Net Loss: Secondary Effects of City Budget Cut Proposals


  1. Alan G. Hevesi, Comptroller's Comments on the Preliminary Budget for Fiscal Year 1996 (March 1995), for example on pp. 1, 5
  2. The remaining $0.9 billion of the budget gap is to be closed by an increase in revenues of $0.2 billion and one-shot gap-closing measures totalling $0.7 billion.

  3. Gross city product (GCP) of $293 billion divided by a population of 7.3 million people.

  4. Employment rate = E/P, where E=total civilian employment and P=civilian noninstitutional population (including unemployables). This is essentially the number of people working in a city as a proportion of its population.

  5. The labor-force participation rate, which measures both those who are employed and those who are unemployed (i.e., those not working but looking for work) as a proportion of the population, was 66.6 percent in 1994 for the nation and 55.5 percent for the City -- a record gap of more than 11 percentage points. See the Comptroller'sEconomic Notes, 2:12 (April 1995), p. 2.

  6. The national proportion of those 65 years old and over (1993) is 12.7 percent; the proportion of the New York City Primary Metropolitan Statistical Area (NYC PMSA) 65 and over (1990) is 13.0 percent. The national proportion of those under 18 is 26.0 percent; the proportion of the NYC PMSA under 18 is only 23.0 percent. The NYC PMSA population is 8.5 million, of which 86 percent is accounted for by the five boroughs of the City. SeeStatistical Abstract of the United States 1994, Table 33, p. 32 and Table 42, p. 40. No age-group data are provided in this source for the City alone.

  7. Irene M. Walsh, "New York in Transition,"Municipal Market Monitor, J. P. Morgan Securities Inc., New York, March 10, 1995.

  8. The Federal I/O model -- called the Regional Input-Output Modeling System (RIMS) -- is designed by the Department of Commerce to look at the national economy and to develop estimates of the national relationships among economic factors at that level. The 1994 model from which multipliers for the City are derived, RIMS II (dating back to 1981 and before), uses 1982 technical coefficients for input-output technology and uses employment and income coefficients based on 1989 data. (A March 1995 update, to which the Comptroller's Office has not yet had access, reportedly utilizes 1987 technical coefficients and 1992 regional wage and salary data.) When the City is assumed to function as the nation does, and the national coefficients or multipliers are applied locally, we are implicitly using a "synthetic" local model. The Port Authority's I/O model for the New York Region (New York and New Jersey only, a gross regional product of $520 billion in current dollars, out of a gross regional product of about $600 billion if Connecticut were included) is based on the RIMS model but adjusts the coefficients based on actual regional data. The Port Authority believes the RIMS-based multipliers are too high because its Regional Purchase Coefficients are employment-based and do not take account of cross-hauling. The Port Authority model suffers -- for someone looking at City data -- from being regionally based, but no up-to-date reliable I/O model is available for the City itself. The two options, each slightly flawed, were both used to develop a range of estimates for the City's secondary economic effects. See Philip J. Bourque, "Regional Multipliers: WAIO vs. RIMS,"International Regional Science Review, 13:1-2 (1990), pp. 87-98, and Richard M. Beemiller, "Improving Accuracy by Combining Primary data with RIMS: Comment on Bourque," International Regional Science Review, 13:1-2 (1990), pp. 99-101. Information also from interviews with Kwame Opoku, Economics Trends Group, Port Authority of New York and New Jersey, April 20, 1995; Faye Duchin, New York University, May 1, 1995; and DeWitt Newton, Regional Economic Analysis Section, U.S. Department of Commerce, May 4, 1995.

  9. Betsy McCaughey, Lt. Governor,Report to Governor E. Pataki Regarding the Fiscal Year 1995-1996 Medicaid Budget, January 18, 1995. Cited subsequently as the "McCaughey Report."

  10. As part of the process by which the Governor and Senator are negotiating with the State Assembly together, the Governor currently states that he now supports the Senate bill.

