Testimony of UFT President Michael Mulgrew before the New York City Council Committee on Finance

My name is Michael Mulgrew, and I am the president of the United Federation of Teachers (UFT). On behalf of the union’s more than 190,000 dedicated teachers, paraprofessionals, school counselors, social workers, secretaries, speech therapists and other professionals who work in New York City’s 1,800 public schools, I would like to thank the City Council for holding today’s public hearing on the November financial plan. Joining me today is Louis Cholden-Brown, special counsel for the union.

It is time to get real about New York City’s budget. What we are witnessing is not a structural risk to financial stability but the twin outcomes of mismanagement and gamesmanship. We must ensure that asylum seekers have safe and secure housing, access to medical care and social services, and the ability to continue their children’s education in our public schools. These needs do pose unbudgeted near-term costs. Yet that must not keep us from questioning the mayor’s unverified calculations on those costs, nor require us to pretend that revenues will not significantly offset the impact. Before these cuts proceed, the financial accuracy of the scenario presented in November must be evaluated. The accompanying budget modification has not been released, which complicates this task. Finally, the administration must abide by city funding and programmatic obligations under the law.

We all know that the Office of Management and Budget sees this plan as merely numbers on a page, but these cuts have very real impacts on ordinary New Yorkers. I do not know if there will ever be an appropriate time to cut school budgets, but now is clearly not the time. Anyone can see that. You do not need to work in schools to know that the effects of the pandemic continue to this day and that we need to be investing in our children in ways that we never have before. One third of the total cuts — $600 million — comes from schools:

• Cuts to pre-K and 3-K, which come on the heels of earlier budget reductions, will eliminate seats for at least 10,000 children. These cuts come at a time when enrollment in standard 3-K programs is forecast to increase up to 18% and the lack of childcare is costing the city $23 billion in lost economic output. ·
• The $3.5 million cut to the system's Computer Science for All program is proposed at a time when only 17% of Department of Education schools are meeting participation targets for girls and for Black and Latinx students. The cuts come just after this Council passed a resolution calling on the DOE to update and increase its professional development in the Computer Science for All initiative.

This financial plan proposes taking away $10 million from community schools. The mayor also plans $96 million in cuts to after-school, substitutes and other per-session pay; a hiring freeze that will severely harm our District 75 students and students with the greatest needs; and cuts to hours, days, and ages for 30,000 Summer Rising participants. So far, more than 4,000 UFT members and parents have sent an email to the Council asking you to reject these cuts and the mayor’s plans to eventually wrest $2 billion just from our schools. Do not let this administration fool you. Do not let them hide the fact that they are taking $200 million in coronavirus recovery funding away from our schools this year with no explanation. Do not let them get away with clawing back money — for the first time since 2019 — for schools that saw enrollment fall short of July projections. They are taking $109 million from 653 schools — 43% of all the schools — and it is going to mean shedding classroom teachers and increasing class sizes.

I want to take a moment to reflect on the impact on class size, because average class sizes increased this year at all grade levels and for the second year in a row for elementary and middle schools. The UFT has worked tirelessly to secure billions of dollars of new funding for public education through Foundation Aid to support legally required class size limits. That money came from the relentless advocacy of UFT members, and it is dedicated to our kids. Yet over the last two years, the administration has plundered over $1 billion in Foundation Aid, and it is undermining the education of the over 300,000 students in Title I schools who are crammed into oversized classes. Even worse, this was effectively done in secret — with no discussion among the Panel for Educational Policy members. The mayor says that is just how the system works. But I say mayoral control is out of control.

We cannot allow children to be harmed. We have gone two successive years now with cuts to education. The federal government has sent us more money than ever during those two years. The state government has sent us more money than ever during those two years. The only level of government that has cut us is New York City. For the first time in a decade, the city cut its own contribution to schools by $400 million. And this comes at a time when the city is sitting on $8 billion in reserves, nearly $1.5 billion of which must be utilized this year, as the city Office of Management and Budget (OMB) conceded this morning.

The asylum seekers do present the city with a fiscal challenge — but it is not the fiscal emergency the administration has claimed, particularly given the fact that the amounts at risk are a relatively small percentage of the more than $100 billion city budget. While OMB has declined to update its forecasts for months, the Independent Budget Office (IBO), in its modeling, found the city will spend $3 billion less than the city anticipated. Indeed, the increased nonrecurring asylum-seeker service costs only added $2 billion to the net gap, and the mayor has already announced that half that figure will be cut by January. Just this past week, the administration, amid promises to cut $940 million from city spending related to asylum seekers, approved an additional $560 million in contracts to for-profit entities, including those under investigation by the state attorney general. The IBO has projected that the fiscal year 2025 shortfall could be as low as $1.8 billion, but the city would need to achieve only 2% average growth beginning this year to offset a $5 billion gap — below the 10-year average of 4.7% prior to the pandemic — so there is no need for punitive spending cuts that affect the most vulnerable New Yorkers.

