Net Loss: Secondary Effects of City Budget Cut Proposals

Chapter 5. Impact on Children: Child Welfare, Child Care, Youth Services, Education

Children stand to lose from many of the proposed cuts. We focus on four areas: child-welfare services; child-care services, which will reduce the ability of parents to work; youth services; and the Board of Education and City University of New York (CUNY). The cuts planned for the City's schools are not available in detail because they are still to be decided on by the Board of Education.

A. Child-Welfare Services

The State proposes to change child welfare spending from a mandate, with the State providing a set percentage of local spending for child protective, foster care and preventive services to a block grant with a fixed level of State funding. The proposed State budget for FY 1996 provides for a total of $375 million in unrestricted funding (block grant) to all local districts throughout New York State to meet each county's child welfare priorities. This level of funding represents the State's total contribution to foster care services, child protective services and preventive services. However, the City has requested that the State allocate an additional $55 million to fund mandated protective services and certain special education services. Adoption services and adoption subsidies are not included in this block grant and are allocated a separate $86.9 million.

As a result of the proposed block grant and other proposed reductions to the child welfare budget there will be a loss of $237 million in public funds for social services to New York City families and children. Of this total reduction, $218.8 million is directly attributable to the decrease in State funding resulting from the block grant.[72] The State share alone represents a loss of $85.2 million for such services to City residents. This decrease in State funding will also result in a loss of $88 million in federal funds, since matching federal funds eligibility is conditioned on the level of State contribution. In addition, a decrease in State funding permits the City to reduce its contribution by $63.8 million.[73] As a result, FY 1996 child-welfare spending will total $1.07 billion. If the federal child welfare block grant currently under consideration by Congress were enacted, there would be further reductions in funding for child welfare services. (See Table 17.)

Table 17.
Proposed Cuts, FY 1996 Child-Welfare Budget*

ProgramTotal, $milCity, $milState, $milFederal, $ mil
Productivity Initiative5.50.74.8
Family Rehabilitation
CWA Homemaking
General Preventive3.81.02.9
Direct Preventive1.70.41.3
Preventive Total48.110.331.66.1
Foster Care
Admin Rate, Foster Boarding50.
2.1% Admin Rate8.
Admin Rate Congr Care
Foster Parent Rate50.814.314.322.2
Foster Parent COLA12.
Baby Sitting2.
Foster-Care Total187.6535381.5
Protective Total1.
CWA Total237.063.885.288.0
*Numbers do not necessarily add because of rounding. CWA = Child Welfare Administration, part of HRA, City of New York. Source: NYC, FY 1996 Executive Budget.

Under the present system, the State and federal government fund predetermined percentages of the cost of services needed to provide foster care and certain preventive services. Under the proposed State block grant, the State's allocation to the City for child welfare services would be capped at $244.5 million, representing a loss of $131.4 million in State funds made available to the City for such services. Because the amount of the federal contribution for child welfare services is currently linked to the amount contributed by the State, this decrease in State funding results in a decrease in federal funds. In addition, a decrease in the amount of State funding permits the City to reduce its contribution to such service.

Currently, no limit is placed on the number of children coming into foster care, or the number of families receiving services to prevent the entry of children into foster care. If there is a need for the service, it is made available along with the funding from the respective governmental sources. This situation will not continue under the proposed block grant for child welfare programs. Instead, a block grant approach will severely limit the number of children and families for whom such services may be provided.

To implement this loss of $237 million, the Executive Budget proposes to severely curtail the services to be made available to the City's families and children. The most significant programmatic cuts relate to foster care and preventive services, which will impact on the City's most vulnerable and needy population, its poor children.

Foster Care

Approximately 46,000 children are in foster care in New York City. Under the proposed budget for FY 1996, the funds allocated for foster-care services will be cut by $187.6 million, representing decreases of $81.5 million in Federal funds, $53 million in State funds and $53 million in City funds. These reductions are to be achieved, in part, through: (1) a decrease of $50 million in funding for the administration of the placements of children in foster boarding homes; (2) a decrease of $32.9 million in funding for congregate care foster care facilities; (3) a decrease of $50.8 million in funds paid to foster parents for caring for foster children; and (4) the elimination of $2.4 million in funding for child care services for working foster parents.

1. Reduction of the Foster Boarding Administrative Rate. Currently, 68.5 percent of the 31,510 children[74] in foster care are serviced by 66 voluntary foster care agencies. The Executive Budget provides for a decrease of $50 million in the funding of these agencies through a reduction in the level of their administrative rate payments. The administrative rate for a foster-care agency represents the rate at which such voluntary agency is reimbursed for expenses incurred in connection with providing services to foster children, foster families and biological families of children in the agency's care. It is calculated on a per diem basis and enables a foster-care agency to pay, among other things, its fixed costs including rent and utilities and the salaries of its administrative and program staff, including social workers and caseworkers who oversee the foster-care placements and provide services to the children and families in their care. Many of the services are mandated by the Child Welfare Administration and the New York State Department of Social Services to assure that foster children are in safe and secure environments and to facilitate the discharge of children into permanent settings.

The maximum allowable administrative rate is set by the New York State Department of Social Services and has been based on historic spending resulting in different maximum rates for different agencies. Currently, agencies are paid approximately 94.5 percent of their respective maximum rates. In an effort to establish a uniform administrative rate for agencies providing foster-care placement in foster boarding homes, the administrative rate will be lowered from the current level of 94.5 percent of the maximum allowable State rate to, on average, 67.2 percent of that amount. This reduction represents a 29 percent decrease in the funds foster-care agencies will receive to provide services to foster children, their biological parents and foster parents. This proposed decrease in the administrative foster- care rate follows a 4.5 percent reduction which was implemented earlier in FY 1995. Thus, foster-care agencies will experience a total decrease of approximately 33.5 percent in less than one year.

The City hopes to achieve a uniform per diem (per child) administrative rate of $13.74, based on a current average administrative rate at the 94.5 percent level of $19.35. Many agencies currently are above the $19.35 level, because of the historically based variations in rates among agencies. If the average per diem rate for every agency were lowered to $13.74, consequences would be greater than even those discussed below.

