Gotham Gazette https://www.gothamgazette.com/component/tags/tag/108 Wed, 21 Aug 2019 03:24:38 +0000 Joomla! - Open Source Content Management en-gb webmaster@gothamgazette.com (Webmaster) Top Charter School Advocate on the Controversial Sector’s Strengths and Weaknesses https://www.gothamgazette.com/city/8747-top-charter-school-advocate-on-the-controversial-sector-s-strengths-and-weaknesses https://www.gothamgazette.com/city/8747-top-charter-school-advocate-on-the-controversial-sector-s-strengths-and-weaknesses gov attends charter

(photo: the governor's office)


James Merriman has been involved in the charter school movement in New York since its inception 20 years ago, first as the general counsel for the Charter Schools Institute and now, for the last 12 years, as CEO of the New York City Charter School Center, a leading charter school advocacy and resource group.

“My parents were both professors. I thought I was going to be a professor. It’s all anybody did in my house,” Merriman said in a recent interview. “And the notion of being involved in education and giving all children the ability to participate fully in our civic, political, and economic life is very important to me. It was then, and it’s what still motivates me today.”

As such, Merriman has been in the middle of many policy and political fights over the years as the controversial charter school sector — public schools that are privately run — of the city’s education system has grown significantly. There were roughly 119,000 students enrolled in 235 charter schools for the 2018-2019 school year, good for 66% growth in student enrollment since 2014, while enrollment in the city’s traditional public schools has declined.

But while he has a prominent role in often-tense education debates, Merriman strikes a calm, stoic demeanor, tries to be a consensus builder, and is one of few top charter sector figures readily willing to acknowledge charters’ shortcomings.

Reflecting on the two-decade charter school movement in New York, Merriman said that originally the schools were to be “labs of innovations,” but have expanded beyond that as they succeeded, and now form a “parallel alternative” to the traditional public school system in the city. Merriman discussed the sector’s trajectory, reasons he believes New York City charter schools have been successful, and how the schools can and should improve during an appearance on the latest episode of the What’s the [Data] Point? podcast from Gotham Gazette and Citizens Budget Commission.

Merriman said at first the charter school movement was so “upstart” and “revolutionary” that at the time he did not think they would grow beyond that.

“I think, though, as time went on, as they succeeded, as parents demanded more of them, as educators wanted to start more charters, they’ve become a significant part,” Merriman said. “Obviously [WTDP’s] number of the day represents about 10% of students in New York City. We are larger than Syracuse, Buffalo, Rochester combined by a significant amount. We’re bigger than Denver in total students.”

As the future of charter schools in the city is somewhat more uncertain than in past years, Merriman weighed in on several key ongoing debates, including about student enrollment and discipline, teacher turnover, the appropriate size of the sector, why charter school students perform so well on state tests, and more.

“There are some people who would say we should not even be the size we are,” Merriman said. “And then there are people who say the natural growth is until parents stop wanting more charter schools.”

The goal of the charter school sector is not to become a replacement to the traditional public school system or even to make up half of the city’s public schools, Merriman said, but to provide parents good choices for their children.

The intent is to grow until there are no longer wait lists, he said, welcoming the idea that traditional district schools improve to the point that there is no longer such demand for charters.

“I wouldn’t say the goal is any specific number,” Merriman said. “The goal is to reach a point where we no longer have parents who aren’t getting a seat if they want one. I don’t know what that number is. I’m going to tell you, though, it’s well, well short of 50%. I just don’t see that at all in any realistic thing. Lots and lots of parents are happy with their district school they’re sending their child to.”

Applications for charter school seats have far surpassed the number of those available, with tens of thousands on wait lists. However, no more charters can be issued as New York City hit the state-imposed cap this past March and legislators declined to work with Governor Andrew Cuomo, a long-time charter school supporter, to lift the cap before the end of the legislative session in June. Charter schools are still growing, however, given that many continue to add new grades — the charter sector is predominantly elementary schools, and schools often build out over years.

Merriman said the charter school center and its allies will continue to try to convince the state Legislature to raise the cap. One of the biggest opponents of charter school growth is Mayor Bill de Blasio, who has been sharply critical of the sector, especially Success Academy CEO Eva Moskowitz, who is often the face and voice of charter schools in New York given that her network makes up 14% of charter students in the city. De Blasio has said he is opposed to raising the charter cap.

Charter schools are concentrated in Central Brooklyn, Upper Manhattan, and the South Bronx, Merriman said, generally where there are many students of color and low-income students, and struggling traditional district schools. Merriman said about 82% of charter school students are low-income. Around 90% of charter school students enrolled in 2017-2018 were black or Hispanic, according to the Charter School Center.

“The ethos was that we would help those students who are in need and who are at risk of academic failure and who, historically, have not been well-served,” Merriman said. “And so that’s why you see those concentrations there.”

Charter school students have far outperformed district students on statewide assessments, according to an analysis of State Education Department data by the Charter School Center. In 2018, around 60% of charter school students scored proficiently in math assessments compared to 43% of district students.

Black and Hispanic students in charter schools also outperform those in public school as 30% of black charter school students scored at Level 4 proficiency (the highest level) in math compared to only 8% of those in traditional public schools.

Merriman said the test score success in charter schools comes from “what is being taught in the classroom” and that principals are more focused on academics than paperwork, often hiring a top aide to handle compliance and operations, and give robust teacher feedback, which then benefits students.

“While test scores aren’t everything, and state tests aren’t everything, they’re not nothing, either,” Merriman said. “We need to make sure that our kids have basic skills in the early grades or there is no way that we are going to be able to do complex math and English language, arts and history down the road.”

Merriman acknowledged that there are still ways the charter school system can improve. As the conversation turned to teacher turnover, which the Manhattan Institute noted in a 2018 report is higher in charter schools than traditional public schools, Merriman said teachers leave charter schools because of the difficulty of the work and how much is expected of them.

Merriman said some schools are trying to figure out how to keep a sense of urgency and focus while working with teachers (though he didn’t specify how) who may leave after 3 to 5 years due to the difficulty of the work. He said, though, that the larger networks may see the turnover rate as more of a model than an issue. Most charter schools do not have unionized teaching staff.

“As long as they think kids are doing well, if that means that most people can’t hack it in their view, well, that’s the way it’ll be,” Merriman said. “I think others think probably they’re not going to have people who work 20 or 30 years with them, that they’re trying to make sure they move from an average of say three-and-a-half years, ideally, to six or seven years.”

Some have also criticized charter schools for harsh “no excuses” discipline practices, which means harsh discipline and high suspension rates for their mostly black and Hispanic students, leading networks like KIPP to announce policy changes. Merriman said among charter schools there has already been a “reckoning” that discipline policies need to be changed, but that not all of the work has been done yet.

“People have revamped not just discipline codes, because I don’t think that’s really the issue,” Merriman said, “They’ve revamped how they think about kids. The shift, if you will, is I think in the past the notion was the children will fit the program. I think there’s a reckoning and an understanding we need to make sure the program fits the kids where they are.”

LISTEN to the full interview with James Merriman, CEO of the New York City Charter School Center

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bySamantha Handler, Gotham Gazette
     

Read more by this writer.

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Top Charter School Advocate on the Controversial Sector’s Strengths and Weaknesses Mon, 19 Aug 2019 04:00:00 +0000
A Chore We Must Do: Over-Hauling Private Waste Management in New York City https://www.gothamgazette.com/130-opinion/8706-a-chore-we-must-do-over-hauling-private-waste-management https://www.gothamgazette.com/130-opinion/8706-a-chore-we-must-do-over-hauling-private-waste-management assist parade cleanup

(photo: Michael Anton/Department of Sanitation)


Environmental advocates and labor unions are dissatisfied with New York City’s system of collecting garbage from commercial establishments. Unlike waste from residences, including apartment buildings, which is collected by the city’s Department of Sanitation, waste from office buildings, retail businesses, and restaurants is collected by for-hire companies that charge their customers fees for the service.

Environmentalists decry the traffic and pollution caused by multiple different waste collection companies’ trucks driving all over the city on uncoordinated routes and schedules. Labor unions are concerned about the reliance of many of the smaller waste-haulers on non-unionized workers with low salaries, no benefits, and relatively little in the way of safety protections. These concerns were highlighted by fatal crashes that led to the shutdown of one waste hauling company. 

My former organization, Citizens Budget Commission, has long been concerned about the high costs of New York City’s waste disposal practices; as CBC President I first testified about this issue before the City Council Committee on Sanitation and Solid Waste Management in October 2011.

We published a comprehensive analysis of city solid waste management in 2014. With respect to commercial waste collection, CBC noted that the high number of private carters (as many as 250 in 2014, including those that handle only special types of waste such as construction and medical) has kept collection prices low and minimized corruption, but a more efficient zoned system would minimize congestion and greenhouse gas emissions:

“...the City should shift from “open” competition to competitively awarded franchises for service in designated districts. The franchise should not be given exclusively to one carter but instead limited to a small number of firms. Such “non-exclusive” franchises allow for greater competition and provide greater opportunity for small and medium size businesses to compete…The franchise agreements should include standards for worker safety and vehicle environmental performance.” 