  11. Analyzing the Governor's plan, the Lewin-VHI consulting firm estimated that the City would lose 77,000 jobs in 1996 (Analysis of the Economic Impact of Proposed Medicaid Budget Cuts in New York State: Prepared for Greater New York Hospital Association and Healthcare Association of New York State, March 6, 1995).

  12. After hisFY 1996 Executive Budget was submitted, the Governor indicated that the State might modify the time frame for enrolling all Medicaid patients into mandatory managed care.

  13. New York State's hospital rate-setting system is called the New York Prospective Hospital Reimbursement System (NYPHRM). NYPHRM legislation expires at the end of calendar 1995. The Governor and Lt. Governor has both indicated that they hope to replace rate-setting with market mechanisms.

  14. §2805B of State Public Health Law.

  15. For example, Presbyterian Hospital (Washington Heights), Bronx-Lebanon (South Bronx), St. Luke's Hospital and Northern General (Harlem).

  16. Moreover, the State of New York, like the City, has relatively more old people. As of 1993, the national proportion of those 65 and over is 12.7 percent. In New York State, the proportion is 13.1 percent, higher than the City (PMSA) proportion of 13.0 percent.

  17. For some kinds of home care (e.g., "nursing home without walls" program), people are eligible to get the home-care service only if Medicaid has already judged that the person would otherwise need to be in a nursing home.

  18. Consensus estimate of Health Systems Agency of New York City and Long-Term Care Division of Greater New York Hospital Association, and validated by calls from the Comptroller's Office to selected nursing-home administrators. The high occupancy rate has existed for more than ten years. For example, see New York City Comptroller's Office, Office of Policy Management,Cork in the Bottle, December 1989.

  19. The term is defined in Medicare law, but not in Medicaid law.

  20. The self-pay number, for 1992, comes from Mildred Shapiro, Associate Commissioner for Health and Long Term Care, New York State Department of Social Services. The Medicaid reimbursement rate is lower than the self-pay rate. In FY 1994, Medicaid paid $41,187 per nursing-home beneficiary, according to New York State Department of Social Services, Medical Financial Status reports MR-O-1A and MR-O-50.

  21. The Health Systems Agency (HSA) is the source of the numbers in the second column of Table 8 -- numbers served by each program. HSA is the most authoritative and up-to-date source for such numbers. We verified them with the Human Resources Administration's Medical Assistance Program. Column 3 of Table 8 includes estimates of the percent of people in each program likely to need institutional care. These estimates are derived from a document of the Health Care Association of New York State and are consistent both with our analysis and that of such other groups as the United Hospital Fund, the Home Care Association of New York City, and the Visiting Nurse Service.

  22. In addition to the programs itemized in Table 8, the Governor's budget bill will also lead to cuts in services by Certified Home Health Care agencies. However, we were unable to quantify exactly the impact on the need for nursing-home beds; we use a conservative estimate of 19,000.

  23. According to a large body of academic research, female relatives (mainly daughters and wives) are much more likely to be the family caregiver than are male relatives.

  24. Health Systems Agency of New York City,Planning for Long Term Care Services For New York City's Older Population.

  25. Staff and board members, Long-Term Care Division, Greater New York Hospital Association.

  26. Visiting Nurse Service of New York City.

  27. New York State Department of Social Services, Medical Financial Status reports MR-O-1A and MR-O-50.

  28. United Hospital Fund,Hospital Watch, March 1995. We use a single number for both HHC and private hospitals since their general-care lengths of stays are about the same (8.27 days for voluntary hospitals and 8.31 for HHC). "General-care" admissions do not include psychiatric, rehabilitative, alcoholism or developmental disability admissions. When these admissions are included, the total average length of stay is 8.8 days for voluntary hospitals, but 10.47 for HHC. Using the average length of stay for "general care" rather than for all admissions, we make our analysis more conservative -- particularly since our scenario includes a number of people who have a dementia (which might lead to a psychiatric admission), or a chronic debilitating condition.

