Civil Service Enforcement/

Research Department

TO:                 Executive Board Members and Statewide Labor Management Chairs   

FROM:           Thomas Cetrino, Martin O’Connor, Susan Mitnick, Stephen Connolly, Michael Marinello, and Amy Sisson

DATE:            January 31, 2003

RE:                 Executive Budget SFY 2003-04 – Preliminary Summary of Major Provisions

STATE WORKFORCE IMPACT

The Executive Budget proposes to reduce the overall size of the State workforce from 195,950 employees on November 2001 to 186,000 employees on March 30, 2004, a reduction of 9,950 employees.  About 6,100 employee positions will be eliminated in SFY 2003-04.  Currently the State has about 193,450 employees on the State Executive Branch payroll and expects to reduce that number to 192,100 employees by March 31, 2003.  That is 1,000 short of the 191,100 target the State set in January 2002.  In SFY 2003-04, the Executive Budget proposes to reduce the workforce through attrition by 5,930 positions, abolish another 1,785 positions, and offset these reductions by the addition of 1,615 new positions, for a net loss of 6,100 positions.  Attachment A is the Division of Budget’s Workforce Impact Summary Report for Executive Branch agencies in SFY 2003-04.  It details the workforce changes for each Executive Branch and “off-budget” agency.  It is important to note that Attachment A does not attribute to a specific State agency 1,154 FTE reductions to be made by March 31, 2003.  It also does not attribute to a specific State agency 1,274 FTE reductions to be made by March 31, 2004.

The major layoff threat that exists is for the 1,785 positions to be abolished beyond attrition in SFY 2003-04, particularly because the Governor does not propose continuing the current early retirement incentive beyond March 31, 2003.  The agencies with position abolitions include:

•         Office of Mental Health:  611 position abolitions due to the proposed closure of the Elmira, Hutchings, and Middletown Psychiatric Centers (-812 FTEs in SFY 2003-04) and the consolidation of the Nathan Kline and New York Psychiatric Institutes  (-113 FTEs in SFY 2003-04);

•         Office of Mental Retardation & Developmental Disabilities:  218 position abolitions, over 200 of which will be in the Institute on Basic Research (IBR).

•         Department of Transportation:  319 position abolitions, most of which will occur in the Design and Construction program.

•         Department of Motor Vehicles:  165 position abolitions.

•         Office of Children & Family Services:  161 position abolitions, most of which will probably occur in the Youth Facilities program.

•         Office of General Services:  106 position abolitions, most of which will likely occur in the Procurement Services and Real Property Management programs.

•         State Education Department:  65 position abolitions.  It is unclear which SED programs will bear the brunt of these abolitions.

•         Department of Health:  58 position abolitions.  It is unclear which DOH programs will bear the brunt of these abolitions.

•         Division of Military & Naval Affairs:  45 position abolitions; we believe that most of these abolitions will occur in the Special Services program.

•         Division of Alcoholic Beverage Control:  7 position abolitions due to the proposed merger with the State Liquor Authority.  It is unclear which ABC programs are faced with these abolitions.

•         Division of the Lottery:  6 position abolitions.

•         Department of Labor:  5 position abolitions.  It is unclear which DOL programs are faced with these abolitions.

•         Public Employment Relations Board:  5 position abolitions.

•         Department of State:  4 position abolitions, it is unclear which DOS programs are faced these abolitions.

•         Crime Victims Board:  4 position abolitions due to the proposed takeover of CVB’s administrative services by the Division of Criminal Justice Services.  All abolitions will occur in positions funded by the General Fund within CVB’s Administration program.

•         Racing & Wagering Board:  2 position abolitions.

•         Office of Welfare Inspector General:  2 position abolitions due to the proposed merger with the audit operations in the Office of Temporary and Disability Assistance.

To avoid layoffs the State will make extensive efforts to “…match those employees in abolished positions to other existing, critical positions that will become vacant and need to be filled during 2003-04.”  This will be difficult to achieve since over 300 positions will be eliminated by the IBR closure and the consolidation of the Nathan Kline and New York Psychiatric Institutes, which employ many research scientists who will be hard to place in comparable jobs in other State agencies.

Attachment B is an analysis of the workforce in State agencies that have PEF members. It shows that the State workforce on March 31, 2003 will be reduced by an estimated 3,097 FTEs more than was indicated in the SFY 2002-03 Executive Budget for those agencies (the difference between what the SFY 2002-03 Executive Budget estimated the workforce would be on March 31, 2003 and what the SFY 2003-04 Executive Budget estimates it will be).  However, the SFY 2002-03 Executive Budget did not allocate 1,500 FTE reductions by agency, so this analysis indicates that an additional 1,597 FTEs will be eliminated in those agencies beyond what was indicated in the SFY 2002-03 Executive Budget.  We have asked the Division of Budget for an explanation of these inconsistencies but these additional FTE reductions in SFY 2003-04 may reflect the elimination of funded vacancies.