In November 2018, after two years of study and consultation with stakeholders, the Department of Sanitation released a reform plan that largely reflects CBC’s recommendations. As the City Council appears close to movement on solid waste management reform, it would be wise to quickly adopt legislation that includes the key tenets of what CBC and Sanitation have put forward, so that an aggressive but careful multi-year implementation process can begin.

Sanitation proposes a Commercial Waste Zone (CWZ) program that would divide the city into 20 zones. Within each zone carters would compete to win city contracts to provide waste collection services. Three to five carters would be selected in each zone, depending on the density of commercial activity in the zone. Selected carters would have to specify a maximum price, offer recycling and organic collection at discounted rates, and comply with vehicle emission standards. The contracts would last 10 years and the first awards would be made in 2021 with the system to be phased in over the following two years, 2022-2023.

CWZs would be a dramatic change and all change meets resistance. Some carters are opposed to limiting the number of franchisees, fearing that they would not be able to compete and would go out of business. Businesses, especially large ones that are now able to drive a hard bargain, are concerned that collection fees will increase and they will have little leverage to control costs. They also want flexibility to be able to change trash haulers if they believe they can get a better deal or performance isn’t meeting expectations.

Environmentalists contend that there should be only one carter per zone to achieve the maximum reduction in greenhouse gas emissions. Labor unions want the better salary and benefits that union-only employees would receive and that only very large collection firms that have exclusive franchises can assure. 

The City Council Sanitation Committee chair, Antonio Reynoso, has been a strong advocate of some environmentally–oriented waste management policies, like charging for single-use plastic bags and curbside collection of organic waste. Now, he has taken the lead on CWZs by introducing legislation to create franchise zones.

His bill provides for only one franchisee per zone. The enviro/labor groups are pleased, but the business community is very concerned about the prospect of dramatically increased waste collection fees and a loss of customer choice. They point to the recent experience in Los Angeles, which adopted single-vendor zones and prices for some companies quadrupled.  (The LA system is quite different and much larger and more expensive in that it applies to multi-family residential as well as commercial waste collection.)

As they say, the mark of a good compromise is that all stakeholders are somewhat dissatisfied. CWZs will require significant readjustments by the Department of Sanitation, the city’s Business Integrity Commission ( which licenses carters), the business community, and the waste collection industry; it would be wise to move resolutely but carefully.

Moving from what is essentially a free-for-all to a highly constrained and regulated system is probably too much to do all at once. The Department of Sanitation’s proposal to allow several franchisees per zone would give businesses some price and quality leverage to select among a few competitor vendors. It would enable some of the smaller waste haulers to remain in business while elevating the quality of equipment and safety of the industry citywide.

Studies indicate that as much as 85% of the greenhouse gas emission reductions to be gained from a CWZ system would be achieved by limiting franchisees to a small number. So while it may not be the more categorical result that some would prefer, let’s hope that the Council doesn’t let the perfect become the enemy of the very good.

The Sanitation Department’s proposal is a thoughtful balancing of interests and concerns. Hopefully some areas of compromise can be found so that the Council can adopt CWZ legislation in the fall and adjustments can be made, if needed, after the city has some experience with the new system. But the time to act is now.

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Carol Kellermann was president of Citizens Budget Commission from 2008 through 2018.

 

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

 

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A Chore We Must Do: Over-Hauling Private Waste Management in New York City Wed, 31 Jul 2019 04:00:00 +0000
An Old, Unfair System: New York City’s Property Tax Conundrum - Part I - Taking on the Difficult Task https://www.gothamgazette.com/state/8712-an-old-unfair-system-new-york-city-s-property-tax-conundrum-part-i https://www.gothamgazette.com/state/8712-an-old-unfair-system-new-york-city-s-property-tax-conundrum-part-i mayor deblasio clears

Mayor de Blasio shovels snow outside one of his two Brooklyn houses (photo: Rob Bennett/Mayor's Office)


This is part one of a three-part series. Skip to part two - Deep and Complex Inequities - here.

In May 2018, after years of criticism that New York City’s property tax system lacks equity, Mayor Bill de Blasio and City Council Speaker Corey Johnson announced they would empanel a commission of “blue chip” experts to explore the issue. Its tasks are to examine everything from the way different property values are assessed to relief for vulnerable homeowners, solicit input from the public and specialists, and make recommendations for reform.

Because of the laws and practices governing New York property taxes, the recommendations will inevitably include some changes that can be enacted by the city and others that would require action in Albany, both of which would upset a longstanding and largely unchallenged system. Even coming up with recommendations has proven fraught.

The commission was tasked with an important constraint: make recommendations to overhaul a complicated, decades-old tax system without changing the city’s bottom line -- in other words, to make sure that a new property tax system would continue to provide city government with its single largest revenue stream, good for roughly $27.8 billion last fiscal year.

More than a year later, with the 2019 legislative session in Albany well over, the panel has conducted ten public hearings and meetings but has produced no report nor indicated what consensus is emerging on a path forward. Asked about it repeatedly, de Blasio, who was criticized for punting on the issue until his second and final term, has said he expects recommendations by the end of this year.

The property tax system impacts homeowners and renters, landlords and developers -- virtually every one of the city’s 8.5 million residents. Problems with the system are myriad in New York, where real estate dominates and nearly a third of the city’s annual revenue comes from real property levies.

Critics have contended that the property tax system is overly complex and opaque, that property assessments are not reflective of true market values, and that classifications and caps aimed at mitigating rapid property tax increases contribute to disproportionate tax burdens across many populations.

Twelve months before the commission was announced, a coalition led by a former city finance commissioner filed a lawsuit alleging the Byzantine tax structure creates vast inequities and that those disparities are felt most severely by low-income New Yorkers and people of color.

One of the central problems is the vast under-assessment of many owner-occupied cooperatives and condominiums, which have experienced sweeping growth in property values over the past two decades, but are taxed instead based not on their sales value but on the much lower income they would likely make if they were rentals. Homeowners, in general, pay a lower effective tax rate (taxes as a percent of sales prices) than commercial and residential rental property owners, according to the Citizens Budget Commission, a fiscal watchdog.

Another problem is the labyrinth of abatements, rebates, caps, and phase-ins that obscure the causes of rising property taxes, making them hard for residents to trace and understand.

As property values ratchet up in gentrifying neighborhoods, so do the taxes assessed on them, which can put a strain on lower-, middle-, and fixed-income homeowners struggling to keep up with bills and maintenance fees. At the same time, homeowners in places with slower real estate market growth, like Staten Island and the Bronx, see their taxes rise higher relative to home sales prices because of caps that keep tax hikes low when the housing market unexpectedly leaps.

The symptoms of unequal assessment and taxation land harder on different populations of New Yorkers. The coalition behind the lawsuit says these factors lead to higher tax assessments in communities of color than in majority-white neighborhoods. Others over the years have asserted that when landlords’ tax burdens increase, they may be passed on to tenants in the form of higher rent, especially in large apartment buildings with sizable black and Latino populations, critics say.

The most expensive home sold in United States history is a Midtown Manhattan condo that went for $238 million earlier this year to Ken Griffin, the hedge fund manager ranked the 45th richest American by Forbes. Griffin pays taxes on a property valuation of just $9.4 million, or .22 percent of the sales price, according to the Wall Street Journal. By contrast, the owner of a two-family home in the northeast Bronx that sold for $439,000 in the most recent fiscal year pays 1.16 percent of the price tag in property taxes, according to an Independent Budget Office analysis provided to Gotham Gazette.

Yet the owners of both these types of homes -- owned by some of the wealthiest New Yorkers, as well as lower- and middle-income residents -- often say they feel pressure from rising property taxes year after year and are seeking relief. One of the barriers to property tax reform is that virtually all homeowners, whether they are likely under-assessed or not, believe they are getting squeezed by property taxes, which for small homes rose an average of 7.7 percent annually between 2001 and 2017, according to a Citizens Budget Commission analysis. (New York City has been repeatedly exempted from a state cap of 2 percent on annual property tax growth that applies everywhere else.)

There is broad agreement that the New York City property tax system produces inequality, that it hurts a wide range of communities from senior homeowners to renters of color to (some) outer-borough residents. Democrats, Republicans, and others across the political spectrum have called for change. But while the debate over the city’s property taxes crosses partisan lines, efforts to make an unequal system more equal means upsetting some stakeholders.

The complexities in the system have cut out a difficult task for members of the commission launched by de Blasio and Johnson, commissioners who were originally given only a year to produce results. But, as with other attempts to rethink the city’s relationship to its most essential resources, the task of unpacking the property tax system reveals a tangle of practical and political factors that have led to the status quo and make change so challenging.

