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Community Engagement Prized by Participatory Budgeting Proponents

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Council Member Menchaca with a constituent (photo: William Alatriste)

For City Council Member Carlos Menchaca and his staff, the Participatory Budgeting Vote Week that just ended was the culmination of a year-long effort to encourage project proposals and votes from communities that are traditionally excluded from politics. Through PB, community members decide how $1-2 million in funding is allocated toward neighborhood improvements. Menchaca’s district, which includes immigrant-rich Brooklyn neighborhoods of Sunset Park and Red Hook, is one of 28 districts running the program in the 51-member City Council, but it is the most active.

Last year, Menchaca’s constituents recorded the city’s highest number of participatory budgeting (PB) votes, a total of 6,299. Although this is double the amount of voters from the prior year’s cycle, it is still only a fraction of eligible voters, as the district has a population of 164,230 — about 80% of which is over the PB voting age of 14, according to the 2010 census.

Still, two-thirds of the votes from those who chose to participate were on non-English ballots and almost one-quarter were from people who couldn’t vote in regular elections, such as people under the age of 18 and immigrants without U.S. citizenship. These data give Menchaca and other supporters of PB energy to push forward despite criticism of the program.

“What we’re doing with PB is removing as many obstacles as possible to get every voice in the community connected to a decision, like a community project,” Menchaca told Gotham Gazette in an interview during vote week, which was March 26-April 3.

Menchaca and other Council members typically begin the PB outreach process in September, when workshops are held for residents to come together and share ideas about what should be improved or changed in their communities. This year in Menchaca’s district, fully translated workshops were held in Spanish and Chinese. Throughout the year, regular updates on scheduled events are sent through more traditional methods like phone calls, text messages, and emails. Residents are also updated via social media outlets like Facebook, Snapchat, and Twitter.

A voting site at the Red Hook Initiative community center, run by volunteers from local high schools, forecasted some success for Menchaca’s community outreach efforts as excited teenagers encouraged their friends to vote. These youth organizers had also been working throughout the year by attending training sessions, collecting project proposals, and organizing mobile voting locations. When they set up their Red Hook Initiative site, they were determined to collect 1,000 ballots by the following day.

The majority of volunteers and voters at the vote week event would not have been eligible to participate in a regular election because of their age, but PB votes are open to residents as young as 14. Tea Cruz, a 16-year-old student, voted with her younger family members in mind. She wanted the local playgrounds to be renovated so that the equipment isn’t rusty and broken when her newborn cousin is old enough to play there. She was also concerned about her younger sister’s middle school, where the library is too outdated for the students to find their books easily.

Along with playground renovations and new library technology, there were 11 other projects on the District 38 ballot this year. Other school improvement proposals included air conditioning installations, lockers for students who are currently required to carry their belongings with them throughout the day, and repairs to auditoriums, bathrooms, and science labs. Brooklyn Community Boards 6 and 7 called for street repairs, including filling potholes and repainting lines. There were also two district-wide proposals for new trees throughout each neighborhood and electronic signs at bus stops with the location and arrival time of each bus.

PB projects are only for these types of physical investments in a neighborhood, known as capital projects. Critics of PB say that many these are projects that city agencies are supposed to take care of through the normal city budgeting process, and that the role for Council members it is to be a liaison between their communities and city agencies, while also influencing the overall city budget. Still, Council members do receive funds to disburse in their communities and many members are now allowing their constituents control over a portion of those funds.

In Menchaca’s district, each voter could support up to five different projects. Informational expos were held before and throughout vote week for residents to learn about each proposal. At the Red Hook Initiative site, a room in the community center was filled with colorful science-fair style posters made by young volunteers, detailing the potential benefits and costs of each project. Voters were encouraged to read all the information before handing in their ballots. Many of the teen-aged voters lingered in front of the posters, questioning details of each project.