As a result of a 29 percent reduction in the administrative foster boarding rate, agencies will be forced to lay off program personnel, increase caseworker caseloads and curtail programs causing a diminution in the supervision of placements and the social services provided children and families. Furthermore, it is likely to prolong the length of children's stays in foster care. Without the provision of a service to address the causes of a child's placement in foster care, an agency will ordinarily be unable to return a child to his or her parent. Nor will the agency be in a position to facilitate a child's adoption. In order to free a child for adoption, State law requires an agency to use diligent efforts to encourage and strengthen the relationship between the parent and child. This has been interpreted by the Courts to mean, at a minimum, offering the opportunity for rehabilitative services. If such services are not made available to the parents, problems will arise in establishing the legal basis for termination of parental rights, a prerequisite to adoption. Thus, many children will be ineligible for being returned home or adopted. Instead, they may remain in foster care for prolonged and indefinite periods of time. During these times, the need for supervision of placements and its attendant costs will continue, while the levels of supervision and casework are likely to decrease.

These reductions will force agencies to evaluate their operations and adopt efficiency measures which can only be productive. In some cases, agencies may be forced to merge, in which event, economies of scale may further decrease overhead expenses. Although a small amount of the rate reduction may be absorbed in this manner, the bulk of it may be reflected in the provision of direct services, as anticipated by the agencies whose projections are discussed below.

The impact of a cut of this magnitude will be severe for both large agencies and smaller community-based foster-care agencies. For example, according to one multi-service agency with a total budget of $23 million, a cut in its foster-boarding-care rate of approximately 29 percent would require it to cut that program's budget by approximately $730,000. This agency cut is in addition to that of approximately $750,000 necessitated by the 4.5 percent cut in the administrative rate for both foster-boarding and congregate care incurred earlier in the fiscal year. Thus, within less than a 12-month period, the agency will be required to cut its foster-care budget by $1.48 million, without any decrease in the number of foster children, foster families and biological parents it serves. This agency also provides congregate care and, as discussed below, believes that it will be forced to substantially curtail its operation as a result of the combination of decreases in funding for foster-boarding and congregate-care programs.

These recent cuts have also affected smaller agencies. Another agency with 475 foster children and a foster care budget of $9 million has already been forced to lay off more than 10 percent of its personnel and put another one-third of its foster care personnel on a four-day work week. As a result, the caseload ratio for its caseworkers is increasing from 1:15 to 1:22. At the same time, the agency executive has stated that he has been trying to pare down the agency's fixed costs, which include, among other things, rent, insurance, and utilities. These items account for approximately 25 percent of its budget. According to the agency, as its revenues decrease due to this additional 29 percent reduction in the administrative rate, it will be forced to lay off another seven caseworkers. As a result, it projects that its caseload ratio will increase to 1:35, a move which cannot be expected to facilitate the discharge of children from foster care. Moreover, the level of supervision of its placements is bound to decrease.

Another agency with a foster-care budget of $4.6 million claims that it would be required to cut its budget by $800,000 as a direct result of the decrease in the administrative rate it will be paid. Consequently, it believes it will be forced to lay-off 30 employees and incur approximately $450,000 in severance and unemployment costs. As a result of this personnel decrease, it foresees its caseworker case ratio climbing to 1:27. It is currently 1:18, but had been 1:15 prior to the 4.5 percent decrease in the administrative rate incurred earlier in the year. Caseworkers will find themselves unable to address the problems of the children, their biological parents and foster parents and will end up employing triage techniques. This agency, which currently has 450 children in its care, foresees foster care placements being extended by a minimum of one year per child, since it will not be in a position to provide on a timely basis the services necessary to facilitate discharge. The cost to the City for a one-year extension of foster care for 450 children would be approximately $5 million, based on an annual reduced foster-care rate of $11,100 per child[75] for each child in the agency's care. This would be in addition to the current average length of stay of more than four years.[76] This represents $4.2 million more than the City's annual savings of $800,000 gained through the reduction of this agency's administrative rate.

Note that this is only one of 66 foster-care agencies providing foster-boarding-home services, so these additional costs may be a higher multiple of this $4.2 million in additional costs to the City. Only in the instance that less than 16 percent of the children (5,225) in the care of the voluntary agencies do not have their foster-care stays prolonged by one year, that the City would enjoy a net cost savings. However, with significantly higher caseloads and very limited resources at the agencies, a high frequency of increased time in care is not unforeseeable.

2. Reduction in the Congregate Care Administrative Rate. Currently, approximately 4,500 children live in congregate-care facilities,[77] such as group homes and residential treatment facilities. Children placed in such facilities ordinarily manifest behavioral problems that make it impossible for them to reside in a less restrictive environment such as a foster boarding home. Many of these children have severe emotional problems which can present a physical danger to themselves or others. Therefore, they are in need of a home-like environment that can provide a host of clinical services. In many cases, therapeutic services and a high level of supervision are necessary to provide proper care for these children.

Voluntary agencies providing congregate care are reimbursed for their services through a congregate care administrative rate which covers the cost of not only administering such facilities, but also providing direct care in the form of supervision, food, shelter and recreation, along with rehabilitative services to both its residents and their families. Congregate care administrative rates, like the foster-boarding administrative rate, vary from agency to agency. In an effort to establish a uniform rate for agencies providing congregate care, the administrative rate for such service will be lowered from the current level of 94.5 percent of the maximum rate to, on average, 76.7 percent of that amount, representing a reduction of approximately 19 percent.

As in the case of the foster-boarding administrative rate, the City hopes to achieve a uniform per diem congregate care rate of $101.94, based on a current average congregate care rate at the 94.5 percent level of $125.56. Many agencies currently are above the $125.56 level, because of historically based variations. If the average per diem rate for every agency were lowered to $101.97, consequences would be far greater than even those discussed herein.

A reduction of 19 percent to their congregate-care budgets will force agencies to severely curtail the services they provide the families and youths in their care. This reduction may force agencies to make their operations more efficient and in some cases make result in consolidations of agencies which could result in further economies of scale. However, much of the rate reduction will be reflected in a decrease in services.

