services, the City must improve the quality and efficiency of its operations to manage labor and service costs.
Key Data
$900 million
— Projected increase in budget gaps in the first year resulting from annual employee raises of three percent.
$2.5 billion
— Projected increase in budget gaps in the third year resulting from annual employee raises of three percent.
2,000
— Number of vacancies the financial plan reduces annually in fiscal years 2024 and 2025.
20,000
— Number of vacant positions remaining in the City.
New York City's recycling collection costs are significantly higher than refuse collection, with recycling costing $615 per ton in fiscal year 2021 compared to $342 for refuse. Improving collection productivity through labor negotiations, route optimization, and automated vehicles could help lower these expenses and increase the city's low diversion rates.
Recommendations related to Labor Costs
The City should negotiate operational and work-rule changes with labor that would improve productivity of recycling and refuse collection.
The City should pursue negotiating work-rule changes that would increase productivity, such as enabling longer shifts or routes that cover more distance.
The City should increase the use of one-worker automated collection vehicles, where appropriate.
The City should use GIS technology to optimize collection routes to improve collection productivity.
Key Data
$615 per ton
— Recycling collection cost in fiscal year 2021.
$342 per ton
— Cost of collecting refuse in fiscal year 2021.
5.2 tons
— Amount of recycling collected per truck shift in fiscal year 2022.
5.8 tons
— Amount of recycling collected per truck shift in fiscal year 2021.
New York City's current negotiations for labor contracts present an opportunity to improve efficiency and manage fiscal burdens by modifying work rules and contractual components. By leveraging the city's 28,000 vacancies, the administration can restructure operations to meet savings targets while still addressing salary needs.
Recommendations related to Labor Costs
Changing work rules and other contractual components to increase efficiency and provide PEG savings is the best way for the City to raise employee salaries without creating an unsustainable fiscal burden.
Key Data
28,000
— The number of current vacancies in the City, which provides an opportunity to restructure operations and meet savings targets.
New York City faces significant staffing challenges, with over 28,500 vacant positions despite an authorized headcount of 333,129, necessitating a shift toward more flexible hiring and retention strategies rather than increasing the total personal services budget. By streamlining civil service processes and reallocating existing vacancies to priority areas, the city can improve service delivery and operational efficiency without expanding its workforce costs.
Recommendations related to Labor Costs
The City should move available positions to where they are needed and increase the flexibility of processes used to control, allocate, and reallocate headcount.
The City should improve and speed up the processes and procedures it uses to control and manage hiring and to administer the civil service system.
The City should institute policies to increase retention of high-performing employees.
The City should modernize civil service and job paths to increase the attractiveness of public sector employment.
The City should report transparently on vacancies, hires, separations, and promotions.
Key Data
333,129
— Authorized headcount for fiscal year 2023.
304,461
— Full-time and full-time equivalent staff on board as of April 2022.
28,500
— Vacant positions as of April 2022.
246
— Median days between exam administration and results in the first four months of fiscal year 2022.
The fiscal year 2023 budget includes a labor reserve sufficient for 1.25 percent annual salary increases, though actual raises will likely exceed this, potentially costing $1.4 billion in the first year and $4.3 billion by the third year. To maintain fiscal sustainability amidst rising costs and budget gaps, the administration must require agencies to identify recurring efficiency savings of 3 percent to 5 percent.
Recommendations related to Labor Costs
The Administration should be requiring agencies to find recurring efficiency savings of 3 percent to 5 percent to be included in the November 2022 financial plan to bring spending levels back down to fiscally sustainable levels.
Key Data
1.25 percent
— Annual salary increases that the City's labor reserve is reportedly able to fund.
$1.4 billion
— Estimated cost in the first year of providing three years of 3 percent raises.
$4.3 billion
— Estimated cost in the third year of providing three years of 3 percent raises.
3 percent
— Example annual raise percentage that would exceed the current labor reserve funding.
The city has an opportunity to fully restore the labor reserve by adding $1.7 billion to the financial plan, which would help offset the costs of future employee raises and mitigate fiscal risks associated with collective bargaining. This action would ensure the city is better prepared for future economic challenges while managing its workforce obligations.
Recommendations related to Labor Costs
The City should add $1.7 billion to the labor reserve over the financial plan to fully restore the reduction, offsetting more of the cost of future employee raises and reducing the fiscal risk associated with collective bargaining.
Key Data
$1.7 billion
— Amount to be added to the labor reserve over the financial plan to fully restore the reduction and offset future employee raise costs.
The NYPD's fiscal year 2023 budget totals $10.9 billion, with increases driven primarily by collective bargaining agreements and rising overtime costs. To achieve meaningful reductions in overtime spending, the department must implement effective managerial controls and policy changes.
Recommendations related to Labor Costs
Meaningful recurring reductions in NYPD overtime depend on effective managerial controls and changes to NYPD policies and procedures.
Key Data
$10.9 billion
— Total spending on the New York City Police Department in fiscal year 2023.
$94 million
— Increase in the NYPD overtime budget for fiscal year 2022 compared to the Preliminary Budget.
$18 million
— Increase in the NYPD overtime budget for fiscal year 2023 compared to the Preliminary Budget.
$617 million
— NYPD overtime expenditures through April of fiscal year 2022.
$743 million
— Estimated total overtime spending for fiscal year 2022 by year end.
$136 million
— Amount by which estimated overtime spending exceeds the modified Executive Budget.
The city's current labor reserve, which funds future contracts, may be insufficient to cover inflation-adjusted raises, as annual three percent raises over three years would increase spending by $3.8 billion annually by fiscal year 2026. To manage these and other fiscal pressures, the city must identify and implement three percent efficiency savings in the adopted budget.
Recommendations related to Labor Costs
The Mayor and City Council should identify and include 3 percent efficiency savings in the Adopted Budget to offset rising costs.
The City should make every effort to include savings in the budget when adopted to avoid future service cuts or tax increases.
Key Data
3,000
— Number of positions added in the Executive Budget, which wipes out nearly half of the vacancy reduction.
3 percent
— Efficiency savings the Mayor and City Council are urged to identify and include in the Adopted Budget.
$3.8 billion
— Increase in annual spending by fiscal year 2026 if annual three percent raises are implemented over three years.
1 percent
— Existing funding provided for annual raises in the labor reserve.
New York City faces a potential $9 billion fiscal disaster by 2026 due to budget gaps, employee raises, and fiscal cliffs, necessitating a focus on efficiency and saving for future economic downturns. To avoid service cuts or tax increases, the city must prioritize productivity in upcoming labor negotiations and resist using temporary federal aid to fund ongoing programs.
Recommendations related to Labor Costs
The city should use this next round of collective bargaining contracts to further increase productivity, which would generate savings to fund raises and stabilize the budget.
The mayor and council must resist the temptation to use additional tax revenue to expand services and instead help refill the city’s labor reserve, the down payment on future employee raises that was cut during the recession.
The city should reduce costs without reducing services by streamlining processes, leveraging technology and fostering cross-agency collaboration that eliminates redundancy.
The city must lower costs, ideally by improving efficiency or by reducing lower impact programs to help manage the budget.
Key Data
$9 Billion
— The combined total of the existing budget gap, employee raises, and fiscal cliff that creates a recipe for fiscal disaster by 2026.
$1.5 Billion
— The cost of providing 3% annual raises to city employees in the first year.
$4.3 Billion
— The cost of providing 3% annual raises to city employees in the third year.
$4 Billion
— The estimated cost of employee raises contributing to the potential fiscal disaster.
New York City maintains over 18,000 vacant full-time positions, indicating that staffing challenges stem from inefficient management and hiring processes rather than a lack of available roles. Improving the flexibility of headcount allocation and streamlining civil service testing are essential to addressing these operational hurdles and filling priority positions effectively.
Recommendations related to Labor Costs
The City should increase the flexibility of its systems that control, allocate, and reallocate headcount to better align vacancies with priorities.
The City should improve the systems it uses to control and manage hiring and to administer the civil service system.
The City should improve recruitment and hiring systems and processes to reduce the time to fill positions.
The City should ensure adequate, timely civil service tests and lists to speed hiring and encourage more to seek City employment.
The Department of Citywide Administrative Services should seek to leverage technology and other process reforms to speed up the process of administering tests and certifying lists.
Key Data
7,026
— Number of vacant full-time positions eliminated across 42 agencies by the Fiscal Year 2023 Preliminary Budget Program to Eliminate the Gap.
$290 million
— Annual savings generated by the elimination of 7,026 vacant full-time positions.
18,000
— Number of full-time positions that remain vacant even after the budget reductions.
7.3 percent
— The vacancy rate for full-time positions following the budget reductions and other changes to authorized headcount.
246 days
— The median time between exam administration and results in the first four months of fiscal year 2022.
306,291
— The authorized full-time headcount level for fiscal year 2022.
NYCHA's financial instability is exacerbated by high labor costs driven by outdated work rules, inflexible scheduling, and high fringe benefit rates that the agency must fund independently. Efforts to improve efficiency and secure savings through collective bargaining have largely failed, necessitating a renewed focus on boosting labor productivity to align with industry standards.
Recommendations related to Labor Costs
NYCHA, in collaboration with its federal monitor, HUD, and labor, needs to redouble efforts to boost productivity and bring operating costs closer to peer housing authorities and private property managers.
The City and NYCHA must prioritize labor productivity increases, which would bring operating costs in line with industry benchmarks and maximize the potential benefits of the Preservation Trust.
The City and NYCHA must reform outdated work rules that limit productivity and inflexible scheduling to reduce high rates of overtime and labor costs.
Key Data
$121 million
— Component of the subsidy in City fiscal year 2021 for collective bargaining increases.
$2.7 billion
— Public housing operating expenses in NYCHA’s calendar year 2022 adopted budget.
The City's preliminary budget includes significant savings from reducing vacant positions, but future raises for city employees could substantially increase spending if not offset by productivity gains. To manage costs, the administration must collaborate with municipal unions during collective bargaining to identify efficiency savings and rationalize benefit levels.
Recommendations related to Labor Costs
The Administration should work with its municipal unions to identify and implement efficiency savings and rationalize benefit levels and administration during collective bargaining negotiations.
Raises for City employees should be funded by increased productivity to avoid significantly increasing City spending.
The Administration should identify additional agency and central function efficiency savings to include in the Executive Budget.
Key Data
3,200
— Number of unneeded vacant positions removed from the fiscal year 2022 authorized headcount.
7,000
— Number of unneeded vacant positions eliminated in fiscal year 2023 and beyond.
$866 million
— Savings delivered in fiscal year 2022 from the Program to Eliminate the Gap, which included important headcount reduction.
$1.1 billion
— Annually recurring savings delivered in fiscal year 2023 and beyond from the Program to Eliminate the Gap.
New York City's financial plan relies on $700 million in unspecified labor and attrition savings that lack a concrete implementation strategy. Furthermore, future collective bargaining increases, such as a potential two percent annual raise, would cost $1 billion in fiscal year 2023 and rise to $2.5 billion by fiscal year 2025, requiring new funding or efficiency offsets.
Recommendations related to Labor Costs
Agencies should work with labor to change work rules to increase efficiency.
The City should remove the unspecified labor and attrition savings from the financial plan or identify specific actions to achieve them.
Future collective bargaining increases must 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.
$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.
New York City spends $53.6 billion on employee wages and benefits, with 95% of staff paying no health insurance premiums. To improve fiscal stability, the city should negotiate modernized work rules, shared premium costs, and consolidated union welfare funds to achieve significant recurring savings.
Recommendations related to Labor Costs
In negotiating the next round of contracts, the administration and unions should modernize employee benefits, eliminate outdated salary differentials, and change contractual work rules that impede efficient service delivery.
The city could save $675 million annually if city employees shared premium costs slightly below the level of state employees.
Consolidating the roughly 75 separate union welfare funds could save $160 million annually through administrative efficiencies and greater purchasing power.
The city and unions should modify some of the Citywide Agreement provisions for work hours, vacation and sick leave, overtime, and other benefits common across nonuniformed collective bargaining units.
The next round of collective bargaining should set a productivity savings target for all bargaining units.
The Absent Teacher Reserve should be time-limited, giving employees an appropriate opportunity and incentive to find new positions within the department.
Key Data
$53.6 billion
— Amount of the city’s budget that funds wages, health insurance, pensions, and other fringe benefits.
95%
— Percentage of city employees who elect health insurance plans with no premium contributions.
$675 million
— Potential annual savings if city employees shared premium costs slightly below the level of state employees.
$160 million
— Potential annual savings from consolidating the roughly 75 separate union welfare funds.
$120 million
— Potential annual savings from lengthening sanitation routes so that trucks are full when they tip.
$136 million
— Annual cost of the Absent Teacher Reserve, which keeps Department of Education employees on the payroll after their positions are eliminated.
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…
The November 2021 Financial Plan fails to account for the next round of raises for city employees, as the labor reserve was zeroed out for the first two years. To address this, the incoming administration should collaborate with municipal unions during collective bargaining to increase productivity, which can then be used to fund raises and close budget gaps.
Recommendations related to Labor Costs
Mayor-elect Adams should work with municipal unions to leverage the next round of collective bargaining agreements to make changes allowing the City to be more productive.
The City should use savings from productivity changes to fund raises, close budget gaps, and help City employment be more supportive to skill building and career enhancement.
Key Data
$540 million
— Cost of 2 percent annual raises for City employees in the current year.
$1.2 billion
— Cost of 2 percent annual raises for City employees in fiscal year 2023.
$2.2 billion
— Cost of 2 percent annual raises for City employees by fiscal year 2025.
$750 million
— Amount by which annual budget gaps are higher than stated due to the inclusion of illusionary labor and attrition savings.
New York City faces significant fiscal challenges, including annual budget gaps of $5 billion, requiring the administration to implement savings programs and modernize operations. To ensure long-term stability, the city must address rising labor costs through reasonable employee health benefit premium-sharing and collaborative collective bargaining agreements that prioritize efficiency.
Recommendations related to Labor Costs
The administration should achieve additional budget savings by bringing health benefit costs to sustainable levels through reasonable employee premium-sharing, similar to the model used for state employees.
The administration and labor unions should collaborate to find efficiencies in collective bargaining agreements that help close budget gaps while funding workforce raises.
Key Data
$5 billion
— Annual budget gaps the city faces starting next year, which necessitate fiscal discipline and savings.
3-5%
— Targeted savings range for the Program to Eliminate the Gap (PEG) to improve efficiency and minimize public impact.
The Metropolitan Transportation Authority faces a structural annual deficit of at least $2.0 billion, which is currently being managed through federal aid and borrowing. To stabilize its future, the agency is expected to implement operational efficiencies and continue planned fare increases, while relying on measures like a $735 million two-year wage freeze.
Key Data
$735 Million
— The value of the two-year wage freeze included in the MTA's July financial plan.
New York City faces significant fiscal challenges, including rising labor costs and the need for sustainable workforce levels, which require negotiating changes with municipal unions to control health and welfare benefit expenses. To ensure long-term stability, the administration should prioritize productivity-based raises and implement gainsharing agreements that align labor costs with the city's financial capacity.
Recommendations related to Labor Costs
The City should bring health and welfare benefit costs to sustainable levels, which requires negotiating changes with municipal labor unions.
The City should implement reasonable premium sharing at rates lower than those paid by New York State employees to reduce City costs significantly.
The City should pursue modest retiree health benefit cost sharing to substantially reduce the City’s annual cost and long-term liability.
The City should consolidate the more than 100 separate welfare funds managed by various unions to provide comparable or better benefits at lower costs.
The City should structure gainsharing to provide significant enough recurring fiscal benefits to the City when negotiating labor contracts.
The City should fund raises through savings from productivity gains rather than increasing City expenditures.
Key Data
$7.2 billion
— The City's annual costs for employee and retiree health benefits.
4.2 percent
— The average annual growth rate of City health and welfare benefit costs since fiscal year 2014.
$122 billion
— The City's long-term fiscal liability for other postemployment benefits (OPEB), largely driven by retiree health benefits.
one-third
— The portion of the City's health insurance spending comprised by retiree health benefits.
New York City's retiree health benefits are costly, with a $122 billion long-term liability and annual expenses of $3.1 billion, yet current reform efforts fail to reduce the city's operating budget because savings are redirected to other labor-related costs. To address these fiscal challenges, the city should implement structural changes like premium sharing and reduced benefit reimbursements to align with other public and private sector standards.
Recommendations related to Labor Costs
The City should pursue reducing the cost of retiree health benefits by 50 percent.
The City should implement premium sharing for Medicare and pre-Medicare eligible retirees.
The City should pursue the elimination or reduction of Part B premium reimbursement.
The City should use the change in how benefits are financed to pave the way for employee premium contributions for health insurance coverage.
Key Data
$3.1 billion
— Annual cost to the City for retiree health and welfare benefits.
$122 billion
— The City's current long-term liability for retiree health benefits, also known as other postemployment benefits (OPEB).
$600 million
— Annual reduction in the City's cost of retiree health insurance under the proposed Medicare Advantage Plus plan.
5.5 percent
— Average annual growth rate of retiree health insurance costs from fiscal year 2014 to fiscal year 2022.
4.3 percent
— Annual average increase for employee health insurance costs.
$2,400
— Cost to the City per member per year for Medigap plans with no retiree premium contribution.
New York State is considering 21 bills that would expand pension, disability, and other benefits for public employees, which would increase state and local government costs without providing additional services. These legislative proposals bypass standard budget negotiations and collective bargaining processes, prompting calls for a veto to prevent unnecessary fiscal strain.
Recommendations related to Labor Costs
The Governor should veto the 21 bills that would enhance pension or disability benefits without providing enhanced services to New Yorkers or offsetting savings.
The Governor should veto these bills because they increase costs to New York State and local governments outside of budget negotiations and/or collective bargaining processes.
The Governor should reject legislation that grants targeted benefit enhancements that not only increase costs but also encourage further expansions.
The Governor should veto S4899/A4125, which would extend “last hired, first fired” provisions, as it would likely increase costs by requiring the retention of longest-tenured employees instead of the most productive.
The Governor should veto S6690/A7464, which would require New York City paraprofessionals to join the Teachers Retirement System, as it would increase annual costs beginning at $9.5 million in the first year.
Key Data
$64.1 million
— Immediate cost of the 15 bills with fiscal notes attached.
$7.8 million
— Annual cost thereafter for the 15 bills with fiscal notes attached.
$48.2 million
— First-year cost of S4523/A6457 establishing a 20-year retirement plan for certain State law enforcement positions.
$9.5 million
— First-year cost of S6690/A7464 requiring New York City paraprofessionals to join the Teachers Retirement System.
$1,270,000
— One-time past service cost of S6710/A7342 regarding performance of duty disability benefits for sheriffs and correction officers.
$930,000
— One-time past service cost of S4441/A7905 regarding in-service death benefits for Suffolk County correction officers.
The Metropolitan Transportation Authority faces a $2.7 billion annual structural deficit that requires significant cost-saving measures, including a two-year wage freeze and reforms to labor productivity and health care spending. These labor-related adjustments, alongside operational changes, are projected to save up to $2.9 billion annually by 2024.
Recommendations related to Labor Costs
The MTA must implement a two-year wage freeze starting next year to help cover the structural deficit.
The MTA should focus on increasing its subway and bus operations and maintenance productivity, which could save $1.6 billion.
The MTA should prioritize reforming how it deploys conductors, including one person train operation (OPTO) on subways and fare payment modernization on commuter rail, which could save $512 million.
The MTA should take steps toward reducing employee and retiree health care spending, which could save $663 million.
The MTA and labor leaders should collaborate on other strategies, including retraining, redeployment, and gainsharing to address implementation challenges.
Key Data
$2.9 billion
— Annual savings the MTA could realize by 2024 through various operational and labor reforms.
$1.6 billion
— Potential savings from increasing subway and bus operations and maintenance productivity.
$663 million
— Potential savings from reducing employee and retiree health care spending.
$512 million
— Potential savings from reforming conductor deployment and fare payment modernization.
$268 million
— Potential savings from increasing bus speeds.
12,838
— Total headcount impact of the proposed operational and labor reforms.
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 New York Police Department's fiscal year 2022 budget includes a $465 million spending increase, reversing previous cuts, while the agency continues to struggle with controlling overtime costs, which reached $474 million in fiscal year 2021. Additionally, the city is shifting various personnel and functions, such as school safety and homeless services, out of the department's budget to other agencies.
Key Data
$322 million
— The actual fiscal year 2021 budget cut to NYPD’s City-funded expenditures.
$474 million
— Fiscal year 2021 overtime expenditures.
77 percent
— The amount by which fiscal year 2021 overtime expenditures were over budget.
$465 million
— The spending increase in the Adopted Budget for fiscal year 2022 against fiscal year 2021.
$306 million
— The amount of intra-city revenue anticipated to shift from the NYPD to the Department of Education in fiscal year 2023.
$4.5 million
— The funding for the Homeless Unit transferred out of the NYPD in fiscal year 2021.
The Fiscal Year 2022 budget temporarily reversed hiring freezes, increasing authorized headcount to 337,294 positions while deferring planned staff reductions to future years. This shift leaves the next administration with the responsibility of managing significant attrition savings, which average $283 million annually from fiscal years 2023 to 2025.
Key Data
$283 million
— The average annual attrition savings for fiscal years 2023 to 2025.
337,294
— The authorized headcount for fiscal year 2022, which is nearly the highest ever.
5,048
— The number of primarily full-time positions by which authorized headcount decreases from fiscal year 2022 to fiscal year 2023.
313,875
— The City's on-board headcount as of March 2021.
$30.4 million
— The amount of attrition savings in the fiscal year 2022 budget following restorations.
4,504
— The increase in authorized headcount positions for the Department of Education from fiscal year 2021 to fiscal year 2022.
The city's budget plan relies on $1 billion in unspecified annual labor savings to mask the true size of future budget deficits. To ensure long-term fiscal stability, the next administration must successfully negotiate collective bargaining agreements that avoid adding to the city's financial strain.
Recommendations related to Labor Costs
The next administration must negotiate the next round of collective bargaining agreements without creating greater fiscal stress.
The City should stop relying on $1 billion in annual unspecified labor savings, which is used to understate the magnitude of the City’s budget gaps.
Key Data
$1 billion
— annual unspecified labor savings included in the budget gaps for fiscal year 2023 to fiscal year 2025
The New York City Police Department's fiscal year 2022 budget allocates $10.5 billion in city funding, representing a $728 million increase over the previous year's plan. This spending projection may rise further as the department faces challenges in managing overtime costs and potential future expenses from unsettled collective bargaining agreements.
Recommendations related to Labor Costs
The City must exercise diligent management to keep fiscal year 2022 overtime spending at the budgeted level of $434 million.
The City must prepare to provide additional resources to the NYPD budget if arbitration decisions for collective bargaining agreements exceed the current pattern.
The City should account for potential salary increases in the NYPD budget, as current funding does not reflect expired or future collective bargaining agreements.
Key Data
$418 million
— NYPD overtime spending through June 10, 2021.
$448 million
— Projected total fiscal year 2021 overtime spending.
$10.5 billion
— Fiscal year 2022 City funding allocated to the NYPD.
$728 million
— Increase in fiscal year 2022 City funding for the NYPD compared to the fiscal year 2021 budget.
$150 million
— Estimated cost of 2 percent annual raises for the NYPD in the first year.
$450 million
— Estimated cost of 2 percent annual raises for the NYPD by the third year.
With annual budget gaps approaching $5 billion through fiscal year 2025, the City should avoid increasing its workforce size and instead use current vacancies to restructure operations for more efficient service delivery. In fiscal year 2020, salaries, wages, and benefits accounted for 52 percent of the City's budget, making workforce size a primary driver of municipal spending.
Recommendations related to Labor Costs
The City should not increase the size of its workforce given annual budget gaps in fiscal years 2023 to 2025.
Federal aid and current vacancies are an opportunity to hire strategically to reallocate City 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
$5 billion
— Annual budget gaps in fiscal years 2023 to 2025.
52%
— Portion of the City’s budget spent on salaries, wages, fringe benefits, and pensions in fiscal year 2020.
6,850
— Number of additional positions the City intends to fill in the Fiscal Year 2022 Executive Budget.
13,364
— Number of positions by which the City workforce shrank between April 2020 and February 2021.
$16 billion
— Amount of federal funds the City plans to use to increase its authorized headcount.
326,739
— Peak headcount of municipal workers in fiscal year 2019.
The Metropolitan Transportation Authority can achieve up to $2.9 billion in annual savings and reduce its workforce by nearly 13,000 positions by 2024 through targeted operational reforms. These improvements include increasing productivity in subway and bus maintenance, expanding one-person train operations, implementing commuter rail proof-of-payment, and aligning health care premium contributions with state standards.
Recommendations related to Labor Costs
The MTA should improve subway facility maintenance productivity to the national median, which would yield $981 million in annual savings and a headcount reduction of 6,185 by 2024.
The MTA should increase hourly productivity for bus operations to national peer benchmarks, yielding $367 million in annual savings and a headcount reduction of 1,793.
The LIRR should align its vehicle operations and maintenance productivity with Metro-North Railroad, saving $242 million annually and allowing a headcount reduction of 1,114.
The MTA should increase local bus speeds by 15 percent, which would permit an average reduction of 13 percent of vehicle-hours and yield $268 million in annual savings by 2024.
The MTA should expand One-Person Train Operation (OPTO) on subways, which would save $221 million in annual subway conductor spending by 2024 and result in a headcount reduction of 1,582.
The MTA should implement commuter rail proof-of-payment, which would allow MNR to reduce its conductor workforce by roughly 573 and LIRR to reduce its conductor headcount by 699, yielding $292 million in combined annual savings by 2024.
The MTA should apply the State’s current cost-sharing agreement for retired New York State employees to its own retired workforce, which would save $263 million annually by 2024.
The MTA should increase the represented employees’ share of health insurance premium contributions to the 18 percent level paid by non-represented employees, saving $130 million annually by 2024.
The MTA should implement a value-based health plan redesign, which would save approximately $270 million by 2024.
Key Data
$2.9 billion
— Total annual savings from all proposed operations reforms by 2024.
13,000
— Total workforce reduction by 2024 from all proposed reforms.
$981 million
— Annual savings from improving subway facility maintenance productivity by 2024.
6,185
— Headcount reduction from improving subway facility maintenance productivity.
$367 million
— Annual savings from improving bus vehicle operations, facility, and vehicle maintenance productivity by 2024.
1,793
— Headcount reduction from improving bus operations productivity.
New York City received significant federal COVID-related aid, including $1,270.0 Million to eliminate labor savings and $149.4 Million for attrition restoration. These funds were part of a broader fiscal relief package totaling $2,900.2 Million to address agency costs and city funding swaps through fiscal year 2025.
Key Data
$1,270.0 Million
— Total funding allocated to eliminate labor savings as part of fiscal relief.
$149.4 Million
— Total funding allocated for attrition restoration to manage workforce levels.
$896.0 Million
— Total funding allocated for agency costs and city funding swaps.
The Executive Budget for Fiscal Year 2022 fails to leverage federal aid and tax revenue to stabilize the city's fiscal future, instead relying on non-recurring savings and increasing the workforce by 5,000 staff. The budget includes $1 billion in annual unspecified labor savings for fiscal years 2023 through 2025 without a concrete plan to achieve them, leaving significant fiscal problems for the future.
Recommendations related to Labor Costs
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 must identify recurring spending reductions to replace the $1 billion in annual unspecified labor savings currently carried in fiscal years 2023 through 2025.
The City should avoid reversing its recent progress in shrinking the workforce by adding 5,000 more staff.
The City should be budgeting regular deposits into its newly established Rainy Day Fund.
Key Data
$1 billion
— Annual unspecified labor savings carried in fiscal years 2023 through 2025.
5,000
— Number of additional staff the City plans to add, reversing recent progress in shrinking the workforce.
$15 billion
— Additional federal aid received by the City.
$5 billion
— Annual budget gaps in fiscal years 2023 to 2025 when unspecified labor savings are removed.
$1.6 billion
— Amount the City reversed its plan to use from the Retiree Health Benefits Trust to balance the budget.
$200 million
— Increase in the general reserve in fiscal year 2022.
New York City should implement structural changes to its workforce and labor costs, including reducing the number of vacant positions and requiring employees and retirees to contribute to their health insurance premiums. These measures, alongside a recurring Program to Eliminate the Gap, would help stabilize the City's long-term fiscal health while allowing for modest salary increases.
Recommendations related to Labor Costs
The City should loosen the hiring freeze and permit replacing two of every three vacancies, calculated on the workforce in entirety without exceptions.
The City should expand its criteria for allowing new hires beyond health and safety to include hires that facilitate efficiency, reorganization, and quality of priority services.
The City should remove half of the current vacancies (about 6,500 of the roughly 13,000 vacancies at the end of February 2021) in each year of the financial plan and allocate those remaining as required to efficiently staff priorities.
The City should phase in employee and retiree contributions over three years, with lower paid employees paying a smaller share than those more highly compensated, similar to New York State.
Absent a reasonable plan to achieve these future savings, the $1 billion in unspecified annual labor savings should be removed from the budget because they obfuscate the magnitude of future City budget gaps.
Key Data
$7 billion
— The City's annual cost for health insurance for employees and retirees.
$560 million
— The amount of recurring health insurance premium savings the City would realize from implementing employee and retiree contributions.
310,000
— The reasonable target workforce size for the City in the near term.
$250 million
— The estimated cost of implementing an Early Retirement Incentive to reduce headcount by 2,250 employees.
$1 billion
— The amount of unspecified annual labor savings currently included in the budget.
New York City should reject offering early retirement incentives to civilian employees, as the city can effectively manage its workforce size through natural attrition and strategic hiring without incurring unnecessary costs. Relying on natural turnover and targeted hiring allows the city to reduce its workforce to sustainable levels while avoiding the significant expense of retirement payouts.
Recommendations related to Labor Costs
The city should flatly reject the opportunity to offer early retirement incentives to civilian employees.
The city can shrink its workforce by selectively refilling vacancies created by departed employees rather than paying staff to leave.
The city should strategically hire to meet service needs and phase in organizational changes to reach a target workforce size of around 310,000.
The city should manage services, finances, federal money, and the government workforce well to ensure long-term stability.
Key Data
$110,000
— Average cost to the city for every person who takes the early retirement incentive.
$250 million
— Total cost the city would incur for the early retirement incentive program.
312,250
— Total number of full-time and full-time equivalent city employees as of February 2021.
$5 billion
— Amount of additional federal aid the city will receive, which supports a guarantee of no layoffs through June 2022.
2,250
— Number of positions the city aims to reduce.
New York City faces significant future budget gaps that can be mitigated by utilizing federal aid to restructure government operations rather than funding new programs or ongoing expenses. By implementing productivity enhancements and benefit changes, the city can reduce labor costs by over $1 billion annually while preserving essential services and avoiding tax increases.
Recommendations related to Labor Costs
The city should lengthen sanitation routes so that trucks are filled before they are tipped to reduce labor costs.
Fire engine companies should be staffed with four firefighters instead of five to optimize labor efficiency.
The city should consolidate the 108 union-administered benefit funds to lower labor-related expenses.
City employees should contribute to their health insurance premiums like state employees and those in the private sector to align labor costs with broader standards.
The city should phase in efficiency initiatives totaling 3% to 5% of city-funded agency spending over two years to reduce labor costs.
Key Data
$1 billion
— Annual labor cost reduction achievable through productivity enhancements and benefit changes.
108
— Number of union-administered benefit funds that could be consolidated.
3% to 5%
— Target for efficiency initiatives of city-funded agency spending to be phased in over two years.
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 school districts spend significantly more on employee benefits than the national average, contributing to the highest per-pupil education spending in the country. Aligning school district employee health insurance premium contributions with those of state employees could generate $846 million in annual savings to help address fiscal gaps.