  29. New York State Department of Social Services, Medical Assistance program,ibid. For both in-patient hospital care and for personal care, the MMIS reports contain statistics on total expenditures, number of unduplicated beneficiaries, number of service units provided (days, hours). With the assistance of HRA staff, the Comptroller's policy staff used these numbers to calculate the other statistics used in its analysis -- e.g., average cost per hour of personal care, cost per beneficiary per year, hospital cost per patient day.

  30. MMIS data from NYS Department of Social Services,ibid.

  31. Gay Men's Health Crisis.

  32. For example, this has been a prominent issue at meetings of the Greater New York Hospital Association, the United Hospital Fund, and the planning committee of the Health System Agency.

  33. The lower estimate is from the most recent report (covering 1991) of the New York State Health Department's Dementia Registry. The higher estimate is from the Alzheimer's Association, based on applying National Institute for Aging approved prevalence estimates to New York City census data. According to the 1990 census, 966,068 New York City residents are over 65 years of age, and 1,278,105 are over 60. An article in the Summer 1993 issue of the scholarly journalHealth Affairs (page 164) estimates that 10 percent of the total US population 65 years of age or older had Alzheimer's disease in 1990. Among people 85 or older the rate is at least 25 percent.

  34. Alzheimer's Association of New York City.

  35. Ibid.

  36. For example, M.H. Cantor and V. Little, "Aging and Social Care," in R. Binstock and E. Shanas (eds.),Handbook of Aging and the Social Sciences, and Chapter 89 in The Merck Manual of Geriatrics.

  37. Statistics from home care registry of New York City Home Care Council.

  38. Source: Calculations by Office of the Comptroller.

  39. Source: Calculations by Office of the Comptroller, based on U.S. Health Care Finance Administration data on AFDC recipients in New York State.

  40. The City Comptroller's Office previously documented these obstacles in great detail inCork in the Bottle, previously cited. Currently about 6,000 nursing-home beds are "in the pipeline" -- approved but not built. Cork in the Bottle found that a high percent of New York City's "pipeline" beds never get built.

  41. Comptroller's Office interview with Professor Howard Berliner, Director, Health Management Program, New York for Social Research, May 4, 1995.

  42. The Federal government pays the rest.

  43. We calculated this by dividing the number of unduplicated beneficiaries by services units (hours), to get the average number of hours per beneficiary per year. We then divided that figure by 12. The MMIS average mayunderestimate the actual average. A key reason is that MMIS just measures services for which Medicaid actually paid. But, often, there is a big discrepancy between when the service is delivered and when it is paid. In addition, Medicaid frequently disallows claims for services already delivered. In addition, the calculation assumed that all clients received their services on a year-round basis, rather than simply getting personal care for a couple of months and then not getting any at all. Obviously, this is not true. The effect is to lower the monthly average by spreading the hours across the whole year.

  44. May 5, 1995 interview with Joe Campanella, Executive Director, Home Care Council of New York City. DSS told him that the agencies had authorized an average of 48 hours a week. The monthly average is 48 times 4.3 weeks (206.4 hours a month). The number of hours that a client isauthorized to get is usually higher than the number they actually receive.

  45. The number of clients included in this table (47,500) is different from the personal care program figures used elsewhere in this report (63,000). The main reason is that the 47,500 refers to clients who were receiving services during a particular month -- December 1994 -- while the 63,000 refers to people who received services any time during the year. There is a roughly 25 percent monthly turnover in the specific individuals receiving personal care. The HRA data is for a single month.

  46. The point where reimbursement shifts from a 25 percent/25 percent State/City split to zero/50 percent.

  47. The point where reimbursement shifts from a 45 percent/5 percent split to 25 percent/25 percent.

  48. For example, cluster care and beepers -- where clients live in the same building and share a common pool of personal care workers. This is often a good idea, but mainly for low-hour clients.

  49. These are the only data for which we have a detailed distribution of hours for different categories of client, rather than just an overall average.