Hope quickly faded that the commission would put forth recommendations to be taken up before the June end of this year’s state legislative session. During a May interview, Marc V. Shaw, one of two commission co-chairs, told Gotham Gazette that for lawmakers to deal with complicated concepts at the end of the legislative session, “there just would not be time...even if we were prepared. But we haven’t reached the point of making even the recommendations. We’re still sort of in an analysis phase.”

A Difficult Task
“I think all of us that have been working on the commission, knew from the beginning that that was a time schedule that was going to be pretty...difficult to attain...so from our perspective we’re looking at trying to put together a series of recommendations to be available for discussion and debate in the next legislative session,” Shaw said in May. Legislators will return to Albany in January, but the mayor and City Council can evaluate the commission’s work throughout the rest of this year, pending a report.

Shaw, a former first deputy mayor under Michael Bloomberg, is the interim chief operating officer for CUNY. He has been the Advisory Commission’s single (co-)chair since its other, Vicki Been, stepped down when she was appointed Deputy Mayor for Housing and Economic Development in April. The body is made up of fiscal policy experts, business leaders, and city planning specialists, almost all of whom have served in city government in the past.

Spokespeople for both the mayor and City Council told Gotham Gazette the Advisory Commission is now planning to release a preliminary report in the coming months and hold another round of public hearings in the fall to solicit feedback. In a July 19 WNYC radio interview, Mayor de Blasio said the commission would produce a final report by the end of the calendar year, in time to be taken up in the next state legislative session.

City Council Member Keith Powers, a Democrat who represents a Manhattan district with a mix of property, is concerned the timeline doesn’t allow for much flexibility to work in Albany’s tight calendar. The timeline “puts you rolling right into January’s legislative session,” and just before state budget negotiations begin, he told Gotham Gazette. “You just may lose a little steam if you don’t have a bill early next year, and you know agencies miss deadlines all the time.”

In the meantime, the Legislature is waiting to hear from the commission. “It just kept coming up where we may be modifying some bills, or not doing some bills, because of the commission and not knowing what their positions are going to be,” Sandy Galef, chair of the Assembly’s real property tax committee, told Gotham Gazette at the end of May. “So yes, I would say it’s holding back some ideas.”

It appears important that the city has its ducks in a row before the January to June state session begins, giving a report and decisions by the mayor and Council enough time to work their way through Albany’s political corridors. Complicating matters further is the fact that 2020 is an election year for the entire state Legislature. Albany lawmakers sometimes try to get around dealing with especially thorny issues in conspicuous ways by packing them into state budget bills, which are due by the April 1 start of the new fiscal year.

Many of the reforms will focus on the state Real Property Tax Law, which sets standards for property tax assessment, among other things, and will require the state Legislature and governor to act. Once the commission produces its final report and city leaders make their opinions known, proposals will have to be negotiated in Albany, which in the past has proven fatal to serious property tax reform.

“We’re involved but at this point I view it as local home rule,” Galef said in May before the legislative session ended. Much if not all of what the city will ask of the state will come through the City Council, even if some of it is through non-binding measures.

Some tax programs were set to expire this year, like tax relief for property owners who install green roofs, which the Legislature extended and the governor signed notwithstanding the city property tax commission’s progress. “Even if the commission does the report at the end of the year, by the time they get authority from the state, there may be a lot of time in between,” Galef said.

That prospect does not sit well with Powers. “I think that any commission or body that’s working on this needs to understand that there are real people who are waiting for this relief,” he said, noting he has heard from constituents who are anticipating the commission’s recommendations.

The Status Quo
The complexities the commission is now grappling with are the result of a system with antique origins, one which has not been comprehensively updated and seldom reviewed over the past four decades. New York State’s current property tax apparatus is the outcome of a judicial ruling that shook up the prior system in the mid-1970s, and subsequent legislative action that mostly put it back into place in the early ‘80s.

In 1975, the Court of Appeals, the state’s highest tribunal, sided in favor of Jerome Hellerstein, an Upper West Side lawyer representing his wife, Pauline, who had sued the Town of Islip for assessing the property value of the family’s Fire Island vacation home -- and every other property on its roll -- at only a fraction of its market value, in violation of state statute (and, apparently, in their own interests). The law, at the time section 306 of the Real Property Tax Law, stated, “All real property in each assessing unit shall be assessed at the full value thereof.”

hellerstein fire island houseThe Hellerstein Fire Island home (image courtesy of Walter Hellerstein)

For nearly 200 years prior, however, property taxes for homeowners in New York State were assessed on only a fraction of the “full value,” based on what assessors “deemed proper,” “not ‘according to their best information and belief, of its value,’ ‘but according to the usual way of assessing,’” an 1852 Court of Appeals decision reads. The decision, in 1852, noted, “the usual method is to estimate property at less than half its value.”

The discretion given to assessors meant commercial and apartment building owners in 1975 paid taxes on a much larger fraction of the market value of their property than homeowners. According to an account published by the city’s Independent Budget Office, reports at the time of the Hellerstein court decision found even the tax burden from similar homes in different neighborhoods could vary, with homeowners in New York City’s lower-income communities paying more than homeowners in more affluent ones.

The Hellerstein decision upended centuries of property tax assessment practices and sent New York’s political world into a spin. For six years, officials in Albany battled over the implications of the decision with some, like Democratic Assembly Speaker Stanley Fink, arguing for the fractional assessment practice to be codified into law, fearing the effects homeowners would feel if their property taxes were to rise rapidly.

There was panic that “fiscal chaos” would ensue if wholesale changes were made to the way the properties of people and businesses were assessed across the board, according to Judge Solomon Wachtler who wrote the majority opinion in the Hellerstein case. A report from the New York Times during that period quotes Edwin Margolis, counsel to the Assembly majority, saying, “The goal is not to shift the burden from residential to industrial or commercial, but simply to keep the status quo.”

The Legislature achieved that goal in 1981 after overriding a veto by Governor Hugh Carey, a Democrat. Instead of meaningfully changing assessment practices, the new legislation removed the “full value” language from the law and established a system in New York City that separated properties into four different categories, each to be taxed on a different portion of the full market value, mirroring the de facto practices assessors had been using all along.

The system placed one- to three-family homes into Class 1; apartment buildings, co-ops, and condos into Class 2; utilities into Class 3; and commercial properties into Class 4.

“The law was set up in such a way that each class of property would continue to pay roughly the same share of the levy” as they did at the time the law was passed, according to Ana Champeny, a property tax expert at the Citizens Budget Commission.

This “is the property tax system that we essentially currently operate under,” said Shaw, the commission chair. “That just gives you a sense that it’s always been a complicated system from the beginning.”

Before the 1981 law codified the current system, a number of other proposals had been floated and a bipartisan commission was even set up, the Temporary State Commission on the Real Property Tax, to review the state’s practices. That commission suggested that as an alternative to moving toward assessment by class, the state could mitigate the shift in tax burden from businesses to homeowners by implementing homeowner assistance programs.

But the political might of homeowners won out over the interests of commercial property owners, as well as over the will of the governor and a sizable minority in the Assembly. As part of the 1981 legislation, lawmakers enacted caps on the amount assessments could increase annually and over a five-year period, further protecting homeowners against rapid rises in property taxes in the event they be more accurately assessed going forward.

The resulting system, in a nutshell, is one where one- to three-family homes, which are more often occupied by their owner, are assessed based on the comparable sales prices of the property, while commercial and rental properties are assessed based on the income those businesses could generate.

One catch to this, which has been a recurring sticking point in perennial calls for property tax equity, is that co-ops and condos like Griffin’s are assessed on the income that would be made if they were rental apartments, rather than the sales prices of owner-occupied homes most observers say they more closely resemble. Another has been the caps on how much the assessed value of a home can increase, which more recently has led to owners of homes in booming neighborhoods paying relatively low property taxes compared to other homeowners in more economically stagnant parts of the city.

“What we’re facing is looking at how to do a reset of the property tax, given all of those problems, to make it a fairer system now,” said Shaw.

This is part one of a three-part series on the property tax system in New York City and potential for changes to it that may be on the horizon. Read part two - Deep and Complex Inequities - here.

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by Ethan Geringer-Sameth, reporter, Gotham Gazette      

Read more by this writer.

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An Old, Unfair System: New York City’s Property Tax Conundrum - Part I - Taking on the Difficult Task Wed, 31 Jul 2019 04:00:00 +0000
What's the [Data] Point? 98,000, Addressing New York City School Overcrowding https://www.gothamgazette.com/city/8681-what-s-the-data-point-98-000-school-overcrowding https://www.gothamgazette.com/city/8681-what-s-the-data-point-98-000-school-overcrowding whats the data point


What's The [Data] Point? Episode 77 -- 98,000, with CBC's Riley Edwards  [You can download What's The [Data] Point? wherever you get your podcasts, including on iTunes]

ep77 riley edaCitizens Budget Commission recently released a new report -- Cut Costs, Not Ribbons -- about how to address New York City's school overcrowding problems. The report, written by Riley Edwards, explains why the city has been misguided to use building new schools as the main tool toward reducing school overcrowding, which impacts almost half the city's 1.1 million students. Edwards joined the podcast to discuss her findings.