Recommendations related to Labor Costs
New York’s 673 school districts should examine all areas of spending, including the high rate of spending on public school health benefits, to find efficiencies and contain costs in the face of stagnant or decreasing State aid and localities’ looming budget gaps.
School districts should increase employee health insurance premiums to the State employee level to generate savings that could offset the impact of State aid actions.
Key Data
$846 million
— Annual savings if all New York school district employees contributed the same share of premiums as State employees.
$7 billion
— Total annual spending by New York's school districts on health insurance for employees, their families, and retirees.
$24,040
— Per pupil spending by New York State and local governments on public elementary and secondary education in fiscal year 2018.
$6,813
— Per pupil spending on employee benefits in New York, which is 116 percent higher than the national average.
14 percent
— Average employee premium contribution rate for single coverage for school districts outside of New York City.
16 percent
— Average employee premium contribution rate for family coverage for school districts outside of New York City.
Early retirement incentives are often a more expensive workforce reduction strategy than attrition or layoffs, as they frequently involve significant pension and lump-sum costs that can undermine potential savings. Instead of pursuing these incentives, local governments should prioritize workforce reduction through attrition and maintain strict hiring freezes to ensure fiscal stability.
Recommendations related to Labor Costs
In light of the City’s fiscal stress and the availability of other options to balance the budget, the City should reduce its workforce through attrition and not pursue the ERI.
If localities are considering an ERI, it is important to do a thorough analysis of the costs and benefits and commit to a strict hiring freeze.
Maximizing savings requires keeping the newly vacated positions unfilled.
Key Data
$110,000
— Average additional pension contribution per retiree estimated by the Actuary for the City of New York.
$90,200
— Average salary of a municipal retiree.
$1.1 Billion
— Incentive cost for 10,000 separations under the proposed early retirement incentive.
$5.9 Billion
— Potential five-year salary savings if positions vacated by early retirement are kept vacant.
$3.3 Billion
— Potential savings if one-third of vacant positions are filled in the first two years at 70 percent of the retiree's salary.
$4.3 Billion
— Savings achievable over five years under similar rates of voluntary separations.
The state budget includes a hiring and administrative salary freeze to manage fiscal gaps, with plans to repay withheld salaries in fiscal year 2023 at a cost of $591 million. Alternative budget-balancing strategies, such as shifting capital financing to debt, could provide resources to reverse these contractual wage freezes and other spending reductions.
Recommendations related to Labor Costs
The State should reverse a portion of the non-school aid spending reductions proposed in the Executive Budget for fiscal year 2022, including the local aid reductions and the contractual wage freeze.
The State should identify and implement actions that minimize the impact on New Yorkers and keep New York a competitive jurisdiction that can create the jobs New Yorkers need.
Key Data
$591 million
— The projected cost of repaying withheld salaries in fiscal year 2023.
$44 million
— The savings achieved from workforce headcount and salary freezes in fiscal year 2021.
$110 million
— The savings achieved from workforce headcount and salary freezes in fiscal year 2022.
The New York City Housing Authority faces significant fiscal instability due to declining rent collection, reduced subsidies, and rising operational expenses, including substantial labor costs. To address these challenges and meet federal monitorship requirements, the authority must implement new organizational structures and staffing models while securing additional funding to manage its $40 billion in repair needs.
Key Data
$101 million
— increase in labor costs resulting from new labor agreements.
$67 million
— CDBG funding used to hire additional capital project management staff.
1 percent
— expected decrease in labor costs in the 2021 budget.
4 percent
— planned increase in budgeted headcount.
$146 million
— year-end projection for overtime expenses in 2020.
$105 million
— adopted budget for overtime expenses in 2020.
Offering early retirement incentives to municipal employees is a less cost-effective strategy for workforce reduction than relying on natural attrition, as these incentives often subsidize retirements that would have occurred regardless. Relying on attrition rather than early retirement incentives could yield $4.3 billion in net savings over five years, compared to $3.3 billion if the incentive program is implemented.
Recommendations related to Labor Costs
In light of the City’s fiscal stress and the availability of other options to balance the budget, the City should reduce its workforce through attrition and not pursue the ERI.
Key Data
$110,000
— The estimated cost to the City per participant over five years for the early retirement incentive.
19 percent
— The portion of the City’s savings from not having to pay the separated employee’s salary and benefits that would be offset by the early retirement incentive cost.
$1.1 billion
— The potential cost of the early retirement incentive if 10,000 employees participate and the City follows its current practice of hiring one new employee for every three vacancies.
$3.3 billion
— The projected net savings over five years if 10,000 employees take the early retirement incentive and the City fills one of every three vacancies.
$4.3 billion
— The projected net savings over five years if 10,000 employees leave through normal attrition and one-third of the vacancies are filled.
32 percent
— The amount by which per-person savings through attrition would be greater than savings through an early retirement incentive.
The fiscal year 2023 budget gap is projected at $4.3 billion, a figure likely understated by $1 billion due to unrealized labor savings. To address this, the city must prioritize structural changes, including headcount reductions, productivity improvements, and modifications to employee benefits and work rules.
Recommendations related to Labor Costs
A stronger partial hiring freeze is a good step, but headcount reductions are needed and should be made permanent.
The City should be taking aggressive steps now to rein in spending by collaborating with labor to change costly work rules and reduce the cost of benefits for City workers.
The City should prioritize improving productivity or modifying employee benefits instead of disproportionately targeting program reductions to minimize pain to New Yorkers.
Key Data
$4.3 billion
— The projected fiscal year 2023 budget gap.
$1 billion
— The amount of labor savings the Administration has failed to achieve, which likely understates the fiscal year 2023 budget gap.
3.2%
— The projected increase in City-funded spending between fiscal year 2021 and fiscal year 2022.
The City's financial plan relies on unrealistic labor savings and non-recurring debt service adjustments rather than structural changes to address its fiscal crisis. To achieve long-term stability, the administration must reduce headcount through attrition and hiring freezes while aligning employee benefit contributions with those of other public agencies.
Recommendations related to Labor Costs
Attrition and the hiring freeze should be used to reduce the City’s headcount over the full term of the four-year financial plan.
The City should continue to work with labor to identify efficiencies and align employee benefit contributions to those of other public agencies.
The Mayor should immediately ask each agency to identify significant recurring savings, with a focus on improving long run efficiency.
Key Data
$1 billion
— Annual labor savings included in the Financial Plan for fiscal years 2022 to 2024 that the administration has made no progress achieving.
$3.8 billion
— The budget gap for fiscal year 2022 that the City needs to close in the upcoming Preliminary Budget.
60 percent
— The portion of annual savings in the November 2020 Financial Plan that do not recur.
0.35 percent
— The amount of City-funded spending represented by fiscal year 2023 savings.
New York City faces a challenge in achieving $1 billion in recurring labor savings, as no contract modifications have been announced to increase operational efficiency or reform benefits. Furthermore, the city's projected overtime spending and headcount growth plans remain questionable without concrete contractual or staffing reforms.
Recommendations related to Labor Costs
Agencies should be tasked with identifying savings, especially recurring savings that improve the efficiency of government and provide multi-year budget relief.
Savings in future years that are not based on a feasible plan should be removed from the financial plan.
Unfilled positions should be removed from the financial plan.
Key Data
$1 billion
— The amount of annual, recurring labor savings the City pledged to achieve starting in fiscal year 2021.
$633 million
— The amount of expenses the City and some municipal unions agreed to shift from fiscal year 2021 to fiscal year 2022.
$927 million
— The amount of overtime spending projected in the Adopted Budget for fiscal year 2021.
$410 million
— The amount of overtime spent through October, representing 44 percent of the Adopted Budget amount.
324,036
— The number of full-time and full-time equivalent employees at the end of fiscal year 2020.
4,000
— The number of positions the Adopted Budget projected headcount would grow by between fiscal years 2021 and 2022.
New York City faces a fiscal crisis where the administration threatens layoffs or borrowing, yet alternative strategies like agency efficiency, attrition, and health insurance reform remain underutilized. Implementing a stricter hiring freeze and requiring employee contributions to health insurance premiums could generate significant savings without resorting to debt or workforce reductions.
Recommendations related to Labor Costs
Commissioners should comb their agencies to increase efficiency of city services or reduce spending on lower priorities.
The city should use attrition and a stricter hiring freeze to reduce the workforce by 7,000 employees a year.
The administration should reinvigorate the labor-management committee to reduce health insurance spending.
City workers and retirees should contribute to health insurance premiums to save hundreds of millions of dollars.
Key Data
22,000
— Number of city workers the mayor threatened to lay off if borrowing was not authorized.
7,000
— Number of employees the city could reduce annually through a stricter hiring freeze.
$1 Billion
— Amount of labor savings committed to in the budget that had not been identified.
14,000
— Number of additional workers the city had at the time of the post compared to the highest point before the last recession.
$2 Billion
— Amount by which the city budget, adjusted for inflation, was higher than what the city spent in 2018.
New York City faces a $1 billion labor savings target to address its fiscal crisis, which can be achieved through reforms to health insurance, work rules, and benefit structures. Implementing these changes, such as premium sharing and overtime caps, would allow the city to avoid layoffs while maintaining essential services.
Recommendations related to Labor Costs
The City should work with the MLC to consolidate welfare funds to leverage economies of scale for prescription drugs and other medical benefits.
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 guaranteed return on the 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.
Key Data
$1 billion
— Recurring savings target from negotiations with labor unions.
$50.2 billion
— Projected personnel costs in fiscal year 2021 out of the $93.5 billion budget.
$1.1 billion
— Uniformed overtime spending in fiscal year 2019.
$100 million
— Overtime earned by employees in skilled trades in fiscal year 2019.
$1.2 billion
— Estimated annual value of the taxpayer-provided TDA guarantee.
$124 million
— City contributions to union annuity funds in fiscal year 2020.
New York City faces a significant fiscal crisis that requires achieving $1 billion in recurring labor savings to avoid widespread layoffs. The city can reach this target by rationalizing employee benefits, such as health insurance and welfare funds, and modernizing work rules, including overtime caps and staffing models.
Recommendations related to Labor Costs
The City should work with the Municipal Labor Committee to consolidate welfare funds to leverage economies of scale for prescription drugs and other medical benefits.
The City should seek State legislation to eliminate the Variable Supplement Funds and have the assets transferred to the main pension funds.
The guaranteed return on the fixed return fund for teachers should be sharply reduced through State legislation.
The City should implement overtime caps for skilled trades and uniformed employees to reduce costs.
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 make four firefighters the standard staffing for engine companies.
The City should reinvigorate the partnership with the Municipal Labor Committee with the goal of implementing a new premium-sharing arrangement.
Key Data
$1 billion
— Recurring savings target from negotiations with labor unions in the FY2021 Adopted Budget.
$50.2 billion
— Projected personnel costs in fiscal year 2021.
7.0 percent
— Annual average growth of health insurance premium costs from fiscal year 2009 to fiscal year 2019.
$1.2 billion
— Estimated value of the taxpayer-provided guarantee for the tax-deferred annuity.
$1.1 billion
— Uniformed-agency overtime budget in fiscal year 2019.
$13,356
— Average differential pay (excluding overtime) for sanitation workers in fiscal year 2019.
The Metropolitan Transportation Authority faces a $16.2 billion budget gap through 2024, necessitating difficult decisions regarding labor costs and service adjustments to maintain operations. To address these financial challenges, the agency must prioritize reducing overtime, controlling employee benefit costs, and freezing new hiring to avoid unsustainable spending.
Recommendations related to Labor Costs
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 financial plan's inclusion of 776 new positions and an increased personnel cost of $250 million is not affordable at this time.
Key Data
776
— Number of new positions included in the fiscal year 2021 financial plan.
$250 million
— Increased personnel cost associated with the 776 new positions in the fiscal year 2021 financial plan.
Watch the original segment here . Budget watchdogs say labor and City Hall should target health care costs first. "The city pays the full premium for employees, retirees and their families. It's a deal that no other New Yorker in the private sector has," said Maria Doulis, vice-president at the…
The NYPD's fiscal year 2021 budget was reduced by $474 million compared to the Executive Budget, with 75 percent of that reduction coming from unrealistic overtime savings. These budget adjustments, which include a reduction of 1,404 positions, rely on one-time savings and headcount reductions rather than structural reforms to labor costs.
Recommendations related to Labor Costs
Overtime reforms would need to be far-reaching and potentially negotiated with labor unions to achieve the steep reduction currently budgeted.
Key Data
$474 million
— Total reduction in the NYPD budget when measured against the Executive Budget for Fiscal Year 2021.
$354 million
— Amount of the reduction in the NYPD budget that is attributed to overtime expenses.
$82 million
— Recurring annual reduction to the operating budget, mainly from reductions in hiring.
1,404
— Total number of positions by which the NYPD workforce is reduced in fiscal year 2021.
6.6 percent
— Percentage decrease in the NYPD operating budget from fiscal year 2020 to fiscal year 2021.
The City's fiscal year 2021 budget relies on $1 billion in labor savings to be negotiated with municipal unions, yet no concrete plan exists to achieve this target. To avoid the potential layoff of 22,000 workers, the City should pursue strategies like attrition, consolidating union welfare funds, and adjusting collectively bargained benefits.
Recommendations related to Labor Costs
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.
Shrinking the workforce through attrition is both possible and preferable to layoffs.
The City and labor could identify savings by agreeing to change other collectively bargained benefits, including vacation days, sick leave, work hours, and even contractually agreed upon raises and steps.
A package that consolidates union welfare funds, phases in employee health insurance premium contributions, changes work rules to improve productivity, and shrinks the workforce through attrition could generate savings of these magnitude.
Key Data
$1 Billion
— Recurring savings target to be negotiated with the City’s municipal labor unions.
22,000
— Number of workers the City would lay off beginning in October if the $1 billion savings agreement is not met.
6 percent to 7 percent
— Percentage of City employees who leave City employment each year.
20,000
— Number of individuals who leave City employment each year.
$53 Million
— Labor reserve savings in fiscal year 2021.
$805 Million
— Labor reserve savings in fiscal year 2024.
The Metropolitan Transportation Authority faces a severe fiscal crisis, with operating budget shortfalls estimated between $8.4 billion and $12.6 billion for 2020 and 2021. To address this, the authority must prioritize operational efficiencies, including renegotiating union agreements to reduce overtime and fringe benefit costs, while also reevaluating capital project timelines and fare policies.
Recommendations related to Labor Costs
The MTA should pursue greater efficiencies to lower operating expenses, which in large part requires working collaboratively with labor unions.
A new financial plan should include additional efficiencies from operational changes, most of which require changes in union agreements about work rules and compensation.
The MTA should implement specific operational changes, such as changes to bus driver schedules to reduce overtime, one-person train operation, and lower fringe benefit costs.
Workers and their union representatives should collaborate in revising work practices to ensure the MTA’s financial survival and long-term job security.
The new financial plan should set a substantial target for savings from negotiations with the major unions.
Key Data
$500 million
— Annual savings sought by the Transformation Plan, largely from reorganization, administrative efficiencies, and better management of staff levels and overtime.
$700 to $800 million
— Estimated annual cost of COVID-19 related cleaning, testing, and personal protective equipment in 2020 and 2021.
$742 million
— Cumulative total of projected debt service for projects in the first five years of the new capital plan.
The fiscal year 2021 budget relies on questionable savings, including a $300 million reduction in police overtime and $1 billion in unspecified savings from municipal labor unions. Without concrete plans for recurring efficiency savings and aggressive attrition, the city faces significant risks of future service cuts and layoffs.
Recommendations related to Labor Costs
City leaders must improve the management of police overtime to ensure the targeted reduction of almost $300 million is actually achievable.
The City must provide specific details on the actions required to achieve the $1 billion in savings expected from collaboration with municipal labor unions.
To avoid drastic service reductions and layoffs, the City must implement a program of recurring efficiency savings and aggressive attrition.
Key Data
$300 million
— The amount of police overtime reduction targeted in the budget, which is considered highly unlikely to be achieved.
$1 billion
— The amount of savings the City expects to generate through collaboration with municipal labor unions, for which specific actions have not yet been detailed.
The New York City Police Department's fiscal year 2020 expenses totaled $10.9 billion, with 88 percent of the budget dedicated to personal services like salaries, wages, and overtime. This spending includes an average total pay of $96,072 for full-time employees, supported by a workforce of 54,003 individuals.
Key Data
$10.9 billion
— Total expenses for the New York City Police Department in fiscal year 2020, including operating budget and centrally allocated costs.
88 percent
— Portion of the NYPD's budget dedicated to personal service spending, which includes salaries, wages, and overtime.
$635 million
— Total overtime spending at the NYPD in fiscal year 2020, representing 44 percent of all overtime spending Citywide.
$96,072
— Average total pay for a full-time NYPD employee in fiscal year 2019, including base pay, overtime, and supplemental pay.
54,003
— Total NYPD headcount in fiscal year 2020, consisting of 36,178 uniformed employees and 17,825 civilian employees.
New York City faces significant budget gaps that require difficult decisions, including reducing the workforce through attrition and collaborating with labor to modify benefits and improve productivity. Implementing health insurance premium-sharing for employees and retirees, alongside targeted headcount reductions in civilian, police, and education sectors, offers a path to balance the budget without mass layoffs.
Recommendations related to Labor Costs
The City should modestly shrink the workforce through attrition to help balance the budget.
The City should collaborate with labor to improve productivity and modify benefits to achieve necessary savings.
The City should require some fringe benefit cost-sharing with employees and retirees to generate significant recurring savings.
The City should reduce the police force by 1,174 over two years through attrition and adjust the size of police recruit classes.
The City should reduce DOE civilian headcount by 500 positions by fiscal year 2022 to save about $60 million annually.
The City should implement a health insurance premium-sharing arrangement for active employees to save more than $700 million annually.
The City should call for time limits on or elimination of the Absent Teacher Reserve to achieve potential savings of about $60 million per year.
Key Data
9,000
— Number of positions the City could reduce from its headcount through attrition.
$700 million
— Annual savings from implementing an active employee health insurance premium-sharing arrangement.
$350 million
— Annual savings from implementing a retiree health insurance premium-sharing arrangement.
1,174
— Number of uniformed police officers the City could reduce over two years through attrition.
$60 million
— Annual savings from reducing DOE civilian headcount by 500 positions.
$136 million
— Cost of the Absent Teacher Reserve to the City during the 2017-2018 school year.
Governments facing fiscal stress can manage labor costs by implementing gain-sharing arrangements, utilizing partly paid furloughs, and reducing planned compensation increases. These strategies help balance budgets while minimizing negative impacts on the workforce and maintaining essential service delivery.
Recommendations related to Labor Costs
Implement gain-sharing arrangements where changes require labor-management agreement to change work rules to achieve significant savings.
Utilize staff furloughs as a way to adapt to temporary declines in demand for services while maintaining a commitment to return to full employment.
Adapt partly paid furloughs in New York through agreements with unions and adjustments to Unemployment Insurance Benefits eligibility to protect worker income while providing fiscal savings.
Reduce expenditures by lowering planned increases to employee compensation, such as implementing pay freezes or payless paydays.
Reduce the fringe benefit portion of compensation by requiring new contributions from workers and retirees for their health insurance.
New York City's municipal workforce grew to an all-time high of 326,739 by the end of fiscal year 2019, despite the need to address looming budget gaps. To manage the city's serious fiscal problems, the administration must implement an assertive plan to shrink the workforce while minimizing service impacts.
Recommendations related to Labor Costs
The Administration should act now to shrink the workforce with the least impact on services.
The Adopted Budget should show the decline in headcount that will be needed to manage the next few fiscal years.
Key Data
$5 billion
— outyear budget gap projected for fiscal year 2022
311,018
— New York City full-time and full-time equivalent personnel in fiscal year 2008
293,550
— New York City full-time and full-time equivalent personnel in fiscal year 2012
17,468
— reduction in personnel from fiscal year 2008 to fiscal year 2012
5.6 percent
— percentage reduction in personnel from fiscal year 2008 to fiscal year 2012
326,739
— all-time high municipal employment at the end of fiscal year 2019
Expanding prevailing wage requirements to private projects receiving public subsidies will increase construction costs by 13 to 25 percent, potentially rendering some developments financially infeasible. Furthermore, imposing Wicks Law requirements on design-build projects and reducing procurement transparency at the MTA will hinder project efficiency and decrease competition.
Recommendations related to Labor Costs
Lawmakers should defer the proposal to expand prevailing wage requirements to publicly subsidized construction projects, as it will increase project costs and potentially make some projects financially infeasible.
The state should not require agencies using design-build to comply with the Wicks Law, as this undermines the benefits of combining project designers and contractors onto a single team.
The state should maintain the standard two-step design-build bidding process rather than allowing agencies to bypass it, which would limit the competitive pool to only large, well-capitalized firms.
Lawmakers should defer nonessential policy issues to allow for greater focus on the fiscal task at hand and a more robust public debate of these policies’ merits at a later time.
The state should not reduce the MTA bid solicitation period from 15 business days to five days or limit bid advertisements to its website, as these measures will decrease competition.
Key Data
13 to 25 percent
— The range by which prevailing wage mandates increase construction costs on public projects, depending on the region and type of work.
30 percent
— The threshold of public funding for construction projects that would trigger the proposed expansion of prevailing wage requirements to private developers.
$3 million
— The project cost threshold in New York City above which agencies using design-build would be required to comply with Wicks Law requirements.
$1.5 million
— The project cost threshold outside of New York City above which agencies using design-build would be required to comply with Wicks Law requirements.
$5 million
— The contract value limit for "innovative" technology projects that the MTA could award through a process to be determined by the MTA board.
New York City faces a potential $6 billion revenue shortfall due to the pandemic, necessitating a more aggressive savings plan than the proposed $1.3 billion target. To address this fiscal gap, the city must prioritize efficiency, increase its savings goal to $3 billion, and potentially implement measures such as hiring freezes or workforce savings through union negotiations.
Recommendations related to Labor Costs
The City should work with municipal unions to achieve workforce savings to address the fiscal crisis.
The City should consider implementing hiring freezes to manage labor costs during the economic downturn.
The City should evaluate the necessity of layoffs as a potential measure to reduce expenditures.
Key Data
0.23 percent
— Average efficiency savings previously achieved by city agencies.
0.66 percent
— Amount of city-funded spending saved in the Fiscal Year 2020 Executive Budget.
0.91 percent
— Amount of city-funded spending targeted for savings in the Fiscal Year 2021 Executive Budget.
$1.3 billion
— The savings target announced for the Fiscal Year 2021 Executive Budget.
$3 billion
— The recommended target size for next year's savings program.
$6 billion
— Estimated revenue shortfall for fiscal years 2020 and 2021.
NYCHA's operating budget is increasingly reliant on City subsidies, with rising labor costs and stagnant rental income creating significant fiscal challenges. To ensure long-term stability, future labor agreements must be financially sustainable while providing the flexibility needed to implement necessary operational turnarounds.
Recommendations related to Labor Costs
NYCHA’s fiscal stability depends on future settlements being financially sustainable and providing enough flexibility for NYCHA to implement its turnaround plan.
NYCHA’s forthcoming organizational plan must include a program to boost the rent collection rate and maintain it going forward.
Devolving budgeting and accountability to the property level could improve collections but it will depend on property managers’ ability to implement changes.
Key Data
$1.4 billion
— The 2020 budget assumes that payroll costs will reach this amount, which includes the cost of staff working on both public housing and Section 8.
42 percent
— Fringe benefits account for this share of payroll expenditures.
$102 million
— This amount of City-funded subsidies covers the cost of recent labor settlements with the workforce.
9 percent
— Payroll costs have grown by this amount since 2015.
$59 million
— The total net cost of the 2018-2021 contract with Teamsters Local 237, the bargaining unit representing Caretakers and Heating Plant Technicians, over four years.
$34 million
— The estimated net cost of the maintenance workers’ contract through January 2022.
The Metropolitan Transportation Authority's new labor contract with the Transport Workers Union increases compensation by 9.8 percent, costing over $1 billion and adding $16.5 million to the agency's four-year budget gap. To mitigate these costs, the agency must secure greater savings through workrule changes and establish rigorous productivity targets with public reporting to ensure accountability.
Recommendations related to Labor Costs
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 to ensure accountability.
The labor-management productivity committees should provide public quarterly reports on savings to ensure accountability.
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
— The compounded 9.8 percent wage increases will cost more than this amount through 2023.
$129 million
— The amount by which the wage increases exceed what was included in the MTA’s November 2020-2023 Financial Plan.
$64 million
— The minimum cost of the agreement’s non-wage benefits over four years.
$16.5 million
— The amount the net costs of the agreement will add to the MTA’s four-year budget gaps.
$11.7 million
— The additional cost if the MTA negotiates similar agreements with its other bargaining units beyond what is budgeted.
$44 million
— The amount the MTA estimates it will save annually if it manages to fully realize the contract's health and worker availability provisions.
New York City's budget grew by $19 billion between fiscal years 2014 and 2019, driven significantly by rising personal service costs including salaries, wages, overtime, and pension contributions. This spending growth, fueled by collective bargaining agreements and an 11 percent expansion of the full-time municipal workforce, highlights the need for fiscal restraint to prepare for potential economic downturns.
Key Data
$4,841.6 million
— The increase in full-time salaries and wages between fiscal years 2014 and 2019.
$1,675.5 million
— The increase in pension costs between fiscal years 2014 and 2019.
$343.0 million
— The increase in overtime expenditures between fiscal years 2014 and 2019.
11%
— The expansion of the full-time municipal workforce from 271,767 to 300,442 between fiscal years 2014 and 2019.
$1.8 billion
— The total overtime expenditure in fiscal year 2019.
$22.9 billion
— The total full-time salaries and wages expenditure in fiscal year 2019.
New York State faces a significant fiscal imbalance driven by rapidly rising Medicaid long-term care costs, which grew 32% between 2015 and 2019. To address these rising labor-related expenses and broader fiscal challenges, the state should implement reforms to retiree health benefits and re-evaluate Medicaid spending policies.
Recommendations related to Labor Costs
The State should consider reforms to retiree health benefits that were proposed repeatedly in recent Executive Budgets to significantly reduce post-employment benefit costs and future liabilities.
The State should reconstitute the Medicaid Redesign Team to identify savings, including policies to address high and rapidly rising long-term care costs.
Key Data
32%
— The State share of Medicaid long-term care costs in New York grew 32% from fiscal years 2015 to 2019, which is two times faster than other areas of Medicaid spending.
56%
— In New York State, 56% of home health costs are paid for by Medicaid.
36%
— The national average for Medicaid’s share of home health services was 36% in 2016.
New York City's annual pupil transportation costs total $1.4 billion, and proposed legislation would mandate costly employee protection provisions that restrict hiring and lock in high expenses. Maintaining flexibility in contract negotiations is essential to securing savings for taxpayers and avoiding the anticompetitive practices that courts have previously struck down.
Recommendations related to Labor Costs
The Governor should veto A7749/S6208, which would impose costly restrictions on school bus contracts in New York City.
It is critical that the City maintain flexibility to procure and negotiate pupil transportation contracts and secure savings for future taxpayers.
Key Data
$1.4 billion
— New York City pupil transportation costs annually.
The Metropolitan Transportation Authority faces a precarious fiscal future with a projected $637 million shortfall by 2023, necessitating strict control over operating expenses. Because labor costs account for three-fifths of these expenses, any new union contracts must be offset by productivity gains and benefit savings to ensure a neutral impact on the budget.
Recommendations related to Labor Costs
It is critical that the MTA negotiate a labor settlement focused on increased productivity with the TWU, since labor costs represent three-fifths of operating costs.
Any raises negotiated in the settlement should be offset by savings from productivity gains and in health and welfare benefit costs so that there is a “net zero” impact on the MTA’s bottom line.
Key Data
three-fifths
— Labor costs represent this portion of the MTA's total operating costs.
$637 million
— The MTA faces a cumulative cash shortfall by 2023 if all financial plan assumptions come to fruition.
The state legislature has passed 18 bills that would increase pension and disability benefits for public employees, which would cost at least $71 million in the first year. These benefit expansions threaten to undermine previous fiscal reforms and increase long-term labor costs for taxpayers.
Recommendations related to Labor Costs
The Governor should veto all 18 bills passed by the Legislature to enhance pension or disability benefits, as they increase costs without providing enhanced services.
The Governor should veto all the bills to send a strong message that past fiscal reforms will not be overturned.
The state should avoid granting targeted benefit enhancements that increase costs and may encourage further expansions.
Key Data
$71 million
— Projected first-year cost of the 18 bills passed by the Legislature to enhance pension or disability benefits.
$41 million
— First-year cost of A4431/S5207, which would establish a 20-year retirement plan for certain state law enforcement positions.
$15.7 million
— First-year cost of A7874-A/S5905-A, which would require New York City paraprofessionals to join the Teachers Retirement System.
$5.6 million
— Annual cost of A7620-A/S5903-A, which would allow New York City police officers to receive retirement credit for time spent as cadets.
$2.1 million
— First-year cost to Nassau County for A5324/S5133, which would grant ambulance medical technicians an enhanced disability benefit.
$1.5 million
— First-year cost to Nassau County for A5021/S3946, which would allow sheriffs and correction officers to be eligible for performance of duty disability benefits.
The Metropolitan Transportation Authority faces significant financial constraints and projected deficits, yet plans to hire 581 new police officers at a cost of $260 million over the 2020-2023 financial plan. Before proceeding with this expenditure, the agency must identify how to fund these new hires without further increasing its operating deficit, which is projected to reach $1 billion.
Recommendations related to Labor Costs
Before authorizing the hiring of 581 new officers, the MTA Board needs to know exactly how the MTA will find the funds to pay for them without increasing the operating deficit.
The MTA should work with the NYPD and its own officers to establish clear goals and expectations and maximize the effectiveness of existing policing.
The MTA Board should identify how it will cover the cost of this expenditure without increasing the MTA’s operating deficit.
Key Data
$56.1 million
— Cost of increasing the MTA police force with 500 new officers and 81 supervisors in year one.
$119.9 million
— Cost of increasing the MTA police force with 500 new officers and 81 supervisors in year ten.
$260 million
— Cost of the new officers over the 2020-2023 financial plan.
$740 million
— MTA's projected operating budget deficit before the new officers are added.
$1 billion
— MTA's projected operating budget deficit after the new officers are added.
$40 million
— Funds provided by the Manhattan DA over four years to reduce fare evasion.
New York City's full-time workforce grew to approximately 305,700 employees by fiscal year 2019, with average pay rising to $85,636 over the preceding five-year period. While uniformed overtime costs reached $1.1 billion in 2019, growth in average total pay for uniformed titles remained slow due to hiring at lower starting salaries and reductions in overtime pay.
Key Data
305,700
— Number of full-time city employees in fiscal year 2019.
$85,636
— Average pay for full-time city employees in fiscal year 2019.
$72,019
— Average pay for full-time city employees in fiscal year 2014.
$1.1 billion
— Total uniformed overtime pay in fiscal year 2019.
$973 million
— Total uniformed overtime pay in fiscal year 2014.
2.3 percent
— Annual growth rate of positions in the top 20 titles between fiscal years 2014 and 2019.
In fiscal year 2019, New York City employed nearly 306,000 full-time workers with an average total compensation of $85,636. Compensation structures varied significantly by role, with uniformed employees averaging $106,000 annually compared to $73,106 for civilian staff and $86,002 for pedagogical employees.
Key Data
306,000
— active full-time employees on New York City’s payroll in fiscal year 2019
$85,636
— average total pay for full-time employees in fiscal year 2019
$106,000
— average annual pay for uniformed employees
$73,106
— average annual pay for civilian employees
$86,002
— average annual pay for pedagogical employees
$10,000
— average annual overtime for civilians in agencies including the Departments of Transportation, Correction, Citywide Administrative Services, and Fire
The MTA's plan to hire 500 new police officers and 81 supervisors will cost over $260 million between 2020 and 2023, contributing to a $1 billion operating budget gap. This hiring strategy significantly increases long-term labor expenses, with annual costs rising from $56.1 million in the first year to $119.9 million in the tenth year.