Attachment A also shows by agency the FTE reductions planned for SFY 2003-04.  The agencies with the largest overall changes in FTEs will be the:

•         Office of Mental Health (OMH), with an overall loss of 1,221 FTEs, 950 of which will occur in SFY 2003-04.  This includes a decrease of 1,089 FTEs in Adult Services, 812 of which will occur in SFY 2003-04, and a decrease of 113 FTEs in Research, all of which will occur in SFY 2003-04.  The Executive Budget proposes to close the Elmira, Hutchings and Middletown State Psychiatric Centers by July 1, 2003 and close the Bronx Adult and Children Psychiatric Centers by October 1, 2005.  It also proposes consolidating the Nathan Kline and New York Psychiatric Institutes (NYPI) with research activities continuing at both campuses under NYPI’s direction.

•         Department of Correctional Services (DOCS), which loses 1,086 FTEs, 492 of which will be eliminated in SFY 2003-04.  This includes a reduction of 274 FTEs in Program Services, 72 of which will occur in SFY 2003-04.  The Health Services Program will lose 63 FTEs, 30 of which will occur in SFY 2003-04.

•         Department of Transportation (DOT), which loses 1,093 FTEs, 523 of which will be eliminated in SFY 2003-04.  The Design and Construction program will lose 773 FTEs, 435 of which will occur in SFY 2003-04.  The other losses will occur in the Planning and Program Management program (-65 FTEs in SFY 2003-04) and the Real Estate program (-25 FTEs in SFY 2003-04).

•         State Education Department (SED), which loses 1,735 FTEs, all of which will be transferred (-1,544 FTEs) or eliminated (-189 FTEs) in SFY 2003-04.  The Executive Budget proposes moving VESID to the Department of Labor (-825 FTEs); moving the Office of Professions to the Department of State (DOS) (-344 FTEs with 300 FTEs moving to DOS); and transferring the State Museum, Library, and Archives to a new public benefit corporation, the New York Institute for Cultural Education (-400 FTEs).

•         Office of Children and Family Services, which loses 686 FTEs, 577 of which will be eliminated in SFY 2003-04.  The Youth Facilities Program will lose 437 FTEs (375 in SFY 2003-04) as the Executive Budget calls for the reduction of 250 OCFS facility beds.  The budget also proposes to move the Commission on the Blind and Visually Handicapped from OCFS to the Department of Labor (-178 FTEs).

•         Department of Environmental Conservation, which loses 419 FTEs, 234 of which will be eliminated in SFY 2003-04.  The largest losses in SFY 2003-04 will occur in the Air and Water Quality (-55 FTEs), Solid and Hazardous Waste (-55 FTEs), and Fish and Wildlife (-38 FTEs) programs.

MAJOR AGENCY CONSOLIDATIONS, TRANSFERS, AND PRIVATIZATIONS

The Executive Budget proposes the consolidation of the State Museum, State Library, and State Archives into a new public benefit corporation called the New York Institute for Cultural Education (NYICE) on October 1, 2003.  This would involve the transfer of 400 FTEs, including many PEF members, which is 50 FTEs less than the staffing level proposed last year, but no positions appear to be eliminated in SFY 2003-04.  The Executive Budget does not indicate any specific savings from this proposed transfer; however we estimate it is $2 million and that it may be included in the Executive Budget as part the $8.7 million in savings attributed to “state operations management efficiencies.”  It is unclear what mechanism will fund NYICE’s operations.  Last year the Governor proposed and the Legislature agreed to increase the surcharge for the recording, indexing, and certifying of records by county clerks, which already partially funds the operation of the State Archives.  According to DOB, the increased surcharge was projected to raise $26 million.  It is unclear whether this surcharge will now fund NYICE.  However, the proposal takes these entities “off-budget” and transfers the employees to a public benefit corporation with its own civil service system similar to the current problematic organizational structure at the Roswell Park Cancer Institute.  While these employees would remain State employees, they would not be in the classified civil service of New York State and their salary grades and titles would not be set by the State Director of Classification and Compensation.  The consolidation seems to be motivated by making these cultural entities directly accountable to the Governor rather than the Board of Regents, who are appointed by the Legislature and not the Governor.  Last year the Legislature rejected the same proposal.

The Executive Budget also proposes the transfer of the Office of Professions from SED to the Department of State on October 1, 2003.  300 FTEs will move from SED to DOS and 40 FTEs will be eliminated.  The Executive Budget does not indicate any specific savings from this proposed transfer; however, it may be included as part the $8.7 million in savings attributed to “state operations management efficiencies.”