Listen to the conversation and let us know what you think: Ben Max of GG (@TweetBenMax), Maria Doulis of CBC (@MariaDoulis). Listen below or download wherever you get your podcasts!

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by Ben Max, Gotham Gazette
     

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What's the [Data] Point? 98,000, Addressing New York City School Overcrowding Fri, 19 Jul 2019 04:00:00 +0000
Struggling with Overcrowded Schools and Large Class Sizes, City Advances $8.8 Billion Plan https://www.gothamgazette.com/city/8673-struggling-with-school-overcrowding-and-large-class-sizes-city-advances-8-8-billion-plan https://www.gothamgazette.com/city/8673-struggling-with-school-overcrowding-and-large-class-sizes-city-advances-8-8-billion-plan 2 cm r espinal ground

Mayor de Blasio & others break ground for a new East New York school (photo: John McCarten/City Council)


Some days, it can be hard for Arthur Goldstein to walk down the hallway of Francis Lewis High School in Queens, where he teaches English as a second language. Goldstein’s school is one of 25 overcrowded schools in the 26th school district, and has a utilization rate of 207 percent, according to a 2018 Department of Education report.

“There are some days when I think I’m going to go to this office and I turn around and walk to another office because it’s just too much work to get through walking down the hall that way,” Goldstein said. “I don’t know if you can even imagine that, but that’s happened to me more than once.”

Francis Lewis High School has a capacity of about 2,400 but enrolls closer to 4,600, Goldstien said. Those students are some of about 520,000 students — nearly half the city’s school population — in the city who attend an overcrowded, also known as over-utilized, school, according to a Citizens Budget Commission (CBC) report released July 9. Those students attend roughly 618 schools, with the worst overcrowding in Brooklyn, Queens, and the central Bronx. Overall, there are roughly 1.1 million students in 1,840 schools in 32 school districts across the five boroughs, according to the Department of Education.

While the CBC report said crowding may lessen as enrollment citywide declines and, overall, the number of crowded school buildings has declined by 31 since 2015, others have expressed concern that the problem will get worse because the current need is already greater than the 83,000 seats the Department of Education has identified to be built to reduce crowding. In 2017, Mayor Bill de Blasio added 57,000 seats to the 2015-2019 capital plan to meet the 83,000 need seat estimate. 

The new plan also includes $180 million for the removal of Transportable Classroom Units — known as TCUs or trailers — where some students at crowded buildings may be receiving instruction. In 2018, it was estimated that about 8,000 students learned in trailers, and then-schools Chancellor Carmen Farina said the DOE had removed 159 out of 354 total trailers and had plans to remove 75 more. In 2003, Mayor Michael Bloomberg’s capital plan projected that all TCUs would be able to be removed, and he promised that would be completed by 2012.

Former state Assembly Speaker Sheldon Silver had in 2014 urged de Blasio to prioritize the removal of trailers and set aside some of the $800 million the city received from the Smart Schools Act, which allocated funds for districts to upgrade technology, increase pre-kindergarten capacity, and get rid of trailers.

Chalkbeat reported at the time that lawmakers had doubts that removing trailers was a priority of the de Blasio administration, as a DOE official said at a hearing earlier that year that trailers could be used to expand capacity for pre-K, de Blasio’s top campaign promise and mayoral priority. De Blaiso said at a press conference at the time that he will keep prioritizing the issue in his capital plan, as in 2014 his administration allocated $405 million toward removing TCUs.

“I don’t want kids in trailers,” de Blaiso said at the press conference. “I want to move aggressively to get them out of trailers. We know that will take some time, but we’re committed to it. We’re also committed to putting in new facilities in most overcrowded areas.”

Now, several years later, advocacy groups like Class Size Matters and City Council Members like Daniel Dromm say the new city capital plan — which includes nearly $8.8 billion for school capacity projects to be started over the next five years — does not have an updated estimate of the need for seats since the 2015-2019 capital plan as residential development, rezoning projects, and other trends will change the need in certain sub-districts.

“It’s very suspicious,” said Leonie Haimson, the executive director of Class Size Matters, a nonprofit advocacy organization. “They claim to be building all the seats that are necessary, but that’s based upon an estimate that is many years old.”

Overcrowding occurs in pockets around the city with crowded buildings in each district of each borough, but CBC research associate Riley Edwards, who wrote the new school capacity report, said there are enough seats currently for all New York City students, and the key to thinking about alleviating school overcrowding is more aggressively pursuing strategies other than school construction.

Edwards said most districts actually have an excess of seats, and the severe overcrowding occurs in sub-districts, with nine of 32 districts — five in Queens, two in Brooklyn, one in the Bronx, and one on Staten Island — packed with more students than their target capacity.

Other myths about school overcrowding, as detailed in a 2016 CBC report also authored by Edwards, are that middle and high school students face the worst crowding problems — it’s actually elementary school students — and that plans to build new schools will solve the problem. The new report says the DOE needs to focus on other strategies it already uses, such as rezoning, changing admissions policies, repurposing seats, and programming.

“It does take a long time for the city to site and build a new school,” Edwards said. “There’s only so much available land in the city and a limited amount appropriate for school buildings.”

According to the Independent Budget Office, Queens’ District 26 ranked as the third-most crowded school district with a utilization rate of 109 percent for the 2017-2018 school year, behind District 25 in Queens, and District 20 in Brooklyn, which both had over 121 percent. However, Dromm said district- or borough-wide numbers do not reflect the “tremendous” overcrowding that occurs at the sub-district level in individual schools.

According to Class Size Matters, the average class size for K-12 schools in New York City during the 2018-2019 school year was 26, almost no change from 2014-2015 when the last capital plan was proposed. The average class size in the United States is 21, according to the Office for Economic Cooperation and Development. Haimson said over 330,000 students in the city were in classes of 30 or more.

While some research shows that reducing class sizes may have small benefits at best, Haimson said ultimately larger class sizes are detrimental for students.

“There’s a huge amount of rigorous research that shows the larger the class, the less learning goes on,” Haimson said. “There are also a lot of other negative effects of large class sizes. Kids become less engaged, they’re more likely to get held back, they’re more likely to get referred to special education, and they’re more likely to have disciplinary problems.”

Dromm, now the Council’s finance chair and previously its education committee chair, said during the 25 years he was teaching at P.S.199 in Queens’ District 24 he saw the crowding getting worse each year.

“I remember a day when the janitors came into the school, and they opened the maintenance closet right outside the staff room,” Dromm said. “They took out the pitchfork, they took out the rake, they took out the shovel, and they threw up a coat of paint. They turned that into the speech classroom. That’s how bad some of the situations are in some of the schools.”

To address the issue, the city Department of Education’s new $17 billion five-year capital plan for 2020-2024 proposes funding to create 57,000 new school seats across all school districts, with about half expected to be completed no later than the start of the 2025-2026 school year, according to the city’s Independent Budget Office. The IBO predicts that all of the seats would be completed by 2028.

The plan sets aside $8.8 billion for capacity issues, including $7.9 billion for 57,000 new school seats in 88 new buildings and $150 million for class size reduction programs, which the DOE described as “increasing the number of school options available to students.” The DOE plan outlines the Class Size Reduction Program as building additions or new school buildings near buildings that have a high rate of overutilization, use trailers, are geographically isolated, or has a recognized seat-need that has not been funded.

In December testimony regarding the new capital plan, the United Federation of Teachers (UFT) said the additional seats are “good news” for crowded schools, but added that the publicly available data regarding trailers is incomplete, which makes it "impossible" to evaluate the removal projects.

“We commend the work that went in to developing this new five-year capital plan, and we support efforts to mitigate these three issues and the many others included within the report," the UFT testimony reads. "However, we want to stress the narrative and appendices in the report fail to clearly tell the story. While they inform many important programs, the information and data provided are insufficient to track the projects’ goals, and project- and program-level spending.”

“We’ll continue to build on these investments and work with school communities to meet their needs,” Isabelle Boundy, an assistant press secretary at the Department of Education, said in a statement to Gotham Gazette.

“We’re committed to reducing class size and alleviating overcrowding and have already implemented many of the recommendations in the report," Boundy said of the new Citizens Budget Commission study. "We’ll continue to build on these cost-effective investments such as rezoning, re-purposing seats through grade truncations and other significant changes to school utilization, setting high school seat targets aligned to space and demand, helping principals program their instructional space more efficiently, and creating capacity through room conversion projects.”