  50. That is, we first recalculated the total number of hours by looking at the bottom part of Table 12 and finding the row for people who got 168 hours of service a week -- 24 hours a day. We saw that there were 1,836 24-hour-a-day clients and that they received a total of 308,448 hours a week. We then subtracted the 308,448 hours from the total number of hours 2,040,765 and divided the difference by the number of clients who did not receive 24 hour-a-day service (47,500 minus 1,836).

  51. These numbers provide an indication of what it would take to bring down the average number of hours of personal care. The calculations were done in the same manner as for the 24 hour a day clients, but, each time, another category of clients added to the number of people removed from the calculation.

  52. The midpoint between the 41 percent and 47 percent in the bottom two rows of Table 14.

  53. For example, the cheapest alternative to the personal care program is the certified home health care program, but home health aides are paid $6 an hour more than home attendants, and are supervised by nurses, who have to visit the home at least twice a month, at a cost of about $82 a visit.

  54. Under the Certificate of Need process, the State can refuse to certify new programs.

  55. It is not a true block grant because the City is not guaranteed a minimum reimbursement, just the maximum.

  56. New York City Department for the Aging's estimate of the growth in number of clients.

  57. Legislative Update,1995 Legislative Session Begins with a Call to Reduce State Medicaid Funding: What are the Possible Impacts of Proposed Medicaid Cuts on HHC?, New York City Health and Hospital Corporation, February 1, 1995.

  58. New York State Office of Alcoholism and Substance Abuse Services,Current Drug Use Trends in New York City, December 1993.

  59. Ibid.

  60. "Mentally Ill Jailed on No Charges,"The New York Times, September 10, 1992.

  61. Ibid.

  62. "Pataki Assailed on Cuts for Mentally Ill,"The New York Times, March 21, 1995, p. B6.

  63. Kevin Sack, "Pataki Assailed on Cuts for Mentally Ill,"The New York Times, March 21, 1995, p. B6.

  64. Ibid.

  65. New York City Council, Committee on Health,FY 1996 Preliminary Budget Hearings.

  66. Alliance for the Mentally Ill of New York State, "Pharmacy Cost Option in Medicaid Report," February 6, 1995.

  67. Source: City Council of New York, based on New York State Senate report on welfare cuts.

  68. Letters to the Editor,The New York Times, April 10, 1995, p. A24.

  69. See "The Cold Truth About Michigan Welfare Cuts,"Nightline television show transcript, Show #3588, aired February 22, 1995 and Joyce Purnick, "When Welfare Is Gone: A Cautionary Message," New York Times, Metropolitan News Section, February 27, 1995, p. B1.

  70. Celia Dugger, "Limiting Welfare -- A Special Report -- Often-Cited Workfare Effort Provides Cautionary Lessons,"The New York Times, November 25, 1994, p. A-1 and Kevin Sack, "Trying to Cut Welfare the Ohio Way," The New York Times, April 3, 1995, p. B-1.

  71. Ibid.

  72. In the event the additional $55 million requested for protective and special education services is not forthcoming from the State, further reductions to the child-welfare budget will be necessary. We estimate the impact could total as much as $157 million representing the State, City and Federal shares.

  73. NYC,FY 1996 Executive Budget. Numbers here and throughout the discussion do not add because of rounding errors.

  74. Mayor's Management Report (MMR), Preliminary, March 2, 1995, p. 275.

  75. This new annual foster care rate of $11,100 assumes a new flat administrative of $13.74 per diem and the average reduction in the foster parent pass-thru rate for each child in a foster home of three children. This average reduction in the pass-thru reflects a 7 percent reduction in the rate for the first child and a 32 percent reduction in the pass-thru rate for the second and third children in the same foster home. This new average rate of $11,100 represents a significant reduction from the 1993 average annual cost of $15,005 per child.

  76. CWA, March 1995.

  77. MMR, p. 275.

  78. New York State Office of Mental Health.

  79. New York State, Department of Youth Services.

  80. New York State, Department of Social Services.

  81. New York State, Department of Social Services.

  82. NY State Department of Social Services.

  83. Pursuant to Section 430.9 of Title 18 of the Official Compilation of Codes, Rules and Regulations of the State of New York, eligibility for mandated preventive services requires a determination that a child is at risk of placement or replacement in foster care.