The congregate-care administrative rate covers, among other things, such fixed costs as food, its preparation and shelter for the children, items which are not ordinarily subject to much paring down. In addition, the cost of child-care staff is not elastic, since a certain ratio of staff to children is necessary to assure the physical safety of the children and maintain secure facilities. The areas subject to reduction are actual administrative costs and administrative staffing which includes casework supervisors, therapists, psychiatrists and others providing rehabilitative services to the children and families. Although the involvement of these types of professionals is needed to address the problems of both the children and their families to facilitate the child's return home, they are probably the only expendable significant cost, and therefore, the area to suffer the scalpel.

One provider with a congregate care budget of $11 million serving 180 adolescents anticipates a decrease in funding of approximately $2.2 million as a result of a 19 percent cut in its congregate care administrative rate. It believes that this loss would force it to lay-off 65 people, mostly social workers and therapists who provide services to children and families to facilitate the child's return home. As a result children will end up staying longer in congregate care, receive fewer and less intensive services and put the City to a greater expense to maintain them. Based on that agency's projected new administrative rate of approximately $110, the City's cost savings of $2.2 million from this agency is equivalent to the cost of its 180 residents remaining in care for an additional 111 days. Thus if on average, children in that agency's care remain there for more than 111 days, the City will incur a greater expense. With a staff reduction of the magnitude necessitated by the decrease in the administrative rate, it is likely that children will remain in congregate care for much longer periods of time, resulting in significantly higher costs.

The $23 million agency discussed in the section on the foster boarding rate cut also has a congregate care program serving 420 children. It anticipates incurring a decrease of approximately $4 million due to the congregate rate reduction. This is in addition to a loss of $730,000 in revenues from the decrease in the foster boarding administrative rate. The agency believes that a loss of this magnitude would cause it to contract severely its services, both in the foster boarding and congregate care programs. It anticipates being forced to lay-off approximately 300 staff members and more importantly to evaluate whether it would be able to continue providing certain services with such limited funding. If it were to close down its congregate care facilities, the children in its care might end up in more costly environments such as mental hospitals where the annual costs start at $146,000[78] or a juvenile detention center with an annual cost of $69,350.[79]

Other congregate care providers will encounter many of the same problems. Even modest extensions of time in care may be very costly to the City and outweigh any cost savings anticipated by the proposed reduction in the congregate care rate. Based on the proposed per diem rate of $102, if more than 1,772 children remain in congregate care for an additional six months, the City will incur costs in excess of its projected savings of $32.9 million. Alternatively, if more than 885 children remained in care for an additional year, the City would also incur costs in excess of its projected savings. With the contraction of services anticipated as a result of the proposed cut to congregate care funding, it is doubtful that the historic rate of discharge from congregate care facilities can be maintained. In 1994, 2,627 residents were discharged, representing 22.6 percent of the congregate care population.[80] The median length of stay for a child in congregate care is approximately 400 days, with more than half leaving within 12 months of entry.[81] As extensions in time in care may become commonplace, the additional costs of care will clearly outweigh any anticipated savings.

3. Cuts to Foster Parents. Foster parents become surrogate parents to children separated from their biological parents as a result of abuse or neglect. Approximately 41,000 children live with foster parents. More than 50 percent of them are placed with non-relatives, while the remainder are placed in the care of family members, frequently their grandmothers. Foster parents have the responsibility of providing children with food, shelter, supervision and recreation, and in return receive funds to provide such services. Historically, rates have differed for children in different age categories and enhanced rates have been paid to care for children with special or exceptional needs. However, each child in the same age category has been eligible for the same amount, regardless of the number of children in a household.

The Executive Budget proposes both to reduce the amount of money paid for each child and to change the methodology for calculating the daily care of foster children. These modifications are projected to save $50.8 million. In addition, a four percent cost of living adjustment scheduled to go into effect in FY 1996 has been eliminated, resulting in a savings of $12.2 million.

Under the new foster rate methodology, three different base rates for children of different age groups will continue to be used. However, there will be a decrease in the amount of such rate by seven percent for the first foster child in a household and by 32 percent for each additional foster child in the home. Families willing to care for more than one child will be penalized, as will the children themselves.

The average monthly payment has been $473 per child.[82] A seven percent reduction for the first child in a foster home will reduce that amount by $33 to $440. The second and each additional foster child in that home would only be eligible for a monthly payment of $322, representing a decrease of $151 from what is currently provided for the child's care. This cut appears to be larger than that proposed to Aid to Families With Dependent Children, where a family of three, a parent and two minor children, will have its monthly stipend cut by $50, while the monthly foster-care payment for two children in the same foster home will be cut by $184. (See Table 18.)

Table 18.
Budget Cuts for Foster Parents

# of Foster Children in FamilyOld monthly amount given to foster parents, $New monthly amount for foster parents, $Decrease in monthly amount, $Average monthly amount per child in home, $
Source: New York State Department of Social Services.

As the purchasing power of the dollar decreases and the consumer price index increases, a decrease in the amount of money made available to foster parents to provide the necessities of life to these fragile children may have a significant impact on foster parents' continuing ability and/or desire to care for these children. A decrease of this size to the rate of payments to foster parents may result in a need to find alternative foster parents for foster children. This could also cause unnecessary disruption in the lives of foster children. In addition, there may not be sufficient foster parents able to assume the responsibility of caring for foster children at the lower rates.

This new approach appears to present a disincentive for foster parent to take sibling groups and to be inconsistent with CWA's legal obligations under the Stipulation and Order of Settlement in the Jesse E. lawsuit. That Stipulation requires siblings to be placed together unless it would be contrary to the health, safety or welfare of one or more of the children. The order provides for an exception for sibling groups of six or more, thereby requiring CWA to facilitate placements in single homes for sibling groups of as many as five children. Only 28 percent of foster-care placements involve a single-child family, leaving 72 percent of the placements representing sibling groups that average 3 children. Sibling placement and reunification will be difficult to achieve when the proposed rate structure provides a disincentive to providing a foster home to more than one child.