Key Data
$93,000
— The annual total cost for one officer in the first year, including salary, overtime, benefits, and pensions.
$260 million
— The cost of the 581 officers and supervisors over the 2020-2023 financial plan.
$1 billion
— The operating budget gap over the next four years resulting from the hiring strategy and projected financial plan deficit.
$56.1 million
— The annual cost of the hiring strategy in the first year.
$119.9 million
— The annual cost of the hiring strategy in the tenth year.
$42,000
— The starting salary for an MTA police officer.
NYCHA's high labor costs, driven by limited schedules and onerous work rules, contribute to high per-unit operating expenses and require fundamental collective bargaining reforms to improve property management. While recent agreements with caretakers introduced alternative work schedules, these changes come at a high price and have not yet been expanded to other bargaining units like skilled trades.
Recommendations related to Labor Costs
Meaningful progress towards reaching a state of good repair will require fundamental shifts in property management practices, work rules, schedules, job responsibilities, and contracting.
Achieving efficient and effective property management requires collective bargaining reforms.
NYCHA should increase the use of private service and job order contracts in order to reduce overtime, improve the deployment of existing skilled trade staffers, and contribute to improved conditions for residents.
The federal monitor should work with the new Chair to lift the federal prohibition on design-build and best value procurement for federally-funded capital projects.
Key Data
$101 million
— The amount included in the City's Adopted Budget for Fiscal Year 2020 for collective bargaining-related costs for NYCHA.
39 percent
— The amount by which NYCHA's costs to operate are higher than the cost to operate the average rent-stabilized unit, excluding property taxes.
24 percent
— The increase in open work orders between the release of NYCHA 2.0 in December 2018 and July 31, 2019.
71 days to 112 days
— The increase in the average time to complete repairs.
Educating an average New York City public elementary school class cost $561,246 in 2017, with 30 percent of that funding dedicated to classroom teacher salaries, fringe benefits, and professional development. Fringe benefits alone accounted for 62.5 percent of salary expenditures, while additional funding supported instructional support, school leadership, and ancillary services.
Key Data
$561,246
— Cost of an average elementary school class in 2017.
$168,500
— Funding for the classroom teacher, including salaries, fringe benefits, and professional development.
62.5%
— Fringe benefits as a percentage of salary expenditures.
$21,400
— Spending on principals and assistant principals per class.
$590,351
— Cost of an average middle school class.
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…
The Metropolitan Transportation Authority faces significant financial instability, with projected cumulative deficits reaching $740 million by 2023 due to optimistic savings assumptions and potential wage growth. To stabilize finances, the Authority must pursue zero-cost collective bargaining agreements and ensure that budget reduction programs and transformation plans are implemented without compromising service quality.
Recommendations related to Labor Costs
The MTA should prioritize seeking zero-cost wage settlements in current collective bargaining to help stabilize the agency's finances.
MTA leaders should focus on developing and detailing the Transformation Plan while realistically assessing its savings potential.
The Authority should focus on specifying the elements of the Budget Reduction Program and integrating them with the Transformation Plan without causing a negative impact on service.
Key Data
$180 million
— The savings in 2020 from implementing zero-cost wage increases and equalizing health insurance contributions.
$288 million
— The savings in 2021 from implementing zero-cost wage increases and equalizing health insurance contributions.
$396 million
— The savings in 2022 from implementing zero-cost wage increases and equalizing health insurance contributions.
1,900 to 2,700 positions
— The range of job reductions assumed by the Transformation Plan.
83 percent
— The portion of Transit employees covered by the civil service system.
98 percent
— The portion of Triborough Bridge and Tunnel Authority employees covered by the civil service system.
The 2019 legislative session saw 189 bills introduced that would increase public employee benefits, including pensions, disability coverage, and health insurance, creating significant long-term fiscal liabilities for the state and local governments. These proposed benefit sweeteners carry substantial costs, with some individual bills requiring hundreds of millions of dollars in additional annual contributions or past service payments.
Key Data
$942.6 million
— The estimated cost of increasing the base retirement allowance for various New York State and City retirement systems.
$149 million
— The estimated immediate past service cost of increasing Tier 6 pension benefits.
$121.7 million
— The additional annual cost of increasing the salary used in the computation of the special accidental death benefit.
$59.3 million
— The annual increase and immediate past service cost of calculating final average salary for judges as the last year's salary.
$41.1 million
— The annual cost and immediate past service cost of establishing a 20-year retirement plan for certain law enforcement officers.
$13.1 million
— The one-time past service cost of modifying the in-service death benefit for state correction officers.
The 2019 Benefit Sweetener Scorecard tracks 189 legislative proposals that would expand public employee benefits, including pensions, disability coverage, and paid leave, creating significant long-term fiscal liabilities for New York State and its municipalities. These proposed enhancements, if enacted, would impose substantial additional costs on taxpayers by increasing employer contributions and past service liabilities.
Key Data
$942.6 million
— Estimated cost of increasing the base retirement allowance for cost of living adjustments for New York State Teachers, State and local police and fire, and New York City retirement systems.
$149 million
— Immediate past service cost of increasing Tier 6 pension benefits from 35% to 40% plus 2% for each year of service in excess of 20 years.
$121.7 million
— Additional annual cost of increasing the salary used in the computation of the special accidental death benefit by 3%.
$59.3 million
— Annual increase and immediate past service cost of calculating the final average salary for elected or appointed judges as the last year's salary.
$57.6 million
— Estimated increase in the present value of benefits and annual cost for establishing an age 55/25 temporary retirement incentive for certain public employees.
$41.1 million
— Cost to New York State for establishing a 20-year retirement plan for members or officers of law enforcement, including immediate past service costs.
The New York State Legislature introduced 189 bills in 2019 aimed at increasing public employee benefits, including pensions, disability coverage, and health insurance, which would impose significant long-term fiscal burdens on the state and local governments. These proposed benefit sweeteners include measures like increasing retirement allowances and accidental death benefits, with some individual bills carrying price tags reaching nearly $1 billion.
Key Data
$942.6 million
— Estimated cost increase for the teachers' retirement system, state and local police and fire systems, and New York City retirement systems due to base retirement allowance adjustments.
$121.7 million
— Additional annual cost of increasing the salary used in the computation of the special accidental death benefit by 3%.
$59.3 million
— Annual increase and immediate past service cost for calculating the final average salary for judges and justices based on their last year's salary.
$41.1 million
— Cost to New York State for establishing a 20-year retirement plan for law enforcement officers, including regional state park police and university police.
$13.1 million
— One-time past service cost for modifying the in-service death benefit for Tiers 2 through 6 State correction officers.
$2.09 million
— Estimated increase in Nassau County annual contributions and past service costs for enhanced disability benefits for ambulance medical technicians.
The Metropolitan Transportation Authority faces a dire fiscal outlook with growing deficits, necessitating a strategy to control operating costs, particularly labor costs which make up a large portion of the budget. Future collective bargaining agreements should prioritize self-funded raises by incorporating savings from productivity improvements and increased employee contributions to health insurance and benefits.
Recommendations related to Labor Costs
The MTA should focus on controlling operating costs, specifically by slowing the growth of labor costs.
Any pay increases should be conditioned on generating offsetting savings.
MTA 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.
New collective bargaining agreements could reduce 'penalty payments' made to bus operators scheduled to work across both morning and evening peak periods.
New agreements also could eliminate the restrictions on hiring more part-time bus operators and the restrictions on express bus scheduling.
Allowing management to schedule split runs for subway train operators and conductors would allow for more efficient scheduling of those workers.
Increasing employee health care contributions of represented workers to levels similar to the nonrepresented workforce would defray a significant share of the authority’s $1.4 billion health and welfare expense.
Key Data
$10 billion
— Labor costs in 2019, which represent nearly three-fifths of the MTA’s operating budget.
$72 million
— Estimated savings in 2019 from conditioning pay increases on offsetting savings, growing to almost $400 million by 2022.
$84,955
— Median earnings for MTA workers in 2017.
$1.4 billion
— Total contribution by the MTA to its six associated pension systems.
$496 million
— Annual savings from increasing subway maintenance productivity to the median for selected U.S. systems.
$444 million
— Estimated savings if the MTA’s total bus productivity matched the median.
NYCHA needs to modernize its operations by reforming labor contracts to improve productivity, specifically by adjusting work schedules and reducing overtime costs among skilled trades. These reforms, alongside expanding maintenance staff responsibilities and utilizing outside contractors, are essential for addressing the agency's repair backlog and operational inefficiencies.
Recommendations related to Labor Costs
The monitor should review labor contracts to improve workforce productivity by scheduling shifts on evenings and weekends.
The monitor should push NYCHA to modify agreements with skilled trades to reduce their disproportionate share of the overtime budget.
NYCHA should expand the job responsibilities of maintenance workers to allow front line staff to contribute to repairs as part of their day-to-day work.
The monitor should push NYCHA to increase the span of accountability and control of frontline supervisors, including requiring property managers to develop project-level budgets.
NYCHA should continue efforts to bring in outside contractors for routine work to speed the pace of maintenance and repair work and reduce the need for overtime.
The monitor should focus on gaps or ideas not previously studied, such as ways that NYCHA can evaluate and improve its project labor agreement.
The New York City Housing Authority's NYCHA 2.0 plan aims to stabilize the system through capital improvements and private sector management practices, but its success requires additional support from government and labor unions. Specifically, labor leaders must collaborate to adjust work rules and salary structures to facilitate more timely and cost-effective repairs and maintenance.
Recommendations related to Labor Costs
Labor leaders must work with NYCHA to ease work rules and salary structures to ensure basic repairs and maintenance are performed in a more timely and cost-effective manner.
Elected officials and labor leaders must take additional action to give NYCHA resources and managerial flexibility.
Governor Cuomo's vetoes of various legislative proposals in late 2018 prevented the enactment of costly enhancements to public employee and retiree benefits, including expanded disability payouts and reduced retirement ages. These vetoed measures would have imposed millions of dollars in immediate and long-term fiscal burdens on the state and local governments.
Recommendations related to Labor Costs
The Governor should continue to veto legislation that increases public employee and retiree benefits, as these measures impose significant, often unbudgeted, costs on taxpayers.
Policymakers should reject bills that expand accidental disability benefits, such as those increasing payouts from two-thirds to three-quarters of final average salary, to prevent long-term fiscal strain.
The state should avoid enacting legislation that reduces retirement ages or alters pension calculations, such as removing overtime limits for Tier 6 employees, to maintain the fiscal sustainability of the retirement system.
Key Data
$13.20 Million
— One-time past service cost associated with enhancing in-service death benefits for state correction officers.
$2.42 Million
— Increased annual contributions and immediate past service costs for accidental disability retirement benefits for law enforcement and forest rangers.
$4.70 Million
— Estimated cost of removing the limit on overtime pay inclusion for calculating final average salary for Tier 6 New York City Transit Authority employees.
$1.50 Million
— Annual and one-time retroactive costs associated with allowing uniformed court officers to retire without early age reduction.
New York City's emergency medical services are inefficiently managed, with excessive reliance on expensive fire engine responses and outdated staffing models that contribute to high labor costs. Reforming these protocols by reducing unnecessary calls, adjusting ambulance staffing, and closing redundant fire companies could significantly improve service quality while generating substantial taxpayer savings.
Recommendations related to Labor Costs
The City should conduct a thorough assessment of the location, coverage, and workload of fire companies to identify where companies could safely close without jeopardizing response times to any type of emergency.
The City should reverse the policy that New York City ALS ambulances must have two paramedics to allow the City to assign one paramedic and one EMT, as is the practice in the rest of the state.
The FDNY should significantly reduce the role of fire engines in responding to medical incidents and shift resources to Emergency Medical Service.
The FDNY should develop programs to reduce residents’ unnecessary or inappropriate requests for an ambulance by building on the experience of other cities.
The City should reallocate resources from fire engine companies to higher priority services, as each fire engine costs about $7.2 million annually.
Key Data
$7.2 million
— Annual cost of each fire engine company, which could be reallocated to higher priority services.
$1,970
— Estimated average cost of a fire engine response to a medical incident in 2017.
$73,913
— Average salary of a firefighter in fiscal year 2017, excluding overtime.
$486
— Average cost of an ambulance run in 2017.
$85,292
— Maximum base salary for a firefighter.
$58.5 million
— Estimated annual savings from a 10 percent reduction in unnecessary ambulance requests.
In fiscal year 2018, New York City employed approximately 297,000 full-time workers with an average total compensation of $80,978. Compensation varied significantly by role, with uniformed employees averaging $107,000 annually compared to $70,726 for civilian staff and $76,114 for pedagogical employees.
Key Data
297,000
— active full-time employees on New York City’s payroll in fiscal year 2018
$80,978
— average total pay for active full-time employees in fiscal year 2018
$107,000
— average annual pay for uniformed employees
$70,726
— average annual pay for civilian employees
$76,114
— average annual pay for pedagogical employees
$10,000
— average annual overtime for civilians in agencies including the Departments of Transportation, Correction, Citywide Administrative Services, and Fire
New York State's personnel expenses have increased 18 percent since fiscal year 2011 to an estimated $23 billion in fiscal year 2019, even as the number of full-time equivalent employees declined. Average annual employee compensation is projected to exceed $127,000 in fiscal year 2019, driven largely by a 45 percent increase in health insurance costs per employee.
Key Data
$23 billion
— Estimated total personnel expenses in fiscal year 2019.
18 percent
— Increase in total personnel expenses from fiscal year 2011 to fiscal year 2019.
$127,000
— Projected average annual employee compensation in fiscal year 2019.
22 percent
— Increase in average employee compensation since fiscal year 2011.
45 percent
— Increase in health insurance costs per employee from fiscal years 2011 to 2019.
$23,456
— Health insurance cost per employee in fiscal year 2019.
The Metropolitan Transportation Authority's 2019 financial plan includes significant hiring to support agency action plans, with 500 new workers for the Subway Action Plan, 100 for the Long Island Rail Road, and 40 for the Bus Action Plan. These labor expansions, combined with rising expenses and declining fare revenue, contribute to forecasted cash deficits reaching $634 million by 2022.
Key Data
500
— The MTA intends to hire approximately 500 additional workers for the Subway Action Plan.
100
— The MTA intends to hire approximately 100 workers related to the Long Island Rail Road Forward Initiative.
40
— The MTA intends to hire approximately 40 workers for the Bus Action Plan.
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 costs at the Fire Department and Department of Correction remain high despite increased staffing levels, with both agencies exceeding their fiscal year 2018 budget caps. Addressing these costs requires negotiating work rule changes in labor contracts and implementing a comprehensive strategy to manage high rates of absenteeism and sick leave.
Recommendations related to Labor Costs
Labor and management must come to the table to develop better strategies to control uniformed overtime costs.
The City should tackle the high rate of absenteeism with a comprehensive strategy and changes to the sick leave policy, which currently grants unlimited sick time to uniformed employees.
Work rule changes will need to be negotiated in the next round of labor contracts to address the root causes of excessive overtime.
Key Data
$1.2 billion
— Total overtime earned by uniformed employees in fiscal year 2016.
$19,400
— Average overtime earned by each uniformed employee in fiscal year 2016.
$272 million
— Uniformed overtime spending at the FDNY in fiscal year 2017.
$240 million
— Uniformed overtime spending at the DOC in fiscal year 2017.
$59 million
— Amount the City increased the FDNY and DOC uniformed overtime budgets for fiscal year 2018.
7 percent
— Absence rate for sick leave and line-of-duty injury leave at the FDNY in the first four months of 2018.
New York City's municipal workforce has grown to a record 331,520 employees, adding $2.5 billion in annual personnel expenses and increasing long-term liabilities by over $520 million. To manage these rising costs and prepare for potential economic downturns, the city must implement stricter controls on headcount growth, including reviewing vacant positions and identifying obsolete assignments.
Recommendations related to Labor Costs
Agencies should review, assess, and remove unneeded vacant positions from the budget for all years of the financial plan instead of assuming they will be retained.
Agencies should be required to justify why a new responsibility cannot be completed with existing resources rather than creating new positions.
The City should undertake a review of all positions to identify obsolete assignments that could be replaced by technology, integrated into other positions, or eliminated.
Key Data
$2.5 billion
— Gross annual compensation costs in fiscal year 2019 for 26,436 new full-time employees.
$520.5 million
— Total estimated long-term costs associated with additional hires in fiscal year 2019, including pensions and retiree health benefits.
331,520
— Projected number of municipal employees by the end of fiscal year 2019.
$56.2 billion
— Unfunded pension liability at the end of fiscal year 2017.
$88.4 billion
— Unfunded other postemployment benefits (OPEB) liability at the end of fiscal year 2017.
New York City's Project Labor Agreements, which govern work rules and pay for major construction projects, have not been evaluated for their effectiveness in achieving promised savings or increasing opportunities for minority and women-owned businesses. With the city's capital commitment plan exceeding $82 billion and construction inflation rising, it is critical to assess these agreements to ensure they effectively reduce costs and improve productivity.
Recommendations related to Labor Costs
The City should commission evaluations of the four expiring PLAs while there is still time to decide if it is in the City’s interest to amend or renew them.
It is important that these decisions be made with transparency and be based on a detailed, independent analysis of performance and experience.
The Mayor’s Office of Contract Services should also identify and evaluate other City efforts to boost construction productivity.
Key Data
$347 million
— Projected savings on construction work under the Project Labor Agreements.
$8 billion
— Total value of construction work covered by the Project Labor Agreements.
$82 billion
— Total value of the City's current Capital Commitment Plan.
4 to 5 percent
— Average annual rate of construction inflation since the City signed the four Project Labor Agreements.
NYCHA's operating costs are 39 percent higher than those of other landlords, driven by inefficiencies such as inflexible labor agreements and centralized management. To address these issues and improve long-term viability, the authority must modernize its collective bargaining agreements, staffing structures, and procurement processes.
Recommendations related to Labor Costs
NYCHA should decentralize property management, modernize its collective bargaining agreements and staffing structures, increase the use of private maintenance contracts, and work with the City and State to use more flexible procurement arrangements, such as design-build, and to improve construction management.
Key Data
39 percent
— The amount by which NYCHA's costs of operations are higher than those of other landlords operating rent-stabilized buildings, driven by factors including inflexible bargaining agreements.
New York City's fiscal year 2019 budget faces significant pressure from a growing municipal workforce, which has expanded by 33,000 positions, and a $93 billion liability for retiree health insurance. To manage these rising labor costs, the city must secure health care savings during collective bargaining and limit further workforce expansion.
Recommendations related to Labor Costs
The City should ensure that raises in excess of the 1 percent per year set aside in the financial plan are funded through concessions or productivity increases.
The City must secure substantial health care savings during collective bargaining negotiations.
The City should develop a policy to increase the size of the Retiree Health Benefit Trust to reduce its other postemployment benefits (OPEB) liability.
The City must halt the growth of the municipal workforce to control rising labor costs.
Key Data
33,000
— Number of positions the municipal workforce has already grown by.
7,000
— Number of additional employees the municipal workforce is projected to expand by.
$93 billion
— The City's liability for providing health insurance to its retirees.
$4.35 billion
— Total balance of the Retiree Health Benefit Trust.
1 percent
— Annual raises set aside by the City in the financial plan.
New York City's pension costs for public employees are projected to grow steadily, with proposed legislation threatening to increase these expenses by enhancing benefits for police and firefighters. These pension sweeteners would likely trigger broader demands for increased compensation across other city agencies, ultimately forcing the city to divert funds from other essential services.
Recommendations related to Labor Costs
The Mayor should oppose and reject the bills that would hike the cost of pensions for NYC police and firefighters.
The City Council and the State Legislature should not pass an unwarranted pension sweetener that will be bitter for taxpayers.
Key Data
$20 million
— Estimated cost of one proposed bill next year.
$74,500
— Average annual pension for a recently retired NYC police officer.
$118,000
— Average annual pension for a recently retired firefighter.
$35,000
— Average annual pension for a civilian employee.
$200,000
— Value of total compensation for a police officer at 5½ years of service.
$10 billion
— Amount devoted to pensions for public employees in the fiscal year 2019 budget.
The Absent Teacher Reserve, a pool of teachers without permanent assignments who continue to receive full pay, costs the city $136 million annually and lacks sufficient incentives for teachers to secure new positions. Reforms such as capping the time teachers can remain in this reserve are necessary to address these ongoing labor costs and improve staffing efficiency.
Recommendations related to Labor Costs
The City should pursue reforms to the Absent Teacher Reserve, such as a six-month time limit, in upcoming labor negotiations with the UFT.
The City should use this round of negotiations to constrain, or preferably eliminate, the Absent Teacher Reserve.
Time in the Absent Teacher Reserve should be capped at six months.
Key Data
$136 million
— Cost of the Absent Teacher Reserve in the 2018 school year.
$98,126
— Average salary of teachers in the Absent Teacher Reserve.
$84,108
— Average salary for NYC teachers overall.
$8.5 million
— Cost of the 2018 separation incentive for Absent Teacher Reserve teachers.
$23 million
— Annual savings generated from the 2018 separation incentive.
$74 million
— Cost of the Absent Teacher Reserve at the start of the 2008 school year.
Several pieces of legislation aimed at expanding public employee retirement and disability benefits were vetoed, preventing millions in additional long-term fiscal liabilities. These vetoed measures included proposals to increase death benefits, modify overtime calculations for pension purposes, and expand accidental disability retirement eligibility.
Key Data
$13.20 Million
— One-time past service cost for the vetoed bill enhancing in-service death benefits for state correction officers.
$2.42 Million
— Increased annual contributions and immediate past service cost for the vetoed bill regarding accidental disability retirement for law enforcement and forest rangers.
$4.70 Million
— Total cost for the vetoed bill that would have removed the limit on overtime pay for calculating final average salary for certain transit authority employees.
$1.50 Million
— Annual and one-time retroactive costs for the vetoed bill allowing certain court officers to retire without early age reduction.
In 2018, several legislative bills that would have expanded public employee benefits—including enhanced disability payments and early retirement options—were vetoed. These proposed benefit sweeteners would have collectively imposed millions of dollars in additional costs, including $13.20 million for death benefit enhancements and $4.70 million for changes to overtime pay calculations.
Key Data
$13.20 Million
— One-time past service cost associated with the bill enhancing in-service death benefits for state correction officers.
$4.70 Million
— Annual cost increase associated with removing the limit on overtime pay inclusion for calculating final average salary for certain transit authority employees.
$2.42 Million
— Combined annual contribution increase and past service cost for providing accidental disability retirement to specific law enforcement and environmental conservation personnel.
$1.50 Million
— Annual and one-time retroactive costs associated with allowing uniformed court officers to retire without early age reduction after 30 years of service.
The Long Island Rail Road operates with significantly higher costs and lower productivity than the Metro-North Railroad, largely due to legacy expenses and inefficient work rules. To address these financial disparities, the Metropolitan Transportation Authority must prioritize productivity reforms and the standardization of work rules in future collective bargaining agreements.
Recommendations related to Labor Costs
MTA management should begin identifying its agenda for improved productivity.
Simply standardizing work rules across the two railroads could help generate savings.
The MTA should seek to align LIRR per-mile costs with Metro-North to reduce operating expenses.
Key Data
$1,453 million
— LIRR operating expenses in 2017.
$1,310 million
— Metro-North operating expenses in 2017.
72 percent
— Share of operating expenses accounted for by total labor expenses in 2017.
$172 million
— Potential savings from aligning LIRR per-mile costs with Metro-North in 2017.
$130 million
— LIRR overtime expenses in 2017.
3.7 percent
— Average annual growth rate of labor expenses over the past five years.
Legislative proposals vetoed in 2018 would have increased public sector labor costs by expanding retirement and disability benefits for various uniformed and public service employees. These measures included enhancements to death benefits, accidental disability payouts, and adjustments to retirement age requirements that would have created significant long-term fiscal obligations.
Key Data
$13.20 Million
— One-time past service cost for enhancing in-service death benefits for state correction officers.
$2.42 Million
— Past service and first-year cost for allowing accidental disability retirement for law enforcement and forest rangers.
$4.70 Million
— Past service and first-year cost for removing the limit on overtime pay inclusion for calculating final average salary for Tier 6 New York City Transit Authority employees.
$1.50 Million
— Past service and first-year cost for allowing Tier 6 uniformed court officers to retire without early age reduction after 30 years of service.
The Project Labor Agreement between the New York City Housing Authority and the Building and Construction Trades Council, which aimed to reduce labor costs by 3% and provide union apprenticeship positions, requires an independent evaluation of its actual impact on renovation costs and operations before any renewal decision is made. This assessment should specifically analyze whether the projected financial savings and employment benefits for residents have been realized since the agreement began in 2015.
Recommendations related to Labor Costs
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, should be conducted and made public.
The evaluation should also examine the extent to which NYCHA residents have participated in BCTC pre-apprenticeship and apprenticeship programs annually since the PLA went into effect in 2015.
A review should commence immediately in order to have the results prior to making a decision on renewal.
Key Data
3%
— Projected savings in labor costs expected from the Project Labor Agreement.
100 to 120
— Number of union apprenticeship positions projected to be provided annually for NYCHA residents.
New York City's teachers' retirement system guarantees a 7 percent investment return on a tax-deferred annuity plan, a benefit that costs taxpayers $1.2 billion annually due to the disparity between this fixed rate and actual market returns. This arrangement creates a significant financial burden and poses a risk to the pension system's viability, necessitating reform to align teacher benefits with those of other municipal employees.
Recommendations related to Labor Costs
The unique, and uniquely expensive, arrangement for the teachers’ TDA plan should be reformed.
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
— Annual cost to New York City taxpayers for the guaranteed 7 percent investment return on the teachers' tax-deferred annuity plan.
7 percent
— Guaranteed investment return rate for the teachers' tax-deferred annuity plan.
$18.7 billion
— Amount of money in the fixed fund in 2015, representing 66 percent of total TDA assets.
$238 million
— Taxpayer subsidy for the TDA fixed return fund in fiscal year 2007.
36 percent
— Portion of the total taxpayer contribution to the TRS QPP that the taxpayer subsidy equaled in 2015.
$4.5 billion
— Potential loss on investments on behalf of TDA plan participants that the QPP would have to make good on if investments suffered a loss equal to the 2008-2009 market decline.
New York City taxpayers contribute over $1 billion annually to union-administered benefit funds, which often suffer from excessive administrative expenses, unnecessary reserves, and mismanagement. Consolidating these supplemental health and non-health benefits into centralized city programs could generate over $160 million in annual savings while improving benefit delivery.
Recommendations related to Labor Costs
The Office of the Comptroller should give higher priority to auditing union-administered benefit funds to ensure better oversight of city spending.
The City should develop benchmarks and indicators for benefit funds that can trigger enforcement powers under Directive #12.
The Office of Labor Relations should negotiate with labor unions to expand the Comptroller’s oversight and enforcement authority over union-administered benefit funds.
The City should consolidate supplementary health care benefits under the City’s Health Insurance Plan to improve efficiency.
The City should provide non-health related benefits through a centralized cafeteria plan to allow for more tailored, efficient benefit delivery.
Key Data
$1.1 billion
— Projected annual taxpayer contribution to 108 union-administered benefit funds in fiscal year 2018.
$163.8 million
— Estimated combined administrative and benefit savings from consolidating the purchase of pharmaceutical and other benefits.
$109.3 million
— Total administrative expenses spent by 91 benefit funds in fiscal year 2014.
$7.2 billion
— Total net assets of 27 annuity funds in fiscal year 2014.
$6.3 billion
— Projected city spending on health insurance benefits in fiscal year 2018.
$160 million
— Potential annual savings for the City from restructuring how supplemental benefits are provided.
New York City's capital construction projects are significantly impacted by state-mandated prevailing wage laws and restrictive work rules, which increase costs and limit managerial flexibility. Renewing Project Labor Agreements and reforming contracting rules could help control these labor-related expenses and improve the efficiency of public infrastructure projects.
Recommendations related to Labor Costs
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 agenda should consist of a repeal of Wicks Law and an expansion of the city’s toolbox for effective contracting, including the latitude to award construction contracts on a “best value” basis.
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 resulting from Project Labor Agreements.
25 percent
— Increase in the cost of housing construction caused by prevailing wage mandates.
200 percent
— Amount by which some prevailing wages were higher than mean hourly wages in the New York City metropolitan area.
New York State legislative proposals in 2017 included numerous benefit enhancements for public employees, such as expanded pension eligibility and disability coverage, which carry significant fiscal implications. These proposed changes, ranging from death benefits for correction officers to retirement plan adjustments for various public safety titles, represent millions of dollars in potential past service and annual costs for taxpayers.
Key Data
$14.4 Million
— The estimated cost for clarifying eligible beneficiaries of New York City sanitation workers pension benefits and providing a special accidental death benefit.
$13.7 Million
— The one-time past service cost for enhancing the in-service death benefit for State correction officers.
$36.5 Million
— The total cost for allowing Department of Environmental Conservation officers, forest rangers, and police officers to be eligible for a special 20-year retirement plan.
$48.9 Million
— The cost associated with increasing the calculation of the final average salary for justices and judges within the New York State unified court system.
$54.5 Million
— The immediate past service cost for allowing certain supervisory titles in the department of corrections and community supervision to opt into the early retirement plan.
$29 Million
— The annual cost for providing a temporary retirement incentive by waiving the early retirement reduction for enrollees with 25 years of service.
The state should veto proposed legislation that expands government employee and retiree benefits, as these measures would increase public labor costs and erode the fiscal savings achieved through Tier 6 pension reforms. These benefit enhancements, which include retirement, disability, and death benefit increases, often lack fiscal notes and threaten long-term fiscal prudence.
Recommendations related to Labor Costs
The Governor should veto A711B/S1411B and the 15 other bills passed by the legislature that provide expensive enhancements to government employee and retiree benefits.
The state should reject A3332/S3670, which would allow Tier 6 uniformed court officers and peace officers to retire early, as it would impose significant past service and annual costs.
The state should oppose A7642/S6594, which would authorize a retirement incentive for certain law enforcement and maintenance employees at the Triborough Bridge and Tunnel Authority, as it would increase authority expenses.
The state should veto A7185A/S5484A, which would provide a special accidental death benefit for uniformed New York City sanitation employees, due to its substantial past-service and annual costs.
The state should reject A7134/S5130, which would increase disability payments for Nassau County sheriffs and correction officers, as it would create significant new financial liabilities.
Key Data
$13.7 million
— Past service costs associated with A5133a/S4077, which would enhance death benefits for retirement-eligible State correction officers who die before retiring.
$8.9 million
— Immediate past-service cost for A7185A/S5484A, which provides a special accidental death benefit for uniformed New York City sanitation employees.
$6.8 million
— Annual cost to New York City for A7185A/S5484A, which provides a special accidental death benefit for uniformed New York City sanitation employees.
$1.75 million
— Immediate past service cost for A7135/S5704, which would increase disability benefits for various ambulance medical technician titles within Nassau County.
$1.15 million
— Past-service costs for A7134/S5130, which would increase disability payments for Nassau County sheriffs, deputy sheriffs, under sheriffs, and correction officers.
New York City's uniformed overtime spending has grown significantly, reaching $1.7 billion in fiscal year 2016, with uniformed employees receiving two-thirds of all overtime pay. To address this fiscal challenge, the City should implement systemic reforms, such as capping overtime earnings for pension calculations and establishing a labor-management committee to negotiate work policy changes.
Recommendations related to Labor Costs
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.
Adopting a system in which routine sick leave usage is accrued and capped (as for NYC civilian employees).
Changing certain work rules, such as eliminating overtime for travel to alternate work locations and guaranteed minimum overtime hours.
Instituting a per employee cap on overtime hours or overtime earnings, as exists for civilian employees.
Capping or eliminating overtime earnings in calculating final average salary for pensions.
Key Data
$1.7 billion
— Total overtime spending in fiscal year 2016.