The Executive Budget also proposes the transfer of VESID from SED to DOL and the transfer of the Commission on the Blind and Visually handicapped from OCFS to DOL on October 1, 2003.  800 FTEs will move from SED/VESID to DOL.  This is an effort to consolidate the State’s vocational rehabilitation programs within a single agency.  The Executive Budget attributes a $393,000 savings to the VESID transfer.

The Executive Budget proposes giving the SUNY Board of Trustees the power to privatize the three SUNY Health Science Centers.  The support memorandum claims that if this were done the State could reduce its current subsidy of $92.6 million.  Additionally, the memo claims that ultimately the State’s All Funds budget could be reduced by $1 billion and the State workforce could be reduced by 9,300 FTEs.

The Executive Budget states that beginning in SFY 2005-06 the State will “…explore possibilities for further savings through contracts with non-profit agencies to privatize remaining OCFS State-operated facilities.”  The Executive Budget claims that this will enable OCFS to “…focus more directly on its core mission of promoting the welfare of children and families.”

Merging the Council on Children and Families with OCFS.  This is projected to save the State $2 million.  It is not clear how many of the 21 FTEs will be moved.  Supporting documentation indicates that 20 of the 21 FTEs will make the move.  If this is so, then the Administration Program at the Office of Children and Family Services will incur a reduction of 14 General Fund FTEs.

Merging State Employment Relations Board with PERB.  The Executive Budget proposes to move the State Employment Relations Board into the Public Employment Relations Board.  According to the Executive Budget Appendix, only 6 of the FTEs will be moved to PERB.

EARLY RETIREMENT INCENTIVE AND PROPOSED HEALTH INSURANCE

PREMIUM INCREASES

The Executive Budget does not propose to continue the Early Retirement Incentive (ERI) program in SFY 2003-04; it will terminate on March 31, 2003.  The Division of Budget’s position is that they want to eliminate as many as positions as possible in the last quarter of SFY 2002-03 so that they can achieve an entire year’s savings in SFY 2003-04.  They believe offering the ERI in SFY 2003-04 will result in fewer employees taking the ERI this year and thus will reduce the savings they need to achieve to avoid layoffs.

PEF will continue to push for the 25/55 bill.  This will be difficult since PEF was told in a briefing by the Division of Budget that they do not believe the 25/55 is valuable.  PEF believes that is allows people, not management, to decide if they are ready to go and so we will continue to push for the 25/55 as an option for employees.

The Executive Budget also proposes to decrease the State share of health care premiums.  The Budget proposes that the employee’s share of health care premiums will rise from 10% to 15% for individual coverage and from 25% to 30% for family coverage for people who retire after April 1, 2004 and current retirees.  The Budget recognizes that these rate changes have to be negotiated for represented employees.  However, for unrepresented employees and retirees it appears the intention is to have it occur on that date.  For retirees the rate schedule will be drastically different.  Currently retirees pay on the same scale as members.  After April 1, 2004 the Budget proposes that the rate will be a base of 50% for a retiree with 10 years of service.  Each additional year of service will entitle them to an additional 1.75% of premium, meaning that the State will pay 67.5% of the premium for a retiree with 20 years of service.  It is unclear how much this will save the State.  They claim that this and some local government assistance changes will total $700 million in savings.  The financial plan projects $200 million in annual savings from health benefit reductions and workforce reductions proposed in the SFY 2003-04 Executive Budget.

THE STATE’S FISCAL OUTLOOK REMAINS BLEAK

The Executive Budget forecasts a $2.2 billion deficit for SFY 2002-03 and a $9.3 billion deficit for SFY 2003-04.  These deficits are largely due to decreased State personal income tax, sales tax, business tax and miscellaneous receipts due to the economic impact of the September 11 terrorist attacks, the continuing national and State recession, significantly lower than expected Wall Street bonuses, and excessive tax cuts enacted since 1994 that will reduce State revenues by over $14 billion in SFY 2003-04. 

The SFY 2002-03 $2.2 billion deficit will be closed through actions begun earlier this year that saved $700 million by continuing a strict hiring freeze, “aggressive use of the targeted retirement incentive plan,” a 5% reduction in State agency spending, federal revenue maximization, and restructuring debt.  The remainder of the deficit, $1.5 billion, will be eliminated by securitizing the State share of the tobacco settlement funds. NY will receive $11.4 billion in tobacco settlement funds over the next sixteen years.  Many other states and cities have sold this revenue stream to investors to raise money to close their budget deficits. It is estimated that New York State can raise between $3 billion and $4 billion using this strategy.