4. Elimination of Child-Care Funding for Working Foster Parents. The City also proposes to eliminate $2.4 million to pay for child care services utilized by working foster parents to care for foster children during working hours. Of this $2.4 million, historically, the federal government has contributed $1 million, while the State and City have each contributed $700,000. These funds have made it easier and/ or have allowed as many as 540 employed foster parents to care for foster children. Without the ability to seek reimbursement for weekly child care expenses of up to $85.50, and the new foster parent rate schedule, employed individuals may find themselves unable to care for the children in their custody. This situation could result in the need to find alternative homes for the children with non-working foster parents. At a minimum, a change of this sort could cause unnecessary disruption in the lives of these children and possibly result in a dearth of available qualified foster parents.

Preventive Services

Preventive services include supportive and rehabilitative services provided to children and families experiencing problems so severe that their children are at imminent risk of foster-care placement.[83] These services help to stabilize families and avert the need for foster-care placement, and its attendant costs. Of the cost of mandated preventive services, 75 percent has been borne by the State with the City paying the remaining 25 percent, although in connection with homemaking services there is a Federal contribution. For FY 1996, the City will determine the portion of the block grant funds to be allocated to preventive services and that amount will represent the total State contribution for such services.

According to the Executive Budget, the total budget for preventive services will be reduced by $48.1 million, $10.3 million in City funds, $33.6 in State funds and $6.1 million in Federal funds. Direct cuts to certain preventive services will total $42.6 million, while the remainder of the funding decrease will be achieved through productivity measures, including increased caseloads. The most significant of the cuts to preventive services relate to homemaking services and the Family Rehabilitation Program.

Homemaking Services. The Executive Budget provides for a 59 percent decrease in the level of funding for child welfare homemaking services, representing a cut of $28.8 million. Of this amount, $6.2 million is represented by City funds, $16.5 million in State funds and $6.1 million in federal funds. Currently, CWA contracts with 8 outside vendors to provide time limited homemaking services to families in which the children are at imminent risk of foster care placement. These services are aimed at teaching and training a mother through modeling how to manage her household and provide appropriate child care, so as to avoid placement of the children in foster care. The service ordinarily lasts from six to 12 months, with a trained homemaker visiting the home either for four or eight hours per day five days a week, at a cost of approximately $11 per hour. At the end of this 6- or 12-month period, the parent has learned to maintain a household and care for the children. This service averts the need to place the children in foster care not only during the period when services are provided, but also well after the time the services have ended. In some cases in which the family's children have already been placed in foster care, it facilitates their return home.

The value of this type of service has been long acknowledged:

Home visiting is a promising strategy for delivering or improving access to early intervention services that can help at-risk families become healthier and more self-sufficient. Evaluations have demonstrated that such services are particularly useful when families both face barriers to needed services and are at risk of such poor outcomes as low birthweight, child abuse and neglect, school failure, and welfare dependency.[84]

A family homemaking service is multi-faceted in nature. It provides simultaneously protective, preventive and rehabilitative services to families that demonstrate evidence of severe dysfunctionality: preventive in that it addresses the imminent problem which alerted CWA to the need for the service; protective in that the homemaker is constantly looking for evidence of physical endangerment of the children; and rehabilitative in that it teaches both how to parent and run a household sufficiently to avert the need for future foster care placement once the time-limited service has ended.

Homemaking services are only made available to families which CWA has determined to evidence extreme dysfunctionality and where the provision of this time-limited service is appropriate to avert placement. Cases are referred to CWA from a number of sources which include Family Court, the State Abuse and Neglect Hotline and doctors and hospital social workers. Once a referral is made, CWA makes an independent assessment of the family to determine that there is an extreme need for the service based on, among other things, the severe dysfunctionality of the family, the likelihood that the child or children are at risk of physical endangerment and/or the level of imminent risk of foster care placement. CWA then makes the determination that such service is appropriate. This decision is ordinarily made after exploring and rejecting less intensive (and less costly) alternatives as inadequate to meet the family's situation. Thus, this homemaking service is in many cases the last step before foster care placement.

In the last 12 months, 3,118 families[85] with an average of three children per family received homemaking services, at an average cost of approximately $15,565.[86] Agencies report a success rate of more than 95 percent in averting foster care placements, resulting in more than 8,886 children once at imminent risk of foster care placement remaining at home. If the program is cut by 59 percent, and the amount of families receiving such services are proportionately reduced, only 1,278 families with 3,835 children would receive homemaking services. This would leave as many as 1840 families with 5,520 children deprived of this valuable service and, more importantly, at risk of foster care placement.

The use of the homemaking service is clearly a cost-effective use of resources, with a 95 percent rate of success in keeping children out of foster care. The cost of homemaking for six months, 20 hours per week, is $5,720, while the more intensive homemaking provided for 12 months, 40 hours per week, costs $22,880. Compare this with the average annual cost of foster care of $33,300 for three children placed in the same foster home, or $11,100 per child. Thus, in cases in which homemaking is provided for 20 hours per week for six months, the City saves $28,580 in the year in which the service is provided and $33,3000 in each subsequent year when foster care is averted. In cases in which the service is provided for 40 hours for 12 months, the City saves $10,420 in the first year and $33,300 in subsequent years. This service clearly saves money and keeps families united.

This proposed decrease will deprive as many as 1,840 severely dysfunctional families with 5,520 children of homemaking services and end up costing the City substantially more than it hopes to save by curtailing this service. Assuming a 95 percent success rate in homemaking services' ability to avert foster-care placement, without homemaking services, as many as 5,244 children may need to be placed in foster care. These placements would cost the City a total of $58.2 million at an average annual foster care rate of $11,100. Even after taking into account the projected savings of $28.8 million representing the program reduction, the City would incur an additional cost of $29.4 million. Moreover, only if more than 47 percent of the children in these severely dysfunctional families or 2,594 children deprived of this service were to remain out of care, would the 59 percent reduction in the program result in a net cost savings.