In 2003, following a lawsuit that claimed the state’s school funding system underfunded the city’s public schools, a New York Supreme Court concluded that for New York City students to receive their constitutional right to a sound basic education, more equitable funding was needed to reduce class sizes. At the time, the average class size for grades 4 through 8 was 25, and the Campaign for Fiscal Equity — the nonprofit advocacy organization that filed the lawsuit — said class sizes needed to be just slightly lower, around 24. 

Four years later, the state passed a law called Contracts for Excellence that partly required districts to put funds toward reducing class size and required New York City to reduce class sizes across all grades to specific goals — such as reducing 4 through 8 class sizes to 23 by 2011 — over the next five years.

Since 2007, about 93,000 school seats have been built, according to CBC, but Class Size Matters says class sizes have gone up and are “still significantly larger” than in 2003. Kindergarten class sizes have risen from an average of 21 in 2007 to 24 in 2019, though the Contracts for Excellence target was around 20.

Class Size Matters joined a group of parents and other advocacy groups in April 2018 in filing a lawsuit against city schools Chancellor Richard Carranza, the DOE, and state education Commissioner MaryEllen Elia to demand the city reduce class sizes. The court ruled in 2018 it was up to the commissioner to decide, and she said in 2017 the class size requirements in the Contracts for Excellence law had expired years ago, though Class Size Matters charges that the law is still in full effect. The plaintiffs are now appealing the decision and arguments are expected later this summer.

Meanwhile, the city continues to build new school seats to try to relieve crowding issues, but does not have to follow the guidelines for class size in the Contracts for Excellence law.

At a City Council hearing in December, Dromm said while the investment in 57,000 new seats included in the new capital plan will bring the total number of seats constructed since the start of the last five-year plan to a “historic” 83,000 seats, he said the DOE did not include a new, recalculated number of seats needed in 2024.

He said the 83,000 seats fulfills a commitment the mayor made in 2017 to fully fund the identified seat need by 2025, but there is disagreement over whether that number will remain years later by the end of the new five-year plan in 2024. Shino Tanikawa, the co-chair of the city’s Education Council Consortium, a body of elected parent leaders, said even though the mayor added more seats to the plan, the city is “always behind” the need.

In 2015, the city rejected a recommendation from the Blue Book Working Group — which was formed to make the DOE’s Enrollment, Capacity, and Utilization report, commonly known as the Blue Book, more accurate — to include the class size standards set in the Contracts for Excellence law in the Blue Book calculations for capacity and utilization. Though, the DOE did remove trailers from capacity calculations, decreasing the capacity of those schools.

Tanikawa, who was a member of the group, said the DOE should use aspirational class sizes to calculate, but instead the report is calculated using class sizes that are too large. For grades 9 through 12, the Blue Book uses a target class size of 30, despite the 2007 goal of an average class size of 25 for those grade-levels, according to the city’s Planning to Learn report from 2018. The Blue Book uses a higher target class size than the goals set in 2007 for all grades except for Kindergarten through 3.

“To many of the advocates on the working group that was the most important recommendation we made,” Tanikawa said. “And that was the one that was rejected.”

The 83,000-seat estimate came from a DOE analysis in November 2017 and was released in the February 2018 version of the 2015-2019 five-year plan. Class Size Matters estimates that the need is at least 100,000 seats based on the number of schools that are currently overcrowded, the likelihood of enrollment growth in parts of the city, and the need for class size reduction.

“I believe that they’re right,” Dromm told Gotham Gazette of Class Size Matters’ estimate. “Seat need is probably closer to 100,000, and the administration’s plan does not really reflect that. They claim that they put 57,000 seats into the budget this year, but still it doesn’t really reflect the need we feel is out there.”

The DOE predicts a decline of 4 percent enrollment, down to about 881,000 students, across public schools (the projection excludes enrollment in non-DOE spaces, charter schools, and District 75) by 2022-2023, though Dromm said residential construction, rezoning efforts, and overall city population growth are not adequately addressed in the plan. Haimson said demographic trends are difficult to predict and that there may be less overcrowding due to population shifts in certain areas over time, but the city’s population is growing fast.

Enrollment has declined over the past decade across the United States due to falling birth rates, but CBC has also reported that enrollment may increase in already crowded districts. 

The city’s population is expected to grow from 8.6 million in 2019 to 9 million in 2040, with the Bronx and Brooklyn expected to grow at the largest percentages, according to the city’s population projections.

“More and more families are choosing to stay in the city when they have children,” Haimson said. “And the mayor’s continuing to encourage development at any cost.”

When the city has undergone large-scale neighborhood rezonings, such as the ones for the Jerome Avenue corridor in the Bronx and East New York in Brooklyn, the School Construction Authority works closely with the Department of City Planning to identify the projected school seat need for those areas, according to SCA President Lorraine Grillo’s comments at a Council hearing in December. Rezoning deals between the city and local Council members often include school seat considerations, sometimes including the construction of at least one new school, like in East New York.

The new five-year plan allocates funding for 6,000 seats within six rezoning areas projected to move ahead during that time: the Hudson Square rezoning and Hudson Yards in Manhattan; Crotona Park East/West Farms rezoning in the Bronx; Pacific Park, Greenpoint Landing, Domino Redevelopment and Albee Square in Brooklyn; and Halletts Point rezoning in Queens.

According to the city’s Rezoning Commitments Tracker, the construction for a 1,000-seat school in East New York (the first neighborhood rezoning passed under de Blasio) has begun, and commitments were made in the Jerome Avenue neighborhood plan for new elementary schools in Districts 9 and 10. Commitments for at least one new school were included in four out of the city’s five large-scale neighborhood rezoning plans, with the others slated to be completed by 2023.

Council Member Vanessa Gibson of the Bronx, who chairs the Council’s capital budget subcommittee and negotiated the Jerome Avenue rezoning, said at the December Council hearing she was “pleased” about the Jerome Avenue commitments but added that the city is frequently rezoning smaller areas, and every new construction will bring families with school-age children. Griillo said the SCA is informed of smaller rezonings and uses them to inform future projections.

“(There are) the larger neighborhoods that we have rezoned from East Harlem, East New York, Far Rockaway, Jerome in the Bronx, and Inwood, but on a monthly basis on a much smaller scale we pass out smaller rezonings every single month,” Gibson said at the hearing. “We are creating an incredible amount of housing.”

The recent CBC report said there are significant shortcomings in the school construction the DOE and SCA do undertake. Not all new school capacity is created to address overcrowding, according to the report, and not all new seats are built in districts with overcrowding.

While the DOE also projects by 2022-2023 an enrollment decrease of 7 percent in elementary schools, where CBC says nearly two-thirds of the seat need is, the mayor’s initiatives like universal pre-kindergarten have added additional pressure to already overcrowded schools, though some programs are located at separate sites not run by the DOE, Edwards said.

A majority of the 93,000 seats built since 2007 have been for elementary school students, but more than 3,700 of those seats were built in districts with a “relatively low utilization,” according to the report.

Dromm said the DOE has allocated seats for districts they say have not received seats “in a while” though the need is greater in other districts. He said for District 24, the DOE has recognized that around 4,000 seats are needed to address crowding issues there, but those seats were not funded in the new five-year plan and were distributed to other areas.

At a Council hearing in December, Grillo said more seats were added in District 24 than any other district in the city, so the funding for those seats were reallocated to districts that had not yet received additional seats. (A DOE spokesperson told Gotham Gazette that the 2020-2024 capital plan includes funding for about 1,500 seats in District 24 and overall aims to create seats in districts experiencing the most critical and projected overcrowding.)

“But District 24 remains one of the top districts for seat need,” Dromm said in December. “They’re still not addressing the areas where the seat need is the greatest, and that’s concerning to me.”

Additionally, the CBC report said the city has allocated too many seats for high schools, whose overcrowding problems could be solved by utilizing the surplus of high school seats and changing high school admissions practices.

Edwards said the city actually has more seats than students — the shortage of seats in crowded high schools, according to the CBC report, is about 32,000 whereas there’s about 65,000 unused seats at high schools — and there are ways the city can maximize that space.

However, the IBO said in testimony to the Council in 2015 that using the unused seats to alleviate overcrowding is difficult because changing admissions policies can be a contentious topic, the extra seats span across boroughs so the potential for change is limited to a few areas of the city, and DOE policies like universal pre-K will continue to put capacity pressure on buildings.

In the CBC report, Edwards outlined four ways the DOE can address overcrowding that are less expensive and more efficient than school construction, which takes an average of 41 months from the start of design to the end of construction. The DOE already uses these alternative strategies to reduce overcrowding — rezoning, repurposing seats, changing admission policies, and programming — but the report said they are “underutilized” while school construction is the main method.

According to an April 2019 DOE report on space overutilization in schools, the decline in overcrowded buildings from 646 in 2015 to 615 in 2018 was due to a combination of new capacity, resiting, facility upgrades, and new facilities.