Youth Council Member Frank Edwin Guzman, Jr., who is mentored by Menchaca, thinks that the perspectives of his peers are an important part of improving the community. After entering the New York City Youth Council program, his goal is to eventually be the youngest Council member in the city (Menchaca is currently among the youngest). In the near future, Guzman would also like to see every City Council member running PB.

Menchaca also hopes to see more City Council participation. Although 28 districts in New York City already run PB, the system still faces some criticism, both from within and outside the Council. In a recent column, NY1 Political Director Bob Hardt argued that PB places too much of the Council member’s responsibility on residents and hurts the poorer parts of districts that aren’t usually politically involved. Menchaca finds that PB has the potential to do the opposite if the right effort is made.

“The people who are going to eventually become participants in PB are the people that you invite to the table,” Menchaca said, emphasizing “invite.” “If you only invite rich, engaged people then you’re only going to get rich, engaged people,” he continued. “It’s not an accident that two-thirds of the votes coming in are in Spanish and Chinese. It won’t be an accident if only rich, privileged people come out and vote for PB. It’s a direct reflection of the leadership that you place in power to engage the people.”

Menchaca also responded to the criticism that PB takes power away from Council members.

“What we’re trying to do is not consolidate power for one person to make decisions or go out and find solutions, but what we’re doing is actually increasing power within the community to develop leaders who are knowledgeable of city agency processes to help make a collective decision about where to place dollars,” he said.

Other critics point out that the entire PB process might be unnecessary. In a recent column for the New York Daily News, NY1 political anchor Errol Louis pointed out that PB only makes up 0.04% of the city’s budget, labeling the process as “painfully low-stakes.” He argues that if it were really the great process participating Council members promote it to be, residents would be allowed to vote on billion-dollar decisions, rather than where to allocate $1 million or $2 million. Louis also echoes Hardt’s point about putting decision-making responsibilities into the wrong hands.

“And if a budget decision goes wrong — if, say, events prove we should have bought NYPD cameras instead of renovating the senior center — participatory budgeting scatters the responsibility, letting the Council member off the hook,” he wrote.

In an article published here last year, Council members not running PB in their districts cited the heavy commitment as a deterrent.

“Participatory budgeting takes an extraordinary amount of office time and resources for no discernible improvement in outcomes over working through the existing vast civic infrastructure for public participation,” said Council Member Rory Lancman, who represents District 24 in Queens.

A press secretary for Council Member Inez Dickens, representative of District 9 in Harlem, explained that local community boards are the most practical way for residents to express the same opinions, concerns or proposal ideas that PB encourages. This was a point raised by Louis in his recent column.

As more City Council members decide whether or not to run PB, Menchaca thinks that the future of the program lies in more funding. Last year, a project for increased Wi-Fi throughout the NYCHA public housing developments in Red Hook couldn’t receive PB funding even though it garnered more than 3,000 votes. Menchaca had already allocated all of his available funds to winning projects such as district-wide technology updates, playground lighting, bathroom renovations, and outdoor fitness equipment in Sunset Park. He went to Brooklyn Borough President Eric Adams, who was able to expand PB this year with a commitment of an extra $100,000 to 10 different districts, for a total of $1 million, to support winning projects. Adams is the first borough president to make such a funding decision.

“PB is a revolutionary approach to growing democracy from the ground up, and this partnership with the City Council will cultivate that growth even further, funding more capital projects and engaging more potential voters,” Adams wrote in the press release.

Along with the continued support of the borough president, Menchaca would also like to encourage the mayor’s office and more city agencies, such as the Parks Department, the School Construction Authority, and the Department of Transportation, to look to PB votes for ideas about how to spend their own money. He believes that PB could be a valuable resource for the mayor’s office and its agencies by showing the city government what residents really want and need, therefore creating a more direct relationship between city agencies and residents. If the city were to directly increase PB funding, it could help improve outreach efforts, according to Menchaca.

