Larry Littlefield's blog
The fiscal 2010 state and local finance data compilation has been released by the U.S. Census Bureau, and I spent one and one-half days of a weekend putting it into a readily comparable form for local governments in the U.S., New York State, New Jersey, New York City, and (by subtraction) the rest of New York State. You can follow my work step by step in the series of worksheets in the “Local Government Finance 2010” spreadsheet, which can be downloaded from Archive.com here. Look to the left and click on “Excel” to download it. I did the work on my own time because providing comparisons with the national average and other states is something neither the City of New York nor the State of New York, which between them spent $3.3 billion on agencies in the Census Bureau’s “Financial Administration” category, have seen fit to do. In the “Added” worksheet, you can hopefully print the FY 2010 data on two pages. The “FY 2002 and FY 2010” worksheet provides that comparison for those who have good eyes.
How much should people concern themselves with this data, and with the New York State legislators and New York council members who pass the budgets that have decided what the data show? Consider this. In FY 2010, the money New York City local governments (including the Port Authority and New York City Transit) directly spent equaled 20.8% of all of the personal income earned by all New York City residents. Of that amount, the equivalent of 12.8% of the income of city residents was extracted directly from city residents and others spending time here in taxes, fees, fines and other revenues, with the equivalent of 8.0% coming from the federal government and the State of New York (with some of the state money originating with the federal government). The State of New York exercises indirect control over the entire 20.8% of everyone’s income that is spent by the city, and also directly spends the equivalent of 12.8% of the income of state residents. Taken together, New York City’s state and local governments spent the equivalent of about one-third of everything New York City residents earn. On public services and benefits that are, or can be, absolutely essential, but which the city and state and those who work for it have no contractual obligation to provide with any quality.
The situation no one wants to talk about is being whispered about here and there. Looking for something else I recently came upon this NY Times essay by Kurt Anderson from a few months back. “Why had the revolution dreamed up in the late 1960s mostly been won on the social and cultural fronts — women’s rights, gay rights, black president, ecology, sex, drugs, rock ’n’ roll — but lost in the economic realm, with old-school free-market ideas gaining traction all the time? There was a long pause. People shrugged and sighed. I had an epiphany, which I offered, bumming out everybody in the room. What has happened politically, economically, culturally and socially since the sea change of the late ’60s isn’t contradictory or incongruous. It’s all of a piece. For hippies and bohemians as for businesspeople and investors, extreme individualism has been triumphant. Selfishness won.”
So, do I agree? In part.
In publications headquartered outside the United States. The Economist seems to imply that as bad as it would be, high inflation may be the only way out for disadvantaged younger generations. Follow the link and read all about it. Earlier, the Financial Times had brought the issue up.
I had predicted this would happen in the future, but it turns out it may have already started to happen in the recent past. According to this report “for generations of Americans, it was a given that children would live longer than their parents. But there is mounting evidence that this trend has reversed itself for the country's least-educated whites, an increasingly troubled group whose life expectancy has fallen by four years since 1990.” Recall that the median wage of those without a high school diploma started to fall first, in the mid-1970s, followed by high school graduates, and then college graduates. Soon only the one percent was getting ahead with everyone else worse off. But now, perhaps it is only the 0.1 percent are getting ahead. Perhaps the rise in early death will work the same way – working its way up the socio-economic ladder a few decades after the wage declines and the increase in divorce and single parenting.
“The five-year decline for white women rivals the seven-year drop for Russian men in the years after the collapse of the Soviet Union, said Michael Marmot, director of the Institute of Health Equity in London.” Bingo. That's how I saw it coming. "There's this enormous issue of why." Perhaps the various ways that the richest generations in U.S. history made later generations worse off, from the collapse of the family to diminished earnings in the marketplace, to public policy, has something to do with it. That first factor will vary from family to family, so you’ll see the damage in the most damaged first. Or perhaps the constant stream of advertising conditioning people to always choose what is easier or pleasurable in the short run, even if it hurts in the long run, has had an effect. Homicide is the surest measure of crime, because it is the easiest to measure (a body) and hardest for the authorities to fudge. The same is true of the basic vital statistics as an overall social measure. One might say that every other social measure is merely an explanation.
One of the dilemmas of writing on Room Eight is whether or not to repeat myself. On one hand, there may be some people who have never actually seen data on comparative public employment, or whose interests or ideology may cause them to try to ignore it. For them, my usual exhaustively explained and sourced “beat them into the dust” (in the words of a former boss) style might make sense. But for anyone who has read this stuff before, the result is boredom. Last year I wrote twelve single typed pages on this data, in four posts. Did anybody read it, after all that effort? Who knows?
So this time, I am going to try to write less, tossing off comments in emulation of the most popular and prolific Room Eight poster. To do so, I’m going to assume that anyone reading my blog has the spreadsheet posted here, printed out and in front of them. If you haven’t already, you should download this and print out the “local output” and “state output” tables, before reading what I have written here. I’ll also assume that there is much I don’t need to say about how New York compares with other places, because I’ve said it over and over again, ad nauseum. And I’ll assume that the reader is willing to assume that if I say something is true, then it is backed by facts, without once again regurgitating exhaustive proof and specific numbers. Rest assured that data is there.