According to CBC, in 2017, 42 high schools implemented “split-session” scheduling, which allows more than the traditional eight periods to be scheduled throughout the day; 43 schools were impacted by the rezoning of school districts; and 21 schools repurposed seats through re-siting to underutilized or new buildings. Some other schools received renovations or new facilities.

The CBC report says the DOE could rezone elementary schools or allow zones to overlap or be grouped together to use more seats at under-utilized schools. The report says the majority of the school district rezonings enacted between 2014 and 2017 were to accommodate the opening of a new school and implementing them more often to adjust incoming enrollment would be more effective.

According to the report, the city could also more frequently repurpose seats by truncating some schools and expanding others to relieve crowding. Another way to repurpose seats that has “substantial potential” to address the issue is converting administrative and non-school space to instructional rooms, CBC says.

While the report specifically says that buildings with multiple schools should share administrative offices to save space, some overcrowded schools have had to convert spaces like closets to create more room.

Enforcing enrollment capacity standards at high schools would reduce overcrowding at schools, like Francis Lewis in Queens, because there are enough seats citywide for high school students and those admissions are done on a citywide basis, the report said.

Tanikawa said because of the way the city funds schools — through the Fair Student Funding Act that allocates a fixed amount per student and adds funds if the school also serves students who are poor, struggling academically, have disabilities, or are learning English — there is an incentive for principals to take more students than a building is designed to hold.

“They don’t do it to be evil,” Tanikawa said. “They want to provide a robust, comprehensive education program and in order to do that principals are forced to take more students than they really should.”

Goldstein said it is “insane” that there is no limit to the number of students, which he said would be the best way to reduce overcrowding at Francis Lewis. Instead, the DOE plans to build an annex by 2021 which will add about 10 to 15 classrooms and replace the trailers the school currently uses.

Goldstein is his high school’s United Federation of Teachers chapter leader, and he said though the UFT has guidelines for class size, there is no upper enrollment limit for neighborhood schools like Francis Lewis.

He said he taught in a trailer for 12 years and taught in a half-sized classroom last year, which posed challenges ranging from preventing students from cheating to just getting around the room. Goldstein said he hopes they can eventually get rid of the trailers, but he fears that even with extra classrooms from the annex will not be enough.

“It will be good,” Goldstein said. “Will it be perfect? No it won’t be perfect.”

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bySamantha Handler, Gotham Gazette
     

Read more by this writer.

This story has been updated with additional comment from the DOE, elements of the UFT testimony, and a couple of other notes.

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Struggling with Overcrowded Schools and Large Class Sizes, City Advances $8.8 Billion Plan Mon, 15 Jul 2019 04:00:00 +0000
The Fading Promise of Property Tax Reform https://www.gothamgazette.com/130-opinion/8586-the-fading-promise-of-property-tax-reform https://www.gothamgazette.com/130-opinion/8586-the-fading-promise-of-property-tax-reform may bdb cc speaker corey jo

(photo: Benjamin Kanter/Mayoral Photo Office)


Despite promising that in his second term he would take on the challenge of property tax reform, Mayor de Blasio appears to be shying away as many leaders have done many times before.

New York City government is extremely dependent upon its property tax, which will generate roughly $30 billion this coming fiscal year, more than any other single revenue source. Not surprisingly, New Yorkers gripe about their property taxes almost as much as about the subways.

The laws and methods used to determine and assess the tax on individual properties are extremely complex and inequitable, but reforming them is a daunting task that will inevitably make some property owners unhappy. For that reason, elected officials have long avoided tackling the problem.

The current New York City property tax system was created in 1981. A lawsuit brought by law professor William Hellerstein in 1975 challenged the legality of the property tax system state-wide as violating the constitutional requirement that all similar properties be taxed equally.

After several missed deadlines, rejected proposals, and a last-minute override of Governor Carey’s veto, a new law was passed that divided properties in New York City into four “classes,” set different percentages of the value of each class of property to be assessed (assessment ratios), limited the amount of total property tax levy to be derived from each class (class shares), and provided for phase-ins and limitations on the growth of tax revenue from different classes so that no one property or type of property would experience a dramatic increase in value and taxation as the new system was phased in.

Thirty-eight years later, New York City looks quite different, property values have soared, and there have been many unintended consequences of the design of the property tax system.

Limitations on phasing in growth in value mean that properties within the same class are often taxed at very different effective rates and the limitations on class shares of the tax levy mean that different classes are shouldering disproportionate amounts of the burden of the growth in overall property value.

One of the most egregious outcomes is that co-ops and condos -- for which the market was very different in 1981-- are in the same class as rental properties and are assessed, not on their market value, but as if they were only generating rental income. The result is many high-end apartments assessed at far lower amounts than their real value; whole residential co-op and condo buildings in some parts of Manhattan are taxed at less than the actual sales prices of individual apartments in the building.

What is to be done? In April 2017 a group of frustrated real estate developers and landlords joined with individual property owners and supportive civic and civil rights groups (including Citizens Budget Commission, which I led at the time and filed an amicus brief) to file a new lawsuit, Tax Equity Now NY LLC vs. City of New York, et al. alleging the current property tax system discriminates against primarily people of color who are low-income renters and homeowners. The lawsuit was filed in the hope that, as had happened in response to the Hellerstein case, city and state leaders would respond with urgency and determination to develop a reformed taxation system.

Instead, both city and state defendants have strenuously resisted the suit, moving to dismiss it on the grounds that the plaintiffs aren’t directly impacted and/or that the state defendants aren’t responsible. The City also infuriated City Council members who wanted to intervene on behalf of the plaintiffs by opposing their application to file a separate brief.

The motion to dismiss was filed in June but it took until September 2017 for the judge to rule that the case could proceed and until February 2018 to rule that the Council members could not intervene in the case. The City filed an appeal and all further action in the case is on hold until that appeal is decided.  

At a breakfast hosted by the Association for a Better New York the day before he was re-elected in November 2017, I asked Mayor de Blasio whether he was going to take on property tax reform. He answered directly and forthrightly that the system needs to be more fair and transparent but that we cannot afford to reduce substantially the revenue it generates and that relying on the judicial system to resolve the problem would be a mistake.

He estimated that it would “take a year or two” to bring all the stakeholders together and come up with the needed reforms and that it would require being “blunt” about the challenges. He said: “I am ready to do it….When I say something that definitively, I mean it…We will create tax reform.”

It took until May 31, 2018, more than a year after the Tax Equity Now case was filed and now a year ago, for the Mayor and the City Council Speaker Corey Johnson to announce the formation of an Advisory Commission on Property Tax Reform. Co-chaired by former city Housing Commissioner Vicki Been, then faculty director of the NYU Furman Center, and former First Deputy Mayor and then Interim COO of CUNY Marc Shaw, the commission was charged to “develop recommendations to reform New York City’s property tax system to make it simpler, clearer, and fairer, while ensuring that there is no reduction in revenue used to fund essential City services.”

No deadlines were specified, but the commission was instructed to conduct at least 10 public hearings.

All the public hearings and meetings were recorded and are available online. The last one was held this past February 28. Yet there is still no word on what the commission will recommend or when it will publish its report. The state legislative session is almost over so it is too late to achieve any changes this year and Been has become a deputy mayor with a lot more on her plate.

So the mayor’s promises notwithstanding, an opportunity to rationalize our property tax system and make it more fair has been missed and the commission looks more like a stalling device than a sincere effort to make tough decisions. Who wants to make New York property owners unhappy during a presidential campaign? As was the case four decades ago, it appears that we will need a lawsuit to compel elected officials to make tough decisions.

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Carol Kellermann was president of Citizens Budget Commission from 2008 through 2018.

 

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

 

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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The Fading Promise of Property Tax Reform Tue, 11 Jun 2019 04:00:00 +0000
The Rainy Day Fund New York Needs https://www.gothamgazette.com/130-opinion/8587-the-rainy-day-fund-new-york-needs https://www.gothamgazette.com/130-opinion/8587-the-rainy-day-fund-new-york-needs mayor bdb fiscal year budget

(photo: Ed Reed/Mayoral Photography Office)


With so much attention focused on the mayor’s presidential campaign, rent regulation renewal, and the state of the transit system, most New Yorkers are unaware they will have the opportunity this fall to vote to dramatically change their city government.

The 2019 New York City Charter Revision Commission is considering what amendments to the City Charter, which defines the structure and powers of city government, it will recommend to voters for a yes or no vote on the November ballot. Notable proposals include ranked-choice voting for local elections, enhancing community board review of land use proposals, and multiple changes to the city’s budget process.

One budget proposal the commission should approve and advance to voters in November is the creation of a Rainy Day Fund (RDF). An RDF is essentially a savings account that would allow city government to put away revenues received when the economy is growing and use them to stave off the most crushing service cuts and tax increases during an economic downturn or catastrophic emergency—the rainy days.

To weather the last two recessions, the city reduced police and ambulance staffing, cut library hours, suspended recycling, and increased personal income, sales, and property taxes. A well-structured RDF can ameliorate the need for this level of municipal pain, helping everyone from those who depend on city and social services to individuals and businesses feeling the strain of high taxes.