“It takes money to engage the communities we’re engaging,” he said. “Especially when they don’t speak the language and there’s low literacy rates, for example, and you have to translate everything. I think the city can understand that gap of resources and bring us more translation, more literacy classes in our communities, bring us more money to teach people how to organize.”

by Carmen Russo, Gotham Gazette
@GothamGazette @carmenjrusso

City Approach to Nonprofit Contracting Questioned

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Council Member Rosenthal at a recent hearing (photo: William Alatriste) 

Human services nonprofits serve the city’s most vulnerable populations, providing a range of critical programs like foster care, homelessness services, after-school programs, mental health care, food pantries, and more. But, many of these organizations are faltering due to problems with the ways in which government approaches contracting.

On Monday, the New York City Council Committee on Contracts held an oversight hearing to examine serious and systemic issues facing human services nonprofits operating under contracts with the city. The hearing, chaired by Council Member Helen Rosenthal, was held in response to a report released by the Human Services Council (HSC), a coalition of 170 nonprofits that provide vital programs like childhood education, senior care, and job training to New Yorkers. The report identifies the major challenges facing the nonprofit human services sector, as well as recommendations to strengthen and stabilize it.

Leaders from 25 organizations testified at the hearing, echoing the issues outlined in the report and painting the picture of a sector in crisis: government contracts account for the majority of provider budgets, but pay roughly 80 cents or less of each dollar of true program delivery costs, creating budget gaps and diminishing the quality of services nonprofits can provide; contract payment is chronically late, forcing providers to turn to costly borrowing to meet their organization’s needs, often accruing interest that is not covered by government contracts; and, programs are often developed without input from the human services nonprofits that are responsible for implementing them, resulting in “ineffective and unworkable programs,” according to the HSC report.

“We absolutely feel that the government has left us behind,” said Dr. Jeremy Kohomban, president and CEO of The Children’s Village, during his testimony. “In addition to underfunding, we often deal with delayed reimbursement, and hidden costs upon reimbursement of interest payments, that we are forced to make on extended credit lines.”

“While we are untiring in our fundraising,” Kohomban added, “our donors are most interested in helping children and families, and least interested in subsidizing what they increasingly see as government shirking its responsibility.”

The city is required to provide many of the support services involved, but contracts them out to nonprofits in order to save on costs and increase efficiency. According to the Human Services Council, the city’s human services nonprofits deliver “essential government services to 2.5 million New Yorkers” every year.

According to the HSC report, the sector includes more than 200,000 workers and New York City is engaged in over 5,100 contracts worth $4.3 billion in the current fiscal year, which ends June 30. There are also thousands of state contracts that add another $1.5 billion in contracts.

Many of these organizations rely on the government for almost all of their funding, and are told to seek grants or other funding methods to account for the rest of their expenses. The city often turns to outside providers to meet city needs, for instance, “When the city decides to build a $40 million bridge, they hire a construction company with that expertise,” Council Member Rosenthal said during her opening remarks.

However, Rosenthal continued, “the city would never say to a construction company, ‘We’re going to pay you $35 million. Try to get philanthropy, foundations, or other jobs that you do to pay for the remaining $5 million.’”

Not only do those contracts rarely cover the actual operating costs of the city’s human services nonprofits, but the payment is often late and unpredictable, creating an unsustainable situation that forces many of these nonprofits to take out loans from private banks in order make payroll and rent.

“Do you know of any human services providers that have had to borrow from a bank in order to provide services?” Rosenthal asked Michael Owh, director of the Mayor’s Office of Contract Services, during his testimony. Owh said he didn’t have any specific examples, but knows that some providers have lines of credit.

Rosenthal asked leaders from several human services nonprofits if they had been forced to take out a loan due to a lack of timely and sufficient funding, and eventually instructed Allison Sesso, executive director of the Human Services Coalition, to consult with her organization’s affiliates and put together a comprehensive list of how many providers have needed to borrow money.