Family Rehabilitation Program. The Executive Budget provides for a reduction of $4.4 million to the Family Rehabilitation Program ("FRP"). FRP was created by CWA in 1991 in response to increased substance abuse among women and the attendant rise in the number of children being placed in foster care. By December 1994, it had grown to a network of 31 therapeutic, preventive and drug-rehabilitation programs, providing services to 700 families with a total of 2,000 children.[87] FRP is the only CWA preventive program providing drug-rehabilitative services. In January 1995, the FRP budget was decreased by $6.4 million, causing a substantial reduction in services and the closing of 15 facilities. This cut was not applied to services across the board, but instead resulted in the defunding of 68 percent of the drug-rehabilitation services.[88] An additional decrease of $4.4 million would bring the FY 1996 FRP budget down to $8.6 million, approximately one-half of the full FY 1995 budget.[89] This can only result in a further contraction in services, a further reduction in drug-rehabilitation services and the possible elimination of additional programs.

Parental drug abuse continues to be a significant contributing factor not only to the increase in the number of children entering foster care, but also to the dramatic increase in the lengths of stays of foster children.[90] FRP was able to provide its services, including drug rehabilitation, at an average cost of $22,000 for a family with an average of three children.[91] This program was able to avert foster-care placements for some children and facilitate the return of others from foster care.[92] In FY 1996, FRP will serve far fewer families and not be able to provide the drug rehabilitative services so sorely needed by substance abusing mothers. As a result, the program's ability to avert foster care placements and facilitate discharges from foster care will be substantially reduced. Even under the newly proposed reduced foster care rates, the cost of foster care would average annually $33,300 for a family of three. This does not include the cost of drug treatment which averages $16,000 per year.[93] Without the provision of drug treatment, children living with drug abusing parents will be at a high risk of endangerment and should not be permitted to remain in such an environment. As a result, not only is there a high likelihood that these children will be placed in foster care, but without a change in the legal requirements for freeing children for adoption, a probability that they may remain in care indefinitely.

Other Preventive Services. The Executive Budget also proposes to reduce other preventive services by $5.5 million. This includes both a reduction to preventive services provided directly by CWA and others provided by social-services agencies. These services are to be made available to children at imminent risk of foster-care placement. With preventive services averaging $2,733 per child,[94] this reduction in preventive service funding could deprive as many as 2,000 children of important services that could avert their placement into foster care.[95] Only if fewer than 495 or 25 percent of these children remain out of foster care would the City reap a cost savings. It seems unlikely that more than 75 percent of these children at risk will remain out of foster care with out any social services. If 35 percent entered care, the City would incur an additional cost of $2.27 million above its savings, while if 50 percent entered care, the additional cost would be as high as $5.6 million.


With drastic reductions in the child-welfare budget, many at risk children who previously would have received preventive services or been placed in foster care may be left at home. These children will remain in abusive or neglectful environments presenting threats to their physical and emotional well being. Young children are especially vulnerable to harm and represent more than half of the children receiving mandated preventive services. Fifty-eight percent of such children are under ten years, while more than 35 percent are five or younger.[96] Without the protections afforded through preventive services, these young children will be subjected to behavioral patterns detrimental to the welfare of children. Certain risk factors such as parental history of drug abuse place children at a great risk of physical harm, even death.[97] Without the availability of homemaking and day-care services currently provided as preventive services, these young children may also be left unattended and unwittingly engage in dangerous activities such as accidental fire setting, which can be fatal. Although the risks presented by this "laissez-faire" attitude are not quantifiable, they will certainly be substantial.

Preventive and foster-care programs when funded properly offer support and rehabilitative services to children of dysfunctional families. The dangers of depriving children-at-risk of such services are beyond quantification in terms of both monetary and societal costs. The absence of these types of interventions will have a long lasting impact on the abilities of these children to become productive members of society. As a result, there may well be a higher incidence of untoward behavior, including teen pregnancy, increased high-school dropout rates, drug usage, violence and criminal behavior, the costs of which will be borne by society as a whole.

B. Child-Care Services

Current Federal, State and City proposals would sharply reduce the allocations for subsidized child care. The proposed Federal Welfare Reform and Consolidation Act would cost the City $8 million over the next five years, and in 1996 would cut by 2,500 the number of child-care slots. The proposed State ($3.5 million) and City cuts ($4.2 million) for FY 1996, combined, will result in a loss of nearly $8 million to the City. Subsidized care for children at child-care centers and private homes permits many families to earn a living, keeping them off the welfare rolls. Additionally, it enables those women already receiving Aid to Families with Dependent Children (AFDC), to enroll in a variety of programs which can help them end their dependence on such government stipends.

Cutting funds for child-care centers implies (1) fewer jobs for those who provide care for children, (2) fewer workers and reduced tax revenues when parents are forced out of the workforce because they cannot find adequate facilities to care for their children, and (3) a reduction in the number of welfare clients able to become self-sufficient.

The City's Agency for Child Development (ACD) is charged with the administration of all child-care programs and services for the Human Resources Administration, which is the local conduit for the State Department of Social Services. ACD monitors child-care centers and family child-care programs and oversees the functioning of the federally funded Head Start programs as well. According to HRA, in December 1994 there were 46,863 children in publicly funded child care and 15,192 in the Head Start program.

Since 1988, the Congress has recognized the importance of encouraging low-income families to work rather than collect AFDC. Since the cost of child care is often a barrier to employment, the Congress created four child-care programs, two of which were targeted towards non-welfare, working-poor families, while the other two were aimed at welfare clients whose efforts towards self-sufficiency include employment, training and education programs. A December 1994 study by the U.S. General Accounting Office found that "reducing child-care costs increases the likelihood that poor, near-poor, and nonpoor mothers will work." The report also concluded that child-care subsidies not only helped women get work, but also enabled them to keep and become successful at their jobs.

The budget cuts proposed by the State and the City will reduce the availability of subsidized child care and could reduce the quality of existing programs. Since a specific dollar amount is not available at the moment for the proposed Federal Block Grants, it is not possible to determine the effects of that change should it be approved. The State cuts, however, will have three clear effects. They will decrease funds allocated to the State's "low-income" child-care fund; eliminate statewide training funds; and eliminate statewide funding for child-care resource and referral agencies.

1. The Governor's Budget Would Cut $2.5 million from the State's "Low-Income" Child-Care Fund. The proposal for this program would cut aid to NYC by $1.2 million. The City is already supplementing State spending for this type of child care. This category of State funding is capped at a set amount. However, the City's Executive Budget has funded this cut with tax-levy dollars in order to maintain the current level of "low-income" child care.