The Executive Budget proposes to close the projected SFY 2003-04 $9.3 billion deficit by taking the following actions:

•         Spending Cuts of $5.67 billion including:

-         Reducing school aid by $1.27 billion;

-         Reducing State agency costs by $1 billion;

-         Medicaid cost containment initiatives totaling $1.02 billion;

-         Reducing State expenditures for welfare by $587 million by using federal funds and other costs reductions;

-         Saving $977 million through spending cuts and federal aid maximization in other local assistance programs;

-         Reducing debt service costs by $516 million through debt restructuring; and

-         “Spending restraint in other program areas” that will save $300 million.

•         Revenue Increases of $1.348 billion including:

-         Eliminating the permanent exemption of the sales tax on clothing priced under $110 and replacing it with an exemption on clothing priced under $500 effective four separate weeks during the year, generating $363 million;

-         Reimposition of a hospital and home care assessment to raise $207 million;

-         Insurance tax changes raising $158 million;

-         A one-year cap on STAR benefit increases for non-seniors to raise $93 million; and

-         A variety of fee increases and other actions to raise $527 million.

•         Tobacco Securitization to raise $2.3 billion

The Executive Budget does not propose to use the $710 million available in the Tax Stabilization Reserve Fund in order to close the SFY 2002-03 deficit although it could be used for this purpose.  The Executive Budget does use $3.3 billion in “non-recurring actions” (one-shots) in SFY 2003-04 to balance the budget.  These “non-recurring actions include:

•         Tobacco securitization ($2.3 billion);

•         Use of federal TANF moneys to offset General Fund welfare and Higher Education Services Corporation spending ($408 million);

•         A one year shift of “pay as you go” capital projects to bonding ($176 million);

•         Debt restructuring ($163 million);

•         One year cap on STAR payments to non-seniors ($93 million);

•         Recoveries of school aid and welfare overpayments ($88 million); and

•         Routine fund sweeps ($101 million).

Overall the actions taken in the Executive Budget will result in deficits of $2.9 billion in SFY 2004-05 and $4.2 billion in SFY 2005-06 and is projected to result in a General Fund balance of $730 million at the end of SFY 2003-04.

Table 1

PROJECTED BUDGET GAPS FOR

SFYs 2004-05 AND 2005-06

($ in millions)

It is important to note that these General Fund budget gaps are based on economic forecasts of greater growth in the State’s economy over the next two fiscal years. They will be significantly larger if the State experiences a slower recovery in the State economy than the Executive Budget forecasts.  These large gaps are also based on an assumption of 5% growth in State Operations spending in SFY 2004-05 and 3.1% growth in SFY 2005-06.  This assumes “no additional general salary increases in SFY 2004-05 or SFY 2005-06”.  The Executive Budget also assumes over $200 million in annual savings from health benefit reductions and workforce reductions proposed in the SFY 2003-04 Executive Budget.

We will provide a more complete analysis of the State’s fiscal and economic projections in next week’s budget memo.

SUMMARY OF EXECTIVE BUDGET PROPOSALS FOR MAJOR STATE AGENCIES

This section highlights the major changes proposed in the Executive Budget for the major State agencies.  Executive Board members and Statewide Labor-Management Chairs will receive a more detailed analysis for these agencies in a separate mailing.

HEALTH, MENTAL HYGIENE AND ENVIRONMENTAL CONSERVATION

(S1404/A2104)

Office of Mental Health

The Executive Budget recommends:

• The net loss of 1,221 FTEs, 950 of which occur in SFY 2003-04 including 611 position abolitions.  This includes a decrease of 1,089 FTEs in Adult Services, including the 277 reductions in the current fiscal year.  An additional 113 positions will be eliminated in the Research Program, and 25 in the Administration and Finance Program. The estimated workforce will be 16,360 FTEs on March 31, 2004. 

• Closure of the following psychiatric centers on July 1, 2003:

-         Hutchings PC, to be consolidated with Mohawk Valley PC.

-         Middletown PC, to be consolidated with Rockland PC.

-         Elmira PC, to be consolidated with Rochester PC.

A provision in the Article VII bill for OMH overrides the 12-month notification provision of Section 7.17 of the Mental Hygiene Law, allowing all of these facilities to be closed by July.

• Closure of the following psychiatric centers on October 1, 2005:

-         Bronx PC, to be consolidated with Pilgrim and Creedmoor PCs.

-         Bronx Children’s PC, to be consolidated with other downstate children’s PCs .

·        Consolidation of the Nathan S. Kline Institute into the New York Psychiatric Institute (NYPI), for a savings of $8.2 million.  Both campuses will remain in operation under the direction of NYPI.

·        Creation of a single appointing authority pursuant to Article VII legislation. This would allow OMH to reassign people from one psychiatric center to another.

