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New York City Finances (8)
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New York City Finances (8)
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The original documents are located in Box 23, folder "New York City Finances (8)" of the
James M. Cannon Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Some items in this folder were not digitized because it contains copyrighted
materials. Please contact the Gerald R. Ford Presidential Library for access to
these materials.
ny NYC C
ADVISORY
COMMISSION ON INTERGOVERNMENTAL RELATIONS
E
REPRESENT
WASHINGTON. D.C. 20575
June 23, 1976
MEMORANDUM
TO:
ALL ACIR COMMISSION MEMBERS
FROM:
Wayne F. Anderson
Executive Director
WIA
SUBJECT: New York City Salary and Fringe Benefit Costs
Chairman Merriam asked that we forward a copy of the
attached New York Times article to you. The article describes
major findings in the New York City Temporary Commission on
City Finances report that pertain to the salary and fringe
benefit costs there and how they compare with other major
city governments.
The report contends that fringes cost 67% of payroll - -
$2.00 for each $3.00 in pay.
FORD is LIBRARY DERALD
Digitized from Box 23 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
THE NEW YORK TIMES, THURSDAY, JUNE 3, 1976
Total Labor Cost of Selected City Employees
Base
Salary Supplement (2)
Fringe
Retirement
Pay (1)
(Exclusive of Overtime)
Benefits (3)
$
Leave
Benefits (4)
Benefits
Average
18,091
City Employee
5,756
3,524
$26,707
220
1,116
PANEL BIDS BEAME
Sanitationman
15,731
6,028
$28,033
618
1,280
CUT BENEFITS PAID
Fire-Fighter
17,458
8,206
$35,288
2,111
1,355
Teacher
TO CITY'S WORKERS
20,350
7,173
$30,288
300
1,110
1,355-
Social Worker
19,025
6,630
$31,009
220
1,040
Report Puts Cost of Fringes
Climber & Pruner
16,530
5,875
at $2 for Each $3 in Pay-
3,6111
$27,351
180 1,155
Hospitals Facing Strike
Senior Clerk
11,150
4,040
11111
$18,952
220-
1,040
2,502
By LEE DEMBART
Nurse's Alde
10,750
With negotiations about to
//4,083
3,268'
$20,093
begin for new labor contracts
842
1,150
(1) Base pay for an average city employee is the average base salary of all city employees as of March 31, 1976..
GERALD
1917
covering most municipal work-
ers in New York City, the
All other base salaries assume a worker with 8 years of city service at the appropriate salary step.
Temporary Commission on City
(2) Salary supplements Include cost of living adjustment, shift differentials, longevity pay and paid holidays where applicable.
Finances will urge major cut-
No overtime is included. The only salary supplement for the average city employee is a $220 cost of living adjustment.
backs today in fringe and leave
(3) Fringe benefits include health Insurance, welfare funds and uniform allowance.
benefits, which it says are cost-
(4) Retirement benefits Include pension benefits, social security and annuity funds, where applicable. The pension benefit for the
ing the city $2 for every $3 it
average city employee is based upon 29.8 percent of earnings. which is the true cost to the city of an employee in the New York City
Employees Retirement System. Social Security is $895. No annuity payment is assumed for the average employee.
spends on base pay.
Source: Temporary Commission on City Finances
The commission's findings
created still new pressure on
The New York Times/June 3, 19.6
the financially beleaguered city,
which yesterday announced it
was sending layoff notices to
Panel Urges Cut in Fringe Benefits
3.150 hospital workers and was
faced immediately with the
Continued From Page 1. Col. 3
The data ranged from a total to arrive at a figure for total
THE VICE PRESIDENT'S COPY
DRAFT 1
June 24
Proposed News Release
President Gerald R. Ford announced today the appointment of
Mr.
of the Domestic Council as Special
Coordinator for New York City Affairs.
"For the first time, "the President said, "this will provide
a single official in the Federal government to assist in
expediting and coordinating the activities of Federal Depart-
ments and Agencies in handling the problems of an individual
city to enable it more effectively to fulfill its responsibilities
to its citizens."
"If this proto-type project proves as feasible as I believe it
will," the President added, "it may be the forerunner of an
expanded service to aid cities generally in obtaining the
assistance which the Federal government, under the law,
makes available and entitles them to."
The new assignment to Mr.
relates to but will not
be limited to the present seasonal aid program administered
by Secretary Simon of the Treasury Department but will
include also other important matters in Departments and
Agencies such as HUD, HEW, and DOT.
FORD : LIBRARY GERALD
A Possible Insert
(A paragraph which could be inserted before the five-
line "prototype" paragraph
or
used as a substitute for the five-line prototype paragraph.)
'With the emergence of New York City from of
the severe crisis situation into a more difficult but
perhaps more stable period, much remains to be done.
It is hoped that now, by identifying a single point
of responsibility for expediting and coordinating
assistance, we might be better able to bolster New
York City's continued efforts toward a balanced budget.
This focus would be unique and could offer valuable
insight into the broader question of greater Federal
responsiveness to the problems of our cities.
a
3A60 A
[7/22/76]
New York Area Showing
Signs of Economic Health
By MICHAEL STERNE
Signs of modest improvement ue to perform less well than
in the economies of New York
the national economy.
City, the metropolitan region
For example, although the
come
New york City
THE WHITE HOUSE
INFORMATION
WASHINGTON
October 11, 1976
MEMORANDUM FOR:
THE PRESIDENT
FROM:
SUBJECT:
JIM CANNON Jan
Vice President's New York City Report
Attached is the Vice President's October 6 Report on New York
City, prepared by Dr. T. Norman Hurd.
The report discusses the following six points:
1.
Mayor and City police are still unable to settle
their labor dispute.
2.
New York City employment dropped in August; Governor
Carey replaced his Council on Economy with a 10 member
cabinet level committee; Mayor Beame appointed Osborn
Elliott, Editor-in-Chief of Newsweek as Deputy Mayor
for Economic Development.
3.
New reports indicate the extreme seriousness of waste
in welfare in New York State and New York City.
4.
Hospital residents and interns strike in three private
voluntary hospitals.
5.
City must fight complacency about its fiscal condition.
6.