The need is much greater than the limited amount of day care funding provided by the Federal government and the State. The City, according to ACD's 1994 claim data, is already financing almost 4,700 slots for low-income working families. Additionally, between 1990 and 1994, the cost of child care rose 13 percent. As a result, the State Legislature has added $2.5 million annually, over the past four years just to maintain the number of children in care.

2. The Governor's Budget Would Eliminate $2.6 Million in Statewide Training Funds. The loss to the City would be about $1.2 million in training funds. Last year in the City, 65 community-based organizations trained more than 2,600 family child-care providers who each completed 15 hours of training. Nearly 700 additional women participated but had not yet finished their training. If the $1.2 million lost were instead used for training, the City could train an estimated 5,000 providers, who could care for about 17,500 children.

Under the State's current regulations, family child-care providers are required to have 15 hours of training every two years. In 1995, training in the City costs $240 per provider. Therefore a secondary impact is that if the City does not pick up the balance of the training cost, then either the community-based agencies or the low-paid child-care providers would be asked to bear the burden of this unfunded mandate, or be out of compliance.

Another impact would be a reduction in the quality of care. Current studies and research[98] clearly document the link between training and the quality of child care.

3. Eliminate $2 Million of Statewide Funding for Child-Care Resource and Referral Agencies. Currently five nonprofit agencies in the City receive $820,000 in State funding to obtain matching funds from other public and private sources, thereby increasing the capacity of these agencies to serve a greater number of the City's families in finding appropriate child care. These agencies have been serving more than 12,000 families annually.

City Budget

The actual service impact of the proposed City budget cuts are unclear since the City's FY 1996 Executive Budget appears to employ the same funding shifts that diminished the effects of the $6.2 million reduction of City dollars in 1995, which included the addition of $4.1 million in Federal funding not previously claimed. The proposed budget calls for no reduction in child-care slots, but a contingency plan in the budget calls for a potential reduction of 3,500 child-care slots. Rather, child-care services are affected in four ways: the amount of funding for child-care contracts is reduced, the budget for substitutes is cut, foster-care-related programs are cut and the proposed Workfare Plan will have major consequences for child-care needs.

1. Reduction in Family Child-Care Contracts of $735,000 (10 Percent). The cut in child-care contracts is justified by the assertion that there has been an "underutilization by child-care sponsors." Advocates indicate that this reduction will further diminish the amount of money available for providers to recruit, inspect and equip prospective family child-care providers' homes, bringing them up to health-code standards, placing children in appropriate providers' homes and monitor ongoing care and children's health records. Since there are already waiting lists of 9,000 for family child-care slots, this cut will have a negative impact on service. An administrative cut of two percent was already imposed on child-care providers in February 1995.

2. Cut of $2.2 million (50 Percent) from the Substitute Staff/Teachers Budget. The impact of the proposed cut in substitute staff is that child-care providers may be forced to combine classes or use paraprofessionals. Since, in a majority of instances, combining classes would put the providers out of compliance with current regulations, an implied secondary impact is that child-care providers will be forced in many instances to either send children home with their parents or violate the health codes and jeopardize the health and safety of the City's children. Clearly, the combined impact of the State and City funding reductions will lower the quality of the City's subsidized child care.

3. Impact on Child Care for 3,660 Children Served by the Child Welfare Administration's Foster-Care and Preventive-Care Programs. We discussed foster-care and related programs in depth in the previous section; these programs have child-care effects. Currently ACD serves, on average, 3,660 children who are also served by the CWA foster-care, foster-care-protective or preventive programs.

These child-care slots are paid for through a variety of programs, including Federal Title 4E of the Social Security Act and the State's Child Welfare Reform Act. The proposed Federal Child Protection Block Grant and State Family and Children's Services Block Grant threaten to reduce funding for these child-care slots, but the City's share of these proposed cuts is as yet undetermined. HRA is presently investigating other possible funding sources for this category of child care. But if other funding cannot be found, the City must either reduce care or use tax-levy dollars to fund the services.

4. Child-Care Implications of the State's Proposed Workfare Plan. The proposed State Workfare Plan, which requires public-assistance recipients -- both AFDC and HR cases -- to work, will substantially increase the need for child-care services. As of February 1995, 584,631 children[99] were on public assistance in the City. In the first year, the plan proposes that 20 percent of "employable" AFDC recipients must work or participate in a workfare program. Current law stipulates that publicly funded child-care must be available for eligible children under age 13. It is estimated that there are as many as 68,400 children who will require subsidized child-care. For every 10,000 additional children requiring care, the annual tax-levy costs to the City would range from nearly $4.4 million for the least expensive unregulated care to more than $11.4 million in regulated family, center and pre-school care. Table 19 shows some of the effects of cuts.[100]

Some 9,000 children are now on waiting lists for subsidized child care, before the proposed program to move many women on welfare to work. About 120,000 AFDC children are under 6 years old. Only a small portion of them are now in child care. If only another 20 percent of those children need child care so their mothers can go to work, the City would need an additional 24,000 slots. That is more than half of the current total of about 46,863 ACD child-care slots.

Clearly, reducing slots and funding for training, start-up, resource and referral networks, and substitute teachers will compromise the integrity of a genuine Workfare plan.

Table 19.
Impact of Child-Care Budget Cuts

Program AreaState Cut ($mil)Impact on City ($mil)Service ImpactSecondary Service Impact
Training Funds$2.6$1.2Decrease in available training.Loss of registered child-care providers.

Decrease in quality of care.

Child-Care Resource and Referral Agencies$2.0$0.8Significantly diminished capacity to obtain matching government and private monies.

Reduced capacity to provide referrals to parents and community organizations or training and start-up information to child-care providers.

Increased length of time to find appropriate child-care provider.

Increased use of informal, and possibly "at risk," child-care arrangements.

Fewer registered child-care providers due to lack of training.

Substitute Teachers
$2.2Providers forced to combine classes or use paraprofessionals, probably putting them out of compliance with codes if they didn't turn away children.Will compromise quality of City child care.
Family Child-Care Contracts
$0.7HRA contends that this cut, 10 percent of the family child-care contracts, will be offset by underutilization by providers; but 9,000 children are wait-listed.
Group Day-Care Contracts
$1.2HRA claims this cut, approximately 1 percent of day-care contracts, is available through "accruals" (money unspent in prior year). Child Care, Inc. says the cut eliminates almost all funds for classroom educational supplies.