Office of Mental Retardation and Developmental Disabilities

The Executive Budget recommends:

·        A net decrease of 13 FTEs , including 24 FTEs in SFY 2003-04.  There are 194 FTE increases in the following programs: Central Coordination and Support Program (13 FTEs, 2 of which occur in SFY 2003-04); Community Services Program (79 FTEs, all in SFY 2003-04), and Institutional Services Program (102 FTEs, all in SFY 2003-04).  These increases are offset by a reduction of 207 FTEs in the Research in Mental Retardation Program.  Overall there will be 218 position abolitions in OMRDD.  The estimated year end workforce is 22,245 FTEs on March 31, 2004.

·        Closure of the Institute for Basic Research (IBR) for a savings of $11.8 million in operating savings ($10.5 million in Personal Service and $1.4 million in Nonpersonal Service) and over $12 million in capital cost avoidance.

·        Elimination of the Youth Opportunity Program (YOP) for a savings of $1.3 million.

Department of Health

The Executive Budget recommends:

• A net decrease of 199 FTEs, 63 of which will occur in SFY 2003-04, including 58 FTE position abolitions which are the most vulnerable to possible layoffs.  The SFY 2003-04 reductions reflect a decrease of 312 FTEs offset by an increase of 249 FTEs.  Significant net reductions in FTEs occur in the following programs:  Administration and Executive Direction (-64, of which 34 occur in SFY 2003-04);  AIDS Institute (-26, of which 11 occur in SFY 2003-04); Community Health (-35, 9 of which occur in SFY 2003-04); Environmental Health (-41, 15 of which occur in SFY 2003-04); Health Care Standards and Surveillance (-62, 22 of which occur in SFY 2003-04); Laboratories and Research (-16, including 21 FTE reductions in SFY 2003-04); and Office of Medicaid Management (-23, including 31 FTE reductions in SFY 2003-04).  The Institution Management Program is increased by 120 FTEs, including 75 in SFY 2003-04.  The estimated year end workforce will be 5,912 FTEs on March 31, 2004.
• Shifting several positions from general fund or special revenue-federal support to special revenue-other funds, including 19 FTEs in the Administration and Executive Direction Program; 80 FTEs in the Community Health Program; and 50 FTEs in the Laboratories and Research Program.
• An agency-wide decrease of $29.9 million (-15.2%) in General Fund appropriations.
• Elimination of a $3 million Maintenance Undistributed appropriation in the Administration program, which was for a time and activity system.
• Funding for Roswell Park is not in the DOH budget, but appears in the Article VII bill, in the HCRA provisions.  According to the Division of Budget, RPCI’s workforce will remain at 1996 FTEs in SFY 2003-04.  The bill provides funding in calendar years, not State fiscal years, in the following amounts:

-         2002:  $85 million

-         2003:  $82.5 million

-         2004:  $80 million

-         January 1-June 31, 2005:  $40 million.

Environmental Conservation

The Executive Budget recommends:

·        A year-end FTE level of 3,301, which represents a decrease of 234 FTEs from the Governor’s current estimated FTE level for 3/31/03.  However, the current estimate is already 185 FTEs below what was projected in last year’s budget, so the net loss of FTEs is actually 419.  The reduction of 185 FTEs during the current SFY is a result of the efforts to reduce the State workforce by 5,000.  All FTE reductions in DEC for SFY 2003-04 will result from attrition rather than position abolitions.

·        FTE reductions in SFY 2003-04 include reductions in the following programs:  Administration (14 FTEs); Air and Water Quality Management (55); Environmental Enforcement (42); Fish, Wildlife and Marine Resources (38); Forest and Land Resources (106); Operations (32); and Solid & Hazardous Waste Management (41).  Most of these reductions are positions funded by the General Fund.

EDUCATION, LABOR AND FAMILY ASSISTANCE (S1403/A2103)

Office of Children and Family Services

The Executive Budget recommends:

·        An FTE level of 3,703, which represents a decrease of 577 FTEs from the Governor’s current estimated FTE level for 3/31/02 of 4,280 and includes 611 position abolitions in SFY 2003-04.  Most of the position abolitions will likely occur in the Youth Facilities program.  Last year’s Executive Budget (SFY 2001-02) estimated there would be 4,389 FTEs so the OCFS lost 109 positions during the current fiscal year.  Current fiscal year losses occurred in the following programs:  Youth Facilities (-62), System Support (-25), Family and Children Services (-8), and Central Administration (-11).  SFY 2003-04 reductions will occur in the following programs, Youth Facilities -375, Family and Children Services -13, Central Administration -12 and System Support -4.  The SFY 2003-04 reduction also includes 178 FTEs from the Commission on Blind and Visually Handicapped that will be transferred to the Department of Labor.  The Training and Development program will have 5 additional FTEs during SFY 2003-04.