With private funds, Mayor Beame created a new Office of
Human Services Planning to plan the reorganization of
the City's education, health and other social services.
Attachment
FORD i LIBRARY 07V830
OFFICE OF THE VICE PRESIDENT
WASHINGTON, D.C.
f
<
October 8, 1976
NOTE FOR JIM CANNON:
1976 OCT 8 8 AM 9 32
Attached is Norm Hurd's New York
City report for this week. The
report was prepared on Wednesday,
October 6.
Because the Vice President has
no meetign with the President
this week, he has asked that you
give the attached report to the
President.
Thanks.
Only
Dick Allison
100809
THE WHITE HOUSE
INFORMATION
WASHINGTON
October 11, 1976
MEMORANDUM FOR:
THE PRESIDENT
FROM:
SUBJECT:
JIM CANNON Jan
Vice President's New York City Report
Attached is the Vice President's October 6 Report on New York
City, prepared by Dr. T. Norman Hurd.
The report discusses the following six points:
1.
Mayor and City police are still unable to settle
their labor dispute.
2.
New York City employment dropped in August; Governor
Carey replaced his Council on Economy with a 10 member
cabinet level committee; Mayor Beame appointed Osborn
Elliott, Editor-in-Chief of Newsweek as Deputy Mayor
for Economic Development.
3.
New reports indicate the extreme seriousness of waste
in welfare in New York State and New York City.
4.
Hospital residents and interns strike in three private
voluntary hospitals.
5.
City must fight complacency about its fiscal condition.
6.
With private funds, Mayor Beame created a new Office of
Human Services Planning to plan the reorganization of
the City's education, health and other social services.
Attachment
October 6 Weekly Report on New York City
1.
Impasse Continues Between Mayor and City Police
A. City police continue their off-duty picketing and
demonstrations in street clothes, although they
have been generally less noisy, more subdued, and
more "responsible" than they were last week at
Yankee Stadium and the Mayor's residence.
B. The issues in the dispute are:
(1) Police objection to a new work schedule which
reduces police officers' days-off by 10 per
year. This schedule went into effect without
incident on October 3;
(2) Police insistence upon salary increases of
8% and 6% retroactive to July 1, 1974, and
July 1, 1975, respectively. The City has
appealed this matter to the State Court of
Appeals, which will hear arguments on October 12;
(3) Police insistence that the City rehire 400
police officers who were laid off in 1975.
C. A "compromise" settlement --- which would have treated
the police the same as other City employees -- was
almost unanimously rejected by the Police Benevolent
Association (PBA) delegates. The proposed settlement
would have increased the base pay for police officers
to $17,058 in two years.
D. Following this rejection, no further discussions or
negotiations are currently underway or planned.
E. Comment:
(1) No one knows when the current dispute will be
settled. It is possible that no further major
efforts will be made until after the Court of
Appeals hearing on October 12th;
(2) The Mayor has made it clear repeatedly that there
is no way in which he can "enrich" the compromise
which was turned down last week.
FORD
(3) In the meantime, the City's police needs are
being relatively well met. There are no reports
of serious neglect of duty such as those from
the period September 28-30;
(4) Reported dissension within the PBA may be a
factor in the situation. It was pointed out,
for example, that the PBA President and
negotiator, Douglas B. Weaving, never should
have agreed to last week's settlement unless he
were certain he could sell it to his membership.
(Reportedly, Weaving will be challenged next May
for the PBA Presidency by four rivals, including
Ken McFeeley, who resigned as President in May
1976.)
2. New York City Employment Drops in August; Governor Carey
Revamps Council on Economy; Mayor Beame Appoints New
Deputy Mayor for Economic Development
A. The State Labor Department reported that there were
3,204,800 jobs in the City in August 1976. This is:
a drop of 15,400 jobs from July 1976;
a drop of 96,900 jobs from August 1975, and
a drop of 619,900 jobs since August 1969.
B.
From July 1976 to August 1976, the numbers of
unemployed persons dropped by 23,700, and the jobless
rate dropped from 10.8 to 10.1%.
C. This apparent discrepancy between a decline in jobs
and a decline in the number of jobless reportedly
results from the fact that the jobless figures do
not include laid-off government workers.
D. For the State as a whole, the number of jobs in
August 1976 was 6,764,200. This was:
1,500 fewer than in July 1976;
86,900 fewer than in August 1975.
-3-
E.
Governor Carey has replaced his 36-man Council on
the Economy (announced in April 1976) with a
cabinet-level committee of 10 members:
Commissioner of Commerce
John Dyson
Commissioner of Conservation
Peter Berle
Commissioner of Transportation
Ray Schuler
Commissioner of Agriculture
and Markets
Roger Barber
Commissioner of Labor
Philip Ross
Commissioner of Housing
John Heimann
Director of Budget
Peter Goldmark
Director of State Operations
Robert Morgado
Secretary to the Governor
David Burke
Director, Economic Development
Board
Richard Richardson
F. Reportedly the remaining 26 members of the old Council
(for example, Walter Wriston of Citibank, Lewis Rudin,
real estate, and Harry Van Arsdale, AFL-CIO, together
with 5 Congressmen and both Senators) will function
like "a constituent assembly," "mobilizing support
for the Governor's programs.'
1.
G. On October 6, 1976, the Mayor appointed Osborn Elliott,
Editor-in-Chief of Newsweek, as Deputy Mayor for
Economic Development. He will have broad powers and
a mandate from the Mayor to "produce" jobs.
H. Comment.
Apparently the old 36-member Council on the Economy
either proved too unwieldy or moved too fast to
suit the Governor;
In any event, the Governor has shifted from a
group where he "controlled" a minority of the
members to one where he has complete control. It
is possible that this smaller, streamlined group
will be more successful in developing a constructive
program to help rehabilitate the economies of the
State and the City;
Mayor Beame's appointment of Elliott may turn out
to be one of his most important. Elliott seems
anxious to get started, and the Mayor promises
all possible support.
3. New Welfare Developments Indicate the General Public's
Failure to Recognize the Extreme Seriousness of the City's
Problem
A. Richard Horan, the State Welfare Inspector, announced
last week that "nearly $1 billion, or almost one-
sixth" of welfare-related costs in New York State,
including Medicaid, were "being dissipated through
recipient- and vendor-fraud, administrative error,
or unnecessary and/or over-billed services."