By and large, charter provisions and state laws enacted in response to the 1970s New York City fiscal crisis provide a strong budgeting and financial management framework that has served New York well—producing balanced budgets and prudent revenue estimates, while allowing the city to fund services New Yorkers desire.

Ironically, the city charter’s balanced budget requirement, among the most stringent in the nation, is what makes using an RDF impossible. Balancing the annual budget requires city services delivered in one year to be funded only with revenues generated that same year. Saving money in a strong economy to use later in a recession misaligns that timing, and violates the accounting rules relied on by the charter.

The solution is for the charter commission to leave the charter’s budgeting and financial management framework intact except to seize the opportunity to improve the charter by allowing an RDF, well structured to preserve both long- and short-term stability.

Absent an RDF, the city has devised legal work-arounds to provide some fiscal cushion. The city pre-pays expenses, freeing up money in the next year. The city has also used its Retiree Health Benefits Trust—money put aside to pay for municipal employees’ retirement health benefits—as a de facto RDF by paying for current bills with the trust’s assets rather than budget revenues.

These workarounds are problematic. Not enough money can be put aside; there are limits to what and how many expenses can be prepaid. In addition, there is no requirement to put money aside even in the best of times. Finally, using the RHBT as de facto RDF makes future taxpayers pay for current bills, which is hardly fair to the next generation.  

True, the city has set aside some funds. The current financial plan includes $1.25 billion annually for reserves, but this pales in comparison to the need. Citizens Budget Commission estimates the projected three-year revenue shortfall from a recession comparable to the past two would be $15 billion to $20 billion.

How would a well-designed RDF be structured? The first step is to determine the right size of the fund. Based on past revenue trends, CBC estimates that 17 percent of tax revenues would be a good target size to mitigate a recession or emergency’s most damaging impacts.

Second, regular deposits should be required during economic expansions. CBC recommends annual deposits of 75 percent of all tax revenues in excess of 3 percent growth; this would allow spending on services to grow in excess of long-term inflation and still generate substantial RDF resources. Had this been in place during the current record-long recovery, the city would now have nearly $9 billion in its RDF.

Finally, withdrawals should be limited to periods of recession or emergency. Economic triggers should be defined in law and RDF funds should not all be used in one year.  

By putting a Rainy Day Fund on the ballot, the charter commission would provide New Yorkers with an important opportunity to strengthen one of the few flaws in the city’s budgeting processes and would create significant momentum for the changes needed in state law.

Yes, some more political and proximate issues may be more galvanizing, and sadly, elected leaders and the public too often accept as inevitable the pain of hard choices during a recession. However, the annual impact of modest deposits in the good times will be significantly outweighed by preserving the services New Yorkers need during times of economic hardship.

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Andrew Rein is president of Citizens Budget Commission. On Twitter @cbcny.

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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The Rainy Day Fund New York Needs Mon, 10 Jun 2019 04:00:00 +0000
Taxi Medallion Exposé Drives Home Key Budget Lesson https://www.gothamgazette.com/130-opinion/8556-taxi-medallion-expose-brings-home-key-budget-lesson https://www.gothamgazette.com/130-opinion/8556-taxi-medallion-expose-brings-home-key-budget-lesson medallions oped

(Photo: Ed Reed/City Council)


Last week, the New York Times published another blockbuster investigative series by reporter Brian Rosenthal, this time on the misleading and predatory practices which led to inflated prices of New York City yellow taxi medallions over the last decade.

The compelling stories of taxi drivers who thought they were buying into the American dream by purchasing taxi medallions, only to find their incomes drastically reduced by the competition of Uber and Lyft, has been a topic of public discussion for some time, but Rosenthal’s reporting provides new and detailed documentation of how lenders and brokers drove up the prices and encouraged purchases without concern as to whether the buyers had the wherewithal to repay their loans.

The story is reminiscent of the over-leveraged home buying encouraged and condoned by financial services firms and banks that contributed to the national housing bubble and the recession in 2008.   

In his second article on the taxi industry, Rosenthal focused on the regulatory agencies that seemingly should have known something was wrong when medallion prices skyrocketed but did nothing to intervene. Indeed, the New York City Taxi and Limousine Commission even ran ads promoting medallion sales as a great investment. State and city officials are now investigating; legislators are looking at ways to aid struggling medallion owners.

The situation of many taxi drivers and their families (especially those who have died by suicide) is unspeakably sad and it is understandable that elected leaders want to help them. But the rise and fall of taxi medallion prices also contains a larger message and lesson for government about the dangers and unintended consequences of relying on one-time revenues to fund government expenses.

Fiscal watchdogs warn against reliance on “one-shots” because they artificially inflate the amount of revenue available and will have to be replaced by other resources over the long term. That is why organizations like Citizens Budget Commission (CBC) urge that one-time windfalls be used to pay down debt or bolster reserves, not to start new programs or pay for employee salaries and benefits.

CBC has repeatedly criticized the city for including large amounts of anticipated taxi medallion sales revenue in its financial plans since it began doing so in 2011:

“Balancing the budget with these one-shots does not address the structural problems– notably, escalating health insurance and debt service costs—but masks the problem temporarily and delays the discourse needed to adopt more enduring, if politically tougher, solutions. In addition, one-shots can be unreliable; if something does not work as anticipated, the savings will not materialize.”

The same concern holds true for one-shots at the state level. New York state government has received over $11 billion in one-time revenue from settlements of litigation with financial institutions over the past five years. This funding has been used for a variety of initiatives, from infusions into economic development schemes like the “Buffalo Billion” to front end development and construction costs of the Mario M. Cuomo Bridge. Regardless of the merits of these projects, it would have been more prudent and appropriate to use these one-time revenues to reduce the state’s indebtedness and/or increase its rainy day reserves to be better prepared for the inevitable time when there is an economic downturn.

And Rosenthal’s investigation highlights another reason for avoiding reliance on one-shots: not only do they obscure the city’s true fiscal picture but they can create pressure on officials – albeit sometimes unintentional or even unconscious – to maximize resources to fill a budgetary need.

The city has repeatedly included as much as $1.5 billion in taxi medallion sales revenue in its four-year financial plans. This is a great deal of revenue and suggestions that it might be achieved through unfair means would probably not have been favorably received by budget directors happy to have this revenue in their projections to reduce out-year deficits. No one was motivated to look a gift horse in the mouth.

The state and city comptrollers have joined CBC in criticizing the city’s reliance on medallion sales receipts and the amount expected has been reduced and stretched out over longer lengths of time as the market changed and then tanked, and was completely removed from the mayor’s executive budget starting in fiscal year 2019 and since.

It would be a great irony if, instead of leading to more than a billion in revenue, the taxi medallion market’s problems lead to significant city spending to purchase owners’ loans or bail them out in some other way, as some legislators are contemplating. The lesson is that when a sudden and untested revenue source appears, don’t count on it because it may well be too good to be true.

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Carol Kellermann was president of Citizens Budget Commission from 2008 through 2018.

 

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

 

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Have an op-ed idea or submission for Gotham Gazette? Email opinion@gothamgazette.com

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Taxi Medallion Exposé Drives Home Key Budget Lesson Tue, 28 May 2019 04:00:00 +0000
What’s the [DATA] Point? 1.28 Cents, the Prospect of a Vehicle-Miles Traveled Fee to Fund Transit Infrastructure https://www.gothamgazette.com/state/8544-what-s-the-data-point-1-28-cents-vehicle-miles-traveled-fee https://www.gothamgazette.com/state/8544-what-s-the-data-point-1-28-cents-vehicle-miles-traveled-fee whats the data point


What's The [Data] Point? Episode 74 -- 1.28 cents, Patrick Orecki [You can download What's The [Data] Point? wherever you get your podcasts, including on iTunes]

patrick orecki cbcNew York State is underfunding upkeep of its roads and bridges to the tune of billions of dollars a year. There are several reasons for this, and potential fixes, including a vehicle-miles traveled fee, which Citizens Budget Commission's Patrick Orecki recently explored in a CBC report. He joined the podcast to explain the state of disrepair, why it matters, and how a smartly-done VMT could make a big difference.

Then, after that 20-minute conversation, hear a recent panel event that CBC and partners hosted in Albany on the prospect of a VMT.

Listen to the conversation and let us know what you think: Ben Max of GG (@TweetBenMax), Maria Doulis of CBC (@MariaDoulis). Listen below or download wherever you get your podcasts!