C. Youth Services

Effects of Proposed Cuts

The City's FY 1996 Executive Budget includes significant reductions to DYS. The agency's overall FY 1996 budget would be reduced to $32.3 million from its forecast FY 1995 budget (as of the April Financial Plan) of $70.8 million, a cut of 55 percent.

While State funds to the City will decline by $610,000 to $10.8 million in 1996, City funds would be reduced to $21.4 million from FY 1995's forecast of $56.6 million. These State funds, however, require a dollar for dollar City match, which was not allocated by the City in the FY 1996 Executive Budget. As a result of all these cuts, an estimated 143,000 fewer youths would receive services.

The proposed cuts will also: (1) eliminate Neighborhood Youth Alliance, (2) eliminate Art Partners, (3) eliminate Grantmakers, (4) eliminate Youth Advocacy, (5) eliminate Street Outreach, (6) eliminate Youthlink Drug Prevention, (7) eliminate City Sports, (8) eliminate the Runaway Program, (9) retain only the Beacons and Youthline programs from the Safe Streets, Safe City initiatives.


Originally created in 1947 as the "Youth Board," the Department of Youth Services (DYS) was established in 1989, and provides a broad array of services to New York City youths under 21 years old. These services are intended to provide positive experiences and encouragement for young people through leadership and youth development programs aimed at guiding them through their crucial formative years. Through contracts with community-based organizations, these programs include tutoring and remedial education, recreational programs, alcohol and substance abuse prevention, adolescent health care, job training, and other after-school programs.

In addition to youth development/delinquency prevention programs, the Department's mandate includes advising the Mayor and City Council on youth services policy, and also initiating and coordinating youth programs with other City agencies and select non-profit organizations.

Programs Offered by DYS

DYS offers a wide range of programs. We review five of them:

1. Youth Development and Delinquency Prevention (YDDP). The original, core funding of DYS is its YDDP program, which offers a wide range of programs to City youths, such as Art Partners, Grantmakers and Youth Advocacy; several are after-school and weekend programs. DYS also targets the "special youth populations" through YDDP, where immigrant youth, youth involved in the juvenile and criminal justice systems, pregnant and parenting adolescents, and disabled youth are offered services. Funds allocated through YDDP are also aimed at general youth development programs, where community-based organizations are contracted to offer a variety of youth activities, such as employment services, recreation, cultural enrichment, and counseling. DYS also contracts with established citywide agencies to work in association with community-based organizations to establish youth services in previously underserved communities.

2. Safe Streets, Safe City Initiatives. In addition to the various crime-prevention controls adopted in the Safe Streets, Safe City legislation, the unprecedented anti-crime plan also provides for several youth programs aimed at diverting youths from the root causes of crime. Safe Streets/Safe City initiatives are funded entirely by City tax-levy dollars.

3. Runaway and Homeless Youth. DYS operates 15 programs for runaway and homeless youth. They offer counseling, independent living skills, vocational training, education, and shelter.

4. Transitional Living. The transitional living program offers temporary housing and support services to youths in need of such assistance.

5. After-School Programs. Originally administered by the Board of Education, DYS funds and monitors several after school programs based on the recommendation of the community school boards. These programs are designed to offer youths a safe and productive alternative to the negative influences of drugs, alcohol, youth gangs and related crime.

Secondary Impacts

In addition to the budgetary impacts, several secondary impacts are anticipated to occur as a result of the programs slated to be eliminated. They include:

Programs and services offered to our City's youth through the Department of Youth Services appear to have been effective. For example, in a January 1995 report entitled Critical Choice: Final Evaluation Report 1993-1994 by Mirand Research Associates, Inc., an evaluation was done of a number of the NYU Creative Arts Team (CAT) programs. The evaluation includes three components of the "Critical Choice" contract with DYS. They are: AIDS Education/Prevention, Prejudice and Racism and an alcoholism-related program. Across the three programs 23,328 students from high schools, middle schools, off-site educational programs and detention facilities were served during the 1993/1994 school year. The broad objectives of these programs are to "develop skills that promote resilience and reduce vulnerability to ever-present risks." This includes social competence, problem-solving skills, autonomy and a sense of purpose and future.

The evaluation concludes that there is considerable evidence to demonstrate that all three programs were effective in achieving their objectives.

In addition to the basic functions provided by these services, the programs also offer guidance, restore a sense of self-worth, and provide encouragement to the young people most in need of these reinforcements. About 18 percent of the City's 2 million young people have participated in one or more of these programs. Cutting the programs will surely result in adverse social and economic effects.

D. Education

Board of Education

The Board of Education is allocated lump sums annually by the City for expenditure by the Board. Since the Board has just recently released its 1995-96 proposed budget, it is possible at this stage to comment only on the broad allocations by the City. We intend to perform a detailed analysis of the cumulative effects of recent years' cuts, coupled with these new cuts, in the next few months.

The City of New York FY 1996 Executive Budget allocates $7.4 billion to the Board of Education. The FY 1996 agency savings-and-reduction program for the Board is $414 million, of which $135 million represents undefined initiatives and unallocated reductions for the Board and $190 million represents transitional labor savings already identified by the City as part of its proposal for $600 million in labor savings. The City's contribution to this budget will be cut by 3.3 percent from the City's FY 1995 forecast. The Board of Education will absorb about 13 percent of the City's $3.1 billion total cuts for FY 1996.

Since the Board of Education represents about one-fourth of the total budget, taking one-eighth of the cuts at first sight would appear to mean that the Board is less affected in FY 1996 than other City services. But the Board must absorb 20,000 more students, largely toe children of new immigrants to the City.

Also, the Board must also establish $275 million in recurring savings initiatives and $65 million in mandate relief from the State. The $275 million for recurring savings and initiatives reflects cuts the Board must make to compensate for one-shots previously used as gap-closing measures. In total, therefore, the Board must achieve $754 million in savings initiatives and reductions in FY 1996.

