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City Disputes Analysts
DC 37: Can Save $128M Cutting Contracting-Out

By DAVID SIMS

March 13, 2009

	LILLIAN ROBERTS: 'Shine light on shadow government.'

District Council 37, whose members could be hardest-hit if city layoffs are needed, has issued a "white paper" titled "Massive Waste in a Time of Need" which castigates the Bloomberg administration for privately contracting out public services that it says could be performed better and cheaper by unionized city workers.

DC 37 Executive Director Lillian Roberts said that she hoped the report would "spur public officials and the media to shine light on the 'shadow government,' work with us to identify and cut waste, and save the taxpayers hundreds of millions of dollars."

City Hall Questions Figures
Bloomberg Press Secretary Stu Loeser responded in a phone interview that based on a preliminary analysis, the report "appears to significantly overstate the cost of functions that could be brought onto the municipal side, while simultaneously understating the full cost to the taxpayers of having career municipal employees." He added that it "does not appear to be counting the cost of health benefits, training and pensions in the cost savings, and that, roughly speaking, is an extra 50 cents on the dollar for most non-uniformed public servants."

	The Chief-Leader Adrienne Haywood-James
	JUDITH ARROYO: 'Do the math.'

Mr. Loeser added that "in order to achieve these savings, we'd have to fill four times as many vacancies as we currently are." Mayoral spokesman Jason Post chimed in, saying, "We've seen this report or something that looks a lot like this before, and the conclusion is that there would be more members for the union."

The white paper alleges that $9.2 billion of the city's $60 billion budget is contracted out to private firms and outside consultants, a "record high" that amounts to "15 percent of the city's tax-levy budget and more than 46 percent of the city's controllable spending," Ms. Roberts told reporters. "It's going sky-high; it's higher than ever. Nine-point-two billion out of a $60-billion budget, it's outrageous. From $5 billion in 2005, with these [possible] layoffs, it's disgusting."

Wants Homeless Moved to HA
The report analyzes 10 instances where it says the city could save money, estimating a potential savings of $128 million if the city were to follow its recommendations. By far the largest concerns the Department of Homeless Services, where DC 37 alleges the city's policy of housing the homeless in private hotels and motels at per-diem rates costs $160 million a year. The union's recommendation is to relocate these people to the Housing Authority, which "needs the funds" and would charge far less, offering potential savings of $51 million.

Mr. Loeser said that DC 37's proposal "might appear to violate the guidelines under which the Federal Government gives us funding for the New York City Housing Authority in the first place."

HA spokesman Howard Marder added that there were not nearly enough vacancies to house the overflow of homeless from DHS. "We have a current waiting list of 132,000 families," he said in a phone interview. "Our vacancy rate is less than one percent. At any given time, there are 1,300 rentable vacants, and they're used for turnover. It's not the 10,000 vacant units cited in the DC 37 report, which cited 'news reports.' That's totally inaccurate; it's a very low number."

Trouble Hiring School Nurses
Another area of concern for DC 37 is the contracting out of work for school nurses, said Local 436 President Judith Arroyo, who represents Nurses and Epidemiologists. Of the 1,040 School Health Nurse positions in the Department of Health and Mental Hygiene and the Department of Education, 230 are unfilled because of comparatively low salaries, the white paper reports.

"What we've discovered is that the contracting-out of nurses, specifically for school health, has jumped, almost up to $33 million," said Ms. Arroyo. "When the vendors can't fulfill their obligation to provide these nurses in the empty schools, instead of looking at why can't we recruit nurses and keep nurses, they go out and give more contracts … Why would you, as a nurse with 10 years of experience, work as a School Health Nurse for $50,000 a year, when you could go to the hospital and make $100,000?"

Ms. Arroyo said that by eliminating the $33 million in outside contracts, the city could provide 6-percent raises to School Health Nurses and "set up a float pool to cover the sick calls and vacations and everything else, and still have money left over." Not only would this address the budgetary waste, she said, but it would also mean every school nurse had undergone the rigorous background checks that public employees go through.

"We continue to actively recruit school nurses to reduce reliance on private contracts," said DHMH Deputy Press Secretary Sara Markt. "When there are open positions, the Health Department is forced to contract with private agencies for nurses to meet health needs in schools until positions are filled. Wages for DC 37 nurses are set by citywide collective bargaining, not by the Health Department."

The report's other big concern is the proliferation of consultants in various city agencies, especially computer consultants. "They do a lot of helpdesk information, system network administration; they maintain the Web site and the intranet. These jobs are not likely to go our way anytime soon," said DC 37 Assistant Associate Director Henry Garrido, the primary author of the white paper.

He said that the city had barely discussed the issue. "They created a new title, Certified Network Administrator, which allows them to hire people at a higher rate of salary, and they began the process and were supposed to convert a thousand. They only got to about 340 and then stopped, and then we began to see an increase in contracting out," he said.

Paying Triple for Services
Certified consultants at the Department of Information Technology and Telecommunications make $175 per hour, the report says, while similar DC 37 administrators make $57.02 an hour, including fringe benefits. Similarly, at the Human Resources Administration and the Department of Education, the white paper says temporary clerical workers end up working 250 days a year, seven hours a day, sometimes for years on end, at a cost of more than $40 million. Transferring these jobs to DC 37 clerical workers would save some $36 million, the report concludes.

"We think it's in the best services of the city and taxpayers to contract work out when there's not going to be full-time employment for one person for 25 years," said Mr. Loeser. "All kinds of organizations, public and private, look outside their offices for specific computer skills. It allows the government to hire people who have specific training and skills and not bear the cost of that training."

Mr. Garrido said that in writing the report, the DC 37 members he spoke to had been the most important sources. "They see this hiring freeze in place, they see these layoffs looming, and they see contractors coming in every day. They don't have to abide by merit and fitness laws, they don't have to take a test," he said. "You have this parallel workforce. There's no threat to lay them off, to reduce them. If anything, they're increasing."