B. Governor Carey's office has announced that the over-
run in this year's State welfare budget may be
between $120 million and $175 million, primarily
because of large increases in non Federally-aided,
single-person home-relief cases, themselves reportedly
resulting from continued high unemployment rates.
C. State Comptroller Arthur Levitt has announced the
results of a State study which shows that $37 million
is wasted each year on the City's day-care program.
D. A Federally (HEW) financed Rand Corporation report
stated that cash and services provided for subpoverty-
level families actually raise the incomes of 80 to
90% of those families above the poverty level.
E.
Comment.
It is apparent that waste in welfare has reached
major proportions. If Horan's figures are correct,
State and local taxes could be cut by about 5%
if all of the waste were eliminated.
But, to date, no one seems to have found a way to
"bell the cat."
However, Governor Carey has announced a plan to
curb abuses in Medicaid "mills" which could save
$50 million per year.
-5-
4. Hospital Residents and Interns Strike in Three Private
Voluntary Hospitals
A. Residents and interns at three private voluntary
general hospitals went on strike on October 5 because
hospital managements refused to bargain with them.
B. Hospital managements declined to bargain because a
National Labor Relations Board ruling held that the
residents and interns are "students," not "employees."
To some it seems that this ruling draws a distinction
without a difference.
C. City hospitals with affiliation agreements with the
struck private hospitals are affected.
D. Comment. No critical emergency is anticipated,
even if the strike spreads, as is expected. In 1975,
hospital managements and their medical staffs handled
a four-day strike without incident, and they are
reportedly prepared to deal with this one.
5. City Must Fight Complacency
1.
A. It is possible that the Mayor's problem with such
matters as the City police and the Bronx Hospital
(see below) reflect a developing sense of relative
complacency administration. on the part of those outside the City
B. Here are signs that encourage complacency:
The City's 1975-76 deficit was $83 million smaller
than had been estimated;
There have been rumors that the City may not
actually ask for the $125 million seasonal Federal
loan wich is planned for October. The City has
already borrowed $1,075,000,000;
The City will probably soon open the controversial
new $100 million 420-bed North Central Bronx General
City Hospital.
-6-
C. But in fact:
The budget "saving" in 1975-76 was small in terms
of the further savings ($686 million, recently
revised upward to $703 million) which must be
made in 1976-77;
Despite rumors, the full $125 million Federal loan
will be called for in October;
As for the Bronx hospital, it will probably not
open until the Mayor is convinced that it can
be done within the already-approved financial plan
for 1976-77.
D. Comment. Despite the progress that has been made,
the City still faces some of its toughest days. Unless
the Mayor can keep the City's extreme austerity needs
before the people, he may have increasing difficulty
in fending off continuous demands from groups such
as the City police.
6.
Mayor Beame Creates New Office of Human Services Planning
with Private Funds
A. The Mayor has created in the office of John Zuccotti,
First Deputy Mayor, a new Office of Human Services
Planning.
B. The new Office, with a professional staff of about
five, has a budget of $205,000, all of which has
been provided by 11 private contributors, including
the New York Community Trust, the Carnegie Corporation,
the Ford Foundation, the Rockefeller Brothers Fund,
and the Chase National Bank.
C. The purpose of the Office is to "try to plan how best
to reorganize education, health and similar social
services during the New York City budget crisis."
[1975]
THE WHITE HOUSE
WASHINGTON
11/T
S. -
here's he memo-
plus four reports
that were all
included included in Pres.
brizing book.
JB.
FORD & LIBRARY GERALD
THE WHITE HOUSE
INFORMATION
WASHINGTON
October 11, 1976
MEMORANDUM FOR:
THE PRESIDENT
FROM:
JIM CANNON
SUBJECT:
Vice President's New York City Report
Attached is the Vice President's October 6 Report on New York
City, prepared by Dr. T. Norman Hurd.
The report discusses the following six points:
1.
Mayor and City police are still unable to settle
their labor dispute.
2.
New York City employment dropped in August; Governor
Carey replaced his Council on Economy with a 10 member
cabinet level committee; Mayor Beame appointed Osborn
Elliott, Editor-in-Chief of Newsweek as Deputy Mayor
for Economic Development.
3.
New reports indicate the extreme seriousness of waste
in welfare in New York State and New York City.
4.
Hospital residents and interns strike in three private
voluntary hospitals.
5.
City must fight complacency about its fiscal condition.
6.
With private funds, Mayor Beame created a new Office of
Human Services Planning to plan the reorganization of
the City's education, health and other social services.
Attachment
SUMMARY
1. Impasse continues between Mayor and City police.
2. New York City employment drops in August; Governor
Carey revamps Council on Economy; Mayor Beame appoints
new Deputy Mayor for Economic Development.
3. New welfare developments indicate the general public's
failure to recognize the extreme seriousness of the City's
problem.
4. Hospital residents and interns strike in three private
voluntary hospitals.
5. City must fight complaceny.
6. Mayor Beame creates new Office of Human Services
Planning with private funds.
October 6 Weekly Report on New York City
1.
Impasse Continues Between Mayor and City Police
A. City police continue their off-duty picketing and
demonstrations in street clothes, although they
have been generally less noisy, more subdued, and
more "responsible" than they were last week at
Yankee Stadium and the Mayor's residence.
B. The issues in the dispute are:
(1) Police objection to a new work schedule which
reduces police officers' days-off by 10 per
year. This schedule went into effect without
incident on October 3;
(2) Police insistence upon salary increases of
8% and 6% retroactive to July 1, 1974, and
July 1, 1975, respectively. The City has
appealed this matter to the State Court of
Appeals, which will hear arguments on October 12;
(3) Police insistence that the City rehire 400
police officers who were laid off in 1975.
C. A "compromise" settlement -- which would have treated
the police the same as other City employees -- was
almost unanimously rejected by the Police Benevolent
Association (PBA) delegates. The proposed settlement
would have increased the base pay for police officers
to $17,058 in two years.
D. Following this rejection, no further discussions or
negotiations are currently underway or planned.