$1.2 billion
— Annual uniformed overtime costs for fiscal years 2015 and 2016.
$19,400
— Average uniformed overtime payment per employee in fiscal year 2016.
$538 million
— NYPD uniformed overtime budget for fiscal year 2018.
$243 million
— FDNY uniformed overtime budget for fiscal year 2018.
$165 million
— DOC uniformed overtime budget for fiscal year 2018.
The Metropolitan Transportation Authority's stabilization plan includes $456 million in recurring operating costs, primarily to hire 2,700 new permanent workers. To manage these expenses, the agency is urged to pursue productivity savings through cooperative agreements with the Transport Workers Union, including adjustments to night shift differentials and the implementation of split shifts.
Recommendations related to Labor Costs
Linking fares to expenses maintains pressure on management and labor to keep expenses down.
The MTA and its workforce should more aggressively pursue efficiencies at the agency to make the stabilization plan self-sustaining.
A cooperative arrangement between MTA management and the Transport Workers Union could provide significant productivity savings to help cover the cost of the added workers.
The MTA should implement potential savings such as altering night shift differentials to reduce the cost of maintenance in the expanded Fasttrack program.
The MTA should utilize 'split shifts' for operators and conductors to reduce subway operating costs.
Key Data
$456 million
— Recurring operating costs, the bulk of which will support the hiring of 2,700 permanent new workers.
2,700
— Number of permanent new workers to be hired as part of the MTA's stabilization plan.
45% to 50%
— Recommended portion of mass transit expenses that should be funded by fares to maintain pressure on management and labor to keep expenses down.
The MTA's plan to address subway performance requires $456 million in annual operating costs and $380 million in capital investments, necessitating contributions from stakeholders beyond just the city and state. To help cover these expenses, the transit authority should pursue productivity savings from labor unions and increase revenue from motorists through measures like congestion pricing.
Recommendations related to Labor Costs
MTA management and the Transport Workers Union should establish a cooperative arrangement to generate significant productivity savings to help cover the cost of additional workers.
The MTA should alter night shift differentials to reduce the cost of maintenance in the expanded Fasttrack program.
The MTA should implement the use of “split shifts” for operators and conductors to reduce subway operating costs.
Key Data
$456 million
— recurring annual operating costs for the MTA's plan to reverse subway performance deterioration.
$380 million
— new capital investments required for the MTA's plan.
74,000
— total number of people employed by the MTA.
55,000
— number of MTA employees who operate the subways and buses.
12%
— portion of the MTA's mass transit system funded by tolls.
New York City's fiscal year 2018 budget includes a projected headcount of 329,055 employees, with average compensation per worker expected to rise from $140,000 to nearly $160,000 by 2021. To manage these rising labor costs, the city should prioritize productivity gains in contract negotiations and increase employee contributions toward health insurance premiums, which currently remain fully covered by the city.
Recommendations related to Labor Costs
Any additional raises should be paid for with productivity gains, which also necessitate settling the contracts promptly.
The next round of labor negotiations should build on the savings generated from the City’s partnership with the Municipal Labor Committee.
Health insurance contributions from employees and retirees should be on the table during negotiations.
Agencies need to step up efforts to make their operations more cost-effective by implementing efficiencies.
The City should limit new spending and achieve more savings, tax reductions, and reserves.
Key Data
329,055
— Expected city headcount in fiscal year 2018.
$160,000
— Projected average compensation per employee by fiscal year 2021.
$140,000
— Current average compensation per employee.
86%
— Percentage of health insurance premiums paid by New York State for individuals.
71%
— Percentage of health insurance premiums paid by New York State for families.
570
— Number of new positions added in the Adopted Budget.
New York City's budget includes a savings program targeting inefficiencies like excessive overtime and outdated paper-based systems to address economic risks. If all city agencies achieved efficiency savings equal to just 1 percent of their city-funded expenditures, the city could generate $378 million in annual savings.
Recommendations related to Labor Costs
City agencies should review their operations to enhance productivity and reduce expenses.
The Office of Management and Budget will work with agencies to exercise stricter review of waivers for civilian overtime.
Overtime for skilled trades will be capped at 12 percent of straight-time hours and at 50 percent of an employee’s base salary.
A Centralized Skilled Trades Pool will be established to alleviate the need for overtime for in-house workers by addressing maintenance backlogs.
The city should consider reinstating mandatory savings requirements for agencies, as voluntary participation has resulted in limited efficiency gains.
Key Data
$378 million
— Potential annual savings if all city agencies achieved efficiency savings equal to 1 percent of their city-funded expenditures.
$14 million
— Initial savings generated by initiatives to better manage skilled trades overtime.
$28 million
— Annual savings once the Centralized Skilled Trades Pool is fully established.
$59 million
— Efficiency savings achieved by the Department of Education in fiscal year 2018.
$31 million
— Savings identified by the Office of Management and Budget's Savings Unit for fiscal year 2018.
$124 million
— Projected savings from the Office of Management and Budget's initiatives by fiscal year 2021.
Rising labor costs, driven by increased spending per position and headcount, necessitate a comprehensive collective bargaining agenda that prioritizes productivity gains in exchange for raises. To manage these expenses, the city must also pursue strategies to reduce overtime costs and continue efforts to find health insurance savings during upcoming contract negotiations.
Recommendations related to Labor Costs
The city should require productivity gains in exchange for raises.
The city should settle contracts in advance of their expiration dates to secure productivity gains that cannot be retroactive.
The city and municipal labor unions should continue the effort to find more health insurance savings during the next contract period.
The city should pursue strategies that reduce overtime costs as a part of the labor negotiations.
Key Data
$140,000
— Average spending on salaries and wages, pensions, and fringe benefits per position in fiscal year 2018.
$160,000
— Projected average spending on salaries and wages, pensions, and fringe benefits per position in fiscal year 2021.
331,605
— Projected headcount by fiscal year 2021.
8.1%
— Projected average annual growth rate for health insurance costs from fiscal years 2018 through 2021.
$1.3 billion
— Budgeted overtime costs for fiscal year 2018.
$1.7 billion
— Actual annual overtime spending in fiscal years 2015 and 2016.
New York City's workforce is projected to grow by over 31,000 employees between fiscal years 2014 and 2018, contributing to rising labor costs. By fiscal year 2021, fringe benefits are expected to push the average total compensation per employee to more than $140,000.
Key Data
31,000
— The projected increase in city headcount from FY 2014 to FY 2018.
$140,000
— The projected average compensation per employee in FY 2021, including fringe benefits.
$76,064
— The average pay for a city worker in FY 2016.
The School Bus Grant Program, which provides supplemental funding to bus companies to increase employee wages and benefits, undermines competitive bidding and unnecessarily increases city costs. This program has cost the city over $30 million in its third year, despite previous efforts to save $400 million through competitive contract re-bidding.
Recommendations related to Labor Costs
The City Council should defund the School Bus Grant Program in the upcoming budget negotiations.
The city should abide by contracts that it has fairly and competitively awarded.
The administration should seek to renegotiate contracts at the appropriate time rather than awarding grants to increase payments to for-profit companies.
The City Council should step in to bring the School Bus Grant Program to a stop.
Key Data
$1 Billion
— Annual cost of school-bus transportation contracts prior to the 2012 re-bidding process.
$400 Million
— Savings achieved by the city through the 2012 re-bidding of school-bus transportation contracts.
$30 Million
— Projected cost of the School Bus Grant Program for its third year of operation.
In fiscal year 2016, the roughly 283,000 active full-time New York City employees earned an average total pay of $76,064, which includes base salary, overtime, and other payments. Uniformed employees earned the highest average annual pay at $109,000, while civilian and pedagogical employees averaged $66,500 and $70,000 respectively.
Key Data
$76,064
— Average total pay for the roughly 283,000 active full-time New York City employees in fiscal year 2016.
$109,000
— Average annual pay for uniformed employees in fiscal year 2016.
$66,500
— Average annual pay for civilian employees in fiscal year 2016.
$70,000
— Average annual pay for pedagogical employees in fiscal year 2016.
$12,000 and $28,000
— Average annual overtime earnings for uniformed employees.
$10,000
— Average annual overtime for civilians in agencies including the Departments of Transportation, Correction, Citywide Administrative Services, and Fire.
The Metropolitan Transportation Authority's recent financial plan update reflects increased labor costs from a new contract with transit workers, alongside reduced state subsidies and lower-than-expected savings from health benefit negotiations. These financial pressures, combined with the exhaustion of easy efficiency gains, create a growing long-term deficit that will require new policy actions to address.
Key Data
$52 million
— Net cash impact of the 28-month labor contract with the Transport Workers Union Local 100 over the four-year life of the financial plan.
$64 million
— Reduction in projected four-year savings from the rebidding of the Transport Workers Union's health benefits.
$116 million
— Combined unfavorable financial impact of the new labor contract costs and the reduction in health benefit savings over the plan period.
2.5 percent
— Wage increases per year spread over the 28-month labor agreement.
38,000
— Number of transit workers covered by the recently negotiated labor contract.
The Metropolitan Transportation Authority's labor agreement with the Transport Workers Union provides 28 months of labor peace but exceeds the agency's financial plan, potentially necessitating fare hikes or increased borrowing. Furthermore, the deal delays the implementation of necessary productivity improvements related to work rules and benefits for over two years.
Between fiscal years 2012 and 2017, New York State negotiated various wage increases for public employee unions under Governor Cuomo, ranging from zero percent in early years to two percent in later years. These agreements included a mix of percentage-based raises and specific lump-sum payments for different bargaining units.
Key Data
$2,625
— The 2012 wage increase negotiated for PBANYS and NYSPBA.
2%
— The standard wage increase negotiated for most bargaining units in 2015 and 2016.
$775
— The lump sum payment negotiated for CSEA, C-82, and NYSCOPBA in 2014.
$225
— The additional lump sum payment negotiated for several bargaining units in 2015.
1.50%
— The wage increase negotiated for NYSPBA and NYSPIA in 2017.
$2,075
— The 2012 wage increase negotiated for NYSCOPBA.
The 2016 Benefit Sweetener Scorecard identifies over 60 active legislative bills that could increase state and local government labor costs by hundreds of millions of dollars annually. Because about half of these proposed benefit expansions lack a specified fiscal impact, the actual financial burden on taxpayers could be substantially higher than currently estimated.
Key Data
more than 60
— bills active this session that could increase state and local government labor costs.
about half
— of the bills do not specify a fiscal impact, meaning potential costs could be significantly greater.
The proposed bill A8019C/S5984-C would impose unnecessary costs on New York City's $1.4 billion pupil transportation system by mandating the retention of expensive staff and tying contract adjustments to the faster-growing Employment Cost Index. Rejecting this legislation is essential to maintain the competitive procurement process that previously saved $400 million over five years and to avoid unjustified tax breaks for equipment.
Recommendations related to Labor Costs
Governor Cuomo should veto bill A8019C/S5984-C to avoid imposing costly restrictions on the procurement of school bus contracts.
The state should reject the bill's requirement to restore preferences for the retention or hiring of the most costly employees.
The state should reject the requirement to use the Employment Cost Index (ECI) as the cap for adjusting costs when contracts are extended.
The state should reject the provision exempting school buses, parts, fuel, and other equipment from the sales tax.
The state must preserve the flexibility to negotiate contracts and to provide savings for future taxpayers.
Key Data
$1.4 billion
— Annual expense for pupil transportation in New York City.
$400 million
— Savings achieved over five years by opening the school bus contract process to competition without costly hiring or retention provisions.
8.1 percent
— Growth in the Employment Cost Index (ECI) between the end of 2011 and 2015.
4.7 percent
— Growth in the Consumer Price Index (CPI) between the end of 2011 and 2015.
New York State's mid-year budget update reflects rising labor costs, including a $75 million increase for the Public Employees Federation contract and potential costs for other agreements reaching $820 million by fiscal year 2020. Additionally, the cost of minimum wage increases for state contracts has doubled since the initial budget, reaching $427 million by fiscal year 2020.
Key Data
$75 million
— Increase in personnel costs in fiscal year 2017 to account for the recently settled Public Employees Federation contract.
$270 million
— Cost of other outstanding collective bargaining agreements in fiscal year 2017 if the PEF contract sets the pattern.
$820 million
— Cost of other outstanding collective bargaining agreements in fiscal year 2020 if the PEF contract sets the pattern.
$31 million
— Increase in minimum wage costs related to State contracts in fiscal year 2017 above the first quarter update.
$167 million
— Increase in minimum wage costs related to State contracts in fiscal year 2018 above the first quarter update.
$427 million
— Increase in minimum wage costs related to State contracts in fiscal year 2020 above the first quarter update.
New York State faces rising personnel costs due to recent collective bargaining agreements that could increase spending by hundreds of millions annually, alongside growing expenses from the phased implementation of minimum wage increases. These labor-related financial pressures, combined with potential revenue shortfalls, threaten to expand future budget deficits significantly.
Recommendations related to Labor Costs
The State must determine if the financial plan can accommodate raises without increasing total personnel costs.
The State and the Public Employees Federation must identify and include savings from a plan to reduce out-of-control healthcare costs in the financial update.
The Administration should monitor whether cost estimates for minimum wage increases are rising as implementation approaches.
Key Data
$260 million
— Projected increase in personnel costs in 2017 assuming the Public Employees Federation agreement sets the pattern for other bargaining units.
$520 million
— Projected increase in personnel costs in 2018 assuming the Public Employees Federation agreement sets the pattern for other bargaining units.
$780 million
— Projected increase in personnel costs in 2019 assuming the Public Employees Federation agreement sets the pattern for other bargaining units.
$19 million
— Included costs in the Enacted Budget Financial Plan for minimum wage increases in 2017.
$588 million
— Projected costs for minimum wage increases by 2020.
2 percent
— Annual raises included in the collective bargaining agreement with the Public Employees Federation covering fiscal years 2017 to 2019.
New York City's guarantee of a 7 percent investment return for teachers' tax-deferred annuity plans costs taxpayers $1.2 billion annually, creating a significant financial burden as market interest rates remain low. This arrangement, which leverages pension assets to fund the guarantee, poses a risk to the long-term viability of the teachers' retirement system and should be reformed to align with market-based investment options.
Recommendations related to Labor Costs
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.
If the city’s elected leaders and taxpayers want to provide teachers, and other municipal employees, with a more secure investment option for their deferred compensation than is available in the OLR plans, they should consider the approach used by the federal government.
Key Data
$1.2 Billion
— Excess interest payments at taxpayer expense in fiscal year 2015.
$18.7 Billion
— Fixed return fund balance in fiscal year 2015.
36 percent
— Taxpayer subsidy as a portion of the total taxpayer contribution to the TRS QPP in 2015.
7.0 percent
— Guaranteed interest rate on the TDA fixed fund option for most participants.
$4.5 billion
— Potential loss on investments on behalf of TDA plan participants if the market declined by 24.3 percent.
The Metropolitan Transportation Authority faces significant fiscal pressure from rising labor costs, including pension expenses and health benefits, which are projected to increase by $730 million in 2017. To mitigate these challenges and address a nearly $14 billion postemployment benefit liability, the agency should consider reviving productivity-focused labor initiatives and implementing retiree cost-sharing for health insurance.
Recommendations related to Labor Costs
The MTA should revive the Net-Zero Labor Initiative to maintain labor costs by offsetting wage increases with work rule changes or productivity improvements.
The MTA should require current and future retirees to share the cost of health insurance premiums to reduce total OPEB obligations and lower liability.
The MTA should set aside additional resources for the agency’s OPEB trust fund to address the nearly $14 billion liability.
The MTA should continue and intensify its efforts to identify and implement efficiencies to manage rising labor and operational costs.
Key Data
$730 million
— The increase in labor spending in 2017.
$14 billion
— The MTA’s OPEB liability as of March 31, 2016.
$1 billion
— The potential savings through 2020 if the MTA revived the Net-Zero Labor Initiative.
$98 million
— The potential savings in 2017 if the MTA revived the Net-Zero Labor Initiative.
$608 million
— The OPEB Current Payment listed in the 2017 financial plan.
$892 million
— The cumulative increase in payroll expense over the financial plan period if arbitration results in 3.7 percent annual wage increases.
New York State is urged to veto ten legislative bills that would expand government employee and retiree benefits, as these measures would increase public costs and undermine fiscal savings achieved through recent pension reforms. These proposed enhancements include higher disability payments, expanded medical presumptions, and more generous early retirement plans that shift financial burdens onto taxpayers.
Recommendations related to Labor Costs
The Governor should veto A9702/S7023 to avoid shifting costs equal to 6.6% of salaries from employees to state and local taxpayers.
The Governor should veto A6612b/S4001b to prevent enriched pension benefits that would cost counties as much as 7% of salaries.
The Governor should veto A9440/S6936 to avoid increasing state pension costs by $100,000 in the first year.
The Governor should veto A5133c/S1000d to prevent increasing total disability benefit payments for volunteer firefighters and ambulance drivers.
The Governor should veto A7146a/S5012a to avoid extending the deadline to file for accidental disability retirement benefits, which carries significant potential costs.
The Governor should veto A7784/S5762 to prevent increasing disability benefits to full salary for state parole officers injured in the line of duty.
The Governor should veto A10614/S8071 to avoid expanding medical condition presumptions for uniformed officers, which costs the State $25,000 annually.
The Governor should veto A10003/S7386 to prevent eliminating restrictions on transferring between public retirement systems, which costs $25,000 annually.
The Governor should veto A10369a/S7174b to prevent allowing members to opt out of Tier 3 and into Tier 5, which would erode savings from Tier 6 implementation.
The Governor should veto A10030/S7216a to avoid expanding medical condition presumptions for environmental conservation police and forest rangers, which has historically proven costly.
Key Data
6.6%
— The percentage of salaries shifted from employees to state and local taxpayers under A9702/S7023.
7%
— The maximum percentage of salaries that counties would incur in additional pension costs under A6612b/S4001b.
$100,000
— The first-year cost to the State for allowing State Court peace officers to retire after 30 years of service under A9440/S6936.
$600
— The increased weekly payment for total disability benefits for volunteer firefighters and ambulance drivers under A5133c/S1000d.
$244,000
— The cost for the individual known to be impacted by the legislation extending the disability retirement filing deadline under A7146a/S5012a.
$25,000
— The annual cost to the State for expanding medical condition presumptions for uniformed officers under A10614/S8071.
New York City's legacy costs, including debt service, pensions, and retiree health benefits, are projected to reach $20.9 billion by fiscal year 2020, outpacing other budget expenditures. Implementing reforms to retiree health premiums, union welfare funds, and Medicare Part B reimbursements could generate up to $1.6 billion in savings by 2020.
Recommendations related to Labor Costs
Retirees should share in the cost of health premiums.
Reform of union welfare funds is needed.
Consolidating supplementary health care benefits under the City’s health plan would be more efficient.
Medicare Part B premium reimbursements should be eliminated.
Key Data
$20 billion
— Projected annual spending on legacy costs by fiscal year 2020.
$17.4 billion
— Current legacy costs before the projected increase to $20.9 billion.
$20.9 billion
— Projected legacy costs by fiscal year 2020.
$1.6 billion
— Potential savings by fiscal year 2020 from implementing the three proposed reforms.
20 percent
— The portion of the city budget currently exceeded by legacy costs.
11 percent
— The projected growth rate of non-legacy spending.
Legacy costs, including debt service, pension contributions, and retiree health benefits, are projected to grow to over $20 billion by fiscal year 2020, outpacing the growth of all other city spending. Implementing reforms to retiree health benefits, such as requiring premium contributions and eliminating Medicare Part B reimbursements, could generate up to $1.6 billion in savings.
Recommendations related to Labor Costs
City-MLC negotiations should focus on reducing health care costs further and bringing retiree health costs in line with those of other state and local governments.
Retirees should share the cost of health premiums.
Reform of union welfare funds is needed.
Consolidating supplementary health care benefits under the city’s health plan would be more efficient.
Medicare Part B premium reimbursements should be eliminated.
Key Data
$20.9 billion
— Legacy costs projected for fiscal year 2020.
$17.4 billion
— Legacy costs in fiscal year 2016.
$1.6 billion
— Potential savings from three proposed changes by fiscal year 2020.
$2.9 billion
— Annual cost of retiree health benefits by fiscal year 2020.
$3.4 billion
— Expected savings in the city’s health care costs.
$2.1 billion
— Announced health care savings to date.
The State Legislature has passed 10 bills that would increase disability and retirement benefits for various public sector employees, including police, firefighters, and correction officers. These legislative changes would impose significant new costs on taxpayers without providing corresponding improvements in public services.
Recommendations related to Labor Costs
The Governor should veto the legislation that provides expensive benefit enhancements to public sector workers and retirees.
Key Data
$6.1 million
— Cost in 2017 for the bill increasing disability payments for New York City firefighters.
$12.6 million
— Annual cost by 2021 for the bill increasing disability payments for New York City firefighters.
5 years
— New filing deadline for firefighters outside New York City to file an application for disability benefits due to certain cancers.
Municipal employee compensation has risen to an average of $137,000 per year, significantly outpacing private sector growth and contributing to an $11.7 billion increase in city spending through 2020. To address the city's $70 billion liability for retiree health benefits, the government should require employees and retirees to contribute to their own health insurance premiums.
Recommendations related to Labor Costs
The city government should require employees and retirees to contribute to their health insurance premiums to align with the private and public sectors.
Key Data
$137,000
— Average annual compensation per full-time city employee.
$70 billion
— Total city liability for retiree health insurance costs and other post-employment benefits.
$11.7 billion
— Total increase in city spending projected through fiscal year 2020.
$158,000
— Projected average annual compensation per full-time employee by 2020.
$2.1 billion
— Realized savings on health expenses through fiscal year 2017.
$53,000
— Median household income in New York City in 2014.
The City's planned spending increase through fiscal year 2020 is driven primarily by rising personal service costs, which account for nearly two-thirds of the total growth. This surge is largely attributed to higher compensation per employee and a workforce expansion of over 23,000 positions, alongside rising health insurance and pension obligations.
Key Data
$11.7 billion
— The amount of the planned spending increase from 2014 to 2020 accounted for by personal service costs, which represent nearly two-thirds of the total growth.
$158,258
— The average compensation cost per employee in fiscal year 2020, representing an increase of more than 20 percent since fiscal year 2014.
23,197
— The projected increase in the number of municipal employees between fiscal years 2014 and 2020, bringing the total workforce to 323,831.
23 percent
— The growth rate of salaries and wages per employee between fiscal years 2014 and 2020.
24 percent
— The increase in fringe benefits, including health insurance, per employee between fiscal years 2014 and 2020.
9 percent
— The increase in pension contributions per employee between fiscal years 2014 and 2020.
New York City's financial plan includes projections for tax revenues, expenses, headcount, and debt service, alongside anticipated savings from the health savings agreement with the Municipal Labor Committee and the Citywide Savings Plan. These figures provide a snapshot of the fiscal outlook and budgetary strategies intended to manage city expenditures.
The State Legislature has introduced eight new bills that would enhance benefits for public employees and retirees, potentially increasing labor costs for the City of New York. Two specific proposals regarding disability benefits for firefighters and police officers are projected to increase city pension contributions by millions of dollars annually through 2021.
Key Data
$4.7 million
— Projected cost to the City in 2017 for the firefighter disability benefit bill (S7530/A10055).
$8.3 million
— Projected cost to the City in 2021 for the firefighter disability benefit bill (S7530/A10055).
$27 million
— Increase in New York City pension contributions in 2017 for the police officer disability benefit proposal (S7421/A10044).
$40 million
— Increase in New York City pension contributions in 2021 for the police officer disability benefit proposal (S7421/A10044).
The New York City Fire Department allocates the majority of its $3.8 billion budget and two-thirds of its personnel to firefighting, despite medical emergencies accounting for 75% of incident responses. Rebalancing these resources through increased firefighter medical training and revised ambulance staffing models could improve efficiency and generate significant cost savings.
Recommendations related to Labor Costs
The FDNY should petition the NYC-REMSCO to change ALS ambulance staffing to one paramedic and one EMT, which would yield about $5 million in savings that could be reinvested to expand the number of ambulance tours.
The department should increase the medical training of firefighters so they can handle more situations without reliance on a separate ambulance and its staff.
It may be preferable to require EMT qualifications for new applicants for firefighter jobs, which would also effectively create a career ladder for advancement among the EMS staff.
The department should fundamentally reorganize to redefine the relationships between the two services and rebalance the financial and human resources provided for each type of service.
Key Data
$3.8 billion
— The FDNY's total budget in fiscal year 2015.
$500 million
— The annual funding for EMS operations, representing just 13 percent of the total budget.
$5 million
— The estimated savings from changing ALS ambulance staffing to one paramedic and one EMT.
$1,200
— The cost per person to subsidize EMT training for all current firefighters.
$39,370
— The starting salary for firefighters, not including overtime and other differentials.
$76,488
— The salary for firefighters after five years of service, not including overtime and other differentials.
Legislative proposals to enhance public employee benefits, including disability, pension, and health insurance, threaten to impose significant, recurring costs on state and local governments. These measures would undermine previous fiscal reforms that have generated substantial long-term savings for taxpayers.
Recommendations related to Labor Costs
The Legislature should reject the bills detailed in the scorecard because they would impose expensive mandates on New York State and local governments without improving services for taxpayers.
Policymakers should maintain hard-fought reforms that yield significant savings rather than adopting proposals to enhance expensive employee benefits.
Key Data
$21 billion
— Projected savings over 30 years from reforms that would be rolled back by bills enhancing disability benefits for recently hired New York City police and fire employees.
$46 million
— First-year cost of the most expensive bill to increase pension benefits, which would allow judges to use their most recent annual salary for pension calculations.
$21 million
— Annual cost to the New York City Transit Authority to decrease the employee contribution rate under the 25-year/55-age plan.
$16 million
— Annual cost to New York City to provide variable supplement fund payments to those who retired between 1968 and 1987.
$13.9 million
— First-year cost of the bill to enhance in-service death benefits for retirement-eligible State correction officers.
$36 million
— First-year cost of the bill to enhance in-service death benefits for State correction officers due to past service costs.
New York State should implement tiered retiree health insurance premium contributions based on years of service to curtail rising costs and reform binding arbitration statutes to require that arbitrators account for the full cost of decisions, including fringe benefits. Additionally, the state should maintain spending discipline by continuing to reduce the executive-controlled workforce, which has already decreased by 10 percent since 2010.
Recommendations related to Labor Costs
The State should implement a tiered system for retiree health insurance based on years of service to curtail rising retiree health care costs.
The State should cap the amount retirees are reimbursed for Medicare Part B premiums at $105 per month and discontinue IRMAA reimbursements for those most able to afford the costs of healthcare.
Arbitrators should account for the full cost of a decision, including retroactive pay and the impact on fringe benefits, without increasing taxes, making service cuts, or employing fiscal gimmicks.
The criteria for binding arbitration should be applicable to all local governments, not just those in the bottom quartile of tax rates and fund balances.
Key Data
$1.3 billion to $1.6 billion
— Forecasted growth of retiree health care costs in fiscal years 2016 to 2020.
$10 million
— Savings to the State in fiscal year 2017 from proposed retiree health insurance premium-sharing changes.
$40 million
— Projected savings to the State in fiscal year 2020 from proposed retiree health insurance premium-sharing changes.
10 percent
— Decrease in the Executive-controlled workforce since 2010.
$122 per month
— Current standard Medicare Part B premium reimbursed by New York State.
The Governor's proposed budget for fiscal year 2016-2017 faces scrutiny regarding the fiscal impact of a $15 per hour minimum wage for state workers and the staffing levels of state prisons. While the number of state inmates has fallen 28 percent since 2000, the corresponding reduction in security staff has not kept pace, raising questions about future corrections budget and staffing requirements.
Key Data
$15
— The Governor has imposed a $15 per hour minimum wage for state workers.
28 percent
— Since 2000, the number of state inmates has fallen 28 percent.
New York City's decision to raise wages to $15 an hour for public and contracted nonprofit employees will cost $238 million through fiscal year 2020 without securing any corresponding service or productivity improvements. This policy establishes a concerning precedent by amending existing labor contracts and vendor agreements mid-stream, undermining the integrity of the city's competitive bidding and negotiation processes.
Recommendations related to Labor Costs
At a minimum, changes to labor contracts should wait until they expire and are up for renewal or renegotiation.
At best, the costs of wage increases should be offset with increased productivity or efficiencies to improve service delivery.
Negotiations for reopening contracts should not be a one-way street in which taxpayers give but receive nothing in return.
Key Data
$238 million
— Total costs of wage increases through fiscal year 2020.
$36 million
— Cost of wage increases for public employees.
$202 million
— Cost of wage increases for nonprofit employees.
10.4 percent
— Compounded wage increase over seven years for DC37.
$11.50
— Hourly wage for 4,500 workers in three job titles raised in March 2015.
30,000
— Number of nonprofit employees providing city-contracted services receiving wage increases.
Raising the minimum wage to $15 per hour for public sector and contracted nonprofit employees would cost taxpayers hundreds of millions of dollars annually without providing additional services or productivity improvements. Policymakers must consider the broader financial implications, including the potential need to increase wages for employees currently earning slightly above the new minimum.
Recommendations related to Labor Costs
If a sizable increase in the minimum wage is pursued, the city and state should focus on how simultaneously to increase productivity to improve service delivery.
The impact on those employees who make $16 or $18 per hour should also be considered.
Public discussion regarding the compensation of public employees should address what the impact on taxpayers will be.
Public discussion regarding the compensation of public employees should address whether the public will get better service in return.
Key Data
$20.3 million
— Annual cost to the state for approximately 10,000 affected state workers.
$19 million
— Annual cost to the city for affected New York City municipal workers.
$300 million
— Approximate annual cost for wages and fringe benefits for 30,000 nonprofit workers affected by the $15 standard.
$142 billion
— Total New York state budget context.
$25 billion
— Total New York City payroll context.
Employee compensation accounts for approximately three-fifths of the Metropolitan Transportation Authority's operating budget, making labor costs a primary factor in the agency's financial stability. To address potential revenue shortfalls during a recession, the agency would need to implement drastic measures such as reducing headcount by 4,780 employees or cutting overtime by 81 percent, both of which present significant operational and political challenges.
Recommendations related to Labor Costs
The MTA should continue to increase planned efficiency gains beyond current targets for future years to help bring expenditures in line with the revenues available when a downturn occurs.
The MTA should reform retiree health benefits to reduce the unfunded OPEB liability which already exceeds $20 billion.
The MTA should establish an explicit rainy day fund covering a larger share of total expenses before releasing future reserves to reduce other long-term liabilities.
Key Data
$129,000
— Compensation costs expected per employee in 2018.
4,780
— Number of employees the agency would need to lay off to cover projected shortfalls.
6.7%
— Percentage of the workforce that would need to be laid off to cover projected shortfalls.
81%
— Reduction in overtime below planned levels needed in Year Three to close the gap.
$3.9 billion
— Total fringe benefit budget in Year Three.
$20 billion
— Current unfunded OPEB liability of the MTA.
The New York City Fire Department faces a significant mismatch between its resource allocation, which remains heavily focused on firefighting, and its actual workload, which is dominated by medical emergencies. To address this inefficiency and reduce labor costs, the department should rebalance its staffing and training models to better align with the high volume of medical incidents.
Recommendations related to Labor Costs
The FDNY should reapply for permission to change ALS ambulance staffing to one paramedic and one EMT, a move that would yield about $5 million in savings that could be reinvested to expand ambulance tours.
The department should increase the medical training of firefighters so they can handle more situations without reliance on a separate ambulance, specifically by training firefighters as EMTs.
To create a career ladder and improve efficiency, the city should require EMT qualifications for new applicants for firefighter jobs.
The relationships between fire and EMS services should be redefined, and the financial and human resources provided for each type of service should be rebalanced.
The department should consider subsidizing EMT training for all current firefighters to increase the number of personnel capable of handling medical incidents.