Of the $5 billion the mayor says he needs for services for asylum seekers, nothing has been designated for city schools, which are the point of contact for the 30,000 migrant children who have come into the school system. Again, this population accounts for the enrollment growth of 8,000 students and the commensurate additional per-pupil state aid that the city has not accounted for.

I will not deny that the state and federal government can do more to support our asylum seekers and help the city address the crisis. I have been a relentless advocate with the governor and our congressional delegation to deliver those resources and accelerate a pathway to work authorization. We do, however, need to acknowledge the money that has been delivered and ask why the city has not accessed those funds. Even as the city has doubled how much it expects from the state, to more than $1 billion, it continues to not submit paperwork to access the funds already advanced or implement programs in a timely fashion. OMB underestimated the city’s allocation from the Shelter and Services Program by two-thirds and has not returned reimbursements for the $250 million advanced by Governor Hochul against the state’s $1.9 billion allocation.

We must not forget that the city left hundreds of asylum seekers to sleep on the sidewalk outside the Roosevelt Hotel, even though the city had hundreds of beds available in shelters, because the money was squandered on building and then dismantling sites too dangerous or ill-planned to be used. We must not forget the failure to prioritize legal services and work authorization supported by state funding. Hold the mayor to account for continued opposition to expanding the city’s rental assistance supplement, which would help families transition from shelters to permanent housing and save the city an estimated $730 million each year. In the wake of these repeated misrepresentations, missed opportunities and messed-up numbers, it would be irresponsible to allow these cuts to proceed without doing our homework.

The administration's calculations do not add up in countless other areas as well. Revenues have already outpaced projections by $775 million this fiscal year, despite OMB projecting a 3% decline in city fund revenue in fiscal year 2024. Indeed, other financial estimates project that the city will end fiscal year 2024 with a surplus of as much as $3.6 billion above OMB’s estimate.

The $10.9 billion in total costs for asylum seekers over fiscal years 2024 and 2025 is really $6.5 billion in new city funding over the next two years, striking far below the $10 billion in budget cuts the mayor has begun to implement. Even these projected costs, which already exceeded the IBO’s most pessimistic cost assumptions by more than half a billion dollars, have drawn little real scrutiny when total spending for asylum seekers in the fiscal year ending June 2023 was less than $1.5 billion and the mayor is evicting migrants and families from shelters. Over the past three years, the city has underestimated tax collections by an average of $6.8 billion annually, underestimated non-tax revenue by another $900 million and overestimated costs by $3.25 billion. The city consistently lowballs revenues. In just the past five years, the city has underestimated revenues in each year’s adopted budget by more than $30 billion. Every year in the same period, once the actual expenses, including new needs, are calculated and subtracted from the actual revenues, the city consistently netted a comfortable surplus of about $7 billion. The mayor has already raised his revenue projections by nearly $3 billion for this year and another $1 billion for fiscal year 2025.

This revenue gamesmanship represents an annual pattern that allows City Hall to call for belt tightening for others while unearthing additional funds, $10 billion in the last fiscal year alone, for administration priorities as suited. This cycle keeps New Yorkers and you — the City Council — from ever seeing the true financial picture and stacks the deck on who holds the power on how the money ought to be spent, since the Council is weakened during the modification process.

There are pots of surprise money scattered all throughout the budget. For instance, the city ended up getting about half a billion dollars last year from the “Financial Corporations Tax” despite OMB at the start of the year, telling us all the tax would earn zero. Another example is the vague revenue line called “sundries” that last year, you were told would only be about $12 million but at the end of the year came in at about $430 million. These two items alone represent about $1 billion dollars that you — the Council — never really got to meaningfully weigh in on.

The mayor often challenges his critics to produce solutions rather than complaints. Here are some: There are many unnecessary state and city tax benefits that accrue to people who need them least, including real estate developers and Wall Street firms. Potential reforms range from closing the “carried interest” loophole that favors the owners of private equity and hedge funds to a variety of breaks associated with real estate investments.

Revenues in this city are far outpacing projections, and the reserves are overflowing. So why are we cutting budgets? The money that the state is sending us belongs in our classrooms. It is mandated to be in our classrooms, but instead it is being diverted. This narrative of austerity is a false narrative that the mayor thinks will succeed because last year he was allowed to slash $469 million from our schools. Enrollment climbed for the first time in almost a decade, but this mayor wants us to have less money to serve more students and is not content with stopping here. He is intent on taking $2 billion from our students and from the school communities that support them and their entire families, when even by his historically conservative math we are slated to see a surplus of $3 billion this year.

The City Council can block the mayor from enacting this cut and the subsequent cuts he plans for early 2024. Tell the mayor that it is unacceptable for New York City to cut funding to its public schools, especially when the state has made such a strong financial commitment to our students.

I want to thank you again for today’s hearing. Education funding is the greatest and most critical investment we make to empower New Yorkers and grow our economy. We need the city government to be committed to our public schools. Let us make sure New York City does not cut education — let us build upon it as mandated by law. The city’s budget lacks imagination, creativity, and innovation. After dealing with a pandemic for more than three years, our students and all New Yorkers deserve better. UFT members stand ready to work alongside you in reversing these unwarranted cuts.