“We are often forced to borrow against a line of credit to meet payroll…last year, CAMBA paid $375,354 in interest for the use of our line of credit,” said Thomas Dambakly, chief administrative officer of CAMBA, a large Brooklyn-based nonprofit that provides employment, education, health, legal, and youth services.

Several human services nonprofits have been forced to close in recent times, and a number of others are on the brink of insolvency. According to a report from SeaChange Capital Partners, a merchant bank serving the nonprofit sector, 18 percent of New York City nonprofits in the health and human services sector are insolvent, while the HSC report (created by a commission of 32 human services executives, civic and philanthropic leaders, former government officials, and others) determined that 60 percent of humans services nonprofits are financially distressed, with no more than three months of cash in reserves.

In March of last year, after 80 years of operation, the Federation Employment and Guidance Service (FEGS), a “$250 million behemoth nonprofit human services provider, announced it would be closing; a clear signal that systemic issues threatened the survival of the sector as a whole,” says the HSC report.

Before filing for bankruptcy, FEGS provided mental health, housing, disability, home care, and employment services to 120,000 households and individuals. As a result of FEGS’ closure, the city’s remaining nonprofit human services providers have been relied on to meet the needs of those 120,000 households and individuals who relied on FEGS services.

If the city does not address the issues facing the sector, providers argue, the communities that these nonprofits serve will be the first ones to suffer the consequences.

“Our ability to effectively serve New Yorkers is seriously compromised by a government system that simply doesn’t cover the true cost of programs and services, and how those costs grow over time,” said Dan Lehman, chief financial officer of the Children’s Aid Society. “Failure to address this issue jeopardizes the viability of community-based organizations, and ultimately harms those who we serve, and who the city depends on us to serve.”

The HSC report and representatives from human services nonprofits who testified at Monday’s hearing put forward a number of solutions that could ameliorate the nonprofits’ dire financial situation. For one, the government could seek input from and collaborate with the human services sector while designing programs, which would ensure the creation of programs that the nonprofits are truly capable of implementing.

Additionally, the government could issue contracts that fully fund nonprofits’ operating costs, including so-called “indirect costs,” or expenses like IT, building maintenance, accounting, and human resources, and fulfill those contract payments in a more timely and consistent manner. These contracts, human services workers say, should also account for cost increases that occur over time due to inflation or newly added mandates.

Toward the end of the hearing, Council Member Rosenthal asked Sesso to return to the testimony table to answer a few additional questions. “Do you think it’s reasonable to ask the administration for some sort of roadmap or strategic plan for how you get from these recommendations to implementation?” Rosenthal asked.

“At the heart of this is the rates, and it’s about what do we consider to be program costs...I do think that, [Mayor’s Office of Contract Services] would be a good partner, but there does have to be a directive at the very highest levels of the administration to do this.” Sesso replied.

“And if there’s another recession,” Sesso continued, “If government has to cut back, we are first on the list - this is going to be a big problem if we do not act, in the context that we are providing services that are a bridge to opportunity for some of the neediest people in New York City.”

by Meg O'Connor, Gotham Gazette

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City Council Budget Response Seeks New Spending, More Savings

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Mayor de Blasio briefs Council members on his budget (photo: William Alatriste) 

The City Council on Monday issued its formal response to Mayor Bill de Blasio’s $82 billion preliminary budget for fiscal year 2017, capping a month of budget hearings that were fraught with concerns over how Governor Andrew Cuomo’s proposed state budget would affect the city and how prepared the city’s coffers are for a rainy day.

Until last week, uncertainty over significant cuts in funding to New York City outlined by Cuomo had the City Council on its toes, with Council Speaker Melissa Mark-Viverito traveling to Albany to participate in efforts to eliminate them. The de Blasio administration said at the first Council budget hearing that it did not have a contingency plan if the state were to shift nearly $700 million in costs for Medicaid and CUNY in fiscal 2017 to the city. Instead, officials said, they would be making every effort to ensure that the cuts did not stay when the state budget was passed.