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by Ben Max, Gotham Gazette
     

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What’s the [DATA] Point? 1.28 Cents, the Prospect of a Vehicle-Miles Traveled Fee to Fund Transit Infrastructure Thu, 23 May 2019 04:00:00 +0000
De Blasio's Budget Savings Plan Contains Few Real Efficiencies, Experts Say https://www.gothamgazette.com/city/8526-de-blasio-s-budget-savings-plan-contains-minimal-real-efficiencies-experts-say https://www.gothamgazette.com/city/8526-de-blasio-s-budget-savings-plan-contains-minimal-real-efficiencies-experts-say Mayor de Blasio city budget executive plan

Mayor de Blasio (photo: Michael Appleton/Mayor's Office)


Mayor Bill de Blasio’s much-touted budget savings program is not what he has made it seem.

After rapidly growing the budget over his first five years in office and resisting calls to find significant efficiencies at city agencies, de Blasio this year instituted his first “program to eliminate the gap,” or PEG, to achieve hundreds of millions of dollars in “savings.” But though the mayor boasted at his executive budget presentation of $916 million in identified savings over the current and next fiscal years -- including $629 million in agency PEG savings -- his budget has little by way of true city agency cuts to existing spending.

The mayor’s spendthrift approach has led to a $20 billion increase in the city budget since he took power, while savings and rainy day funds, though solid, have remained below optimal levels, according to budget experts. Exceedingly good economic times have allowed the mayor to spend somewhat lavishly on programs and personnel without having to make many tough decisions about cuts.

The city is also maintaining about $5.72 billion in reserves each year, though the mayor has not added to them this year and the City Council is pushing for an additional $250 million infusion.

The mayor’s latest spending plan, a whopping $92.5 billion executive budget proposal for the 2020 fiscal year, is no exception to his spending growth trend. And as de Blasio touts new savings, fiscal watchdogs are casting doubts and poking holes.

One in particular, Citizens Budget Commission, says city budget officials are misclassifying savings, passing off re-estimated spending and cost shifts as efficiencies at city agencies.

Instituting a targeted PEG for the first time this year, de Blasio required city agencies to make specific spending reductions through various means -- efficiencies, re-estimates of spending and revenue, and service reductions. The mandated PEG, with target amounts for each agency set by the mayor’s budget office, came after years of the administration relying on a Citywide Savings Plan, which had agencies offer voluntary savings, re-estimates, and revenue-raising ideas.

All told, the mayor’s executive budget estimated the $916 million in savings between fiscal years 2019 ($419 millions) and 2020 ($496 million). An analysis by Citizens Budget Commission, a nonprofit fiscal watchdog, of the overall savings plan shows that for 2020 the Mayor’s Office of Management and Budget identified about 62.5% of the savings from what it classified as agency efficiencies.

Melanie Hartzog, the director of the Mayor’s Office of Management and Budget, in testimony before the City Council at a budget hearing last month, stressed the “high levels of efficiency savings” at city agencies that were found through the PEG. That included service reduction for the first time under de Blasio.

“In Fiscal Year 2020, the first full year impacted by the PEG, efficiencies account for two-thirds of the savings. To achieve these savings agencies streamlined and improved practices, yet maintained service levels,” she said.

But CBC’s analysis shows that the estimate of efficiencies in the executive budget savings plan may be overblown. Agency efficiencies in fiscal year 2020 only accounted for about 20.77% of the savings, while re-estimates and funding shifts accounted for the bulk, about 66.4%, according to the analysis, performed by CBC’s Riley Edwards.

City Council Member Daniel Dromm, chair of the finance committee, echoed CBC’s concerns about finding true efficiencies at last month’s budget hearing, saying the Council “is struggling to understand the purpose of the PEG.” He noted, as CBC pointed out, that the PEG and savings plan together did not find sufficient efficiencies or recurring savings at agencies. He noted that PEGs are supposed to force administrations to find “true efficiencies and recurring savings.”

Dromm pointed out that the mayor has typically relied on the voluntary CSP instead of a PEG, during a period of healthy growth and positive economic conditions.

“Since the implementation of that program, the Council has been urging the administration to search for savings more rigorously because the majority of the program consisted of accruals, re-estimates, and increased revenue projections that would have occurred even in the absence of a savings program,” Dromm added. “So, when the administration announced a mandatory PEG this year, the Council was hopeful that the mayor was finally getting serious about reining in inefficient spending. Unfortunately, the result of the PEG is just more of the same.”

CBC experts point out that certain categories of savings that OMB classifies as efficiencies aren’t truly that, including swaps where state or federal funds are used in place of city funds or the hiring freeze that OMB says saved about $116 million across fiscal years 2019 and 2020. According to OMB, the hiring freeze involves permanently taking down 1,600 positions in the executive budget (many are currently filled and will be eliminated when they become vacant without affecting agency performance) after 1,000 vacancies were already eliminated in November. The freeze reduced net planned headcount growth this year for the first time under de Blasio and is meant to create savings every year till 2023.

“Because we’re dealing with positions that are already vacant, we consider that a re-estimate rather than an efficiency,” said CBC’s Edwards, in a phone interview.

CBC director of city studies Ana Champeny said this savings plan has largely been a “continuation” of past years’ plans. “There was a change in their approach in setting the targets for the agencies but they still haven’t delivered substantially more efficiency savings,” she said. According to CBC, these could be achieved through redesigning programs and shrinking or eliminating inefficient ones, as the mayor did by eliminating Extended Time Learning at Renewal and RISE schools; by using technology to improve operations; sharing resources across agencies; finding alternative service providers within or outside the public sector; and strengthening centralized management of cross-agency operations.

Champeny said the city should not stop looking for savings through re-estimates or funding shifts, which are “routine budget management that you would expect every administration to be doing. Our criticism is that there should be more PEG savings, more efficiency savings in addition to this routine budget and fiscal management.”

Ideally, efficiency savings in one year would equal about one percent of the city-funded budget, she said. “That’s about $700 million in one year, not across two years,” she said.

Nicole Gelinas, senior fellow at the Manhattan Institute, a think tank, concurred. “I think the PEG is pretty superficial in the context of this larger budget,” she said, noting that the executive budget increases overall agency spending by about $1.4 billion compared to the mayor’s initial proposal released in January, allowed by higher revenues than earlier projections. Those higher revenues “are giving them some room to increase spending while sticking to this narrative of savings,” she said. “Overall, agency spending is not shrinking by any means. It would be hard to call this an austerity program.”

“It would be good if agency spending pretty much kept pace with inflation, going up 1.5-2% a year,” she said.

Budget watchdogs have also repeatedly urged the administration to find long-term recurring savings rather than temporary ones. Gelinas pointed out that hiring freezes, in particular, “don’t last forever” as a source of savings.

“It’s kind of superficial because the mayor has increased hiring by so much already that it’s kinda time for a pause,” she said. “Hiring freezes are not very good management. This is the same problem at the MTA. If you need a new person to do something, you should hire that person. If there’s something that the government is doing that it shouldn’t be doing anymore, repurpose that person. But just a sort of general hiring freeze oftentimes means positions that should be filled aren’t being filled. So it’s kind of the opposite of efficient.” 

De Blasio has overseen a large increase in the city workforce, from about 297,000 employees when he took office to roughly 332,000 now. Still, he has budgeted for many more positions at various agencies that have gone unfilled each year, with many of those now “frozen” and the act of keeping them empty being counted toward savings.

OMB spokesperson Michael Greenberg said in a statement Tuesday, “Our aggressive approach helped us meet ongoing, fundamental needs, and balance the budget. We will continue to find ways to save money for New Yorkers in future financial plans.”

In a Thursday statement, after this article was published, Greenberg pushed back against the criticism from Gelinas and CBC. "The 2,600 positions we have permanently eliminated since November will lead to hundreds of millions of dollars in savings, much of it recurring annually, and agencies will provide the same level of service with fewer employees. Despite what others might say, this is the actual definition of 'efficiency savings,'" he said. 

Short of creating more efficiencies, the city risks major service reductions should an economic downturn set in. Even without a downturn, the city faces a budget gap of $3.5 billion in 2021 and $3 billion annually in the years after, according to its own documents. While those numbers are manageable and fairly typical, they become much more concerning if there is a recession.

“A recession could easily double or triple these out-year budget gaps that we already need to fill,” Champeny said. “Right now you have the ability to take the time and do a careful analysis of where you can make efficiency changes or improve your processes whereas if you’re cutting during a recession, you’re sometimes looking for quick savings and you’re not as precise and you’re going to have more negative impacts in services reduction.”

Gelinas added, “The city always depends on revenues coming in higher than expected and then because it says it conservatively budgeted, it has these extra revenues. So these budget deficits basically disappear. But that only happens if the city’s economy is doing well. If we do fall into a recession...then suddenly these are real deficits so you’d need a lot more than a billion dollars in savings in two years. So that’s when you really start to see layoffs and service cuts.”

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

Note - This article has been updated with additional details about the administration's partial hiring freeze. 

Note - This article has been updated with additional comment from OMB spokesperson Michael Greenberg. 

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De Blasio's Budget Savings Plan Contains Few Real Efficiencies, Experts Say Tue, 14 May 2019 04:00:00 +0000