E. Comment:
(1) No one knows when the current dispute will be
settled. It is possible that no further major
efforts will be made until after the Court of
Appeals hearing on October 12th;
(2) The Mayor has made it clear repeatedly that there
is no way in which he can "enrich" the compromise
which was turned down last week.
-2-
(3) In the meantime, the City's police needs are
being relatively well met. There are no reports
of serious neglect of duty such as those from
the period September 28-30;
(4) Reported dissension within the PBA may be a
factor in the situation. It was pointed out,
for example, that the PBA President and
negotiator, Douglas B. Weaving, never should
have agreed to last week's settlement unless he
were certain he could sell it to his membership.
(Reportedly, Weaving will be challenged next May
for the PBA Presidency by four rivals, including
Ken McFeeley, who resigned as President in May
1976.)
2.
New York City Employment Drops in August; Governor Carey
Revamps Council on Economy; Mayor Beame Appoints New
Deputy Mayor for Economic Development
A. The State Labor Department reported that there were
3,204,800 jobs in the City in August 1976. This is:
a drop of 15,400 jobs from July 1976;
a drop of 96,900 jobs from August 1975, and
a drop of 619,900 jobs since August 1969.
B. From July 1976 to August 1976, the numbers of
unemployed persons dropped by 23,700, and the jobless
rate dropped from 10.8 to 10.1%.
C. This apparent discrepancy between a decline in jobs
and a decline in the number of jobless reportedly
results from the fact that the jobless figures do
not include laid-off government workers.
D. For the State as a whole, the number of jobs in
August 1976 was 6,764,200. This was:
1,500 fewer than in July 1976;
86,900 fewer than in August 1975.
FORD
-3-
E.
Governor Carey has replaced his 36-man Council on
the Economy (announced in April 1976) with a
cabinet-level committee of 10 members:
Commissioner of Commerce
John Dyson
Commissioner of Conservation
Peter Berle
Commissioner of Transportation
Ray Schuler
Commissioner of Agriculture
and Markets
Roger Barber
Commissioner of Labor
Philip Ross
Commissioner of Housing
John Heimann
Director of Budget
Peter Goldmark
Director of State Operations
Robert Morgado
Secretary to the Governor
David Burke
Director, Economic Development
Board
Richard Richardson
F. Reportedly the remaining 26 members of the old Council
(for example, Walter Wriston of Citibank, Lewis Rudin,
real estate, and Harry Van Arsdale, AFL-CIO, together
with 5 Congressmen and both Senators) will function
like "a constituent assembly," "mobilizing support
for the Governor's programs.
G. On October 6, 1976, the Mayor appointed Osborn Elliott,
Editor-in-Chief of Newsweek, as Deputy Mayor for
Economic Development. He will have broad powers and
a mandate from the Mayor to "produce" jobs.
H.
Comment.
Apparently the old 36-member Council on the Economy
either proved too unwieldy or moved too fast to
suit the Governor;
In any event, the Governor has shifted from a
group where he "controlled" a minority of the
members to one where he has complete control. It
is possible that this smaller, streamlined group
will be more successful in developing a constructive
program to help rehabilitate the economies of the
State and the City;
FORD
over
-4-
Mayor Beame's appointment of Elliott may turn out
to be one of his most important. Elliott seems
anxious to get started, and the Mayor promises
all possible support.
3. New Welfare Developments Indicate the General Public's
Failure to Recognize the Extreme Seriousness of the City's
Problem
A. Richard Horan, the State Welfare Inspector, announced
last week that "nearly $1 billion, or almost one-
sixth" of welfare-related costs in New York State,
including Medicaid, were "being dissipated through
recipient- and vendor-fraud, administrative error,
or unnecessary and/or over-billed services."
B. Governor Carey's office has announced that the over-
run in this year's State welfare budget may be
between $120 million and $175 million, primarily
because of large increases in non Federally-aided,
single-person home-relief cases, themselves reportedly
resulting from continued high unemployment rates.
C. State Comptroller Arthur Levitt has announced the
results of a State study which shows that $37 million
is wasted each year on the City's day-care program.
D. A Federally (HEW) financed Rand Corporation report
stated that cash and services provided for subpoverty-
level families actually raise the incomes of 80 to
90% of those families above the poverty level.
E. Comment.
It is apparent that waste in welfare has reached
major proportions. If Horan's figures are correct,
State and local taxes could be cut by about 5%
if all of the waste were eliminated.
But, to date, no one seems to have found a way to
"bell the cat."
However, Governor Carey has announced a plan to
curb abuses in Medicaid "mills" which could save
$50 million per year.
FORD
-5-
4. Hospital Residents and Interns Strike in Three Private
Voluntary Hospitals
A. Residents and interns at three private voluntary
general hospitals went on strike on October 5 because
hospital managements refused to bargain with them.
B. Hospital managements declined to bargain because a
National Labor Relations Board ruling held that the
residents and interns are "students," not "employees."
To some it seems that this ruling draws a distinction
without a difference.
C. City hospitals with affiliation agreements with the
struck private hospitals are affected.
D. Comment. No critical emergency is anticipated,
even if the strike spreads, as is expected. In 1975,
hospital managements and their medical staffs handled
a four-day strike without incident, and they are
reportedly prepared to deal with this one.
5. City Must Fight Complacency
A. It is possible that the Mayor's problem with such
matters as the City police and the Bronx Hospital
(see below) reflect a developing sense of relative
complacency on the part of those outside the City
administration.
B. Here are signs that encourage complacency:
The City's 1975-76 deficit was $83 million smaller
than had been estimated;
There have been rumors that the City may not
actually ask for the $125 million seasonal Federal
loan wich is planned for October. The City has
already borrowed $1,075,000,000;
The City will probably soon open the controversial
new $100 million 420-bed North Central Bronx General
City Hospital.
VORD
-6-
C. But in fact:
The budget "saving" in 1975-76 was small in terms
of the further savings ($686 million, recently
revised upward to $703 million) which must be
made in 1976-77;
Despite rumors, the full $125 million Federal loan
will be called for in October;
As for the Bronx hospital, it will probably not
open until the Mayor is convinced that it can
be done within the already-approved financial plan
for 1976-77.