Key Data
$3.8 billion
— Total FDNY budget in fiscal year 2015.
$500 million
— Annual funding for EMS operations.
$6.8 million
— Estimated average annual cost of operating an engine company in fiscal year 2015.
$8.6 million
— Estimated average annual cost of operating a ladder company in fiscal year 2015.
$5 million
— Potential annual savings from changing ALS ambulance staffing to one paramedic and one EMT.
$1,200
— Estimated cost to subsidize EMT training per firefighter.
Proposed legislation regarding disability benefits for uniformed employees would significantly increase city pension contributions, with some bills adding hundreds of millions of dollars in actuarial present value. These changes, which include restoring prior cost-of-living adjustments and altering final average salary calculations, represent substantial long-term fiscal commitments for the city.
Key Data
$889.3 Million
— Actuarial present value of NYC contributions for bill S5656, which includes improved disability benefit provisions for sanitation and correction uniformed employees.
$850.2 Million
— Actuarial present value of NYC contributions for bill A6046/S4269, which grants disability benefits to Tier 3/6 police and fire uniformed employees.
$622.9 Million
— Actuarial present value of NYC contributions for bill A5295, which modifies disability benefit calculations for Tier 3/6 police uniformed employees.
$39.1 Million
— FY2015 budget increase associated with bill S5656, which expands disability benefit provisions for sanitation and correction uniformed employees.
$37.8 Million
— FY2015 budget increase associated with bill A6046/S4269, which grants new presumptions of injury for medical officers in the FDNY.
$35.7 Million
— FY2015 budget increase associated with bill A5295, which modifies disability benefit calculations for Tier 3/6 police uniformed employees.
New York school districts face significant budget constraints as instructional employee benefits grow at an annual rate of 9.4 percent, far outpacing teacher salary growth. Because pension benefits and retiree health insurance rules are largely set by the State Legislature, school districts struggle to control these rising labor costs, which increasingly crowd out investments in classroom supplies and student learning.
Recommendations related to Labor Costs
The State Legislature should include employee benefits in the conversation as it debates its role in public education.
Policymakers must act to curb the high growth rates of employee benefits to prevent them from consuming an ever-greater share of school budgets.
State officials should address the challenge of limiting the cost of fringe benefits, as much of this cost is currently beyond the control of local school districts.
Key Data
9.4 percent
— Average annual growth rate of instructional employee benefits from 2003 to 2013.
3.4 percent
— Average annual growth rate of teacher salaries and wages from 2003 to 2013.
22 percent
— Portion of 2013 school budgets allocated to instructional staff fringe benefits.
$4,412
— Average cost per student for instructional staff fringe benefits in 2013.
$8,359
— Average cost per student for instructional salaries and wages in 2013.
5.0 percent
— Decline in non-compensation spending for instruction from 2012 to 2013.
New York public schools spent an average of $19,818 per student in 2013, a figure 85 percent higher than the national average, largely driven by elevated employee compensation costs. Instructional staff fringe benefits, which grew at an average annual rate of 9.4 percent between 2003 and 2013, accounted for 22 percent of school budgets, significantly outpacing national norms.
Key Data
$19,818
— Average total spending per student in New York public schools in 2013.
22%
— Percentage of 2013 school budgets allocated to instructional staff fringe benefits.
$4,412
— Average per-student cost for instructional staff fringe benefits in New York school districts in 2013.
9.4%
— Average annual growth rate of instructional employee benefits from 2003 to 2013.
$8,359
— Average per-student spending on instructional salaries and wages in New York schools.
The New York City Housing Authority faces a severe financial crisis driven by high operating costs, including excessive personnel expenses, inflexible work rules, and redundant management structures. To address these deficits, the authority's roadmap includes strategies to streamline management, reduce office headcount, and renegotiate collective bargaining agreements to limit overtime compensation.
Recommendations related to Labor Costs
NYCHA should improve productivity by negotiating work rule changes in collective bargaining to limit overtime compensation for work performed in the evenings and on weekends.
The authority should streamline management to curtail the scope of responsibility for borough offices to non-redundant functions.
NYCHA should reduce its office headcount to achieve annual savings by 2019.
The authority should pursue cost savings through private property management companies to improve productivity.
Key Data
$33 million
— Annual savings by 2019 from streamlining management to curtail the scope of responsibility for borough offices to non-redundant functions.
$90 million
— Annual savings by 2019 from reducing NYCHA's office headcount.
$68 million
— Annual savings from reducing the operating cost gap between NYCHA and rent-stabilized units by 10 percent through productivity measures.
$19 million
— Annual savings from eliminating responsibility for community and senior centers.
The Metropolitan Transportation Authority faces significant financial pressure from labor expenses, which total nearly $8.6 billion annually. These costs include $5.4 billion in wages and overtime, alongside $3.2 billion in fringe benefits such as health insurance, pension contributions, and retiree benefits.
Key Data
$8.6 billion
— Total annual costs related to labor for the Metropolitan Transportation Authority.
$5.4 billion
— Amount paid by the MTA in 2014 for wages, including overtime.
$3.2 billion
— Total cost of fringe benefits for MTA workers and retirees.
$991 million
— Cost of health insurance for current MTA workers.
$1.3 billion
— Cost of pension fund contributions for MTA employees.
$474 million
— Cost of health insurance for MTA retirees.
New York City's health insurance costs for employees have doubled since 2005, prompting a need for structural changes to the health plan rather than relying on temporary market fluctuations to meet savings targets. Initiatives such as reducing emergency room utilization and improving chronic disease management are essential to achieving permanent, meaningful savings for taxpayers.
Recommendations related to Labor Costs
Initiatives should “bend the cost curve” and achieve recurring savings for City taxpayers by establishing premium-sharing, reducing per enrollee utilization of services, better managing chronic conditions, or lowering provider payments.
Savings should be counted clearly and honestly, ensuring that lower national and regional health care inflation or temporary premium rate freezes are not credited as savings gained under the agreement.
Initiatives such as reducing emergency room utilization and improving chronic disease management should be the basis for meeting the savings targets established in the health agreement.
Key Data
$3.4 billion
— The total savings target agreed upon by the City and the Municipal Labor Committee between fiscal year 2015 and 2018.
$5.3 billion
— The cost of the City's health insurance plan in fiscal year 2015.
9 percent
— The annual rate at which the financial plan projected health insurance spending to increase.
2.89 percent
— The City's actual health insurance rate increase for fiscal year 2016.
$2.6 billion
— The cost of the City's health insurance plan in fiscal year 2005.
6.7 percent
— The portion of the 2015 budget comprised by the City's health insurance plan costs.
The Port Authority's maritime terminals face persistent financial deficits that could be mitigated by reforming labor practices, specifically by adjusting staffing arrangements and reducing container royalty fees. These changes, negotiated through collective bargaining, would lower shipping costs and improve the competitiveness of the region's ports.
Recommendations related to Labor Costs
The Port Authority should support changes to collective bargaining agreements to lower costs driven by staffing arrangements for groups of workers known as “gangs” that service ships and move cargo.
The Port Authority should support changes to collective bargaining agreements to lower container royalties paid by shippers to the workers’ union to fund payments and benefits beyond those funded in their contracts.
The Port Authority should advocate for the elimination of ILA supplemental cash payment assessments and local assessments to improve the port’s competitiveness worldwide.
Key Data
18 percent
— Reducing the total number of gang members to better utilize skilled workers could lower costs by up to 18 percent.
$354 million
— In 2013 carriers paid an estimated $354 million in container royalties for using New York-New Jersey terminals.
$300 million
— Elimination of the cash payments and port-specific assessments would lower costs by $300 million.
$125 million
— In 2013 carriers paid an estimated $354 million in container royalties, $125 million of which was for ILA assessments.
$229 million
— In 2013 carriers paid an estimated $354 million in container royalties, $229 million of which was for NYSA assessments.
$297 million
— The total potential savings from eliminating ILA and NYSA assessments using a 2013 base is $297 million.
The Municipal Labor Committee agreement aims to achieve significant health insurance savings by implementing reforms that bend the cost curve rather than relying on temporary measures. These savings must be based on specific, recurring improvements in efficiency and benefit structure, rather than accounting tricks or unrelated inflation trends.
Recommendations related to Labor Costs
An objective system for measuring health insurance savings should be established.
The basic principle for defining qualifying savings should be that they are recurring and of a nature that truly "bends the curve" in health care costs by making the system operate more efficiently.
The City should have a reliable mechanism for recouping amounts of planned savings not actually achieved during a fiscal year.
Savings should be based on an agreed upon baseline number of people covered, meaning increases or decreases in covered lives should not affect the calculation.
An agreement should be reached that assures there will be regular audits of eligibility in the future as a matter of managerial discretion.
Moving retirees to the New York State Health Exchange with federal subsidies should be studied as a potential source of savings as part of the joint efforts under the MLC agreement.
Additional funding taken from the Health Insurance Stabilization Fund beyond the $1 billion already agreed upon should not count as savings.
Key Data
$1.3 Billion
— Total health insurance savings targeted by the New York City agreement.
$1 billion
— Amount already agreed upon from the Health Insurance Stabilization Fund that should not be counted as additional savings.
$2,736,126
— Projected baseline cost for radiation services in FY2018 in the hypothetical savings calculation.
$2,208,378
— Actual projected cost for radiation services in FY2018 in the hypothetical savings calculation.
$527,748
— Calculated savings for radiation services in FY2018 in the hypothetical savings calculation.
New York City's Variable Supplement Fund payments, known as "Christmas bonuses," provide $12,000 annual checks to retired uniformed officers that drain pension fund assets and require taxpayer support. Because these payments are not constitutionally protected, the city should pursue their elimination in Albany to improve the fiscal health of the pension system and reduce taxpayer-funded contributions.
Recommendations related to Labor Costs
The Mayor and City Council should make phasing out or eliminating the Variable Supplement Fund (VSF) a priority on their agenda in Albany.
The City should gradually eliminate these unusual pension bonuses for retirees to enhance the fiscal condition of the pension funds and reduce the needed contributions from taxpayers.
Key Data
$12,000
— The amount of the annual check received by eligible retired New York City police, fire, and correction officers.
$500 million
— The total cost of Variable Supplement Fund payments made to eligible retirees in 2014.
$8.2 million
— The amount transferred from the police pension fund to pay beneficiaries in fiscal year 2013 due to a VSF shortfall.
$2.5 billion
— The amount transferred by the police pension fund to police officers’ and police superiors’ VSFs in fiscal year 2014, representing almost half of the fund's investment earnings.
17.5 percent
— The combined return earned by the city's five pension funds on $150.3 billion in investments in fiscal year 2014.
$8.6 billion
— The total pension contributions required in the fiscal year 2015 budget, representing 11.3 percent of the budget.
New York City's Health and Hospitals Corporation faces significant fiscal pressure, with labor costs increasing due to new contract settlements with major unions like 1199SEIU and NYSNA. While the city has agreed to cover these incremental labor costs, the corporation must navigate long-term financial challenges, including a projected $3.2 billion cash shortfall by fiscal year 2018.
Key Data
$431 million
— Estimated cost of 1199SEIU and NYSNA contract settlements over the course of the fiscal years 2015 to 2018 financial plan.
$879 million
— Estimated cost of 1199SEIU and NYSNA contract settlements over fiscal years 2014 to 2021, the full term of the contract.
2,203
— Number of staff positions reduced between fiscal year 2010 and fiscal year 2014.
40,060
— Full-time equivalent employee headcount in fiscal year 2010.
37,857
— Full-time equivalent employee headcount in fiscal year 2014.
$95 million
— Initial budget transfer from the City to HHC to cover the incremental cost of labor contracts.
New York City's garbage collection system is significantly more expensive than private-sector alternatives, with potential annual savings of $300 million achievable through operational reforms and increased competition. These improvements include optimizing collection routes, expanding the use of automated trucks, eliminating unproductive labor bonuses, and diversifying the snow removal workforce.
Recommendations related to Labor Costs
The City should promote flexibility in refuse collection, such as redesigning routes to increase the average amount of refuse collected per truck-shift from 10 to 12 tons, which would save $72 million a year.
The Department of Sanitation should expand the use of one-worker, automated trucks from 8 percent to 18 percent, which would save $20 million annually even if it doubled the related bonus payment to operators.
The City should eliminate 'unproductive' productivity bonuses for workers, as meeting the criteria for these bonuses is a function of route assignments rather than productivity, which would save $4 million a year.
The City should introduce competition to promote efficient public waste collection by soliciting bids for smaller waste streams and permitting private carters to compete for residential garbage collection, which could save $220 million a year if all collections were subject to competition.
To avoid the impact of snow events on year-round staffing decisions, the City should diversify its snow removal workforce to include other public employees, private contractors, and retired DSNY employees.
Key Data
$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 for sanitation workers.
$220 million
— Annual savings if all Department of Sanitation collections were subject to competition.
$57 million
— Estimated annual savings from implementing pay-as-you-throw fees to reduce refuse generation.
$26 million
— Annual savings to the private system from creating franchises for more efficient commercial waste collection.
New York City could save nearly $100 million annually in the short term and over $300 million long-term by modernizing sanitation collection practices, including increasing route efficiency, expanding automated truck use, and eliminating unproductive bonuses. These reforms, which include transitioning to managed competition and implementing pay-as-you-throw fees, would reduce the city's reliance on labor-intensive collection methods and lower overall operational costs.
Recommendations related to Labor Costs
The City should promote flexibility in service arrangements to meet neighborhood needs, such as altering collection frequency and redesigning routes to ensure every truck-shift picks up at least 12 tons.
DSNY should expand the use of automated trash collection to reduce the physical labor required for garbage collection and improve overall productivity.
The City should eliminate “unproductive” productivity bonuses that are currently based on route assignments and neighborhood characteristics rather than actual worker performance.
The City should implement financial incentives to reduce refuse generation, such as pay-as-you-throw fees, to encourage residents to produce less waste and recycle more.
The City should introduce managed competition for residential garbage collection to expose DSNY to competitive pressures and reduce per-ton collection costs.
The City should create franchises for more efficient commercial waste collection to limit the number of carters in a given area, thereby reducing truck congestion and improving operational efficiency.
The City should diversify its snow removal workforce to include other public employees, private contractors, and retired DSNY employees, reducing the need for year-round staffing levels based on infrequent snow events.
Key Data
$275 million
— Annual savings from redesigning municipal waste collection policies.
$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.
$57 million
— Annual savings from implementing pay-as-you-throw fees.
$220 million
— Annual savings from managed competition for all residential garbage.
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. These supplementary payments to private contractors would require reducing funding for other municipal services to cover costs for which no additional services are provided.
Recommendations related to Labor Costs
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 Metropolitan Transportation Authority employs approximately 68,000 workers, with 60 percent of total expenditures dedicated to their compensation. To address labor relations challenges and inconsistent legal frameworks, the agency should implement a unified system that prohibits strikes and utilizes binding arbitration to manage costs.
Recommendations related to Labor Costs
A reinvented MTA would have a legal framework for labor relations that permits all its employees to bargain under the same set of rules and be part of a single human resource system.
The new framework would effectively prohibit strikes and provide timely binding arbitration that gives adequate recognition to standards of ability to pay without unreasonable tax or fare increases.
Key Data
68,000
— The number of employees at the Metropolitan Transportation Authority.
60%
— The portion of total expenditures devoted to compensating MTA workers.
New York City's fiscal year 2015 budget includes significant spending increases driven by labor contract settlements, with projected costs for these agreements reaching $13.6 billion through 2018. To manage these rising personnel and health care expenses, the city must secure recurring savings through labor-management agreements and improve operational efficiency.
Recommendations related to Labor Costs
The Administration and the Municipal Labor Committee should agree to changes that provide recurring savings on rapidly-growing health care costs.
The City should adopt changes that make the health care system operate more efficiently, reduce utilization of services, or reduce the city’s costs, through premium-sharing or lower payments to providers.
The City should use unsettled contracts as an opportunity to make city operations more efficient by eliminating archaic work rules, adopting new technologies, and reinventing service delivery.
The City should use part of the savings from labor contract changes to fund larger wage increases or productivity bonuses.
Key Data
$13.6 billion
— Projected gross cost of negotiating labor agreements with the entire municipal workforce between fiscal years 2014 and 2018.
$1 billion
— Amount the Administration and the Municipal Labor Committee agreed to draw from the off-budget Health Insurance Stabilization Fund to offset labor costs.
$3.4 billion
— Targeted savings in health care costs to be achieved through actions yet to be specified.
$1.3 billion
— Amount of recurring savings in health care costs targeted after the initial $3.4 billion in savings.
39 percent
— Projected growth in health care costs by the end of the financial plan in 2018 without specified savings.
The agreement regarding New York City's health insurance for workers and retirees relies on temporary measures and artificial rate caps rather than structural reforms that would generate sustainable savings. These calculation methods allow for the attribution of savings to the agreement even when they result from broader trends in health care inflation rather than specific policy changes.
Legislative proposals in 2014 introduced numerous pension and benefit enhancements for public employees, creating significant long-term fiscal liabilities for the state and local governments. These 'benefit sweetener' bills, which included modifications to disability pensions and retirement formulas, carried multi-million dollar price tags that would increase taxpayer-funded labor costs.
Key Data
$1,100 million
— Past service cost associated with replacing the current benefit formula for Tier III, IV, and V members.
$617.9 million
— Increase in the Actuarial Present Value of benefits in fiscal year 2019 resulting from proposed changes to Tier III police member disability retirement benefits.
$374 million
— One-time costs associated with allowing members of Tiers III and IV to receive additional service credit for each year of service after 10 years.
$1,699 million
— Total estimated state-level costs for the various pension and benefit enhancement bills tracked in the 2014 scorecard.
Guidelines for measuring health insurance savings between the City and the Municipal Labor Committee emphasize that only recurring, structural changes that improve efficiency should be credited as savings. These measures should exclude temporary accounting adjustments or funding shifts, ensuring that labor cost reductions are based on verifiable, long-term improvements.
Recommendations related to Labor Costs
As a first step, as specified in the agreement with the MLC, an objective system for measuring savings should be established.
The City should have a reliable mechanism for recouping amounts of planned savings not actually achieved during a fiscal year.
Savings should be based on an agreed upon baseline number of people covered.
An agreement should be reached that assures there will be regular audits in the future as a matter of managerial discretion.
A significant source of potential savings may be possible through changing the status or eligibility of retirees, for example, by moving some or all from City plans to those available on the New York State Health Exchange with federal subsidies.
Additional funding taken from the Health Insurance Stabilization Fund beyond the $1 billion already agreed upon should not count as savings.
Key Data
$1 billion
— Amount already agreed upon for the Health Insurance Stabilization Fund that should not be exceeded for savings calculations.
$2,000,000
— FY2014 baseline and actual cost for the hypothetical program to centralize radiation services.
$2,736,126
— FY2018 baseline cost for the hypothetical program to centralize radiation services.
$527,748
— Calculated savings for the hypothetical program to centralize radiation services in FY2018.
New York maintained its position as the top per-pupil spender on public education in 2012, with spending 84 percent higher than the national average due largely to elevated teacher compensation and fringe benefit costs. While instructional salaries grew by 1.4 percent, the cost of fringe benefits for teachers rose by 6.8 percent, creating a significant squeeze on school district budgets.
Key Data
$8,313
— Instructional salaries and wages in New York averaged $8,313 per pupil.
94%
— Instructional salaries and wages in New York were 94 percent higher than the national average of $4,287.
$4,233
— Instructional employee fringe benefits in New York averaged $4,233 per pupil.
169%
— Instructional employee fringe benefits in New York were 169 percent higher than the national average of $1,573.
6.8%
— The cost of fringe benefits for teachers rose 6.8 percent from 2011 to 2012.
1.4%
— Instructional salaries and wages increased 1.4 percent from 2011 to 2012.
New York City's garbage collection system is significantly more expensive than private alternatives and other major cities, largely due to inefficient labor contracts and operational practices. Renegotiating sanitation worker contracts offers a critical opportunity to improve productivity and align spending with the administration's goals.
Recommendations related to Labor Costs
The City should renegotiate the expired labor contract with sanitation workers to address the exceptionally high costs of the trash system.
The City should reform 'productivity' bonuses to ensure that taxpayers receive increased productivity in exchange for bonus payments.
The City should revise union contracts to update routes and schedules, eliminating inefficiencies like minimum refuse collection frequency and inflexible eight-hour shifts.
The City should address the heavy reliance on DSNY for snow removal to reduce the generation of high overtime expenses.
Key Data
$150,000
— Average annual compensation for a City sanitation worker, including direct wages and fringe benefits.
$100,000
— Starting annual compensation for a City sanitation worker.
$431
— DSNY's average combined collection and disposal cost per ton.
$185
— Private carters' average combined collection and disposal cost per ton.
$251
— Public sector cost of collecting a ton of refuse in New York City.
$57
— Public sector cost of collecting a ton of refuse in Miami-Dade County.
New York City's sanitation department faces high labor costs, with average annual compensation for workers exceeding $150,000, driven by generous benefits and bonus structures that often fail to yield promised productivity gains. Inefficiencies, such as the mandatory use of two-worker trucks and limited night collections, further inflate expenses compared to private sector alternatives and other major cities.
Recommendations related to Labor Costs
The City should transition to fully-automated trucks, as each one-worker truck could save more than $100,000 annually in labor costs.
The City should re-evaluate the mandate for two-worker trucks, as the current requirement means the labor cost per ton of recycling is double that of refuse.
The City should reform or eliminate 'productivity' bonuses, as taxpayers do not get increased productivity in exchange for these payments.
The City should increase night collections, as the savings in labor time is about 9 percent compared to day collections.
The City should implement a pay-as-you-throw system to connect the amount of garbage residents generate to the price those residents pay for collection.
Key Data
$150,000
— Average annual compensation for a DSNY sanitation worker.
The tentative agreement with the teachers union and the associated executive budget commit $17.7 billion to cover raises and back pay over several years. While the deal includes $3.4 billion in health insurance savings, the extended timeline for back pay and the uncertainty of these savings create significant fiscal challenges for the city.
Recommendations related to Labor Costs
The city must ensure that health insurance savings are certain rather than speculative.
The city should avoid extended time frames for paying back pay that conflict with sound principles of public finance.
The city should adhere to the principle that this year's taxes should pay for this year's services rather than deferring costs.
Key Data
$13.4 billion
— Cost of applying the teachers' deal pattern to all workers in the next four years.
$4.3 billion
— Cost of subsequent payments for the teachers' deal pattern.
$17.7 billion
— Total cost of applying the teachers' deal pattern to all workers and giving the teachers back pay.
$3.4 billion
— Savings in health insurance costs committed by the unions.
$1 billion
— Fund of tax dollars jointly controlled with the unions.
$370 million
— The gap in fiscal year 2018 as projected in February.
The tentative agreement with the teachers' union provides wage increases costing $4 billion over four years, with the city relying on $3.4 billion in health care savings to offset these expenses. To ensure long-term affordability, the city must implement cost control measures, specifically requiring employees and retirees to contribute to their health insurance premiums.
Recommendations related to Labor Costs
The city's labor agreements must ensure concrete savings from health care costs to maintain affordability.
The city should require employees and retirees to share in the cost of their health insurance premiums to achieve more predictable savings.
Key Data
$4 billion
— Estimated cost of the teachers' contract over the next four years.
$400 million
— Projected additional salary growth for employees in fiscal year 2015.
$1.5 billion
— Projected additional salary growth for employees in fiscal year 2018.
$3.4 billion
— Estimated new health care savings to be determined by city and labor officials.
1% to 3%
— Range of wage increases provided by the contract from 2013 through 2018.
The PATH rail system faces growing annual deficits, projected to reach $487 million by 2018, driven by high operating costs and a reliance on bridge and tunnel toll cross-subsidies. To address these financial challenges, the system should adopt a more equitable funding model that incorporates passenger fares, tax subsidies, and reduced cross-subsidies, while considering a potential transfer of operations to New Jersey Transit.
Key Data
1,220
— Total number of PATH employees.
168
— Number of PATH employees not covered by collective bargaining agreements.
3 percent
— Annual raises included in the previous six-year contracts for unionized PATH employees.
New York City's health insurance policies for employees and retirees are significantly more generous than those of comparable public and private employers, contributing to a growing fiscal burden. Implementing premium-sharing requirements for active employees and retirees, alongside the elimination of Medicare Part B reimbursements, would generate substantial recurring savings to help balance the city's long-term finances.
Recommendations related to Labor Costs
The City should implement premium-sharing by employees to align with norms in the private sector and other state and local governments.
The City should require premium-sharing by retirees to reduce the taxpayer burden and align with practices in other jurisdictions.
The City should eliminate Medicare Part B reimbursement for retirees and their spouses, as this practice is rare among other public employers.
Key Data
$1.8 billion
— Total savings in fiscal year 2014 if the recommended health insurance reforms are adopted.
$2.2 billion
— Total savings in fiscal year 2016 if the recommended health insurance reforms are adopted.
$3.5 billion
— Total cost of employee health insurance premiums to the City in fiscal year 2013.
$1.4 billion
— Total cost of retiree health insurance premiums to the City in fiscal year 2013.
$280 million
— Cost to the City in fiscal year 2013 for reimbursing retirees and their spouses for Medicare Part B premiums.
$83 billion
— Estimated unfunded liability for retiree health insurance and other post-employment benefits.
This presentation was given during CBC's Conference on The Most Important Economic and Fiscal Decisions Facing the Next Mayor , which took place on December 6, 2013.. CBC provides a framework for curbing expenditures effectively and provides 8 options for savings: Implementing health insurance premium-sharing; Consolidating union welfare funds;…
The Metropolitan Transportation Authority faces significant financial instability due to reliance on debt and underfunded liabilities, necessitating a shift toward a '50-25-25' funding model involving fare increases, tax subsidies, and auto-user fees. Addressing these fiscal challenges requires acknowledging that current labor contract assumptions regarding pay increases may be overly optimistic and could lead to substantial additional costs.
Binding arbitration laws for uniformed personnel often result in wage awards that exceed inflation and ignore the fiscal constraints of local governments. Reforming the statute to strictly define "ability to pay" as the capacity to fund contracts without tax hikes or service cuts is necessary to protect taxpayers and ensure fiscal responsibility.
Recommendations related to Labor Costs
State leaders should amend the statute to address its key weakness: inadequate consideration of the fiscal condition of State and local governments.
The statute should be revised to define “ability to pay” as the capacity to pay all costs—including related fringe benefits— of the imposed contract from recurring resources without increasing taxes, making service cuts or employing fiscal gimmicks.
Guidance and training should be provided to arbitrators so they understand how to judge “ability to pay” based on this more specific definition.
Key Data
10
— Number of contracts settled with uniformed personnel through arbitration in Suffolk County since 2000.
20
— Number of years during which direct negotiations with police officers in Suffolk County have been rare.
New York leads the nation in public school spending, with per pupil costs reaching $19,076, driven largely by instructional salaries and fringe benefits that significantly exceed the national average. Instructional salaries and benefits in the state totaled $12,158 per pupil, with fringe benefits alone costing 2 ½ times the U.S. average.
Key Data
$8,196
— Instructional salaries in New York averaged $8,196 per pupil, nearly double the U.S. average.
$4,326
— The U.S. average for instructional salaries per pupil was $4,326.
$3,962
— New York's per pupil spending on fringe benefits for instructional employees was $3,962.
$1,505
— The U.S. average per pupil spending on fringe benefits for instructional employees was $1,505.
$12,158
— New York’s per pupil spending on instructional salaries and fringe benefits totaled $12,158.
$4,919
— New York City spent $4,919 per student on fringe benefits for instructional staff.
Negotiating municipal labor contracts presents a significant fiscal challenge, as all city contracts have expired and the city lacks reserves for potential retroactive pay raises. Granting these raises could cost over $7 billion in one-time payments and nearly $3 billion in recurring annual expenses, necessitating sharp tax increases or significant spending cuts.
Recommendations related to Labor Costs
Taxpayers should pay attention to how candidates handle their courtship of union members' votes regarding municipal labor contracts.
New Yorkers should take the time to understand the issue of municipal labor contracts, as they will be paying the bill.
Key Data
$72 billion
— The total size of the city's budget, of which personnel costs make up more than half.
more than $7 billion
— The potential one-time cost of granting retroactive pay for past years.
10 percent
— The portion of the city's fiscal year 2014 operating budget that would be consumed by a one-time retroactive pay settlement.
almost $3 billion
— The amount of future recurring costs annually if retroactive pay is granted.
New York City's municipal labor contracts have all expired, creating a significant fiscal risk as there are no budgetary reserves set aside to cover potential retroactive wage increases. A holistic approach to negotiations, including reforms to health insurance, salaries, and work rules, is necessary to avoid creating multi-billion dollar budget gaps.
Recommendations related to Labor Costs
A more holistic approach to labor negotiations should consider reforms to health insurance, salaries, work rules, productivity and cross-agency collaboration.
New Yorkers should pay attention to contract negotiations, as they will ultimately bear the cost of the outcome.
Key Data
$300 million
— The annual increase in operating costs for every 1 percent raise awarded to the city workforce.
$3.5 billion
— The cost of retroactive pay in fiscal year 2014 if two 4 percent raises are awarded to teachers and principals.
$3.7 billion
— The cost of providing 2 percent wage increases to the entire workforce in each year for the 2010-2013 round of bargaining.
$7 billion
— The size of the budget gap that would immediately open in fiscal year 2014 if labor settlements are reached.
$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.
The current binding arbitration process for public unions often results in generous wage awards that burden local governments, necessitating reforms to the Taylor Law. These reforms should include stricter decision criteria, time limits, and a clear definition of a locality's ability to pay to ensure contracts are sustainable without tax hikes or service cuts.
Recommendations related to Labor Costs
Revising the binding arbitration law to strengthen localities' position is necessary to incentivize union leaders to negotiate.
A better set of rules would give arbitrators more guidance in making determinations and assure that the process, once invoked, moves expeditiously.
The changes should include time limits and deadlines that avoid the uncertainties and risks arising from delayed, retroactive wage awards.
New, more specific decision criteria should place greater emphasis on the fiscal condition of local governments.
“Ability to pay” should be defined 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 in the 2004-2006 contract.
5%
— Wage increase awarded to New York City police officers in the 2004-2006 contract.
2%
— Proposed annual raise limit for localities meeting the definition of fiscally distressed.
New York City's budget is increasingly consumed by legacy costs, such as pensions and retiree health benefits, which are projected to reach $17.8 billion by fiscal year 2015. These obligations, which are largely determined by past commitments rather than current policy, are growing at a rate that significantly outpaces other city spending and reduces available funds for current services.
Key Data
$8.2 billion
— Annual pension contributions projected for fiscal year 2015.
$2.4 billion
— Annual cost of retiree health benefits projected for fiscal year 2015.
$17.8 billion
— Total legacy costs projected for fiscal year 2015.
24 percent
— Share of operating expenses comprised of legacy costs in fiscal year 2015.
$3.2 billion
— Annual pension contributions in fiscal year 2005.
$1.2 billion
— Annual cost of retiree health benefits in fiscal year 2005.
New York City Deputy Mayor Caswell Holloway discusses public employees costs and the City's plans to rebid the health insurance plans offered to its employees.
New York City's health insurance costs for employees and retirees are projected to rise to nearly $7 billion by 2016, a figure that will equal 80 percent of the city's projected budget deficit. To address this, the city should implement premium-sharing and eliminate Medicare Part B reimbursements, which could save $1.7 billion annually.
Recommendations related to Labor Costs
The taxpayers' obligations for health insurance for city employees and retirees will have to be controlled through premium-sharing.
Annual savings of $1.7 billion can be achieved by requiring contributions of up to 25 percent from employees.
Annual savings of $1.7 billion can be achieved by requiring contributions of up to 50 percent from retirees.
Annual savings of $1.7 billion can be achieved by eliminating the Medicare Part B reimbursement.