  84. United States General Accounting Office.Home Visiting: A Promising Early Intervention for At-Risk Families, July 1990, p.2

  85. Homemaker Vendors' Survey, May 1995.

  86. The total FY 95 CWA homemaking budget was $48,532,000. If 3,118 families were served during that period, the average cost per family was $15,565, including the cost of both the direct service and the CWA evaluation process.

  87. General Welfare Committee, New York City Council,Today's Savings, Tomorrow's Losses, A Report on the Impact of Cuts to the New York City Family Rehabilitation Program, April 1995.

  88. Ibid.

  89. FY 1996 Executive Budget.

  90. "Child Welfare Administration Foster Care Overview, Fiscal Years 1993-1994", May 10, 1994.

  91. Op. Cit. General Welfare Committee

  92. Preliminary studies showed highly positive outcomes in preventing placements and facilitating discharges from foster care. National Development and Research Institutes Report, November 1994.

  93. New York State Office of Alcoholism and Substance Abuse Services.

  94. Monitoring and Analysis Profiles with Selected Trend Data 1989-1993, New York State Department of Social Services ("MAP Report").

  95. Preventive services have had an 85 percent success rate in averting foster care placement. Only 14.4 percent of the children in New York City for whom preventive service cases were opened in 1992 entered foster care within 15 months or less of the case opening. MAP Report, p.8.

  96. MAP Report, p.10 .

  97. Child Fatality Review Panel Annual Report for 1993, p. 27.

  98. Tamar Lewin, "Training Found a Big Factor in Child Care,"The New York Times, April 12, 1995, p. A19.

  99. Source: New York City, Human Resources Administration, Office of Financial Management.

  100. The Comptroller's Office estimated an average annual cost of care per child under 13 by weighting child-care costs according to number of children by age group, type of care and whether regulated or unregulated, in FY 1995. Assuming AFDC funding percentages, the City's share would be 25 percent of the total cost.

  101. Based on $69,000 annual cost per youth in juvenile justice system.

  102. Center for the Study and Prevention of Violence:"What Works in Reducing Adolescent Violence: An Empirical Review of the Field."

  103. City of New York FY 1996 Executive Budget, p. 213.

  104. Ibid., p. 216.

  105. City of New York FY 1996 Executive Budget, pp. 214-215, 220.

  106. Interview with CUNY budget office, April 19, 1995.

  107. The three senior colleges that offer A.A. degrees are John Jay College, New York City Technical College and the College of Staten Island. A fourth will be added in the future.

  108. Testimony by Richard Rothbard, Vice Chancellor for Budget, Finance, and Information Services, CUNY, before the City Council, March 9, 1995.

  109. The other four were Massachusetts, New Hampshire, Ohio and Vermont. Source:Digest of Educational Statistics, 1993, as reprinted in American Association of Community Colleges, National Profiles Book 1995, Table T4.2.

  110. Anthony DePalma, "Community Colleges Forced to Restrict Access, and Goals,"The New York Times, November 11, 1992, p. A-1.

  111. The study was conducted by Marilyn Gittell et al., Howard Samuels State Management and Policy Center, CUNY, as reported by Nick Chiles, "Studies: College Makes a Difference,"Newsday, March 29, 1995, p. A8.

  112. The four states were Illinois, Tennessee, Washington and Wyoming. Chiles,ibid., p. A8.

  113. Educational Attainment in the United States, 1994, cited in American Association of Community Colleges, National Profiles, 1995, Table T3.10, p. 41; and interview with Margaret Rivera, American Association of Community Colleges, April 18, 1995.

  114. City University of New York, "Investing in the Future: A Report on the Economic Impact of the City University of New York," October 1994.

  115. Testimony by Richard Rothbard, Vice Chancellor for Budget, Finance, and Information Services, CUNY, before the City Council, March 9, 1995. The CUNY study unfortunately does not appear to differentiate between A.A. and B.A. degrees.