D. Comment. Despite the progress that has been made,
the City still faces some of its toughest days. Unless
the Mayor can keep the City's extreme austerity needs
before the people, he may have increasing difficulty
in fending off continuous demands from groups such
as the City police.
6.
Mayor Beame Creates New Office of Human Services Planning
with Private Funds
A. The Mayor has created in the office of John Zuccotti,
First Deputy Mayor, a new Office of Human Services
Planning.
B. The new Office, with a professional staff of about
five, has a budget of $205,000, all of which has
been provided by 11 private contributors, including
the New York Community Trust, the Carnegie Corporation,
the Ford Foundation, the Rockefeller Brothers Fund,
and the Chase National Bank.
C. The purpose of the Office is to "try to plan how best
to reorganize education, health and similar social
services during the New York City budget crisis.' "
GERALD FORD Tea.
SUMMARY
1. City police picketing reflects a basic problem that
could become serious.
2. Progress being made on City's new Financial Management
System.
3. City considering plan to cut police time required in
court arraignments.
4. Felix Rohatyn's proposed Federal guarantee of
Municipal Assistance Corporation Bonds apparently
making slow progress.
5. City's 1975-76 deficit less than expected.
6. City's principal employee union keeps promise to
accept pay and benefit cuts.
7. New examples of City problems indicate that the drive
toward solvency "has only begun."
FORD
GERALD
September 29 Weekly Report on New York City
1. City Police Picketing Reflects a Basic Problem that Could
Become Serious
A.
Since September 24, off-duty policemen in civilian clothes
have picketed many of the City's 73 station houses and
other locations such as the homes of Mayor Beame and
Police Chief Codd.
B.
Because the police are picketing on their own time,
their action does not constitute a strike. But there
have been numerous complaints about the noise and
confusion the picketing has caused.
C. The principal issues are that:
(1) The police protest the new work schedules which are
to go into effect on October 3; these new schedules
would require of each policemen 10 more days of work
each year.
(2) The police insist upon City approval of an arbitration
panel decision giving them 8% and 6% salary increases
retroactive to July 1, 1974, and July 1, 1975,
respectively. This decision has been upheld by the
State Supreme Court and the Appellate Division.
The City has taken the case to the Court of Appeals,
which will hold a hearing on October 12.
D. Comment. The City is adamant with respect to the new
work schedules. But the Mayor has offered to grant a.
6% increase effective September 1, 1975, plus the same
cost-of-living adjustment received by other City
employees, provided the union withdraw its court action.
To date the union has not agreed. A police strike is
possible, but not likely. There is about one chance
in three that a settlement will be worked out before
October 12.
2. Progress Being Made on City's New Financial Management System
A. Mayor Beame and City Comptroller Goldin have announced
the creation of a new "Integrated Financial Management
System." It will operate through a new "Financial
Information Services Agency" when it "opens up shop"
January 1, 1977.
FORD
GERALD
-2-
B.
Essentially the Agency will function as a central
computer service unit for all of City government.
Its Executive Director will report to a five-man
Commission - two members appointed by the Mayor, two
by the City Comptroller, and one by those four appointees.
C. The objectives of the new Agency are to (a) provide
central financial control and thus permit prompt
preparation of accurate and reliable City reports
and statements, (b) eliminate duplicate and conflicting
financial reports, and (c) provide information not
previously made available.
D. Comment. Creation of the new Financial Information
Services Agency will perform no miracles, but it does
represent a basic step toward establishing -- for the
first time -- centralized financial information and
control. While this is not an end in itself, it is
an important means of achieving an end, namely modern
financial management, which the City, unlike most public
and private businesses, has never had.
3. City Considering Plan to Cut Police Time Required in Court
Arraignments
A. Completely separate from the police picketing problem,
the City is considering plans to cut down on the time
required by police officers waiting in court for their
"arrestees" to be arraigned.
B. A proposed "pre-arraignment" system would cut down on
the waiting time, thus reducing overtime payments and
also allowing police officers to return to their other
duties. Savings of $4 million per year have been
estimated.
C. The courts insist that better police "management" would
solve the problem. The City maintains that only a
basic procedural change will "do the job."
D. Comment. The Mayor will probably prevail with his
plan to reduce police officers' time in court. Net
savings may exceed the estimated $4 million if the
courts cooperate.
4. Felix Rohatyn's Proposed Federal Guarantee of Municipal
Assistance Corporation Bonds Apparently Making Slow
Progress
A. Rohatyn's proposal for a Federal guarantee of MAC
bonds with "stretched out" maturities does not seem
to be making much progress.
B. While the impact of the stretch-out would cut the
City's debt service expenditures during the next few
years and thus ease the tax burden upon the economy
generally, the reluctance of the Congress to consider
such a guarantee in 1975 probably foreshadows the
same position in 1976.
C. In a related development, Rohatyn has charged that
Moody's was unfit to rate MAC's bonds. He based
this charge on a letter sent by Moody's President
Lockton to a City note-holder. This letter was
highly critical of the Governor and the Legislature
for enacting the 1975 moratorium bill. Lockton now
claims that the letter does not precisely reflect his
views, even though it was in fact quite blunt, calling
the moratorium bill "one of the biggest fraudulent
acts ever recorded."
5. City's 1975-76 Deficit Less than Expected
A. Now -- nearly three months following the end of the
City's Fiscal year -- the City is estimating its
1975-76 deficit at less than $1000 million,* compared
with an original City Financial Plan estimate of
$1,051 million. (Published reports of a total accum-
ulated deficit of more than $5 billion by the end of
Fiscal 1976 apparently had included estimated amounts
by which City-employee pension funds were allegedly
under-funded.)
B. Comment. The City's achievement is remarkable.
Although the figures are still subject to audit, it
appears that the City's toughness, together with the
constant needling by Arthur Levitt's man, Deputy State
Comptroller Sidney Schwartz, has produced a minor
miracle.
* The exact figure will be announced at 1 p.m., Thursday,
September 30.
FORD
6. City's Principal Employee Union Keeps Promise to Accept
Pay and Benefit Cuts
A.