·        Moving the Commission on the Blind and Visually Handicapped to the Department of Labor, which requires the transfer of 178 FTEs.  This will allegedly result in improved program coordination and will lead to enhanced cost effectiveness for vocational rehabilitation programs but no dollar amount was identified for savings.  According to the Executive Budget, all but one General Fund FTE is transferred to the Department of Labor.

·        Merging the Council on Children and Families into OCFS.  This move is expected to save $500,000 during SFY 2003-04 and will provide $1 million per year in savings every year thereafter.  It appears that the program is transferred into the Administration Program.  If that is the case, 6 of the 7 FTEs funded by the Special Revenue Funds-Federal are transferred and it is unclear what happened to the 14 FTEs funded by the General Fund.  This is because the Administration program’s General Funded FTE total is reduced by 19, so either all 14 Council on Children and Families FTEs were reduced, the reduction occurred within the Administration program, or some combination thereof.

·        Initiating a multi-year reform of the juvenile justice program.  The program will be a targeted expansion of community-based intensive supervision programs designed for non-violent youth.  The program will be run by local non-profit agencies and will provide services ranging from family-based counseling to specialized after-school programs.  This is expected to reduce capacity by 250 beds in the 2003-04 fiscal year and will save $11.6 million by 2004-05.  Beginning in 2005-06, the State will explore privatizing the remaining State-operated facilities.

·        A decrease of $4 million in the Youth Facilities Program.  This breaks down as a decrease of $4.4 million in personal services, a decrease of $1.1 million in nonpersonal services, and a new appropriation of $1.4 million in Maintenance Undistributed that is used for contracts with not-for-profit community based organizations.

State Education Department

The Executive Budget recommends:

·        An FTE level of 1,417, which represents a decrease of 1,735 positions from the current estimate of the FTE level on March 31, 2003 and includes 65 position abolitions in SFY 2003-04.  This is a reduction of 1,822 from last year’s adjusted projection of the FTE level on March 31, 2003.  The agency lost 87 FTEs during the current fiscal year.  Reductions in SFY 2003-04 will occur in the Office of Management Services Program (-30), and the Elementary, Middle and Secondary Education Program (-10).  A “Management Efficiencies Program” will take reduce another 130 FTEs across the entire agency.  Consolidations and transfers will result in reductions in the Office of Higher Education and Professions (-340), the Cultural Education Program (-400), and the Vocational and Educational Services for Individuals with Disabilities (-825).  Most of these positions will move to other agencies.

·        Moving the Cultural Education program to a new public benefit corporation, the New York Institute for Cultural Education in the Council on the Arts.  The move is proposed for October 1, 2003.  The Executive Budget states that all 400 positions being eliminated in the SED budget will be transferred.  This is expected to save $2 million.  The employees of the Institute would be governed by the State Civil Service Law and would remain in the bargaining units they were in prior to the transfer.

·        Transferring the Office of the Professions to the Department of State and consolidating with its Business and Licensing Services program.  The Executive Budget states that all 340 positions eliminated from the SED budget will be transferred.  However, the Department of State budget only shows an increase of 300 FTEs in the Licensing Services Program.  This is scheduled to take effect October 1, 2003.  The Legislature has rejected a similar proposal in the past.  This is projected to save $18.3 million to SED but will not result in any savings to the State.

·        Merging portions of the State Education Department’s (SED) Vocational and Educational Services for Individuals with Disabilities (VESID) and portions of OCFS’s Commission for the Blind and Visually Handicapped into the Department of Labor on October 1, 2003. This is an effort to consolidate the State’s vocational rehabilitation programs within a single agency.  All programs relating to the education of children with disabilities will continue to be administered by SED.  According to the Executive Budget, SED/VESID will lose 825 FTEs and DOL/VESID will gain 804 FTEs.  This indicates that 21 FTEs will be eliminated due to the transfer.  It is also interesting that 202 FTEs will remain at VESID/SED.  The Governor claims this will result in improved program coordination and will lead to enhanced cost-effectives for vocational rehabilitation programs.  The Executive Budget claims the VESID transfer will save $393,000 in SFY 2003-04.  It is unclear how these savings will be achieved.

Department of Labor

The Executive Budget recommends:

·        An FTE level of 5,103, which represents an increase of 751 from the Governor’s revised 3/31/03 FTE level.  This revised level is, however, 133 FTEs lower than last year’s Executive Budget estimate for 3/31/03.  FTEs were lost in the Administration (-126 FTEs) and Employment and Training programs (-7 FTEs).  Most of the increases for SFY 2003-2004 are the result of transfers of programs into the Department.  There will be 5 position abolitions in SFY 2003-04.