The governments division of the U.S. Census Bureau has released state and local government employment and payroll data for March 2011, and as in the past I’ve compiled it for New York City, the rest of New York State (by subtraction), New Jersey and the United States, along with some related and relevant private sector data, and added 2002 data for comparison. A spreadsheet of related private-sector data is also included. A link to the spreadsheets, and notes on how the data was compiled, come after the jump.
Based on the Census Bureau’s release schedule, I may have 2010 state and local government finance data to show you in time for the state legislature election this November. But this 2011 employment data, that 2010 finance data, and the 2011 education finance data are likely to be the latest available prior to the 2013 New York City Democratic Mayoral primary. And it is this data, and the values and priorities it demonstrates, that the candidates for Mayor ought to be asked about. How much do we pay, compared with other places? What do we spend more than average on, or less, adjusted for everything? For which public services do we employ more people compared with other places, and how is that changing? Let’s see what the data shows.
That claim was made not by New York's United Federation of Teachers, but Chicago's teacher's union, which is now on strike. According to a media report “A day after Chicago Public Schools’ teachers overwhelmingly authorized a strike, CBS 2 wanted to know how much the average teacher earns. As CBS 2’s Dana Kozlov found out, it depends on who you ask. Salary figures provided by the Chicago Public Schools show teachers here have the highest average salary of any city in the nation. But, according to the Chicago Teachers Union’s calculations, Chicago teachers would rank second behind New York City.”
The difference is the union believes it isn't just salary that matters, but benefits such as pensions and total spending on teacher per pupil that matters. I agree.
It turns out the Generation Greed bond in Poway, California that I wrote about here is not alone. I just followed a link to this from National Public Radio. “Look, there's no doubt that this has happened in dozens if not hundreds of school districts around California. I mean, we're already finding them; we've been sort of broadening our scope and we're actually publishing a piece today that shows three other local school districts that have very similar deals to Poway's. This is a multi,-multi-billion dollar issue across the whole of the state. Tens of billions of dollars of debt out there in this type of creative financing.”
What about New York, where these horrors are cooked up. Did some of our government entities snort our own supply? The MTA perhaps, or Nassau County, or the State of New York?
Like many Americans of the past 30 years, the people of Poway, California wanted more in government services, in this case new schools, but didn’t like taxes, and weren’t likely to complain as long as they got what they wanted. The future was not one of their concerns. And like many politicians, the Poway school board gave them exactly what the whiniest generation in U.S. history wanted. How they did so has now become a scandal that has received national attention.
“School officials said the long-term bond was needed if the district was to continue with a school construction program in these difficult economic times” according to the San Diego Union Tribune. “Board member Marc Davis pointed to the taxpayer approval of the bond measure in 2008 without a tax increase. ‘We had those parameters and we executed or operated within the parameters you had given us,’ Davis said, adding: ‘There are no backroom deals. There are no shenanigans. There is no fraud.’” Not in the legal sense, I suppose. But there is the fraud that Generation Greed has perpetrated on those coming after, and not just in Poway. As the future no one cares about continues to arrive, and politicians and the media call for “creative” ways to pay for things now that so much of people’s taxes are going to past debts and public employee retirement benefits, New Yorkers should pay attention to what the Poway Unified School District did.
Here is something I wanted to do something about 15-plus years ago, but go nowhere because I was a public employee, and thus could make no useful contribution to the city. Use regulations that make no sense but remain on the books, to be enforced rarely and in a discriminatory way.
The New York Times reports that some yoga studios are being fined, and are at risk of being shut down, for being "physical culture establishments," which technically they are. Basically, just about any place with exercise is required to get a special permit that requires months to get -- after you have already rented a place and started paying rent, but before you are allowed to do anything to prepare the property to open for business. It is something no business other than a huge national chain can afford, so most places -- from karate schools to your local health club -- just open without it, or get it later. But every now and again they go after someone.
If Paul Ryan had merely proposed to keep federal taxes the same, rather than cutting them, and had proposed to reduce old age benefits for all Americans, not increase them for today’s seniors and cut them for those under 55, I might have something good to say about the Romney/Ryan ticket. But instead Ryan is little more than a panderer to Generation Greed, once again promising the better off lower taxes and the non-poor richer benefits with all the associated costs shifted to younger generations. He is another in a long line of careerist frauds.
So why doesn’t President Obama say so? Why doesn’t he highlight the Republican way of victory over the past 30-plus years, selling out the future and those who will live in it on behalf of the most selfish generations in American history? Why doesn’t he take this opportunity, win or lose, to ensure that no one under 55 (if they bother to show up) votes for a Republican at the national level ever again? Two words – Walter Mondale. Since he promised to raise taxes and cut spending to reduce the deficit, no Democrat has dared to stand up for the future of this country. Instead they have sought to get a few more of the benefits for their yuppie and public employee union constituents, at the expense of the people they pretend to represent, while hoping to avoid the blame in the end. If Obama would highlight the generational inequities not only of the Ryan plan but also of the past 30 years, I would vote for him enthusiastically. But he dares not, because he leads a Generation Greed-run party pandering to Generation Greed benefitting interests.