In accordance with commitments made in June 1976, when
the new City Budget was adopted, District Council 37
of the State, County, and Municipal Employees (Victor
Gotbaum, Executive Director), has agreed to cuts in
pay and employee benefits which will save the City
$15 million. The pay cuts are in entrance-level
salaries for new appointees only.
B. This saving will help to qualify Gotbaum's union
members for cost-of-living adjustments. (The Emergency
Financial Control Board has determined that no cost-
of-living adjustments would be paid unless newly
achieved savings were adequate to pay them.)
C. The savings in benefits will result from such changes
as shorter vacations, reduced premium pay rates, reduced
welfare fund payments, longer summer hours, and increased
payments for meals at City institutions. Savings in
pay will result from a 10% cut in entrance-level
salaries for new employees only.
7. New Examples of City Problems Indicate that the Drive
toward Solvency "Has Only Begun"
A. State Comptroller Arthur Levitt reported that hundreds
of needy New York City students in the SEEK (Search
for Education, Elevation, and Knowledge) program at
the City University had received about $1 million in
overpayments through their failure to report fully
their welfare grants.
B. Even though housing construction in 1976 is expected
to be 58% above that of 1975, it will still barely
equal the housing-construction level of 1932, the
depth of the Depression.
C. The Under Secretary of Agriculture has prohibited the
State from making any further payments for food or
food services in connection with the Summer Children's
Free Food program. This program was financed by the
U.S. Department of Agriculture but administered by
the State Education Department. There have been many
charges of bad management, and an investigation is
underway.
SUMMARY
1. Felix Rohatyn proposes Federal guarantee of Municipal
Assistance Corporation Bonds.
2. State Housing Finance Agency (HFA) gets back into the
market with public $149 million bond sale.
3.
The Municipal Assistance Corporation (MAC) repays State
loan of $250 million.
4. Federal Environmental Protection Agency (EPA) turns
down City application to proceed with construction of
two large sewage treatment plants.
5. Mayor Beame proposes 52 community districts within the
City to replace the present 62 community districts.
6. City and Unions making progress toward finding
productivity savings to finance a City Employee Cost-
of-living salary adjustment.
7. City "White Paper" on Medicaid "scandal" in preparation.
8.
Arbitrator recommends 4.5% wage increase for non-
professional voluntary hospital workers.
2541
GREATE FORD
September 22* Weekly Report on New York City
1. Felix Rohatyn Proposes Federal Guarantee of Municipal
Assistance Corporation Bonds
A. In a surprise move and speaking only for himself,
Felix Rohatyn of MAC has proposed a Federal guarantee
of MAC bonds; Governor Carey has subsequently
endorsed this proposal.
B. The proposal's real purpose is to stretch out the
repayment schedule of present City and MAC bonds, at
lower interest rates, in order to cut debt service
costs for the City and thus enable it to speed its
economic recovery.
C.
Rohatyn believes the heavy debt-service load during
the next three to five years - together with other
unavoidable expenditures - will do permanent harm
to the City's economy; for that reason, he urges
spreading out the load over a longer period.
D. Rohatyn's proposal reflects the following combined
City and MAC debt service expenditure projections
(figures current as of June 30, 1976) :
Years
Billions of Dollars
1976 - 77
$2.5
1977 - 78
1.9
1978 - 79
2.7
1979 - 80
1.6
1980 - 81
1.2
Average 1981 - 82
through 1985 - 86
0.9
Average 1986 - 87
through 1990 - 91
0.3
E. A Federal guarantee of City bonds was turned down
by the Congress in 1975; Rohatyn's current proposal
represents only a technical change, i.e., a Federal
Guarantee of MAC bonds, in the proposal Congress had
rejected.
There was no report on September 15, 1976.
FORD
F. Comment. Rohatyn's proposal does not really involve
the abandonment of the City's three-year financial
plan, but it would greatly ease the problem of
achieving it. If Mayor Beame endorses Rohatyn's
proposal, it might be considered carefully by former
Governor Carter, who is working very closely with
Mayor Beame and who has become quite supportive of
the City's problem. But unless the Congress has
materially changed its position, it is not likely
that the Rohatyn proposal would be approved.
2. State Housing Finance Agency (HFA) Gets Back into the
Market with Public $149 Million Bond Sale
A. On September 16, the state HFA publicly sold $149
million of State University Construction bonds at
an average interest rate of 8.5%; the bonds were
rated "A" by Moody's and "AA" by Standard and Poor's.
B. The demand for the bonds was so great that orders
for more than $100 million of additional bonds were
turned down.
C. This is the first time that HFA has "gone to market"
since August 1975.
D. Comment. HFA's return to the public market with this
large volume of bonds selling at competitive rates is
quite significant. (Actually, HFA itself was never
in financial trouble; but it had been kept out of the
market as a result of the crisis brought on by the
problems of New York City and other agencies.)
3. The Municipal Assistance Corporation (MAC) Repays State
Loan of $250 Million
A. On September 14, the Municipal Assistance Corporation
repaid to the State a $250 million loan which had been
obtained by MAC on behalf of New York City in the Fall
of 1975.
B. This is the first of three $250 million repayments to
liquidate the total State loan of $750 million.
C. The second payment will be made by the State
Comptroller's "deducting" the amount owed (a
second increment of $250 million) from regular
State-aid payments to the City.
D. Comment. Despite some rumors to the contrary, there
never was any real doubt about MAC's ability to
meet its September 14 repayment. But State and City
officials admit that detailed arrangements have not
yet been worked out for the final November repayment.
4. Federal Environmental Protection Agency (EPA) Turns Down
City Application to Proceed with Construction of Two
Large Sewage Treatment Plants
A. Lacking capital appropriations for sewage-plant
construction, the City has asked EPA approval of
plans under which bankers, through private sale of
bonds, or the contractors, through the purchase of
bonds, would provide part of the City's one-sixth
share of the $540 million total cost of the two
projects - one in Brooklyn, and one on Staten Island.
B. EPA found legal bars to the City's proceeding in
this manner and suggested an alternative - the
earmarking of necessary amounts of the Federal "pay
back" monies on prior pure waters projects.
C. An initial review indicates that this may not be
possible under present State law; an Attorney
General's opinion is being requested.