·        Transferring the Commission of the Blind and Visually Handicapped from the Office of Children and Family Services into the Department.  All but one of the 178 FTE positions will be moved.

·        The Vocational and Educational Services for Individuals with Disabilities (VESID) program will be transferred from the State Education Department to the Department of Labor.  804 of the 825 FTEs eliminated from the SED will move to DOL.  The Executive Budget attributes a savings of $393,000 from this action.

·        Merging the Employment Relations Board with the Public Employment Relations Board.  16 FTEs are eliminated in DOL and only 6 FTEs are added to PERB.

PUBLIC PROTECTION AND GENERAL GOVERNMENT (S1400/A2100)

Department of Correctional Services

The Executive Budget recommends:

• A net decrease of 1,086 FTEs, 492 of which will be eliminated in SFY 2003-04. This includes a reduction of 274 FTEs in Program Services, 72 of which will occur in SFY 2002-03.  The Health Services program is reduced by 63 FTEs, 30 of which will occur in SFY 2003-04. The Supervision of Inmates Program is reduced by 615 FTEs, 344 of which occur in SFY 2003-04.  Support Services is reduced by 58 FTEs, 10 of which occur in SFY 2003-04.  The estimated workforce will be 30,538 FTEs on March 31, 2004.
• Article VII legislation will provide eligibility for early release for certain inmates through the expansion of the Merit Time Program and the Earned Eligibility Program.  According to press reports, up to 1,300 inmates would be eligible for release by April 2004 under the proposal.
• A year-end inmate population of 65,100, representing a reduction of approximately 1,600 from the current census.  Last year the population declined by about 1,000 inmates.  It is unclear if the early release proposals will allow DOCS to reach this year-end target.

·        A reduction of $7.3 million in Personal Services in the Program Services Program. The loss of 202 FTEs in SFY 2002-03 includes 158 FTEs that were funded by Enterprise Funds.  It is unclear what these lost FTEs represent, since the appropriations for SFY 2002-03 and SFY 2003-04 are relatively unchanged.

Department of Taxation and Finance

The Executive Budget recommends:

·        An FTE level of 4,922 which is a decrease of 126 FTEs in SFY 2003-04.  These are all General Fund items and are in the following program areas:  Audit (-48), Revenue & Info Management (-41), and Tax Compliance (-20).  These are in addition to the approximately 270 FTEs that the Department lost in SFY 2002-03 beyond the reductions called for in the enacted SFY 2002-03 budget, which were in the same program areas:  Audit (-105), Revenue & Info Management (-89), and Tax Compliance (-44).

·        Personal Service appropriations are reduced by approximately 5.4% in virtually all program areas except Tax Enforcement and Treasury Management.  The NYC Assessment personal service appropriation in the Revenue and Information Management program is decreased by approximately $2.3 million 13%.

Office of General Services

The Executive Budget recommends:

·        An FTE level of 1,631 which represents a decrease of 146 positions from the revised estimate FTE level for 3/31/03.  This includes 106 position abolitions, most of which will likely occur in the Procurement Services and Real Property Management programs.  The revised estimate represents a decrease of 221 FTEs from the estimate in the SFY 2002-03 Executive Budget.  The specifics of the current fiscal year changes are as follows:  Executive Direction (+3), Design and Construction (-61), Procurement Services (-115), Real Property Management, and Development (-48).  Additional FTE reductions in SFY 2003-2004 will occur as follows:  Executive Direction (-20), Procurement Services (-56), and Real Property Management (-70).

·        A reduction of $2.3 million in the personal services appropriation in the Design and Construction program.  This may be the annualized savings of the 61 FTE reduction that occurred SFY 2002-03.

·        A reduction of $5.3 million in the Internal Services Fund personal services appropriation in the Procurement Program.  This likely represents the annualized savings of the 115 FTE reduction that occurred during SFY 2002-03 and the 56 FTE reductions scheduled for SFY 2003-04.  This may reflect the movement of data processing personnel to the Office for Technology.

·        A reduction of $3.2 million in the General Fund personal services appropriation in the Real Property Management and Development program, reflecting the reduced FTE level for this program.

TRANSPORTATION AND ECONOMIC DEVELOPMENT (S1405/A2105)

Department of Transportation

The Executive Budget recommends:

·        A reduction of 523 in the estimated number of FTEs of to 9,590 from 10,113.  However, since last year’s budget (SFY 2002/03) anticipated adding a year-end FTE total of 10,683, the Department has been reduced by 570 FTEs in the current SFY in response to the efforts to reduce the State workforce by 5,000 positions.  In SFY 2003-04 there will be 319 position abolitions which are most vulnerable to layoffs.  Most of these position abolitions are likely to occur in the Design and Construction program.