When central funding of educational services is taken into account, the Mayor asserts that the Board of Education's share of the total City budget will grow slightly from 25.6 to 25.7 percent, and that the cuts in education in large part reflect expected reductions in intergovernmental aid.[103] State aid, which is projected to pay for 46 percent of the education budget in FY 1996, is projected to decline by 1 percent from the City's FY 1995 forecast, and Federal aid is expected to decline by 17 percent.[104]

Special education is cut significantly, by $282 million, 13 percent, through a number of program reductions described as streamlining or restructuring (of special education and related services including transportation) or changes in associated fringe benefits and pension costs.[105]

State and Federal CUNY Aid Cuts: Overall Impact Unclear

State and federal funding of CUNY Student Financial Assistance may be cut, but amounts cannot be projected yet. In addition to City cuts, the Governor has proposed cutting State funds by $158.1 million to the CUNY senior colleges and by $10.6 million to CUNY's community colleges.

CUNY Chancellor Ann Reynolds has asserted that CUNY as a whole will have to lay off 1,000 full-time professors, one quarter of the faculty, and raise tuition by $1,000 if the proposed State cuts are passed.

City's CUNY Cuts: Community Colleges Suffer Most from City Cuts

While Federal and State cuts are not clear, the City of New York FY 1996 Executive Budget cuts the City share of CUNY funding by $45.8 million in FY 1996. This represents a cut of more than 40 percent in CUNY funding from City tax-levy funds, in a budget that reduces the City's tax-levy spending by only about 4 percent.[106]

Two-thirds ($30.4 million) of the CUNY cuts are in Community College Services, to be achieved through administrative efficiencies, early retirement, new funding sources, CUNY involvement in the City's workfare initiative, and a higher student-faculty ratio.

The City's reduction in its spending on community colleges continues a recent decline of nearly 50 percent in City support per full-time-equivalent student at the community colleges from $2,666 in FY 1990 to $1,498 in FY 1995. The FY 1996 support level would be down more than 40 percent in one year, to $897.

An additional $7.9 million will be saved through changing the requirements for the Associate Degree Subsidy. Until FY 1993, City support for Associate Degree students was based on current-year support. In FY 1994 the State changed this method and required that the City support Associate Degree students at senior colleges[107] based on the average level of support per full-time-equivalent student two years earlier. The FY 1994 formula raised the costs to the City; the State's restoration of the current-year calculation will reduce the City's Subsidy costs.

Two other sources of savings are:

Secondary Effects of Community-College Cuts

CUNY estimates that enrollment could decline by 7 percent (15,000 students) because of reductions in course offerings and substantial tuition increases. Nearly half of the decline in enrollment will occur at the community colleges. More than 40 percent of CUNY students come from families with household incomes under $20,000 a year and nearly one-third already work full-time.

The High Tuition Barrier to Students Will Be Raised. The Mayor's budget for FY 1996 does not propose an increase in tuition at the community colleges although the Mayor has suggested this frequently. CUNY's Chancellor has suggested that a $1,000 tuition increase may be needed.

A tuition increase at the community colleges is all the more likely in that the community-college teaching load is 27 credits per year. A heavier teaching load is far more feasible in the senior colleges than in the community colleges.

Community-college tuition at CUNY is already $2,100 a year, higher than at more than 95 percent of community colleges nationally. It is twice the national average for community colleges.[108] The State was one of only five that had an average in-state community-college tuition above $2,000 in 1992-93.[109]

Tuition constitutes 39 percent of the FY 1995 community-college budget and will climb to 45 percent in FY 1996 even without a tuition increase because of tax-levy cuts.

Undermining Community Colleges' Role as a Bridge from Poverty. Community colleges have become the helping hand to low-income high-school graduates. More than one-third of all students in higher education and more than half of all freshmen are now enrolled in community colleges.[110]

A study of former AFDC recipients in 1988 concluded that college education was a very successful way of bringing women from welfare into the workforce. Of those who graduated from college, 88 percent were employed and 22 percent went on to graduate school (some were both employed and in graduate school).[111]

This survey has been replicated in Philadelphia and four states and the same findings emerged -- community colleges are a major escape route from poverty.[112]

Secondary Economic Impact from Reduced Incomes. National studies indicate that a community college associate's (A.A.) degree raises the income of recipients in the 25-34 age range by $5,000 compared to a high school diploma. Going on to receive a B.A. degree raises incomes another $7,000. These differentials also apply, and are higher, in the older age groups.[113]

Since 80 percent of CUNY graduates stay in the State and 65 percent stay in the City, this is a boon to the State and local economy, even before including the indirect tax revenues paid by others as a result of CUNY alumni expenditures.[114]

The kind of work done by college graduates is more likely to be of the export-industry type than work done by those without a college degree, because New York City's exports are heavily in the knowledge-based industries (law, accounting, finance, communications, arts, media). It is therefore likely that the incomes of CUNY graduates have a multiplied effect on the City's economy, as their work creates jobs for other City residents.

Loss of Community-College Educational Services and Jobs. The proposed cuts would mean the elimination of 501 full-time positions at the community colleges (including 286 teaching faculty); a corresponding reduction in adjunct faculty leading to the elimination of over 3,300 sections; cuts in part-time staff; and expenditures for academic equipment and libraries.

Secondary Effects of Senior-College Cuts

The senior colleges will be similarly adversely affected by cuts in the State budget. A reduction of 928 full-time faculty (nearly 25 percent of the faculty) and the elimination of 25 percent of adjunct faculty would mean the cancellation of more than 10,000 sections. Other impacts would include dramatic reductions in part-time staff and non-personal service expenditures for libraries, equipment, and facilities maintenance and operations.[115] These service cuts could be mitigated by increasing the faculty workload.

Senior-college tuition, now $2,450 per year, would increase by 40 percent if the senior-college budget is cut as the Governor requests and the CUNY Chancellor's proposed response, rather than an increase in teaching loads or increased administrative efficiencies, is adopted. It is hard to avoid the conclusion that enrollment will be down, the quality of students reduced and the institution of public higher education severely damaged. An increase in teaching loads, while it might discourage recruitment of the best possible faculty, would be far preferable to a tuition increase.

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