D. Comment. If, in fact, State law does prohibit the
use of Federal "pay back" funds, the City will be
"stumped." But the City is determined to find a
way, if at all possible, and is continuing its
discussions with EPA and with Senator Buckley, who
is a member of a subcommittee that is attempting to
reconcile House-Senate differences concerning a bill
making omnibus amendments to existing pure water
legislation. Such a bill might conceivably provide
relief for the City, but probably not before 1977.
5.
Mayor Beame Proposes 52 Community Districts within the
City to Replace the Present 62 Community Districts
A. Under the revised City Charter, responsibility for
"monitoring" important City services, including parks,
welfare, highways, sewers, housing, health, sanitation,
and police, is to be delegated to community boards
throughout the City.
B. The proposed 52 Community Boards will have a major
responsibility for monitoring the providing of most
"direct" City services except fire protection; the
present 62 district boards, which have operated "on
paper" for 8 years, have no real power.
C. The Mayor's proposed 52-district layout will be the
subject of public hearings, after which some changes
presumably will be made before the district boundaries
become final on January 1, 1977.
D. Comment. The literal delegation of even "monitoring"
authority. to 52 district boards, each of which will
have a district manager and a "cabinet" composed of
senior departmental officers, could create problems
for the Mayor at a time when tight control of City
fiscal affairs will remain necessary in order to enable
the City to reach its goal of solvency by July 1, 1978.
This proposal could create another difficult challenge
for the Mayor and his top staff.
6. City and Unions Making Progress Toward Finding Productivity
Savings to Finance a City Employee Cost-of-Living Salary
Adjustment
A. In June 1976, the Emergency Financial Control Board
determined that no City employee cost-of-living
salary adjustments would be made during 1976-77
unless they could be financed from newly developed
productivity savings.
B. With the cooperation of employee unions, the City has
identified savings from increased productivity which
may well make possible an October adjustment for some
City employees. The number involved has not yet been
estimated.
-5-
C. Comment. Granting a cost-of-living adjustment
for any significant number of City employees would
have a tremendously favorable impact upon morale.
But the documentation and clear proof of the
productivity savings which would have to result if
the adjustment is to win Emergency Financial Control
Board approval may be much more difficult to produce
than is generally recognized.
7. City "White Paper" on Medicaid "Scandal" in Preparation
A. Despite apparent lack of activity on the part of the
City in replying to Senator Moss's Medicaid disclosure,
the Mayor's Office reports that a "White Paper"
outlining the City's plans to deal with the subject
is in preparation and will be available early in
October.
8. Arbitrator Recommends 4.5% Wage Increase for Non-Professional
Voluntary Hospital Workers
A. Margery Gootnick, arbitrator in the dispute between
the voluntary hospitals and 40,000 workers represented
by District 1199 of the National Union of Hospital
and Health Care Employees, has recommended a 4.5%
wage increase for the first six months of 1977.
B. Mrs. Gootnick's appointment settled an 11-day strike
in July 1976, when both sides accepted compulsory
arbitration.
C. Comment. The settlement is a reasonable solution to
the problem. Neither side is really happy, but the
decision is justified by the facts. Yet this wage
increase may intensify pressure for similar wage
increases in the City hospitals.
SUMMARY
1. More "bad" than "good" developments in City's 1976-77
financial plan - after two months.
2. Some developments in connection with the City's basic
economic problem.
3. School teacher salary dispute still unresolved.
4. No important visible action by City or State following
Senator Moss's Medicaid revelations.
5. New City "Official Statement" issued.
6. Mayor Beame and City Comptroller Goldin testify before
SEC.
BENALD
Ny. tile
September 9 Weekly Report on New York City
1. More "Bad" Than "Good" Developments in City's 1976-77
Financial Plan - After Two Months
A. Although it is too early to attempt to evaluate the
City's entire fiscal year on the basis of the first
two months, the experience so far has shown more
"bad" than "good" signs.
B. There is uncertainty about whether the full $350
million from the sale of Mitchell-Lama housing
mortgages -- with Federal mortgage insurance -- will
be realized. The projected unsold remainder may range
from about $75 million to much more. The principal
problem seems to be delay in getting mortgages ready
to sell. Federal delays are not yet a problem.
C. Debt service costs are up $11 million, because of the
exchange of Municipal Assistance Corporation bonds,
which require interest payments, for City notes, which
are under the moratorium.
D. Some revenue collections are falling below estimates,
but others are above. As of now there is no- cause for
concern on this count.
E. Comment. The City is preparing to make necessary
alternative cuts from the list totaling $85 million
which was submitted on August 1. Unless there are
more favorable developments than unfavorable ones
from now on, it may be necessary to use all of the
"backup" list of cuts.
2. Some Developments in Connection with the City's Basic
Economic Problem
A. The State AFL-CIO, with 2,000 delegates at its con-
vention on August 31, joined with Governor Carey's
recently-created Coalition of Northeastern Governors
in order to promote economic recovery in the north-
east region and to obtain a larger share of Federal
assistance. The Governor, who spoke at the Convention,
reiterated the Coalition's goal, which he had first
outlined when the Coalition was announced last
June 23rd, of a "united front to lobby in Washington"
for Federal policies favorable to the Northeast - in
connection with high unemployment, obsolete trans-
portation systems, energy shortages, slow economic
development, and high living costs.
-2-
B. The U.S. Bureau of Labor Statistics announced that,
from mid-1975 to mid-1976, there was a loss of
112,000 jobs in New York City, while the national
total showed a gain of 2.5 million. This year's
loss in New York is smaller than for previous
years; the drop in manufacturing was only 6,600 jobs,
compared with 74,000 in the prior year.
C. Real estate tax relief has not become an important
factor in the City's economy. Only two important
projects --- the Commodore Hotel and a shopping mall in
Jamaica --- have been approved, although others are
pending. "Normal" bureaucratic delays are partly
responsible, but there is also opposition from existing
private business.
D. Comment. The effort to attack the City's basic economic
situation remains largely dormant. There are reports
of forthcoming developments this Fall. To date, most
of those primarily responsible seem too busy with other
things or are completely "stumped" because of the
difficulty of the task.