·        The Design & Construction Program has lost an estimated 338 FTEs during the current fiscal year and the proposed budget proposes an additional decrease of 435 FTEs by the end of SFY 2003-04.

·        The reduction of 65 FTEs in the Planning & Program Management program (Capital Projects Funds-Other) and the reduction of 23 FTEs in the Real Estate program (Capital Projects Funds-Other).

·        Shifting Capital Projects funding for the Engineering Services Program.  This program funds both private consulting engineers as well as the in-house DOT Design & Construction positions.  The funds supporting these programs have been shifted to the Non-Federally Aided Capital Projects account in the amount of approximately $578 million.  This represents a decrease of approximately $51 million from the last fiscal year (SFY 2002-03).  It is not clear how this reduction will be allocated between DOT and private consulting engineers.  However, based on the total reduction in FTEs in the Design & Construction program for this and next year (-773 FTEs) multiplied by an approximate average State salary of $45,000,  it would appear that DOT takes a $35 million hit while consulting engineers are reduced by $16 million.

Department of Motor Vehicles

The Executive Budget recommends:

·        A year end FTE level of 2,921, which represents a decrease of 168 FTEs in SFY 2003-04, including 165 position abolitions which are most vulnerable to possible layoffs.  The DMV has lost 180 FTEs in SFY 2002-03 beyond the reductions called for in the enacted SFY 2002-03 budget.  The additional SFY 2002-03 FTE losses were in the following programs:  Administration (-24 FTEs); Administration Adjudication (-24); Clean Air (-9); Compulsory Insurance (-13); Governor’s Traffic Safety Committee (-5); Operations (-57); and Transportation Safety (-48).  It is not clear where the SFY 2003-04 reductions will take place as the budget proposes shifting to the Transportation Support Capital Projects Funds-Other program all of the General Fund items in the following programs:  Administration (223), Operations (1,473), and Transportation Safety (565.  While the FTEs for these program areas total 2,260, the Transportation Support CPF program will only support 1,940.  Thus, there will be a net loss of 321 FTEs from these program areas.

·        These losses will be partially offset by an increase of 126 positions in the new Identification Security SRF-Other program that is related to Homeland Security and an increase of 27 FTEs in the Clean Air program.

FINAL OBSERVATIONS

It is clear that Executive Budget closes the SFY 2002-03 ands SFY 2003-04 deficits mostly through spending cuts and one-shot revenues like the tobacco securitization proposal. While it does raise $1.4 billion in revenues, it does so by raising regressive taxes like the sales tax and fees that put a greater burden on working families who already pay more than their fair share of State and local taxes.  According to the Institute on Taxation and Economic Policy, in 2002 all New York’s non-elderly taxpayers paid about 12% of their income in State and local taxes except the wealthiest New Yorkers, who make $634,000 or more a year, who pay only about 6.5% of their income in State and local taxes.  The Executive Budget will exacerbate this gap rather than close it. According to the New York State School Board’s Association, property taxes will increase by at least 13% in most school districts throughout the State.  The fact that New York’s large and profitable corporations are not asked to pay their fair share of the State’s fiscal burden is illustrated by the Executive Budget’s Financial Plan’s projections that business taxes will only go up $160 million in SFY 2003-04, and that is largely due to a restructuring of the insurance tax.  Since 1977, New York’s corporations’ contribution to State revenues has decreased from 10% to less than 4%.

The Legislature is likely to add school aid to the proposed Executive Budget and will likely add other spending.   PEF will not only need to fight proposed program reductions, but will also have to protect against further cuts imposed by the Legislature so they can fund other local assistance programs.

In addition to this memo, we are forwarding to the respective Executive Board members and Statewide Labor Management Chairs our department’s line-by-line analysis of the Program Details–State Operations portion of the budget for the State agencies with the most significant changes in their budgets.

Next week we will distribute any revised drafts of the major agency summaries sent this week as well as State Operations summaries for all other agencies.  We have also included on PEF’s website a complete copy of Executive Budget Appendix I and all State budget legislation which contains each State agency’s specific budget information.  Executive Board members and Statewide Labor Management Chairs who do not have a computer to access PEF’s website and want a copy of their agency’s budget should call the Research Department at 1-800-342-4306 ext. 280 and request that we mail you a copy.  

We will keep you informed as we get more details about the Executive Budget.  It is important that all Labor-Management Chairs schedule meetings with their agency management as soon as possible to get more budget details.  The agency specific spreadsheets contain many unanswered questions that need to be answered by agency management.  The Civil Service Enforcement/Research Department will work with Statewide Labor Management Chairs to formulate these questions and, if requested, will participate in agency meetings on their budget.  Please call the Civil Service Enforcement/Research Department if you have any questions about or have further information to add to our budget analysis.

 Attachment B