Although I have a master’s degree in city planning I generally am interested writing about public finance rather than land use issues. But since my neighborhood is wigged out about the closure of the local Key Foods, and future replacement by a Walgreens, I might as well do the usual and write a post pointing out the unsaid, even if I don’t really feel passionately about the whole thing.
Based on the meetings, petitions, and press coverage, one would think the Windsor Terrace Key Food, a successor to a Bohacks that was built in the early 1950s, was a beloved institution. But lots of people who are complaining now were hardly enthusiastic about the place back when it was open. As someone put it “the only thing worse than Key Food is no Key Food.” The chain has a high-low strategy. For certain items, for the weekly specials, and for basic foodstuffs it was a pretty good deal. For other items and for non-food items it was not. We shopped at Key Food for some things, therefore, and not for others, but over the decades that certainly added up to at least $60,000 spent by my family at that store, in today's money adjusted for inflation. Others presumably spent more. But then the owner, being 80 years old, wanted to retire, and who could be grudge him? Supermarket chains offered to pay over time, but Walgreens offered to pay up front, and that’s what he wanted, I was told. So now what?
Now that the latest education finance data is out, I’m prepared to write a post on the near and intermediate term future of education in NYC (and perhaps elsewhere). Thanks to a couple of decades of retroactive pension enhancements, pension underfunding, and inflating the problem by sweeping it under the rug, it is not a future of “reform” or “improvement” no matter how anyone chooses to define it and no matter what one’s education politics. It is a future of degradation, one I have already described in detail in this post, one that is well worth a read.
Basically, you cannot have one year in retirement for each year worked without getting it at someone else’s expense. Huge if funded over a career, the cost of that kind of retirement becomes devastating if granted retroactively, and that is what the United Federation of Teachers has achieved twice. New York City’s public schools are going back to the 1970s, and this time they won’t be alone, because the same sort of irresponsibility has occurred in much of the country. Although elsewhere, taxpayer underfunding of promised pensions, rather than retroactive increases in those pensions, account for more of the damage. Underfunding, that is, by past taxpayers with future taxpayers holding the bag. So now what?
I understand that there is a group called StudentsFirstNY, organized by the affluent to do battle with the teacher’s union over “school reform.” As the battle rages, however, I can’t help but think the whole thing is nothing but a distraction – from the fact that retroactive pension enhancements and pension underfunding, leading to a huge shift in available taxpayer funds to the retired, have doomed the public school system for a generation, despite much higher spending than in the past. Particularly in New York City, where the cost of retroactive pension enhancements is wrecking the schools for a second time, just as they were starting to recover from the first time. So if StudentsFirstNY really wants to wake people up, it should use its resources to send every parent, teacher and taxpayer a postcard with the following information.
In Fiscal FY 2010, according to data compiled by the U.S. Census Bureau, New York City spent $23,472 per student on public schools, compared with an average of $22,861 in the Downstate New York Suburbs, $18,546 for New Jersey, and $12,502 for the U.S. as a whole. Adjusting the New York figures downward for higher average non-Wall Street private sector wage here, the NYC total is $17,647 per student, still 41.2% higher than the U.S. average. New York City non-instructional spending is and always has been low compared with the US. average and other parts of the state. Spending on instructional (teacher) wages and benefits (including retirement benefits) totaled $13,469 per student in NYC in FY 2010, or $269,380 per 20 students, or $161,628 per 12 students. Adjusting the NYC figure down for the higher average wage here, you get $10,126 per student spent on teacher wages and benefits in NYC, or more than 77% higher than the U.S. average of $5,703. The NYC figure for teacher wages and benefits was also higher than the average for the Downstate Suburbs, although a higher share of the suburban teacher dollars went to wages, and not to pensions and other benefits.
If this post takes it will seem like a miracle, and I'll finish off that FY2010 Census Bureau public education finance data for publication next week. Reading between the lines, it is clear to see what the source of conflict is that led to the Con Edison lockout/strike: not enough money in the pension fund. Like our local government agencies, Con Edison is a monopoly, and more for Con Edison workers means less for other workers due to higher rates (or vice versa). Con Edison managers and shareholders represent a limited buffer that could also become better or worse off as well, but as for the government the issue is mostly a question of fairness among workers.
So why is there not enough money in the pension fund? Did shareholders/managers skimp on contributions when asset prices were inflated during the various bubbles, to get higher executive pay or profits? Were some of the savings passed on to ratepayers in the form of lower rates than would have otherwise been the case, under Con Ed’s regulated “cost plus” pricing? As for the unionized workers, the question of fairness comes down to a simple question: are they only getting the pensions they were promised when they were hired? Or were those pensions retroactively enhanced at some point (or perhaps more than once point) in the past 20 years, without the cost of the increases being honestly disclosed to those who would ultimately be forced to pay for them?