Key Data
40 percent
— Projected growth of health insurance costs between fiscal years 2013 and 2017.
$7 billion
— Projected cost of health insurance in 2016.
80 percent
— Portion of the city's projected budget deficit that health insurance costs will equal in 2016.
90 percent
— Portion of the city's workforce enrolled in health plans that require no employee contribution.
25 percent
— Typical contribution for single and family coverage for employees of large organizations.
12-27 percent
— Cost-sharing arrangements for New York State employees.
New York should prioritize controlling labor costs by implementing mandate relief for local governments, such as capping binding arbitration awards, rather than adopting short-term pension stabilization plans that threaten long-term fund viability. Furthermore, the state should continue to right-size operations by closing facilities in response to the nearly 25 percent decline in the inmate population since 2000.
Recommendations related to Labor Costs
The Legislature should enact real mandate relief measures that aid local governments, specifically utilizing the Governor’s proposed 2 percent cap on awards for fiscally distressed employers to better control labor costs borne by local governments.
The Legislature should reject the pension 'stabilization' plan, as its adoption could threaten the viability of the pension funds and erode New York’s historically good practice of paying pension bills on time.
The State should pursue further savings in state operations by closing more facilities to right-size capacity as the inmate population has declined.
The Legislature should reintroduce and pass special education mandate relief proposals approved by the State Education Department last year to assist local governments.
Key Data
25 percent
— The inmate population has declined by almost 25 percent since 2000, indicating a need for more facility closures to right-size capacity.
2 percent
— The Governor’s proposed 2 percent cap on binding arbitration awards for fiscally distressed employers is a mechanism to better control labor costs borne by local governments.
25-year
— The Governor proposes an optional 25-year, fixed rate pension funding plan to provide short-term fiscal relief for localities.
New York State Assembly legislation introduced to enhance pension benefits for public employees and retirees would impose at least $1.35 billion in additional costs on state and local employers. One specific bill, A4890, accounts for $1.1 billion of these costs by increasing the pension benefit multiplier for long-term service.
Key Data
$1.35 billion
— Total cost of eight bills introduced in the New York State Assembly to enhance pension benefits for public employees and retirees.
$1.1 billion
— One-time cost imposed on the State by bill A4890, which increases the pension benefit multiplier.
New York City's public employee health insurance costs are projected to reach $7 billion annually by 2016, contributing significantly to the city's budget deficit. Implementing premium-sharing, where employees and retirees contribute to their health coverage, would align city practices with national standards and generate billions in savings.
Recommendations related to Labor Costs
It’s time for lawmakers and labor to reach an agreement to implement premium-sharing.
City employees should contribute 10% for individual and 25% for family coverage, similar to most U.S. workers.
Retirees should pay for 50% of the premium.
Reimbursement for Medicare Part B should be phased out.
Key Data
$7 billion
— Projected annual cost of health insurance for New York City public employees and retirees by 2016.
$1.8 billion
— Total savings in fiscal year 2014 if premium-sharing reforms are implemented.
$2.2 billion
— Total savings in fiscal year 2016 if premium-sharing reforms are implemented.
90%
— Percentage of the city’s workforce enrolled in health plans that require no employee contribution.
40%
— Projected growth of health insurance costs for New York City public employees and retirees by 2016.
New York City's health insurance costs for employees and retirees have more than doubled in the last decade, creating a significant fiscal burden that exceeds spending on many other city services. To address this, the city should implement premium-sharing arrangements for employees and retirees and eliminate Medicare Part B reimbursements to align with national standards and reduce long-term financial obligations.
Recommendations related to Labor Costs
The City should implement premium-sharing by employees to align with the norm in the private sector and other state and local governments.
The City should require premium-sharing by retirees to bring New York City closer to the standards set by other municipal governments.
The City should eliminate Medicare Part B reimbursement for retirees and their spouses, as this practice is rare among other state and local governments.
Key Data
$1.8 billion
— Projected savings in fiscal year 2014 if the recommended premium-sharing and Medicare Part B reimbursement changes are adopted.
$2.2 billion
— Projected savings in fiscal year 2016 if the recommended premium-sharing and Medicare Part B reimbursement changes are adopted.
$83 billion
— Estimated unfunded liability for retiree health insurance and other post-employment benefits as of fiscal year 2011.
$4.8 billion
— Total cost of health insurance for New York City municipal employees and retirees in fiscal year 2012.
70 percent
— Portion of the projected budget gap in 2016 that will be comprised of health insurance costs.
90 percent
— Percentage of the municipal workforce enrolled in health insurance plans that require no employee contribution.
New York City faces structural budget deficits driven by rapidly increasing expenditures on health insurance and debt service, which are outpacing revenue growth. To address these gaps, the city must navigate expired labor contracts and potential wage settlements that could significantly widen the budget deficit if not offset by concessions.
Recommendations related to Labor Costs
The City should prioritize reforming health insurance premium arrangements to reduce the long-term trajectory of rising costs.
The City must ensure that any future labor settlements are offset by concessions to prevent the budget gap from widening.
The City should pursue larger recurring expenditure cuts to address the structural budget deficit before the fiscal year ends.
The City should prioritize rightsizing capital investment to help reduce the long-term trajectory of debt service costs.
Key Data
$8.0 billion
— Annual cost of pension contributions, which are a major driver of expenditure growth.
$5.2 billion
— Annual cost of health insurance, which is a major driver of expenditure growth.
$3 billion
— Potential budgetary impact of retroactive pay in the current fiscal year if the City settles with unions.
$2 billion
— Additional potential budgetary impact of retroactive pay in fiscal year 2014 if the City settles with unions.
Port Authority of New York and New Jersey police officers receive compensation that is significantly higher than that of most other regional law enforcement agencies, driven by both higher base salaries and more generous supplemental payments. To address these disparities, future labor contracts should aim to align officer compensation with that of other large urban police departments in the region.
Recommendations related to Labor Costs
The next contract for PANYNJ officers should make progress in aligning their pay to that of officers in large urban departments in the region.
Key Data
$406 Million
— The PANYNJ's 2012 budget allocation for the Public Safety Department.
$372 Million
— The PANYNJ's 2012 budget allocation for personal service items, representing 31 percent of the total personal service budget.
$83.99
— The hourly pay of PANYNJ senior officers in 2009.
$16,458
— The average overtime earnings for all PANYNJ officers in 2009.
$8,832
— The 2009 annual premium cost for individual health coverage for PANYNJ officers.
$23,532
— The 2009 annual premium cost for family health coverage for PANYNJ officers.
New York's public school system spends significantly more on employee fringe benefits than the national average, with districts spending 20 percent of per-pupil expenditures on these costs compared to the 13 percent national norm. Reforming health insurance premium-sharing arrangements to align with state employee standards could generate over $500 million in annual savings that could be redirected to the classroom.
Recommendations related to Labor Costs
The legislature and the Governor should work together to establish a statutory cap on school district employer contributions at 85 percent for single coverage and 75 percent for family coverage.
State leaders should reallocate responsibility for employee and retiree health insurance premium costs to align with state employee standards.
School leaders and legislators should focus on retargeting the dollars already committed to fringe benefits and other areas rather than pursuing even more funding.
Key Data
20 percent
— Statewide, school districts spend this percentage of per pupil expenditures on employee fringe benefits, compared to a U.S. average of 13 percent.
$3,688
— The per student amount spent on employee fringe benefits in New York, which is nearly three times the U.S. average of $1,330.
169 percent
— The growth in spending per pupil on instructional staff fringe benefits in New York over the last 10 years, compared to a national average of 100 percent.
$4.7 billion
— The amount school districts in New York State, including New York City, spend annually on health insurance for employees and retirees.
$500 million
— The amount of annual savings that could be achieved if New York City and school districts changed their health insurance premium-sharing arrangements to match those of the State of New York.
Local governments are increasingly borrowing money to cover the costs of accrued sick leave and vacation payouts for departing employees, a practice that creates long-term fiscal instability. To address these unfunded liabilities and the even larger burden of retiree health insurance, municipalities should implement preventive policies like limiting leave accruals and mandate the funding of reserves to cover these future obligations.
Recommendations related to Labor Costs
State officials should develop alternatives to borrowing to cope with the underlying problem – accrued liabilities for “separation costs.”
Preventive policies include not allowing the lifetime accrual of vacation days and tighter limits on the amount of unused sick leave that can be converted to cash payments.
Towns, cities and villages should be required to fund at least partially their accrued liabilities for separation costs.
The Legislature should allow borrowing for those who need it now only on the condition of future requirements to build adequate reserves.
The Legislature should prevent future borrowing needs by establishing standards for funding more adequately future separation costs and OPEB liabilities among all localities and the State itself.
Key Data
$1.8 million
— Separation costs generated by the retirement of six police officers in Glen Cove.
4%
— Separation costs as a percentage of Glen Cove's $46.6 million total annual budget.
$3.9 billion
— New York City's accrued liability for vacation and sick leave at the end of the 2011 fiscal year.
$83.9 billion
— New York City's OPEB liability at the end of the 2011 fiscal year.
$1.2 billion
— New York State's accrued liability for vacation and sick leave at the end of the 2011 fiscal year.
$10.6 billion
— New York State's OPEB liability at the end of the 2011 fiscal year.
New York City faces significant financial pressure from rising labor costs, including past wage increases and generous health benefits that require structural reform. To address these challenges, the city should implement a wage freeze, introduce premium-sharing for employees and retirees, and eliminate the reimbursement of Medicare Part B premiums.
Recommendations related to Labor Costs
Sustain the three-year wage freeze for municipal employees to avoid further budget gaps.
Phase out the reimbursement of Medicare Part B premiums for retirees over age 65 through local legislation.
Support the implementation of premium-sharing arrangements for employees, such as 10 percent for single coverage and 25 percent for family coverage.
Phase in premium contributions for retirees under age 65 over the course of the financial plan to reduce the city's unfunded liability.
Key Data
26 percent
— Wage increases negotiated for civilian employees between fiscal years 2002 and 2010.
32 percent
— Wage increases negotiated for teachers between fiscal years 2002 and 2010.
42 percent
— Wage increases negotiated for uniformed employees between fiscal years 2002 and 2010.
$5 billion
— The projected budget gap in fiscal year 2014 if wage increases are not kept at or below the rate of inflation.
$280 million
— The savings in fiscal year 2013 from phasing out the reimbursement of Medicare Part B premiums.
$700 million
— The annual savings from implementing employee contributions of 10 percent for single coverage and 25 percent for family coverage.
Rising costs for retiree health benefits are crowding out funding for essential government services, creating massive unfunded liabilities that threaten municipal budgets. Legislation that restricts the ability of public officials to modify these benefits forces a choice between unsustainable labor costs and the reduction of critical public services.
Recommendations related to Labor Costs
Public officials should maintain their discretion to alter retiree health insurance to avoid laying off police or closing libraries.
State legislators should reject bills that would prevent government officials from reducing current benefit levels, as this forces the sacrifice of core services.
State and local elected officials should retain the latitude to address retiree health-insurance costs rather than having their hands tied by legislation.
Key Data
$1.6 billion
— The amount New York City will pay for health insurance for retired government employees in fiscal year 2012.
$1.3 billion
— The amount the state paid for retiree health care in fiscal year 2011-12.
44%
— The increase in retiree health-insurance costs in the city budget from five years prior.
$84 billion
— The estimated unfunded liability for retiree health benefits for New York City.
$56 billion
— The estimated unfunded liability for retiree health benefits for New York State.
$200 billion
— The Empire Center's estimate of the statewide unfunded liability in 2010.
The New York City Health and Hospitals Corporation faces significant fiscal challenges as expenses for pensions and fringe benefits grow faster than revenues, necessitating potential layoffs and deeper expenditure reductions. To address these deficits, the corporation has already reduced its full-time workforce by approximately 2,500 employees, saving $218 million in personal service expenditures.
Recommendations related to Labor Costs
HHC must implement steeper expenditure reductions and layoffs if the current plan fails to achieve savings goals.
HHC must redouble its efforts at delivering services more efficiently to avoid a dramatic reduction in services for needy residents.
Key Data
2,500
— Number of full-time employees trimmed from the HHC headcount between 2009 and early 2012.
$218 million
— Reduction in personal service expenditures achieved by trimming the full-time employee headcount.
New York City's prevailing wage law lacks transparency, as the Comptroller's Office does not clearly explain the methodology or specific labor agreements used to determine pay rates. Expanding these requirements without establishing clear, public criteria for setting standards risks obscuring how labor costs are determined for public projects.
Recommendations related to Labor Costs
The City Council should not expand prevailing-wage requirements without also requiring more public information and explanation about how these standards are developed.
The City Council should direct the comptroller to clarify and make public his methodology for setting prevailing wages.
The comptroller should be required to periodically re-examine the criteria for establishing job titles.
The comptroller should consider whether changes can be made to simplify the schedules and reduce the cost of compliance.
Collective-bargaining agreements used to set prevailing-wage rates should be identified on the schedules and posted online.
Key Data
30%
— The threshold of workers in a job title covered by a union contract required to set the prevailing wage in the construction industry.
2
— The number of court cases from the previous year that highlighted problems with the comptroller's inconsistent application of the prevailing wage rule.
The Tier VI pension reform legislation introduces significant long-term savings for New York City by increasing employee contributions to align with national norms and extending the final average salary calculation period. While the reforms successfully curb pension padding and limit benefit sweetening, they include less desirable outcomes such as only a modest increase in the retirement age and the continued inclusion of unlimited overtime in pension calculations for uniformed employees.
Recommendations related to Labor Costs
The legislation includes increasing member contributions, with employee contributions ranging from 3 to 6 percent depending on income, to align with national norms.
The legislation implements changes in the benefit calculation, such as moving from a three-year to a five-year final average salary and reducing benefit multipliers, to produce significant long-term savings.
The legislation includes further curbs on pension padding by reducing credit for accumulated leave time and imposing limitations on the inclusion of overtime, severance, and salary spiking.
The legislation adds a provision to discourage the practice of 'sweetening' pension benefits by the Legislature, ending the past practice of passing these costs on to local governments.
Key Data
3 to 6 percent
— Range of employee contributions required under the new pension legislation.
three-year to a five-year
— Change in the final average salary period used for benefit calculations.
63
— The new retirement age for employees under the Tier VI reforms.
one year
— The total increase in the retirement age implemented by the legislation.
New York City faces a new fiscal reality where the large tax revenue surpluses of the past decade have disappeared, necessitating a shift from temporary one-shot resources to more fundamental budget adjustments. To address long-term deficits, the City may need to reform its spending arrangements, particularly the generous health insurance policies provided to municipal employees and retirees.
Recommendations related to Labor Costs
The City should address budget growth by reforming the City's generous health insurance policies for municipal employees and retirees.
Key Data
$1 billion
— Amount drawn from the retiree health insurance trust fund to help balance the fiscal year 2013 budget.
New York's public employee pension contributions are significantly lower than national averages, with taxpayers covering 89 percent of costs compared to a 66 percent national employer average. Implementing a "Tier VI" pension formula that raises employee contributions to 4-6 percent and introduces a risk-sharing mechanism would help align state costs with national standards and provide relief to taxpayers.
Recommendations related to Labor Costs
The state should raise pension contributions by new employees to between 4 percent and 6 percent of wages, depending on pay level.
Policymakers should implement a “risk-reward” approach to pension contributions, which would share the downside risk and the upside potential with employees.
The state should ensure that if the employer-contribution rate as a share of payroll rises above 7 percent, half of the added amount is contributed by employees.
The state should ensure that if employer contributions fall below 4 percent of payroll, half of the saved amount is used to lower employee contributions.
The state should require future employees to contribute up to 6 percent of salary to make pension costs more sustainable.
Key Data
22%
— In 2009, only 22% of state and local pension plans required employee contributions of less than 3.9% of wages.
55%
— In 2009, employee contributions of 6% or more were required in 55% of US public plans.
89%
— New York state and participating local governments paid 89% of pension costs, while employees paid 11%.
8:1
— The ratio of employer to employee pension contributions in New York is 8:1, compared to a national average of 2:1.
87%
— In 2009, 87% of the amount paid to New York’s local plans came from taxpayers, and just 13% came from employees.
7:1
— The ratio of taxpayer to employee contributions for New York's local pension plans is 7:1, compared to a national average of 4:1.
New York's public pension systems currently place a disproportionate financial burden on taxpayers, with employer contributions significantly outpacing employee contributions compared to national averages. Adopting the proposed Tier VI reforms, which include a sliding scale for employee contributions and a risk-sharing mechanism, would align the state with national norms and provide relief to local government budgets.
Recommendations related to Labor Costs
New York State should adopt the Tier VI proposal to increase employee pension contributions to align with national norms.
Policymakers should implement the "risk-reward" approach to share the financial burden of market downturns and benefit adjustments between taxpayers and employees.
The state should move toward the middle of the pack among states by raising employee contribution rates to a range of 4 to 6 percent.
Key Data
78%
— Percentage of state and local pension plans nationwide that required employee contributions greater than 3.9 percent in 2009.
$97.7 Billion
— Total employer and employee contributions to state-run public pension funds in 2010.
89%
— Share of total contributions made by New York State and its local government entities to state-run pension systems, compared to 11 percent from employees.
$8.3 Billion
— Total amount contributed to New York’s local pension plans in 2009.
7:1
— Ratio of employer to employee contributions for New York local pension systems, compared to the national average of 4:1.
Prevailing wage mandates in New York City significantly increase labor costs by requiring compensation levels that are often double the average private sector wage for similar roles. To ensure these mandates reflect actual market conditions and improve transparency, the current calculation methods—which rely on a 30 percent union membership threshold—should be reformed to align with broader, more inclusive standards.
Recommendations related to Labor Costs
Efforts should be undertaken to ensure wage surveys are inclusive and widely administered, and the definition of prevailing wage should be broadened to a standard greater than 30 percent.
The State Labor Commissioner and the City Comptroller should take steps to improve transparency in the determination of prevailing wage.
They should exercise their discretion to re-examine the criteria for establishment of titles and consider whether changes to prevailing wage schedules could be made within occupations to simplify the schedules and reduce the cost burden.
Collective bargaining agreements used to set prevailing wage rates should be identified on the schedules.
These and other contractual agreements relevant to the determination of the prevailing wage should also be posted online.
Key Data
65 – 67 percent
— The amount by which the New York City prevailing wage for boilermakers exceeds the mean hourly rate paid by private employers.
30 percent
— The threshold of trade union membership in a jurisdiction used to determine the prevailing wage for an occupation.
at least 30 percent
— The amount that the required supplemental rate for fringe benefits generally adds to the cost of wages.
up to 99 percent
— The amount by which prevailing wages for engineers exceeded mean hourly government wages.
$47
— The approximate hourly prevailing wage for boilermakers in New York City.
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. Given that transit employee compensation already exceeds that of comparable systems and private sector workers, any wage growth should be strictly tied to productivity gains or increased employee contributions toward health insurance.
Recommendations related to Labor Costs
The arbitration award should include work rule changes that produce savings to allow for enhanced maternity benefits and the accelerated installation of clear bus partitions.
Any wage increases should be funded by additional productivity concessions or added employee responsibility for health insurance costs, such as implementing premium-sharing or increasing contributions toward retiree health insurance.
The MTA should prioritize accelerating the installation of clear bus partitions to improve the safety of transit workers.
The MTA's proposed work rule changes, such as merging the positions of conductor and train operator, deserve serious consideration to improve operational efficiency.
The arbitration panel should adopt a "net-zero" wage increase, as it is fair and appropriate given the current economic climate and the MTA's fiscal outlook.
Key Data
$42 million
— The cost increase to the MTA for each one percentage point wage increase awarded to the TWU.
$92.4 million
— The projected budget gap in 2012 if the MTA awarded wage increases in line with projected inflation.
$140,000
— The average annual compensation for TWU heavy rail vehicle operators.
$120,000
— The average annual compensation for TWU bus vehicle operators.
11.4 percent
— The compounded wage increase provided by the 2009 arbitration award between January 2009 and January 2011.
5.5 percent
— The urban inflation rate in the New York metropolitan area between January 2009 and January 2011.
New York's public pension system relies heavily on state funding, with employee contributions accounting for only 11.5 percent of combined contributions compared to the 33 percent national average. To address these rising costs, a proposal has been introduced to increase public employee pension contributions to between 3 and 6 percent of salary, depending on earnings.
Recommendations related to Labor Costs
The Governor's proposal to modernize the system would increase the contributions required of public employees, who would be required to contribute between 3 to 6 percent, rising according to salary, toward the cost of their pensions.
The proposal includes a “risk/reward” provision that would reduce employee contributions if investment earnings are flush and increase the required contributions if the level of contribution required by employers exceeds a certain rate.
Key Data
11.5 percent
— Employee contributions as a share of combined employee and employer contributions to New York State’s pension systems.
33 percent
— The U.S. average for employee contributions as a share of combined employee and employer contributions.
1 percent
— Public employee contributions as a share of total revenues to New York State’s pension systems in 2010.
8.5 percent
— The U.S. average for public employee contributions as a share of total revenues.
47th
— New York’s ranking among states regarding the share of total revenues comprised by public employee contributions.
3 to 6 percent
— The range of salary-based contributions required of public employees under the proposed pension modernization.
New York's public pension system faces significant financial strain, with costs for New York City alone expected to reach $8.6 billion by fiscal year 2014. Proposed reforms, including a 401(k)-style option and increased employee contributions, aim to save taxpayers an estimated $123 billion over the next 30 years while addressing the unsustainable growth of retirement benefits.
Recommendations related to Labor Costs
Future employees who opt for the traditional defined benefit plan will contribute between 3% and 6% of their paychecks toward their pensions, depending on their income, to lower the long-term labor costs associated with public employee retirement benefits.
The retirement age for new employees would rise from 62 to 65 to align with national trends and manage rising labor costs.
Overtime would be barred from pension calculations to curb excessive labor costs as it is for all but 6% of all public employees in the country.
New employees would be given the opportunity to enroll in a 401(k)-style plan to provide a more sustainable and manageable labor cost structure for the state.
Employees would be able to have up to 10% of their salary deposited in a retirement account if they opt for the full matching program to create a flexible, cost-effective retirement benefit model.
Key Data
$574
— New Yorkers pay $574 per person per year in taxes for public employee pensions, which is more than twice the national average.
$123 billion
— Proposed changes to the pension system would save taxpayers throughout New York State an estimated $123 billion over the next 30 years.
$8.6 billion
— New York City’s pension costs are expected to reach $8.6 billion by FY 2014.
$1 billion
— For the MTA, pension costs will rise to $1 billion in FY 2014.
30%
— Without reform, pension costs will total 30% of the MTA payroll by FY 2014.
19%
— Without reform, pension costs will total 19% of fare and toll revenue for MTA subways, buses, bridges and tunnels by FY 2014.
New York's state and local tax burden is significantly higher than the national average, driven largely by public employee pension costs that are projected to rise sharply for the city, state, and MTA. Implementing a new pension benefit package for new employees could save state and local governments $123 billion over the next 30 years while aligning benefits more closely with national norms.
Recommendations related to Labor Costs
The governor has a strong hand in the budget process, and he should use it to bring about more affordable pension benefits at all levels of government.
A pension reform proposal should be in the governor's budget, and the Legislature should swiftly adopt it.
A new package of pension benefits for new employees would bring New York more closely in line with national norms, saving New York state and local governments $123 billion over the next 30 years.
Key Data
$143 per $1,000 of personal income
— New York's state and local tax burden in fiscal year 2009.
$12 per $1,000 of personal income
— Pension costs in fiscal year 2009.
$574
— Annual taxes paid per person for public employee pensions.
$2.4 billion
— New York City's pension costs in FY 2004.
$8.6 billion
— Expected New York City pension costs by FY 2014.
New York's public pension costs have grown significantly, with state and local employer contributions reaching 4.1 percent of total spending and New York City pension payments rising from $2.4 billion to nearly $7.0 billion between 2004 and 2011. To address these rising labor costs and improve competitiveness, the state should adopt the proposed "Tier VI" pension reform, which is estimated to save $123 billion over 30 years.
Recommendations related to Labor Costs
The Legislature should adopt the "Tier VI" pension reform plan in a timely manner to address rising labor costs.
The Governor should include the "Tier VI" pension reform plan in the upcoming Executive Budget.
The state should extend the optional defined contribution plan currently offered to SUNY employees to other groups of public employees.
Key Data
$123 billion
— Total projected savings for New York State, local governments, and New York City over 30 years from the proposed Tier VI pension reforms.
$574
— The combined state and local pension cost per capita in New York, which is more than twice the national average.
4.1 percent
— The share of total state and local spending accounted for by employer contributions to pension funds in New York.
$7.0 billion
— The amount New York City's pension payments grew to by fiscal year 2011, up from $2.4 billion in fiscal year 2004.
$93 billion
— The estimated savings for New York State and local governments over 30 years from the proposed Tier VI pension changes.
New York State's special education system faces unsustainable spending growth, driven in part by excessive mandates that require staffing levels nearly double the national average. Implementing proposed reforms to align state regulations with federal standards would allow school districts to control costs and improve flexibility without compromising service quality.
Recommendations related to Labor Costs
The State should adopt the federal standard for initial student evaluations by repealing the state law that requires mandatory physical exams, psychological evaluations, social histories, classroom observations, and functional behavior assessments.
Multidisciplinary school committees should be allowed to determine which evaluations to administer based on each student's individual needs rather than following blanket mandates.
The Board of Regents should approve the proposed regulatory changes to reduce unnecessary and unsustainable costs.
The State Legislature should pass the necessary changes to State law to support mandate relief.
Key Data
$10,874
— The average cost of instruction per general education student in New York State during the 2008-09 school year.
$26,551
— The average cost of instruction per special education student in New York State during the 2008-09 school year.
7.5 percent
— The average annual rate of instructional spending increase for special education over the past decade.
20 percent
— The rate by which special education spending growth has outpaced general education spending growth.
5.5
— The student-to-staff ratio in New York's special education system.
10.1
— The U.S. average student-to-staff ratio for special education.
The current system of multiple, independent union welfare funds for municipal employees is inefficient and lacks accountability, resulting in unnecessary administrative and benefit costs. Consolidating these supplementary health benefits under the City's health insurance program and utilizing a centralized cafeteria plan for non-health benefits could generate significant taxpayer savings through economies of scale.
Recommendations related to Labor Costs
The City should consolidate supplementary health care benefits under the City’s health insurance program to replace the varying and inefficient package of drug, dental, and optical benefits currently provided by multiple welfare funds.
The City should provide non-health related benefits through a centralized cafeteria plan to achieve meaningful economies of scale.
The City should improve accountability for any remaining union welfare fund expenditures by setting new standards, placing limits on allowable administrative expenditures, and granting the Comptroller new enforcement powers.
Key Data
$1 billion
— Annual City payments to union welfare funds.
$3.7 billion
— Cost to the City for health insurance benefits in fiscal year 2010.
$12.7 million
— Estimated annual administrative savings from consolidating welfare funds.
$146 million
— Total estimated annual gain from consolidating health benefits and administrative functions.
$254,052,851
— City payments to District Council 37 in 2007.
$250,646,789
— City payments to Local 2 United Federation of Teachers in 2007.
Recent agreements with municipal unions to avoid layoffs have relied on one-time budget maneuvers and city resources rather than structural labor concessions, leaving the city vulnerable to future fiscal threats. To achieve sustainable savings, the city should implement fundamental reforms such as eliminating the Absent Teacher Reserve and requiring employee contributions toward health insurance premiums.
Recommendations related to Labor Costs
The city should eliminate the Absent Teacher Reserve (ATR) altogether to achieve recurring savings.
The city should revise employee health insurance arrangements by requiring all employees to make premium co-payments of 10 percent for individual and 25 percent for family health coverage.
Key Data
$315 million
— Budgeted savings from 4,600 teacher layoffs.
$60 million
— Savings generated from United Federation of Teachers concessions.
$255 million
— Funding from City resources used to prevent teacher layoffs.
$16 million
— Reported savings from the District Council 37 agreement.
$100 million
— Estimated savings from eliminating the Absent Teacher Reserve.
$625 million
— Potential savings in fiscal year 2012 from requiring employee health insurance premium co-payments.
New York City's fiscal health is threatened by rapidly rising costs for health insurance, pensions, and debt service, which are projected to consume a growing share of the budget. To avoid future service cuts and layoffs, the city must implement structural reforms to these major expenses, including premium-sharing for health insurance and adjustments to pension eligibility.
Recommendations related to Labor Costs
The City’s leaders must work with the Municipal Labor Committee to reform health insurance arrangements by requiring employees and retirees to pay a share of their premiums.
The City Council should join the Mayor in backing the pension reform bill that would increase vesting to 12 years, raise the retirement age to 65, require greater contributions from employees, and eliminate overtime from the final salary calculation.
The Mayor and City Council should make slowing the growth of debt service a higher priority by downsizing the capital budget.
Key Data
$30 billion
— Total savings over the next 30 years from the proposed pension reform.
$23.1 billion
— Projected spending on health insurance, pension contributions, and debt service in 2015.
$625 million
— Savings produced in 2012 by adopting a premium-sharing arrangement for health insurance.
New York State has made fiscal progress by limiting property tax growth and negotiating agreements with public employee unions to slow payroll costs and increase health insurance contributions. However, significant challenges remain, including the need for serious pension reform and the achievement of over $1 billion in budgeted savings to prevent mid-year deficits.
Recommendations related to Labor Costs
The state should issue a prompt veto of the bill allowing school districts to borrow to fund pension payments, as this is a dangerous practice that undermines the property tax cap.
Serious pension reform must become a top priority to ensure the fiscal stability of New York City and the state.
The state must achieve the more than $1 billion in unspecified savings in the adopted budget, which includes labor savings from all unions, to avoid a serious mid-year budget deficit.
Key Data
$1 Billion
— Unspecified savings in the adopted budget, which includes labor savings from all unions.
2%
— Annual property tax growth limit for local governments and school districts.
New York City could avoid thousands of layoffs and service cuts by adopting labor cost-saving measures established in a recent state agreement, including wage freezes, furloughs, and increased employee health insurance contributions. Implementing these changes would generate over $1.4 billion in savings for the city in fiscal year 2012 alone.
Recommendations related to Labor Costs
The City should extend the wage freeze to a third year to achieve $388 million in savings.
The City should implement a five-day furlough for all municipal employees to generate $400 million in savings in 2012.
The City should require employees to contribute to health insurance premiums to achieve $735 million in savings.
The City should adopt the State’s policy for retiree health insurance premium-sharing to save an additional $290 million in fiscal year 2012.
Key Data
$3.8 billion
— Five-year savings for New York State if the agreement is adopted by all State employees.
$1.4 billion
— Potential savings for New York City in fiscal year 2012 by following the state agreement template.
$388 million
— Savings in 2013 from extending the wage freeze to a third year.
$400 million
— Savings from implementing a five-day furlough for all municipal employees in 2012.
$735 million
— Savings from requiring city employees to contribute to health insurance premiums.
$290 million
— Savings in fiscal year 2012 from adopting the state's policy for retiree health insurance premium-sharing.
Reforming health insurance arrangements for city employees and retirees could generate over $1.5 billion in savings for fiscal year 2012, helping to avoid proposed layoffs and service cuts. Implementing premium sharing for current employees, requiring retiree contributions, and ending Medicare Part B premium reimbursements are key strategies to achieve these fiscal goals.
Recommendations related to Labor Costs
Institute health insurance premium sharing for current employees at 10 percent for individual coverage and 25 percent for family coverage.
Require retirees to pay 50 percent of their premium cost for health insurance.
End reimbursement of Medicare Part B premiums for retirees over the age of 65.
Key Data
$1.5 billion
— Total savings in fiscal year 2012 from reforming health insurance arrangements for employees and retirees.
$600 million
— Savings in fiscal year 2012 from adopting premium sharing requirements for current employees.
$700 million
— Savings in fiscal year 2012 from requiring a 50 percent premium contribution by retirees.
