Contact: Charles Brecher Diana Fortuna
212-279-2605, ext. 15 212-279-2605, ext. 22

FOR IMMEDIATE RELEASE - Wednesday, December 4, 2002

NEW YORK CITY COULD SAVE MORE THAN $1 BILLION ANNUALLY THROUGH FIVE PRODUCTIVITY IMPROVEMENTS

The City Should Pursue These And Other Efforts To Run Government
More Efficiently - Rather Than Raise Taxes And Cut Services

New York, NY - The Citizens Budget Commission (CBC) today identified how the City of New York could save $1.2 billion annually through five productivity improvements. In four new reports issued today, the Commission proposed improvements that would save $1 billion annually. A fifth report issued earlier in the year recommended streamlining procurement to save almost $200 million annually. The five proposals are:

· Proposal #1: A 40-Hour Work Week For Civilian Employees

Of the nearly 250,000 full-time employees of the City of New York, about 80,000 are "non-managerial civilians" - meaning that they are not teachers or other educators; they are not uniformed employees, and they are not managers. Of these 80,000 civilians, less than 10,000 are required to work a 40-hour week. About 3,400 civilians work a 37.5-hour week, and more than 67,000 work a 35-hour week. If those civilians not working a 40-hour week were required to do so, then fewer workers could accomplish the same amount of work. The City would save $498 million annually.

Most similar federal employees have a 40-hour week; workers in other large cities such as Los Angeles, San Francisco, Phoenix and Washington, DC have a 40-hour week; nationally, among all state and local government employees fully 85 percent of the blue-collar workers and 64 percent of the white-collar workers (except teachers) have a 40-hour week.

· Proposal #2: Restructure Special Education

Special Education in New York City is provided to about 168,000 students at a cost of $18,919 annually per child, and it does not work well. Only one of every six of those students eventually receives a diploma. Three changes would improve educational outcomes and increase efficiency:

o The City should move about 30,000 students from the most restrictive settings to less restrictive settings in order to bring its pattern of placements into line with the rest of New York State, and should reduce the number of students in special private schools by about 6 percent. The share of the City's students (44 percent) in the most restrictive settings such as segregated classrooms is more than double the national average; the miniscule proportion (1 percent) dividing their time more evenly between separate services and regular classrooms is far behind the national average (29 percent).
o The City should reduce placements by using more preventive services. Application of national best practices in New York would let about 6,400 students receive preventive services in regular classrooms rather than in special education.
o Support services (notably transportation, evaluation, and administration) should be provided more efficiently. The process for evaluating students' needs in New York, for example, includes duplicative personnel and steps not found elsewhere.

The new placement policies would save $177 million annually, and the non-instructional efficiencies would save $140 million annually. Even after investing an additional $50 million in professional development to ensure that these new policies work well, the savings would amount to $267 million annually.

· Proposal #3: More Rational Staffing At The Police Department

As the City adjusts to difficult economic times, three strategies should be adopted to use crucial Police Department resources more efficiently:

o The police officers' workday should be rescheduled to increase time in law enforcement and decrease time allocated to changing uniforms. Police officers currently work in shifts of 8 hours and 35 minutes: the 8 hours are typically spent in law enforcement; the 35 minutes overlap their colleagues' shifts and are used for briefings and changing clothes. Reducing the overlapping time to 15 minutes for briefings, and making the changing time available for law
enforcement, would create the equivalent of 10 more working days for each officer without increasing the total time worked in a year. This would permit the City to maintain the number of officers on patrol each day with a smaller number of officers on the payroll, saving $67 million annually.
o Police officers should be reassigned from jobs better done by civilians to law enforcement duties. Almost 1,600 officers, and more likely as many as 2,300 officers, fill positions that could be staffed well and less expensively with civilians. This change would save between $46 million and $67 million annually.
o Overtime should not be used to pay for duties that are predictable and could be scheduled in advance. The Police Department's overtime expenses rose from $114 million in fiscal year 1995 to $353 million in fiscal year 2001. In fiscal year 2002, overtime hit $610 million, with $347 million not related to the attacks on September 11, 2001. Some of these overtime activities could be accomplished at lower cost by staffing them as part of officers' regular schedules; other overtime activities might be reduced or eliminated. These measures would save about $117 million annually.

Total savings of $251 million could be achieved through these three strategies, if needed changes are made in the police officers' contract, which has expired.

· Proposal #4: Streamlined Procurement

In fiscal year 2001, the City spent more than $8.6 billion for procurement of construction, goods and services. Its procurement process, which is widely criticized both inside and outside City government, is known for long procurement cycles, which can be traced to four underlying problems: lack of effective management and governance; burdensome oversight involving up to 10 agencies; excessive paper, estimated at 12 million sheets annually; and poor use of e-government resources.

Three changes are needed:

o The Mayor's Office of Contracts should be replaced with a new procurement entity that offers "one-stop" oversight, a central place for vendors to interact with the City, and improved agency support services.
o An advanced e-procurement system should be implemented that includes a central web site; an option for vendors to submit bids and other materials electronically; online access to pre-negotiated contracts from agency buyers; a central contract management system; and annual subscription and transaction fees for vendors.
o The legal framework for procurement should be changed to give the Procurement Policy Board more independence and to permit new cost-effective procurement techniques.

These changes would yield savings of $197 million annually, through lower transaction costs ($11 million) and reduced prices from vendors ($186 million) due to greater competition and less time-consuming bidding and payment procedures.

· Proposal #5: Energy Conservation At Municipal Agencies

The City paid about $500 million for electricity and fossil fuels in the last fiscal year. While the City has initiated some conservation efforts, it could save more by following practices pursued successfully in other jurisdictions, such as the following:

o Responsibility for energy conservation in City agencies should be centralized within the Office of the Mayor. The new unit should increase efforts to assist agencies in their conservation practices and negotiate savings targets with City agencies.
o Agencies and individuals should be offered incentives to conserve energy - with City agencies allowed to keep a percentage of savings achieved, and an employee recognition program created to reward individual performance.
o The annual rate of capital investment for energy conservation projects should be doubled.

An energy usage reduction of 10 percent in fiscal year 2004 would save $36 million. If 10 percent of that savings were used to establish an expanded energy office and to provide incentives to agencies, the net savings would then be about $32 million. If the City also reduced fossil fuel costs by 10 percent, another $15 million in savings would be achieved, bringing the total to $47 million.

These five proposals would save $1.2 billion annually. All of the savings may not be achievable in the first year, and they would require a determined and persistent effort by the City's political leadership. But these and other productivity initiatives should be aggressively pursued.

"At a time when New York City's taxes are being raised, at a significant cost to the City's economic competitiveness, and municipal services are being cut, to the detriment of City residents, the City has an obligation to ensure that it is operating as efficiently as possible," said Diana Fortuna, CBC President. "These reports make very clear that it is not fulfilling that obligation."

"If the Citizens Budget Commission, with a small research staff, can identify savings of this magnitude," said Charles Brecher, CBC Research Director, "imagine what savings could be identified by the City, with its large analytic staff, if it made productivity improvement a priority. If a $6 billion budget gap is not enough reason to operate more efficiently, what is?"

All five of the reports are available on CBC's website at www.cbcny.org.

Founded in 1932, the Citizens Budget Commission is a nonpartisan, nonprofit civic organization devoted to influencing constructive change in the finances and services of New York City and New York State governments.