3. School Teacher Salary Dispute Still Unresolved
A. The teacher salary problem outlined in last week's
report remains unresolved, with no apparent sign of
progress.
B. The basic issue is the extent to which, within the
guidelines established by the Emergency Financial
Control Board, the School Board will deny salary
increases to teachers in order to provide funds to
avoid teacher layoffs. The almost unbelievable
complexities surrounding this basic issue are numerous
and serious.
C. Comment. It is impossible to predict with any degree
of accuracy just what may happen before a decision
is reached. My guess is that, through non-salary
savings and the use of some funds already budgeted
for salary increases, the Board of Education will
grant nominal salary increases to certain groups of
teachers and lay off only small numbers of the most
marginal ones. If carefully presented, this solution
might receive the approval of the Emergency Financial
Control Board (Governor Carey, Chairman) -- which is
necessary for the decision to become effective.
Coincidentally, the Board of Education has suspended
three school lunch officials for alleged neglect.
-3-
It has also undertaken a review of its own purchasing
practices, after City Comptroller Goldin had published
a report indicating illegal purchases of materials
and supplies.
4. No Important Visible Action by City or State following
Senator Moss's Medicaid Revelations
A. While the Moss report tended to place blame for the
Medicaid situation primarily upon the states and
cities, Secretary Mathews and Wilbur Cohen, formerly
Secretary of HEW, attributed part of the responsibility
to Congress. Cohen said that Congress had failed to
provide constraints against fraud and had failed to
monitor the program.
B. There is increasing evidence that so-called Medicaid
"mills" -- possibly as many as 600 of them in New
York City -- have been important factors in the abuse
of the Medicaid program. These "mills" are a form of
Medicaid clinic in which a group of doctors "process"
large numbers of Medicaid cases, with supposedly more
attention to the maximum dollars that can be- collected
than to the health care of the individual patients.
C. Slowness by the City in making payments to doctors
and others is also a problem. This supposedly has
encouraged "padding" of bills -- and also "factoring,"
that is, the sale of receivable bills in order to
provide cash for current operating purposes. HEW has
recently taken steps to forbid factoring, but there
are major problems involved in enforcing such action.
D. Comment. No doubt some steps are being taken to curb
the fraud and abuse that exist in the Medicaid pro-
gram. To date, these steps have not become apparent,
and no results are yet observable.
5. New City "Official Statement" Issued
A. A new "Official Statement of the City of New York"
concerning the City's tangled financial situation
appeared on September 4, 1976.
-4-
B. Preparation of this 110-page document has taken
almost one year -- under the direction of Kenneth
Axelson, Deputy Mayor for Finance.
C. The Statement was prepared in order to meet the need
for an official document which would provide "com-
plete disclosure" of all aspects of the City's finances.
It is especially designed for present and prospective
holders of City bonds and notes. It provides the
best single, official source of information on the
City's finances. It attempts to "tell all," including
"warnings" of the soft spots in the City's 1976-77
and 1977-78 financial plans, as well as information
on the 50 lawsuits that are pending in connection with
various emergency actions taken by the City and the
State in order to help the City pull out of its
financial crisis.
6. Mayor Beame and City Comptroller Goldin Testify before SEC
A. Mayor Beame testified for 5 1/2 hours and Comptroller
Goldin testified for 20 hours before the SEC in
New York City.
B. The SEC is reportedly interested in knowing if there
is any evidence of fraud growing out of failure on
the part of City officials and others, including
bankers, to disclose all pertinent facts concerning
the City's financial condition in the period prior
to the fiscal crisis of 1975.
THE WHITE HOUSE
WASHINGTON
Jim Cannon
Original to Bill Seidman for
action. This for your information.
Jim Connor
11/19/76
THE SECRETARY OF THE TREASURY
TREASURE
WASHINGTON 20220
70
myl
November 19, 1976
MEMORANDUM FOR THE PRESIDENT
SUBJECT: New York City
On November 19, 1976, the highest court of the
State of New York ruled that the moratorium on the
New York City notes violated the State Constitution.
Because the decision was on State rather than on
Federal Constitutional grounds, there is no right of
further appeal. While a formal order will not be
issued for at least 30 days, it appears certain that
at least the holders of $900 million in notes out-
standing will be entitled to payment in full at some
point in 1977. In addition, it is likely that former
holders of $700 million in notes (who exchanged their
notes for MAC bonds) will also be entitled to cash.
The Court's ruling constitutes an event of default
under the Credit Agreement between the United States
and New York City. Accordingly, the first question is
whether the Secretary of the Treasury should exercise
his right to declare the agreement in default and
demand immediate payment of the $1.075 billion in
Federal loans outstanding. A more important question
from a practical standpoint is whether the Treasury
should advance funds needed for operating expenses in
early December. The amount required by the City during
the month of December is $750 million. If no advances
are made, the City will run out of cash not later than
December 6.
Bill
William E. Simon
Table
At
THE WHITE HOUSE
WASHINGTON
OCT 3.00
October 20, 1976
. B.u NY
FOR:
ART QUERN
FROM:
NORM HURD
On Tuesday evening, October 5, I heard Peter Goldmark
New York State Budget Director, address the Albany
ASPA chapter on the fiscal health of New York State and
its localities.
Peter did an excellent job - pointing out that we have been
through some "tough" times together and still have some
"heavy seas" ahead of us. He confessed that he could not
outline specifically just how all of the remaining problems
were going to be met and dealt with but he had confidence
that ways would be found to handle them.
Near the end of his remarks he said, in effect, "you may
have noticed that I have not mapped out a 'revolutionary'
role for the Federal government to play in the years ahead.
If I were asked to state what the Federal government could
do, I would say that we need two things:
"1. Action to revise the unfavorable inter-regional
policy that has threatened the economy of the
Northeast, and
"2. Establishment of a clear-cut Federal policy
toward State and local government. We've never
had one and we can't go on indefinitely without
one. I'm more interested in having a policy
than I am in dictating just what the policy
should be."
Peter spoke only from notes. I do not believe his remarks
were recorded so there is no official report on exactly
what he said.
CC: Dean Overman
Janet Brown
Norm
FORD i LIBRARY GERALD