$250 million
— Savings in fiscal year 2012 from ending the reimbursement of Medicare Part B premiums for retirees.
New York's pension system has seen costs quadruple since 2002, forcing difficult budget choices and layoffs, which necessitates structural reforms to ensure long-term fiscal sustainability. The proposed changes, including increasing the retirement age and raising employee contributions, aim to align New York's benefits with national norms and generate significant long-term savings for state and local governments.
Recommendations related to Labor Costs
The retirement age will increase to 65, the same age that retirees become eligible for Medicare.
The plan would raise required employee contributions to bring them closer to national norms.
This proposal would require a 6 percent contribution from all employees for their entire length of service.
Pension benefits will be calculated based on the highest five years' of earnings with maximum eligible wages capped at $179,000.
Overtime pay will no longer be included in the earnings used to calculate benefits, bringing New York’s rules in line with 94 percent of other public employees nationwide.
Key Data
$1.5 billion
— New York City pension costs in 2002.
$7 billion
— New York City pension costs since 2002.
$8.7 billion
— Projected New York City pension costs in 2015.
$93 billion
— Projected savings for state and local governments over 30 years.
$30 billion
— Projected savings for New York City over 30 years.
94 percent
— Other public employees nationwide whose pension calculations exclude overtime pay.
New York City faces a budget crisis that threatens to cut essential services and lay off staff, yet these reductions could be avoided by reforming unusually costly retiree health insurance benefits. By ending Medicare Part B reimbursements, increasing vesting requirements, and implementing premium-sharing for retirees, the city could generate $950 million in savings to preserve the Retiree Health Insurance Trust.
Recommendations related to Labor Costs
The city should end reimbursement for Medicare Part B premiums to bring the city in line with the public-sector norm.
The city should increase vesting requirements for the rest of the city workforce, similar to the change made for teachers in 2009.
The city should require retirees to share in the cost of their premiums, as New York state has required since the 1980s.
Key Data
$1.5 billion
— Retiree health insurance cost in the current year.
$2.2 billion
— Projected cost of retiree health insurance by 2015.
$70 billion
— Existing unfunded liability created by retiree health-insurance obligations.
$250 million
— Savings generated in fiscal year 2012 by ending reimbursement for Medicare Part B premiums.
$700 million
— Savings generated in 2012 if retirees paid half their premiums.
$950 million
— Combined value of savings from ending Medicare Part B reimbursement and requiring premium sharing.
The 2011 scorecard identifies numerous legislative proposals that would increase public employee benefits, resulting in significant additional costs for state and local governments. These proposed benefit expansions include changes to retirement formulas, service credit calculations, and health benefit protections that collectively impose substantial financial burdens on taxpayers.
Key Data
$130.0 Million
— Local government cost estimate for bill A5093, which changes the final average salary determination for state and local employees.
$99.3 Million
— Local government cost estimate for bill A6848, which allows state and local teachers to receive additional service credit for unused sick days.
$97.0 Million
— Local government cost estimate for bill A3904, which permits retirement at any age over 55 for those with 25 to 30 years of service.
$95.0 Million
— State government cost estimate for bill A5093, which changes the final average salary determination for state and local employees.
$86.0 Million
— Local government cost estimate for bill A5086, which changes the benefit multiplier for Tier III, IV, and V state and local employees.
$70.0 Million
— State government cost estimate for bill A3904, which permits retirement at any age over 55 for those with 25 to 30 years of service.
The Metropolitan Transportation Authority faces significant fiscal challenges, with operating expenses reaching $8.0 billion in 2009, necessitating efficiency improvements across its subway, bus, and commuter rail divisions. By benchmarking performance against other large U.S. transit systems, the analysis identifies labor productivity and unit cost disparities, particularly within bus and commuter rail operations, as key areas for potential savings.
Recommendations related to Labor Costs
The MTA should continue its "net-zero" wage policy, which requires any wage increases to be offset by productivity gains.
The MTA should conform its practices to those of direct state government employees regarding a new pension tier and cost sharing for health insurance premiums.
The MTA should pursue efficiency improvements by terminating redundant station staff, such as former token booth clerks.
The MTA should prioritize efficiency initiatives for its two large bus systems, which perform poorly compared to other large U.S. bus systems.
The MTA should conduct an exploration of transit practices in Chicago to identify potential new efficiency initiatives.
Key Data
$8.0 Billion
— Total operating expenses of the five MTA passenger transport divisions in 2009.
$935 Million
— Total projected savings from all identified cost-cutting initiatives in 2014.
$220 Million
— Projected savings from the "net-zero" wage policy in 2014.
$32 Million
— Projected savings from the "net-zero" wage policy in 2011.
$3,787,430
— Total vehicle operations expenses for MTA passenger transportation divisions in 2009, in thousands.
$1,066,203
— Total general administration expenses for MTA passenger transportation divisions in 2009, in thousands.
New York City faces a $70 billion unfunded liability for retiree health benefits, which have grown 150 percent over a decade to reach $1.5 billion annually. To avoid depleting the retiree health insurance trust fund, the City should eliminate Medicare Part B premium reimbursements and implement premium sharing for retirees, which could generate nearly $1 billion in annual savings.
Recommendations related to Labor Costs
The City should eliminate the reimbursement for Medicare Part B premiums to generate recurring savings.
The City should require retirees to share the cost of their health insurance premiums to align with other public employers.
The City should protect the retiree health insurance trust fund from any further drawdowns to preserve long-term fiscal vitality.
The City should increase vesting requirements for retiree health insurance benefits for the rest of the public workforce.
The City should institute premium sharing for retiree health insurance to reduce the City's unfunded liability.
Key Data
$70 billion
— Unfunded accrued liability for retiree health benefits.
$1.5 billion
— Current annual cost of retiree health insurance.
150 percent
— Ten-year growth of retiree health insurance costs.
$240 million
— Savings generated in the current year by eliminating Medicare Part B premium reimbursements.
$620 million
— Savings generated in the current year if retirees paid for half the cost of their premiums.
$975 million
— Combined value of savings in fiscal year 2012 from eliminating Medicare Part B reimbursements and implementing premium sharing.
To address a $9 billion state budget gap, the government must move beyond across-the-board layoffs by negotiating reduced compensation costs with public employee unions. Because 70% of local budget expenses are for labor, municipalities must also implement structural changes to pensions and compensation to achieve long-term sustainability.
Recommendations related to Labor Costs
The corrections work force should be consolidated to reduce costs.
Public employee unions should agree to reduce compensation costs so that many of them do not have to lose their jobs.
Alternatives to layoffs include having employees pay a higher percentage of health insurance costs, switching to less expensive health insurance plans, and lowering wages through furloughs or other mechanisms.
Localities need to make changes in pensions and compensation to address budget constraints.
Key Data
70%
— of expenses in any local budget are for labor.
nearly 10,000
— number of state agency layoffs threatened to back up proposed reductions.
$9 billion
— worth of serious belt-tightening proposed to close the state's budget gap.
$2.9 billion
— in school aid cuts proposed to help close the budget gap.
$2.9 billion
— in Medicaid reductions proposed as a large savings measure.
$1.4 billion
— in cuts to state agency operations proposed as a large savings measure.
New York faces a significant fiscal challenge as the rapidly growing cost of public employee retirement and health benefits threatens the ability of state and local governments to provide essential services. The state's pension system is heavily subsidized by taxpayers, with costs exacerbated by the inclusion of overtime in salary calculations and the frequent legislative expansion of benefits.
Recommendations related to Labor Costs
New York must control the cost of public retirement benefits to ensure the future ability of state and local governments to provide essential public services.
The state should exclude overtime from final average salary calculations used to determine pension benefits, as most other states do.
The state should cease the annual practice of passing legislation to "sweeten" pension benefits for public employees.
Key Data
$1.5 billion
— The current annual cost of New York state pension contributions, which has grown from $100 million ten years ago.
8:1
— The ratio of employer contributions to employee contributions for pension funds in New York, compared to the U.S. average of 2:1.
$56 billion
— The unfunded liability for retiree health insurance benefits for the state of New York.
$61,295
— The average pension received by police and firefighters who retired in 2009, which is more than double the $25,440 received by regular civilian employees.
6 percent
— The share of full-time state and local employees across the country who can include overtime in final average salary calculations used to determine pension benefits.
515,000
— The total number of public retirees and beneficiaries in New York, a figure exceeding the combined population of Rochester, Yonkers, and Albany.
Rising municipal pension and benefit costs are forcing significant budget cuts to essential youth services in New York City. If these labor costs had been held flat, the city would not need to implement these damaging reductions to agency staffing and community-based programs.
Recommendations related to Labor Costs
The Legislature must enact a new pension system for future uniformed workers that includes a minimum age for retirement.
Future uniformed workers should have their pensions based on salaries without overtime.
Future uniformed workers should be obliged to contribute more during their working years.
Union leaders must agree to more cost-sharing for health insurance premiums.
Retirees should be paying for a share of their benefits similar to arrangements in the private and nonprofit sectors.
Key Data
$6.6 billion
— Total pension contributions cost New York's taxpayers last year.
$8.1 billion
— Projected annual pension fund contributions in fiscal year 2012.
$1.2 billion
— Retiree health insurance cost to New York taxpayers last year.
$106,743
— Average compensation figure for city employees in 2008.
$3 billion
— Amount the city has had to cut in spending.
$4.9 billion
— Annual pension fund contributions in 2007.
Governor Paterson's plan to reduce the state workforce by 2,000 positions addresses an $8 billion budget gap, but disproportionately impacts agencies under executive control while employment at SUNY, CUNY, and the Judiciary has expanded. Rather than layoffs, the state should prioritize reducing labor costs through measures like increasing employee health insurance premium sharing, which could save $79 million annually.
Recommendations related to Labor Costs
Reducing the cost of health insurance and retiree benefits is a preferable option to layoffs to save money and prevent further deterioration of state services.
Increasing employee premium sharing for family health insurance plans from 25 to 30 percent would save $79 million annually.
Compensation for the state workforce should not be excluded from options to close next year’s budget gap given it accounts for more than one-fifth of the non-federal portion of the State’s budget.
Key Data
$8 billion
— The projected budget gap for the new fiscal year beginning April 1, 2011.
29%
— The growth in full-time equivalent employment at SUNY, CUNY, and the Judiciary combined since the end of fiscal year 1989-90.
22%
— The contraction of the rest of the state workforce since the end of fiscal year 1989-90.
$79 million
— The annual savings from increasing employee premium sharing for family health insurance plans from 25 to 30 percent.
898
— The number of state workers Governor Paterson announced plans to lay off.
1,102
— The number of positions vacated by the end of the calendar year that will go unfilled.
New York State's public pension and retiree health insurance systems face significant fiscal strain, with employer pension contributions rising sharply and unfunded retiree health liabilities totaling $55.9 billion for the state. To address these escalating costs and ensure long-term sustainability, the state must consider reforms such as adjusting contribution requirements and reevaluating the inclusion of overtime in pension calculations.
Key Data
$55.9 billion
— State liability for retiree health insurance and other benefits.
$33,270
— Average annual pension received by employees retiring in 2010.
$2.1 billion
— Projected pension contributions by fiscal year 2014.
$200 billion
— Total State and local unfunded actuarial liabilities for retiree health.
$100 million
— Annual pension contributions paid by New York State at the start of the decade.
$56 billion
— Future cost of New York State retiree health insurance obligations.
The Metropolitan Transportation Authority should aim to cover 50 percent of its operating expenses through fare revenue, a goal that requires constraining expenditure growth through aggressive collective bargaining to limit wage and fringe benefit costs. Additionally, implementing peak pricing on subways and buses could help manage demand and reduce the need for costly capacity expansions.
Recommendations related to Labor Costs
The MTA should constrain expenditure growth through all available means, including aggressive collective bargaining to limit wage and fringe benefit costs.
The proposed legislation mandating 80 hours of additional training for firefighters would impose an estimated $29.5 million in costs, primarily through overtime payments and increased pension obligations. This mandate is unnecessary given existing training protocols and would exacerbate the city's rapidly growing pension expenses.
Recommendations related to Labor Costs
Governor Paterson should veto A9885/S6784, which mandates an additional 80 hours of training for firefighters.
The State should avoid mandating non-essential training that creates additional, unjustified labor costs for the City.
Key Data
$29.5 million
— Estimated cost of the legislation, primarily driven by overtime payments.
$19 million
— Added current year wages and fringe benefits resulting from the training mandate.
20 percent
— Projected growth of pension costs by 2014.
$8 billion
— Projected level of pension costs in 2014.
80 hours
— Additional training mandate for firefighters imposed by the bill.
222,114
— Total inspections conducted by the FDNY in fiscal year 2010.
New York City's municipal union welfare funds, which receive $1 billion in annual taxpayer contributions, suffer from poor management and inefficiency that could be addressed through consolidation and centralized administration. Implementing these reforms would improve accountability and generate an estimated $146 million in annual savings for the city.
Recommendations related to Labor Costs
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 'cafeteria' plan should be developed for non-health-related benefits, enabling individuals to select specific benefits with a limit on the dollar value.
Setting standards for fund performance and management and expanding the Comptroller's authority to oversee and sanction funds that don't meet those standards would help to keep remaining funds accountable.
Key Data
$1 billion
— Annual taxpayer contributions to municipal union welfare funds.
$146 million
— Estimated annual savings from consolidating supplementary health care benefits.
81
— Total number of municipal union welfare funds established by 58 unions.
8-16%
— Percentage of current welfare fund expenditures that go toward non-health-related benefits.
48
— Number of the 70 analyzed funds cited for at least one issue regarding financial management.
4-7%
— Average annual increase in payments to welfare funds.
The 2010-11 New York State budget includes $4 billion in spending reductions but fails to address structural issues in major spending areas like employee compensation and pension funding. The plan relies on $500 million in projected labor savings that are unlikely to materialize and masks long-term costs by under-funding state and local pension systems.
Recommendations related to Labor Costs
The State must implement meaningful controls to address employee compensation, which remains unchecked despite being a major component of State spending.
State leaders must improve the impact of investments in education to manage labor and operational costs within the constraints of reduced aid and local funds.
The State should avoid under-funding pension funds, as capping required contributions masks long-term costs and jeopardizes the soundness of the plans.
Key Data
$500 million
— Projected savings from labor for early retirement and agency initiatives that are unlikely to be realized in the financial plan.
New York City spends $1 billion annually on union welfare funds that suffer from limited accountability, poor financial management, and inefficient benefit delivery. Consolidating these supplementary health benefits under the City's health insurance plan and centralizing non-health benefits could generate approximately $146 million in annual savings.
Recommendations related to Labor Costs
Consolidate Supplementary Health Care Benefits under the City’s Health Insurance Plan to replace the varying and inefficient package of drug, dental, and optical benefits provided by multiple welfare funds.
Provide Non-health Related Benefits through a Centralized Cafeteria Plan to achieve economies of scale and allow individuals to select benefits based on their needs.
Improve Accountability for any Remaining Union Welfare Fund Expenditures by setting new standards that improve upon the requirements in the Comptroller’s Directive #12, including placing limits on allowable administrative expenditures and establishing reserve requirements.
Key Data
$1 billion
— Annual City payments to union welfare funds.
$3.7 billion
— Cost to the City for health insurance benefits in fiscal year 2010.
$146 million
— Total estimated annual savings from consolidating health benefits and administrative functions.
$12.7 million
— Estimated annual administrative savings from consolidating welfare funds.
$285,000
— Questionable expenses found in the United Probation Officers Association’s welfare fund audit.
83 percent
— Percentage of total City payments to welfare funds accounted for by ten large unions.
The New York State Legislature is advancing numerous bills that increase pension and benefit costs for public employees, further straining an already unaffordable system. These legislative actions, which include specific enhancements for teachers, corrections officers, and other state employees, should be rejected to maintain fiscal responsibility.
Recommendations related to Labor Costs
The Governor should veto the dozens of bills advancing in the Legislature that enhance benefits for State and local employees and retirees.
The Governor should veto bill A8664-A/S5748A, which would make the final average salary calculation for New York City teachers who have taken a leave of absence more generous.
The Governor should veto bill A8509A/S5633A, which enhances pension packages for uniformed employees by allowing members of the State Department of Corrections to defer five vacation days per year.
The Governor should veto bill A10068/S7078, which allows certain employees in nursing titles in the State University of New York’s optional retirement program to retroactively transfer their membership to the New York State and Local Employees Retirement System.
The Governor should veto bill A10753/S7544, which would set a precedent for State police officers to receive death benefits for longer periods of service than their records reflect.
Key Data
$1.1 million
— Annual added contributions for New York City teachers resulting from bill A8664-A/S5748A.
25
— Number of bills enhancing benefits for State and local employees and retirees currently being tracked on the annual Sweetener Scorecard.
3
— Number of benefit-enhancing bills already sent to the Governor for consideration.
5
— Number of vacation days per year that members of the State Department of Corrections would be allowed to defer under bill A8509A/S5633A.
Public employee pension and fringe benefits, which account for nearly a quarter of city expenses, are projected to grow by nearly 5% annually. Reforming these benefits to align with private sector standards, including increased employee contributions to health care and pension plans, could generate over $1.2 billion in annual savings.
Recommendations related to Labor Costs
The City should require employee contributions to health care premiums of 10 percent for individuals, 25 percent for families and 50 percent for retirees to achieve significant annual savings.
The City should take a stronger stance on reforming health care and retirement benefits for its workers to address rising labor costs.
The City should bring public employee fringe benefits more in line with those of the private sector to achieve significant savings now and into the future.
Key Data
5%
— Average annual growth rate for city employee pension and fringe benefits during the plan years.
$1 Billion
— Annual savings achievable by requiring employee contributions to health care premiums of 10 percent for individuals, 25 percent for families, and 50 percent for retirees.
$200 Million
— Annual savings estimated from creating a new pension tier with greater employee contributions and a longer vesting period.
New York is considering legislation that would increase public employee pension and health benefits, despite existing fiscal challenges and the high cost of current obligations. These proposed "sweeteners" would further burden taxpayers and limit the government's ability to manage labor costs effectively.
Recommendations related to Labor Costs
The Legislature should refrain from passing the proposed 'sweetener' bills that increase pension and health-insurance benefits for public employees.
The state should maintain the integrity of the Tier V pension system by avoiding legislative changes that undermine its cost-saving reforms.
The government should preserve the ability to manage labor costs by allowing health benefits for retirees to be modified through collective bargaining rather than prohibiting reductions.
Key Data
$1.7 billion
— Cost of state government pension contributions in fiscal year 2010-11.
85 percent
— Projected growth of pension contributions by 2014.
$3.2 billion
— Projected cost of pension contributions by 2014.
50
— Number of bills introduced to 'sweeten' pension and health-insurance benefits.
26
— Number of 'pension sweetener' bills moving forward despite the lack of a state budget.
$7.7 million
— Annual cost to the state for eliminating the minimum retirement age for state employees with 35 years of service.
The 2010 scorecard tracks various legislative bills that expand public employee benefits, such as reducing the vesting period for certain transit employees from 25 years to 10 years, which increase long-term government labor costs. These 'sweeteners' create significant financial obligations for taxpayers without addressing the underlying fiscal sustainability of the public workforce.
New York's proposal to defer pension contributions to address short-term budget gaps creates significant long-term debt and undermines the fiscal health of the state's retirement systems. Simultaneously, the legislature continues to increase labor costs by adding "sweeteners" to public employee fringe benefits, further straining future budgets.
Recommendations related to Labor Costs
State leaders should avoid the "stretch" proposal, as it is a slippery slope that creates hidden debt.
Legislators should foreswear efforts to please labor unions with sweeteners that enhance pension and health insurance benefits.
The state should develop more aggressive plans to provide permanent, long run savings rather than pushing costs onto future taxpayers.
Key Data
$1.7 billion
— Taxpayer support required for New York State employee pensions in fiscal year 2010-11, which is projected to rise to $3.2 billion by fiscal year 2013-14.
$4.5 billion
— Estimated cumulative reductions in pension fund contributions over the six-year period of the proposed stretch plan.
$5.8 billion
— Estimated long-term cost to repay the deferred pension contributions, which acts as a loan from the pension funds.
$1.5 billion
— Projected loss in total assets for State pension funds by fiscal year 2025-26 due to the amortization plan.
50
— Number of both-house bills introduced in the current session that would enhance pension and health insurance benefits.
New York's public sector retirement benefits are significantly more generous than those in the private sector, creating a substantial and rapidly growing fiscal burden for the City and State. To ensure long-term sustainability, the report advocates for shifting new hires to defined contribution plans and implementing structural reforms to existing benefits, such as increasing employee contributions and tightening eligibility for disability and health insurance subsidies.
Recommendations related to Labor Costs
Require retirees to pay 50 percent of the premium for health insurance for themselves and their dependents.
Stop reimbursing retirees for Medicare Part B premiums.
Increase required employee contributions to pension plans and discontinue the ITHP program.
Raise the minimum age requirement for retirement to align more closely with federal Social Security thresholds.
Base pension benefits on a more standard definition of final average salary that excludes overtime and other supplements.
Define work-related disabilities more rigorously to prevent abuse.
Eliminate the variable supplements available to some retired New York City uniformed workers.
Convert from defined benefit to defined contribution plans for all new workers.
Key Data
$35.16
— Average total compensation per hour for public employers in 2004.
$23.90
— Average total compensation per hour for private sector employers in 2004.
$4.7 billion
— Projected City pension fund contributions for fiscal year 2008.
$1.4 billion
— Projected State pension fund contributions for fiscal year 2008.
$6.3 billion
— Combined cost of health insurance for the City and State in 2008.
$12,000
— The amount of the variable supplement 'Christmas bonus' for certain uniformed workers in 2007.
New York State faces unsustainable growth in public employee compensation, with pension and health insurance costs projected to rise significantly by fiscal year 2013-14. To address a projected $12.4 billion budget gap, the state must implement comprehensive reforms, including increased employee premium sharing for health insurance, the introduction of defined contribution pension options, and more aggressive reductions in state employment.
Recommendations related to Labor Costs
For single policies, the individual's share of the health insurance premium should increase from 10 to 20 percent.
For families, the health insurance premium sharing should increase from 25 to 30 percent.
For retirees, the health insurance premium sharing should be increased to 50 percent for both single and family policy holders.
The state should discontinue the practice of allowing retirees to buy down future health care premiums with unused sick days and end the reimbursement for Medicare Part B premiums.
A defined contribution option should be added to the pension system for all State employees.
The state should reexamine the need to fill any position in State government in the coming year.
Negotiations with public employee unions should include adding hours to the workweek to reduce needed staffing levels and overtime.
Key Data
$18.9 billion
— Employee compensation in fiscal year 2009-10, including wages, salaries, health insurance, pensions, and other fringe benefits.
$22.2 billion
— Projected total compensation for state employees in fiscal year 2013-14.
$45 billion
— Payments to compensate for assets lost from the stock market decline.
$56.3 billion
— Estimated unfunded liability of providing retiree health care for State employees.
$581 million
— Estimated fiscal benefits associated with changes to health insurance premium sharing arrangements.
$800 million
— Estimated savings from not filling 16,000 vacant positions in State government.
The state budget plans fail to address rising labor costs, as they do not seek concessions from employee unions despite a projected $3.3 Billion increase in compensation over four years and scheduled 4% raises. State leaders must prioritize these concessions to control spending and avoid future deficits.
Recommendations related to Labor Costs
State leaders should prioritize securing concessions from employee unions to address rising labor costs.
Key Data
$3.3 Billion
— The projected increase in employee compensation over the four-year term of the financial plan.
4%
— The scheduled raise for employee unions effective April 1.
New York City can avoid large-scale layoffs by implementing labor reforms such as requiring employee contributions to health insurance, extending the workweek for civilian staff, and creating a new pension tier for future hires. These measures, along with better managing overtime and reforming teacher assignments, could save nearly $2 billion annually without reducing essential city services.
Recommendations related to Labor Costs
The city should share costs for health insurance premiums by requiring 10% contributions from workers, 25% from dependents, and 50% from retirees.
The city should adopt a 40-hour workweek for the approximately 70,000 civilian municipal employees currently working fewer hours.
The city should create a new pension tier for future workers to offer a more affordable benefits package.
The city should better manage overtime by replacing some overtime hours with workers on regular schedules, particularly in the Police and Fire Departments.
The city should stop paying teachers who do not teach by speeding up the review process for those in the Absent Teacher Reserve and those pulled from classrooms.
Key Data
$3.4 billion
— Annual health insurance bill for taxpayers.
$500 million
— Potential savings from adopting a 40-hour workweek for civilian municipal employees.
$7.1 billion
— City contribution to pension funds for city workers.
$2,300
— Equivalent cost per household in the city for pension fund contributions.
$1 billion
— Total amount spent on overtime by the city last year.
$100 million
— Annual cost to the city for paying roughly 2,000 teachers who are not assigned to a classroom.
New York City faces a $4.1 billion budget gap that necessitates reforms to teacher contracts, including ending indefinite pay for teachers not in classrooms and replacing seniority-based raises with merit pay. These changes would allow the city to avoid unnecessary job cuts and ensure that staffing decisions prioritize performance over tenure.
Recommendations related to Labor Costs
The city should end compensation for teachers who aren't teaching, limiting the 'Absent Teacher Reserve' to a six-month period.
The school system should implement quick termination for unsatisfactory teachers to avoid paying them for years while cases are considered.
The city should use financial rewards to attract qualified teachers in hard-to-fill fields like special education, math, and science.
Merit pay should replace seniority rewards to better align compensation with performance.
The city should kill the 'last in, first out' rule to ensure that layoffs are not based solely on seniority.
Key Data
$4.1 billion
— The size of the city budget gap necessitating urgent spending reforms.
$100 million
— The annual outlay on 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 maintaining the 'Absent Teacher Reserve'.
$285 million
— The estimated annual savings from ending pay hikes based solely on seniority.
2,500
— The number of potential job cuts if the city does not cap teacher raises at 2 percent.
The City's financial plan aims to address budget gaps by seeking new union contracts that reduce long-term pension and health insurance costs while implementing agency-wide job cuts. Despite these efforts, the plan continues to prioritize teacher pay raises and staffing levels over other municipal workers, while relying on funds from the Retiree Health Benefits Trust to balance the budget.
Recommendations related to Labor Costs
The City should adopt a policy for the Retiree Health Benefits Trust that links withdrawals to growth in the current year liability for retiree health insurance premiums rather than using it as a rainy day fund.
The City should re-evaluate the highly favored status of teachers and the Department of Education regarding pay increases and staffing levels during the current fiscal crisis.
Key Data
$150 million
— Cost of teacher raises in the current fiscal year.
$500 million
— Cost of teacher raises in the next fiscal year.
$200 million
— Annual savings from changes in pension benefits for future workers.
$357 million
— Annual savings from changes to the employee and retiree health insurance program.
4,286
— Number of jobs to be eliminated by the end of fiscal year 2011.
$1,149 million
— Total funds scheduled to be used from the Retiree Health Benefits Trust in fiscal years 2010 through 2012.
New York City's budget relies on $500 million in assumed future concessions from labor unions and a $395 million drawdown from a retiree health insurance trust fund to address a $4.1 billion projected gap. These one-shot measures and optimistic labor assumptions should not replace the implementation of necessary, long-term cost-cutting strategies.
Recommendations related to Labor Costs
The city must avoid using additional tax revenue as an excuse to avoid needed cost-cutting.
Budget plans should avoid relying on one-shot measures, such as the $395 million drawdown from a retiree health insurance trust fund.
The city should not rely on assumed future concessions from labor unions to balance the budget without concrete agreements.
Key Data
$500 million
— Future concessions from labor unions assumed in the mayor's plan.
$395 million
— Drawdown from a retiree health insurance trust fund used as a one-shot budget measure.
New York City taxpayers spend $10.4 billion annually on municipal employee pension and health benefits, a figure that exceeds private-sector standards and requires reform. Aligning these benefits with private-sector practices, such as requiring employee contributions to health premiums and adopting defined-contribution pension plans for future hires, could save the city nearly $1.4 billion annually.
Recommendations related to Labor Costs
The city should require its current workers to make contributions toward health-insurance premiums equal to the amounts paid by employees of local private-sector firms.
The city should require retirees to make contributions toward health-insurance premiums equal to the amounts paid by employees of local private-sector firms.
The city should convert to defined-contribution plans for future hires to remain competitive with the private sector.
Key Data
$10.4 billion
— Total annual cost for pension and health-insurance benefits for current and retired municipal employees.
$1.4 billion
— Potential annual savings if the city offered benefits similar to those in the private sector.
$628 million
— Annual savings if current workers contributed to health-insurance premiums equal to the amounts paid by employees of local private-sector firms.
$741 million
— Annual savings if retirees contributed to health-insurance premiums equal to the amounts paid by employees of local private-sector firms.
8 percent
— Percentage of private firms in the survey that do not require premium payments from their workers.
90 percent
— Percentage of private firms in the survey that offered a defined-contribution pension plan.
New York City provides significantly more generous health and pension benefits than private sector firms, costing taxpayers billions annually. Aligning these benefits with private sector standards could save the city nearly $1.4 billion in health insurance premiums, while transitioning to defined contribution pension plans for future hires could yield substantial long-term savings.
Recommendations related to Labor Costs
The City should require from its current workers contributions toward health insurance premiums equal to the amounts paid by employees of local private firms in the survey.
The City should require from its retirees contributions toward health insurance premiums equal to the amounts paid by retirees of local private firms.
The City could be competitive with the private sector by converting to defined contribution plans for its workers.
Key Data
$1.4 billion
— annual savings for health insurance premiums from following policies competitive with the private sector.
$628 million
— annual savings to taxpayers if the City required from its current workers contributions toward health insurance premiums equal to the amounts paid by employees of local private firms.
$741 million
— annual savings to taxpayers if the City required from its retirees contributions toward health insurance premiums equal to the amounts paid by retirees of local private firms.
$900
— typical annual contribution from private sector workers for individual health insurance coverage.
$3,500
— typical annual contribution from private sector workers for family health insurance coverage.
$2,950
— typical retiree required contribution for individual health insurance coverage among local private companies.
The state legislature passed a deficit reduction program and a new, less costly pension tier for government employees, though the program relies heavily on non-recurring items. Additionally, a new provision permanently prohibits the reduction of retiree health insurance benefits for teachers without union bargaining, potentially limiting future cost-containment efforts.
Recommendations related to Labor Costs
The Legislature must stick to the terms of the new pension tier and refrain from passing 'sweetener' bills that raise costs.
The Governor and future Governors must stand firm against demands from other employee groups for the same retiree health insurance benefits granted to 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.
59 percent
— Share of the $3.2 billion current-year deficit covered by non-recurring items in the final Deficit Reduction Program package.
The Governor's deficit reduction proposal relies heavily on one-time fixes and fails to address rising employee compensation costs, which are projected to grow by 23% over the next three years. By neglecting structural reforms like a new pension tier, the plan avoids necessary long-term savings and leaves the state vulnerable to a massive budget gap in the near future.
Recommendations related to Labor Costs
The State should implement a new pension tier to provide significant long-term local budget relief.
The State must reduce spending in meaningful ways that have recurring value to avoid a slash and burn assault on services in 24 months.
Key Data
23%
— Projected increase in employee compensation over the next three years.
Between fiscal year 2000 and 2009, the cost of compensating New York City municipal employees rose by $15 billion, or 80%, with average compensation exceeding $100,000. To restore fiscal health, the city must curb wage growth, reform fringe benefits, increase the retirement age for new hires, and reduce the workforce through attrition and work rule changes.
Recommendations related to Labor Costs
Wage increases must be kept below inflation to reverse the trend of escalating payroll costs.
Fringe benefits must be reformed to be more in line with those of other public and private-sector entities.
Every employee should contribute to his or her health insurance premiums.
The retirement age should be increased for new employees.
New employees should contribute more to their pensions.