In a letter to the mayor on Wednesday, the Council identified its budget priorities but stopped short of issuing its full response given that the state budget had yet been finalized.

At the end of last week, a new $147 billion state budget was passed without the most significant cuts to city funding, and the Council had the all clear to move forward with its priorities unchanged. Out of a budget process so far largely focused on identifying savings across city government, the Council outlined specifics for a city budget that serves immigrants and youth, sets aside more in reserves, and invests in expanded services that it can track.

“The Council’s budget recommendations are the culmination of dozens of comprehensive budget hearings and reflect the needs of all New Yorkers while also planning for our City’s future,” said City Council Speaker Melissa Mark-Viverito, in a Monday statement accompanying the Council’s budget response, which will form the agenda over the next three months as it negotiates a final budget with the mayor’s office by the June 30 deadline. “This is a budget that is smart, fair and fiscally responsible, all while greatly expanding opportunities to New Yorkers across the City,” Mark-Viverito wrote.

The Council identified eight major priorities in its response: increased investment in city youth; investment in healthcare, education, jobs and legal services for immigrants; specific funding for the diverse communities; capital investment in infrastructure; creating a Rainy Day Fund and adding to existing reserves; baselining essential city services; expanding criminal justice, community support, and human services; and more accurately tracking city agency performance.

The Council is proposing $790 million in new spending and tax reductions but estimates that the increase to the budget would ultimately be only about $127 million once larger agency savings and changes to debt service payments are included. Even with additional spending, the Council estimates a budget surplus of $258 million in fiscal 2017.

The Council identifies $91.2 million in agency savings that the preliminary budget did not account for. A majority of this amount, $80 million, would come from reducing the city’s contribution to fringe benefits for the Administration for Children’s Services (ACS) and the Human Resources Administration (HRA), which have received increased state and federal funding for these costs, the Council says.

The response also calls for reduction in the city’s data processing equipment budget by $14 million and a $6 million reduction in Other Than Personal Services costs at the Department of Transportation. All of these savings figures were arrived at through analysis by the Council’s budget office, which is under the supervision of Mark-Viverito, Council Member Julissa Ferreras-Copeland, who chairs the finance committee, and Finance Director Latonia McKinney.

Although the state budget no longer haunts the city’s fiscal future, the Council recognizes risks remain. An economic slowdown is widely expected by city officials, economists, and budget watchdogs, and the Council’s budget response notes the consequences it could have on consumer spending, tax revenue, real estate prices, and cost of living.

“These preliminary budget recommendations reflect a central challenge in government: making our city more equitable while also planning prudently for the future,” said Ferreras-Copeland, in a statement. “The proposals included address inequality in New York City while remaining fiscally responsible, and I believe they represent the diversity of needs across our city. As the budget process advances, I will continue to ensure that the Council is an equal partner and that the Administration’s investments are transparent.”

The budget is due before the start of the next fiscal year on July 1. Along with the state budget, Mayor de Blasio will take the Council’s feedback into consideration as he crafts his executive budget, due out later this month. The release of that updated spending plan, which the mayor has indicated will likely include a more robust agency savings plan, will trigger another round of hearings at the City Council. Then, the two sides will negotiate out of public view until a deal is struck.

Asked to respond to the Council’s preliminary budget response, Office of Management and Budget spokesperson Amy Spitalnick, recounted by email that “Budget monitors and rating agencies have all applauded this administration's fiscal prudence and focus on targeting investments and protecting against economic uncertainty – and investors agree,” while providing a link to a Bloomberg news article on the subject.

Spitalnick outlined that the administration has “unprecedented” reserves while restoring “funds cut under the prior administration.” Even with billions already in savings, she wrote, “the Mayor has made clear, we’ll continue to build on those savings in the Executive Budget.”

“We look forward to continuing to work with the Council throughout the budget process,” she said.

by Samar Khurshid, City government reporter, Gotham Gazette

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