The City should shift from a 35- to a 40-hour workweek to do more with fewer workers.
The City should adopt work rule changes and technological innovations to enable the City to operate while eliminating positions.
Key Data
$15 billion
— The increase in the cost of compensating City employees, including pension and fringe benefits, from fiscal year 2000 to 2009.
80%
— The percentage increase in the cost of compensating City employees from fiscal year 2000 to 2009.
$100,000
— The average compensation of a New York City municipal worker.
6,838
— The number of full-time municipal workers added between 2000 and 2009.
2.5%
— The percentage growth in the number of full-time municipal workers from 2000 to 2009.
20%
— The reduction in the number of City workers achieved through layoffs and attrition during the fiscal crisis of the 1970s.
New York City's upcoming teachers' contract negotiations present a critical opportunity to address rising labor costs, including salary increases, pension benefits, and health insurance, while eliminating wasteful staffing practices. The city should prioritize fiscal responsibility by implementing merit-based pay, reforming pension and health insurance contributions, and expediting the removal of underperforming teachers to ensure taxpayer funds are used effectively.
Recommendations related to Labor Costs
Salary increases should be funded with value-generating concessions.
Pension and health insurance reforms should be implemented to curb rising costs.
Merit pay should replace seniority rewards to better incentivize performance.
Compensation for teachers who are not teaching should end after six months.
Unsatisfactory teachers should be terminated quickly by expediting disciplinary procedures.
Financial incentives should be provided to teachers in shortage areas willing to commit to fixed-term assignments in hard-to-staff schools.
Key Data
$655 million
— Annual cost of the Mayor's budget for two 4 percent teacher raises.
$285 million
— Annual savings achievable by stopping seniority increments after ten years.
$74 million
— Annual cost of the Absent Teacher Reserve.
$60 million
— Annual cost to the City for teachers in rubber rooms.
$100 million
— Projected annual savings from pension benefit changes for the next 20 years.
$125 million
— Savings from requiring retirees to pay half the health insurance premium.
New York State faces a growing budget gap projected to reach $18.2 billion by 2012-13, driven by unsustainable spending growth in Medicaid, education, and personnel costs. To avoid painful future cuts, the state must implement aggressive spending reductions, specifically targeting the rising compensation and benefit costs for state employees.
Recommendations related to Labor Costs
New York must address the overly generous and costly fringe benefits provided to state employees.
The state should reform its defined benefit pension plan to address low employee contributions and the practice of counting overtime toward pensionable salary.
New York must implement aggressive spending reductions to address the growing budget gap, including personnel costs.
Key Data
24%
— Expected growth in expenses for compensation of state employees over the next three years.
13.6%
— Contractual wage increases for state employees from 2007 to 2011.
29%
— Expected increase in employee health care expenses.
55%
— Expected growth in required pension contributions.
New York City faces a severe fiscal imbalance, necessitating structural changes to municipal labor costs, which account for approximately 55 percent of the total budget. Proposed strategies include implementing a one-year wage freeze, requiring employee contributions toward health insurance premiums, and adopting productivity measures to achieve billions in annual savings.
Recommendations related to Labor Costs
CBC proposes a 25 percent contribution by current employees and a 50 percent contribution by retirees toward their health insurance premiums to bring the City more in line with other public and private sector employers.
It is reasonable for workers to forgo one 4 percent wage increase to help the City manage its current fiscal situation.
The City should pursue productivity measures, such as moving to a 40-hour work week and limiting overtime, to lower costs while maintaining services.
The Mayor’s proposal for a fifth tier in the pension system is urgently needed to achieve long-run savings.
Key Data
$106,000
— Average annual compensation for municipal employees.
$3 billion
— Potential annual savings starting in fiscal year 2010 from changing employee work rules and compensation.
$1 billion
— Annual savings generated by implementing a 25 percent contribution for current employees and 50 percent for retirees toward health insurance premiums.
$1.2 billion
— Recurring savings from a one-year wage freeze for municipal employees.
$730 million
— Savings in fiscal year 2010 from establishing a 2 percent annual savings target through productivity measures.
Extending Tier II pension provisions to new police and fire hires would undermine efforts to control rising public sector labor costs by exempting these employees from the more sustainable Tier V benefits. To ensure fiscal responsibility, the state must maintain consistent pension standards across all employee classes rather than granting costly exemptions.
Recommendations related to Labor Costs
The Governor should veto A3426/S1409 to prevent the extension of expensive Tier II pension provisions to new police and fire hires.
New uniformed employees must be eligible for Tier V benefits to ensure the effectiveness of efforts to curb rising state and local pension costs.
The Governor should reject any effort to exempt certain classes of employees from Tier V pension provisions, even on a temporary basis.
Key Data
86%
— of uniformed employees who retired from the New York State Police and Fire Retirement System were under the age of 60.
$48,900 to $66,586
— annual lifetime pension payments received by the majority of retired uniformed employees.
20%
— of salary that public employers are expected to contribute to fund the pension of a uniformed employee.
11%
— of salary that public employers are expected to contribute to fund the pension of a civilian employee.
New York State should veto legislation that prevents school districts from adjusting retiree health insurance benefits without union approval, as this mandate restricts the ability to manage rising expenses. Eliminating such costly requirements is necessary to help localities control their budgets and reduce the burden of high local taxes.
Recommendations related to Labor Costs
The Governor should veto A4628, a bill that would renew the provision prohibiting school districts from reducing health insurance benefits offered to retirees without union approval.
State leaders should reconsider the automatic extension of a measure that ties the hands of school districts seeking to control skyrocketing costs.
New York should, whenever the opportunity arises, roll back costly mandates that prevent local governments from managing their expenses.
New York City faces significant fiscal challenges due to the rapid growth of pension costs for its employees. This report outlines essential information regarding the structure and financial impact of these retirement benefits on the city's budget.
New York City's retirement costs are escalating rapidly, with annual pension benefits exceeding $10.2 billion and retiree health care costs projected to reach $1.9 billion by fiscal year 2013. To address this fiscal pressure, the city should implement a new, less costly pension tier for future workers, require employee contributions to health premiums, and eliminate supplemental "Christmas bonuses" for police and firefighters.
Recommendations related to Labor Costs
The city should create a new "tier" for future workers that would provide less costly pension benefits.
The city should seek employee contributions to health premiums for current municipal employees.
The city should apply the concept of employee contributions to health premiums to retirees.
The city should work to lower or end the police and firefighter "Christmas bonuses" which are unusually generous.
Key Data
230 percent
— Growth in the annual cost of funding pensions since fiscal year 2003.
$5.7 billion
— City pension-fund contributions in fiscal year 2008, which are projected to reach $7.6 billion by fiscal year 2013.
$10.2 billion
— Annual benefits paid to New York City's retirees.
$42,100
— Average pension for a new retiree in 2006.
$1.1 billion
— City spending on health care for retirees in fiscal year 2008, projected to grow to $1.9 billion in fiscal year 2013.
$12,000
— Annual supplemental retirement benefit, or "Christmas bonus," paid to police officers and firefighters.
New York State's public employee compensation, particularly pension and health insurance benefits, requires significant reform to address rising costs that burden taxpayers. Implementing changes such as increased employee health insurance contributions and pension adjustments for new hires is essential to align public sector benefits with private sector standards and ensure fiscal sustainability.
Recommendations related to Labor Costs
The state should eliminate one annual pay increase, typically averaging 3 percent, for state employees that was planned as part of recent collective bargaining agreements to help control labor costs.
The state should require retired state employees to pay a larger share of their health insurance premiums to reduce the burden of labor costs.
The state should embrace the governor's proposals and consider enhancing cost-sharing for current workers to manage rising labor costs.
Mayors, county executives, school boards, and other municipal managers need the state to give them tools to control labor costs.
Key Data
one-fifth
— Salaries and fringe benefits comprise nearly <b>one-fifth of the state budget</b>.
3 percent
— State employees receive an annual pay increase typically averaging <b>3 percent</b>.
75 percent
— The state currently pays <b>75 percent of family insurance premiums</b> for retired workers.
$250 million
— The proposed short-term savings from the measures are approximately <b>$250 million</b> in fiscal year 2010-11.
$25 million to $500 million
— Annual savings for new hires would grow from about <b>$25 million to $500 million</b>.
New York City's average employee compensation cost reached $106,743 in the last fiscal year, having grown by nearly two-thirds over the previous eight years. This rapid increase, driven largely by pension and health benefit growth, significantly outpaced the 31% and 34% growth seen in private and public sectors nationally.
Recommendations related to Labor Costs
Mayor Bloomberg and the city's unions must partner to identify concessions and workplace reforms that would provide immediate and recurring savings, and the city should return to productivity-based negotiations in future contract talks.
The mayor should aggressively pursue health-insurance reforms, including the implementation of identified savings.
The Legislature should approve a new pension tier for new employees to limit the growth of future liability.
Key Data
$106,743
— Average compensation cost of full-time city employees in the last fiscal year.
704%
— Growth in the city's average contribution for pension benefits per full-time employee over eight years.
63%
— Growth in total compensation costs for New York City over the last eight years.
$200 million
— Savings from health-insurance restructuring included in the mayor's plan for the next fiscal year.
31%
— Growth in total US compensation costs for private employers over the last eight years.
34%
— Growth in total US compensation costs for state and local governments over the last eight years.
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 primarily driven by a 700 percent surge in pension benefit contributions, which significantly outpaced growth in private sector and other government compensation.
Key Data
$106,743
— Average compensation cost per full-time New York City employee in fiscal year 2008.
63%
— Growth in the City's average employee compensation cost since fiscal year 2000.
700%
— Growth in the City's average contribution for pension benefits per full-time employee between fiscal years 2000 and 2008.
$37,619
— Average fringe benefit costs per full-time employee in fiscal year 2008.
35%
— Percentage of total compensation represented by fringe benefits in fiscal year 2008.
31%
— Total compensation cost increase for private employers nationally from 2000 to 2008.
New York's Medicaid nursing home payment system is outdated and inefficient, resulting in high costs that do not correlate with better patient care or adequate staffing levels. A new payment strategy should replace facility-specific historic costs with a standardized base rate that accounts for regional labor costs, patient characteristics, and quality outcomes.
Recommendations related to Labor Costs
A new payment strategy should address the problems in current rates by changing from a facility-specific to a standardized base rate system that varies primarily by differences in patient-specific characteristics and in geographic labor costs.
New York homes should be staffed at the federally recommended level of 4.1 hours of care per patient per day.
An auditing system should be developed to detail whether the level of staffing assigned to a patient meets the criteria required according to the patient’s RUG category.
Homes should provide payroll and employment tax filings electronically to State and federal auditors on an annual basis, so they can target audits to homes with staffing levels that do not correlate with their case-mix index.
New York State should develop a set of quality indicators such as those being used in other states and being tested by Medicare to assess patient outcomes.
Key Data
$85
— The estimated amount of the $187 daily rate spent on <b>direct nursing care wages and benefits</b>.
3.6 hours
— The amount of <b>direct care nursing hours per patient day</b> provided by New York nursing homes in 2005, compared to the national average of 3.7 hours.
4.1 hours
— The <b>total nursing care per patient per day</b> recommended by a panel of experts to ensure nursing home patient safety.
$6.10
— The estimated <b>additional wage and benefit costs per day</b> required to meet federally recommended staffing levels.
State government expenditures can be reduced by adjusting compensation packages for public employees, including the creation of a new pension tier for future hires. Additionally, increasing the standard work week for state employees from 37.5 to 40 hours would generate significant annual savings.
Recommendations related to Labor Costs
Scaling back health-insurance and retirement packages for state-government workers is necessary because many government workers are now paid more than their private-sector counterparts.
The state should create a new 'tier' for future employees regarding pension benefits to address the issue of overly generous retirement packages.
The state should increase the work week for state employees to 40 hours a week from the 37.5 hours currently required.
Key Data
$216 million
— Annual savings from the creation of a new pension tier for future state employees.
$227 million
— Annual savings from increasing the work week for state employees to 40 hours.
New York's prison system remains overbuilt despite a declining inmate population, with the state spending $3.6 billion annually on operations and $57,000 per inmate. Closing underutilized facilities and reducing the number of correctional officers could generate significant savings, allowing funds to be redirected toward more productive economic investments.
Recommendations related to Labor Costs
The number of correctional officers can be reduced to align with the declining inmate population.
Unneeded facilities should be closed and repurposed to reduce excessive state spending on underutilized infrastructure.
New York can save nearly $300 million a year by fitting the size of the prison infrastructure to the population it serves.
The state should develop more effective and appropriate alternatives to incarceration for drug offenders to generate an additional $100 million in annual savings.
The prison system should be built around correctional needs, rather than prioritizing local employment in underused facilities.
Key Data
$57,000
— Annual cost of keeping someone in the custody of the prison system, including debt service and fringe benefits for employees.
$3.6 billion
— Annual operating cost of the entire prison system.
$34 million
— Estimated operating savings from prison closures when fully annualized in the financial plan.
$30 million
— Savings in capital costs generated in fiscal year 2010 from prison closures.
$300 million
— Estimated annual savings from fitting the size of the prison infrastructure to the population it serves.
$100 million
— Estimated annual savings from developing more effective and appropriate alternatives to incarceration for drug offenders.
New York State faces significant budget gaps that require fiscal discipline, including restructuring state employee compensation packages to align with private-sector standards. Proposed measures include increasing employee contributions to health insurance and pensions, as well as extending the standard work week for state employees to 40 hours.
Recommendations related to Labor Costs
The state should restructure its health insurance to require an additional 4 percent contribution toward family plan premiums from current workers.
New York should insist on a larger contribution toward premiums from retirees and eliminate repayment for Medicare Part B premiums.
The state should restructure pensions by creating a new tier for future employees to address unusually generous benefits.
The state should increase the work week for state employees to 40 hours from 37.5.
Key Data
$1.1 billion
— Annual cost of state-required pension contributions for employees and retirees.
4 percent
— Proposed additional contribution toward family plan health insurance premiums from current workers.
37.5
— Current number of hours in the work week for state employees.
40
— Proposed number of hours in the work week for state employees.
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's local governments face high labor costs due to staffing levels that exceed the national average and wages that are significantly higher than those in other jurisdictions. To address these fiscal pressures, the state should reform public employee pension systems and revise the legal framework for collective bargaining to better align compensation with the ability to pay.
Recommendations related to Labor Costs
The State should reform the pension system by converting to a defined contribution system rather than a defined benefit system.
The State should reform the current defined benefit system by excluding overtime in benefit calculations, setting higher age requirements for retirement, and requiring larger contributions from workers.
The State should reform the collective bargaining framework by mandating that PERB weigh more heavily criteria such as ability to pay and past collective agreements.
The State should reform the collective bargaining framework by adopting 'last-best offer' or bracketed negotiation models to encourage vigorous bargaining.
The State should reform the collective bargaining framework by setting limits on the duration of any conflict resolution process to ensure more timely settlements.
Key Data
459
— Number of local government employees per 10,000 residents in New York localities, excluding New York City.
395
— Average number of local government employees per 10,000 residents nationwide.
30%
— Amount by which the average wage among local government employees in New York exceeds the national average, when New York City is included.
8.5%
— Amount by which the average wage among local government employees in New York exceeds the national average, when New York City is excluded.
29%
— Percentage increase in salaries per teacher in New York from school year 1995 to 2005.
97%
— Percentage growth in health insurance, pensions, social security, and other benefits for teachers in New York from school year 1995 to 2005.
New York's state budget process remains dysfunctional and secretive, leading to unsustainable spending growth and a significant budget gap. To address these fiscal challenges, the state should prioritize reducing the size of its workforce through productivity gains and renegotiating labor union contracts.
Recommendations related to Labor Costs
The state should reduce the size of its workforce through productivity gains to curb spending.
Negotiations with labor unions should aim to create a smaller, better-paid workforce to serve the public interest and help close budget gaps.
Implementing performance-based management in New York City would improve service delivery and accountability while providing objective data to inform labor negotiations. By linking compensation to productivity and comparing service costs with other jurisdictions, the city can better manage labor contracts and improve overall efficiency.
Recommendations related to Labor Costs
New York City should join the ranks of other cities and take steps to link performance information with the budget.
The bar on New York City agencies for reporting efficiency measures must also be raised.
City leaders should renew their focus on achieving high-quality outcome measurement and reporting in every agency.
New York City leaders should develop and present comparative performance measures to determine how able their locale is to compete for jobs and residents.
New York City should expand the use of public perception measures to enrich its measurement and reporting and also involve citizens in government to a greater extent.
Key Data
$263
— Refuse cost per ton (fully loaded) in 2005.
$109
— Disposal cost per ton in 2005.
$343
— Recycling cost per ton (fully loaded) in 2005.
4
— Number of efficiency indicators New York City reports out of 42 total indicators published by the ICMA.
14
— Average wait time in seconds for 3-1-1 calls in fiscal year 2006.
45,000
— Number of 3-1-1 calls handled per day in fiscal year 2006.
New York's education system faces significant financial challenges, with high per-pupil spending often masked by inequities between wealthy and poor districts. Addressing these issues requires structural reforms, including managing instructional costs like teacher pensions and benefits, alongside strategic revenue generation to avoid compromising the state's economic competitiveness.
Recommendations related to Labor Costs
The state should address high instructional costs by reforming generous pension and fringe benefits for teachers to provide substantial savings to the school system.
School districts should reform rigid teacher contracts that divert teacher time away from the classroom, as these arrangements impose significant additional costs on the system.
The state should implement systemic efficiencies, such as using teacher time more effectively, to generate at least $1.2 billion annually.
Key Data
$1.2 billion
— Potential annual savings from eliminating system inefficiencies, including more efficient use of teacher time.
$500 million
— Potential savings from correcting rigid administrative arrangements and consolidating small school districts.
$10,665
— Average per pupil spending in New York State after adjusting for regional cost differences.
New York's local government pension system is exceptionally generous, with benefits that are set by the State Legislature rather than through local collective bargaining. To address these high costs, the state should reform pension benefits by increasing employee contributions, raising retirement ages, and eliminating the inclusion of overtime in benefit calculations.
Recommendations related to Labor Costs
Redesign the State-mandated pension benefits for future state and local government workers by raising the minimum retirement ages.
Redesign the State-mandated pension benefits for future state and local government workers by increasing the required employee contributions.
Redesign the State-mandated pension benefits for future state and local government workers by eliminating the inclusion of overtime in benefit calculations.
Redesign the State-mandated pension benefits for future state and local government workers by eliminating variable supplements for uniformed workers.
Key Data
6 percent
— Percentage of full-time state and local government employees nationally who can count overtime in their pension formula.
$12,000
— Projected annual variable supplement payment per retiree for uniformed workers in New York City in 2007.
74 percent
— Percentage of state and local government employees in other systems required to contribute more than 3 percent of their earnings.
1.5 million
— Number of people employed by local governments and school districts in New York.
The MTA's labor costs, which include wages and fringe benefits, represent the agency's largest expense and have grown significantly due to contractual increases and rising health insurance and pension contributions. To address growing deficits, the agency must implement productivity initiatives to reduce operating costs, as current revenue projections are insufficient to cover rising expenditures.
Recommendations related to Labor Costs
The MTA should implement a program of productivity initiatives to reduce operating costs from the baseline level by 2 percent in 2006 and by 2.5 percent annually in each year from 2007 through 2009.
Key Data
$5,437 Million
— Total labor expenses in 2005.
56%
— Percentage of total MTA expenses accounted for by payroll, including direct wages and fringe benefits, in 2005.
3.5%
— Annual growth rate of salaries and wages from 1992 to 2005.
4.2%
— Average annual growth rate of fringe benefits from 1992 to 2005.
63,390
— Number of full-time employees in 2005.
61,099
— Expected number of full-time employees in 2008.
Mayor Bloomberg's proposal to reduce pension benefits for newly hired city workers addresses the unsustainable growth of municipal labor costs, which are projected to exceed $5.7 billion by 2010. By aligning public sector compensation and retirement ages more closely with private sector standards, the city can maintain a capable workforce while curbing excessive fiscal burdens.
Recommendations related to Labor Costs
Mayor Bloomberg's proposal to trim the pension benefits of newly hired city workers is a prudent and fair step to address spiraling costs.
New York should reform the pension benefit formula to exclude overtime earnings, a practice that is rare in other systems.
New York should increase the retirement age for city employees to align with the age for full Social Security benefits, which is rising from 65 to 67.
Key Data
$4 billion
— Taxpayer contribution to pension funds in the current fiscal year.
$900 million
— Taxpayer contribution for retiree health insurance in the current fiscal year.
$5.7 billion
— Projected pension contributions in 2010.
15%
— Average hourly wage advantage for public employees over private-sector workers.
30%
— Average hourly wage advantage for blue-collar public employees over private-sector workers.
New York City government employees receive compensation and retirement benefits that significantly exceed those of private-sector counterparts, creating unsustainable long-term fiscal pressures. To address these rising costs, the city should transition to defined contribution pension plans and reform retiree health insurance to align with standard private-sector practices.
Recommendations related to Labor Costs
The long-run goal of pension reform should be to convert from defined benefit to defined contribution plans.
The City should increase required employee contributions, as the current requirement is often limited to 3 percent for ten years.
The City should raise the minimum age requirement for retirement to align with federal Social Security thresholds.
The City should base pension benefits on the more standard definition of final average salary, excluding overtime and other supplements.
The City should define work-related disabilities more rigorously to prevent broad access to benefits without clear evidence of a work-related cause.
The City should require retirees to pay 50 percent of the premium for health insurance for themselves and their dependents.
The City should stop reimbursing retirees for Medicare Part B premiums to align with benefits provided by other large employers.
Key Data
$3.2 billion
— City contribution to pension funds in fiscal year 2005.
$927 million
— City payment for health insurance for retirees in fiscal year 2005.
$35.16
— Average hourly total compensation cost for public employers in 2004.
$23.90
— Average hourly total compensation cost for private employers in 2004.
$325 million
— Potential savings for the City in fiscal year 2004 if retirees were required to pay 50 percent of health insurance premiums.
$131 million
— Potential savings for the City in 2004 if the practice of reimbursing retirees for Medicare Part B premiums was stopped.
New York City's budget is burdened by rapidly growing non-discretionary expenses, particularly pension and health insurance costs for employees, which are projected to reach $25 billion by fiscal year 2009. Implementing reforms to these benefit structures could save the city nearly $2.5 billion annually, freeing up resources for other municipal needs or tax relief.
Recommendations related to Labor Costs
Establish a new, more affordable pension plan for new workers through State legislation, with employer contributions held to 10 percent of payroll, to reduce pension costs.
Require current employees to pay 10 percent of premiums for individual health insurance policies and 20 percent for family policies to align health insurance practices with other employers.
Require retirees to pay 50 percent of their health insurance premiums and stop paying for their Medicare Part B premiums to reduce retiree health insurance costs.
Advocate for the repeal of, or exemption of more projects from, the State’s Wicks Law to reduce construction labor and capital costs.
Use the large operating surplus accumulated in fiscal year 2005 to pay off outstanding debt rather than increasing payroll to avoid burdening the next generation with debt service costs.
Key Data
$549 million
— Projected annual savings from pension reform by fiscal year 2009.
$1,197 million
— Projected annual savings from health insurance reforms in fiscal year 2009.
10 percent
— Proposed cap on employer contributions for a new pension plan for new workers.
18 percent
— Typical individual health insurance premium contribution for current employees of large private employers.
31 percent
— Typical family health insurance premium contribution for current employees of large private employers.
$12,000
— December holiday bonus received by retired New York City police officers on top of their monthly pension checks.
New York's public employee retirement benefits are significantly more generous than those provided by private sector employers and other public entities, creating a rapidly growing fiscal burden for the City and State. To address these costs, the current system should be reformed by shifting to defined contribution plans and adjusting existing benefits, including increasing employee contributions and raising retirement ages.
Recommendations related to Labor Costs
The City and State should convert from defined benefit to defined contribution plans to align with private sector practices and facilitate worker mobility.
The City and State should require retirees to pay 50 percent of the premium for health insurance for themselves and their dependents.
The City and State should stop reimbursing retirees for Medicare Part B premiums, as this practice is out-of-line with other large employers.
The New York systems should increase required employee contributions and not limit them to ten years.
The New York system should raise the minimum age requirement for retirement to reflect increased life spans.
The pension systems should base pension benefits on a more standard definition of final average salary, excluding overtime and other supplements.
The City and State should define work-related disabilities more rigorously to set more standard requirements.
The City should eliminate the variable supplements available to some retired uniformed workers, which contradict the principle of regular and predictable income.
Key Data
$35.16
— Average total compensation cost per hour for public employers in 2004.
$23.90
— Average total compensation cost per hour for private sector employers in 2004.
$2.3 billion
— Required contributions to New York City pension funds in fiscal year 2004.
$4.7 billion
— Projected required contributions to New York City pension funds by fiscal year 2008.
43%
— Percentage of retired New York City firefighters receiving additional benefits due to a job-related disability.
$12,000
— Annual variable supplement payment, or 'Christmas bonus,' for certain retired New York City uniformed workers by 2007.
New York City's public school system faces significant labor cost inefficiencies, with teacher compensation structures heavily weighted toward longevity and graduate credits rather than performance. To address these issues and improve educational outcomes, the system should implement performance-based pay, offer financial incentives for teachers in shortage areas, and expand managerial discretion for principals regarding staff assignments.
Recommendations related to Labor Costs
Teachers should be given financial incentives for better performance by revamping pay schedules to make a larger share of compensation conditioned on job performance and de-emphasizing longevity and graduate educational credits.
The State should offer differential pay for teachers who qualify for specific titles deemed in a shortage condition and who agree to work in schools facing the greatest difficulty securing qualified teachers.
Principals' managerial discretion regarding teacher transfers should be expanded by allowing them to select teachers for given posts from among multiple candidates rather than forcing decisions based on seniority.
School districts should implement a reasonable reduction of non-instructional time for teachers, such as fewer preparation periods and the elimination of sabbaticals and released time for union work, to generate annual savings.
The State should pursue the consolidation of small school districts and implement caps on administrative expenses to reduce unnecessary overhead costs.
Key Data
$9,573
— Maximum annual salary increase a teacher can receive under the current contract by earning graduate credits.
$32,659
— Maximum annual salary increase a teacher can receive under the current contract due to longevity.
$350 million
— Estimated annual savings from reducing non-instructional teacher time, including fewer preparation periods and the elimination of sabbaticals.
$125 million
— Estimated annual savings from consolidating small school districts and implementing caps on administrative expenses.
17%
— Percentage of the school system's total positions that were in serious shortage during the 1999-2000 school year.
New York City's public school system requires structural changes to teacher compensation and deployment to improve educational outcomes and efficiency. By shifting from seniority-based pay to performance-based incentives and reallocating teacher time, the city can better utilize its existing workforce and resources.
Recommendations related to Labor Costs
Restructure the pay schedule to make a larger share of compensation conditioned on job performance and to de-emphasize longevity and graduate educational credits.
Use financial incentives to overcome teacher shortages by offering differentials in the range of 20 to 25 percent to qualified teachers in shortage areas.
Increase teacher time spent on classroom instruction by reducing combined preparation and administrative periods for junior high and high school teachers from 10 to five per week.
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.
Eliminate subsidized time for union activities to increase teacher time spent on classroom instruction.
Key Data
$9,573
— Maximum annual salary increase a teacher can receive by earning graduate credits.
$32,659
— Maximum annual salary increase a teacher can receive due to longevity.
43%
— Percentage of teacher job titles deemed in shortage in the 1999-2000 school year.
20% to 25%
— Range of pay differentials that should be offered to teachers in shortage titles.
4,250
— Equivalent number of teachers that could be added to the payroll by reallocating non-teaching time.
13.9
— Number of pupils for each teacher in New York City public schools.
Rising workforce expenditures, including significant increases in pension contributions, collective bargaining settlements, and health insurance costs, account for more than half of the fiscal year 2004 budget gap increase. By fiscal year 2004, the City is projected to spend $6,954 more in compensation per employee than was originally planned in June 2001.
Key Data
$6,954
— The amount the City will be spending more in compensation per employee in fiscal year 2004 than had been planned in June of 2001.
$1,688 million
— The cumulative increase in workforce expenditures for fiscal year 2004 since June 2001.
$729 million
— The increase in pension contributions for fiscal year 2004 since June 2001.
$617 million
— The amount by which collective bargaining settlements will surpass budgeted levels in fiscal year 2004.
$342 million
— The increase in worker health insurance costs for fiscal year 2004 since June 2001.
New York City's municipal workforce has grown significantly over the last decade, with wages and fringe benefits outpacing inflation, necessitating a reevaluation of labor costs to address budget gaps. Implementing strategies such as a 40-hour work week for civilian employees and more efficient police staffing could yield substantial annual savings.
Recommendations related to Labor Costs
The City should require civilian employees not currently working a 40-hour week to do so, which would allow for the elimination of about 8,500 positions and save $498 million annually.
The City should reschedule the police officers' work day to reduce overlapping time for briefings and changing clothes, creating the equivalent of 10 more working days for each officer and saving $67 million annually.
The City should reassign police officers from jobs better done by civilians to law enforcement duties, which would save a minimum of $46 million annually.
The City should stop using police officers on overtime to perform duties that are predictable and could be scheduled in advance, saving about $117 million annually.
Key Data
$498 million
— Annual savings from requiring a 40-hour work week for civilian employees.
$117 million
— Annual savings from reducing police overtime for predictable duties.
$4.2 billion
— Total cost of fringe benefits for City workers in fiscal year 2001-02.
$67 million
— Estimated annual savings from rescheduling police officers' work days.
$46 million
— Minimum annual savings from reassigning police officers to law enforcement duties.
10,700
— Number of full-time City employees greater than it was six years ago as of 2002.
The City of New York could save approximately $498 million annually by transitioning its 80,000 non-managerial civilian employees from a 35-hour to a 40-hour workweek. This shift would allow for the elimination of roughly 8,500 positions while aligning municipal work schedules with those of other public and private sector employers.
Recommendations related to Labor Costs
The City should require that all civilian employees currently working a 35-hour week shift to a 40-hour workweek to increase productivity and reduce personnel costs.
To overcome occupational specialization, the City should implement "broad-banding," or the combining of similar job titles into broader common job titles to facilitate work sharing.
To address geographic dispersion, the City should relocate workers to more concentrated offices or have employees divide their time among two or more locations.
To manage peak-hour demand, the City should increase part-time staff during peak periods rather than relying on full-time staff.
Key Data
$498 million
— Estimated annual savings to the City from shifting non-managerial civilian employees to a 40-hour workweek.
8,500
— Number of positions that could be eliminated if all non-managerial civilian employees worked a 40-hour week.
$58,000
— Average savings per worker, including salary, fringe benefits, and space costs, realized by eliminating a position.
67,000
— Number of civilian workers currently scheduled for a 35-hour workweek.
$41,592
— Average salary in fiscal year 2002 for a non-managerial civilian employee working a 35-hour week.
Municipal collective bargaining agreements significantly impact the city's fiscal health, as worker compensation represents half of all municipal expenditures. To improve efficiency and service quality, the city should implement performance-based pay, modernize health insurance and pension systems, and streamline welfare fund administration.
Recommendations related to Labor Costs
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
$19.2 billion
— Compensation of workers in fiscal year 2000, representing half of all municipal expenditures.
$1.1 billion
— Necessary expenditures for base pay increases in fiscal year 2004.
$138 million
— Potential annual savings from five specific changes in the Fire Department.
$150 million
— Cost of well-targeted, one-time 'catch-up' raises for shortage occupations.
$798 million
— Recurring annual cost of pension enhancements added in 2000.
$1.4 billion
— Net savings to taxpayers from the recommendations in fiscal year 2004.
The 2000 report outlines strategies for utilizing collective bargaining between the Board of Education and the United Federation of Teachers to enhance public school performance. It focuses on leveraging contract negotiations as a mechanism for educational improvement.
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