New Yorkers Deserve a More Socially-Responsible Budget*
By Nancy Holt
As the New York City budget cycle ramps up, the need for near-term fiscal balance often leads to decisions that are costly, economically and socially, in the long run. Put another way, it’s generally cheaper to help than to harm, but the budget process is geared toward the latter. The extent to which this is avoidable in reality is open to debate. However, New Yorkers, as citywide investors, should have a publicly available tool to shed light on how these outcomes are affecting the overall well-being of the city and its residents.
Due to the complexity of the budgeting process in New York City, gauging such information is, at best, rather difficult and time-consuming. Budgetary analysis can be found in various reports by city entities, notably the Comptroller’s Office and the Independent Budget Office (IBO), as well as those by agencies, the City Council, and nonprofit groups. The challenge as an outsider looking at these many materials is that they are often overly-complicated, incomplete, or issue-specific — requiring labor intensive research to better understand the bigger picture across the vast array of city services.
A public communications approach along the lines of socially responsible investing (SRI), a strategy that works to generate both social change and financial returns, would afford New Yorkers a better sense of whether or not their tax dollars are being put to best use. It represents a shift from the current outlook, which strives to limit negative outcomes, by giving a sense of how strategic investments could produce more positive ones. The more comprehensive, economically-centered, easy-to-follow, and transparent the information is, the better.
To note, this idea differs to some degree from earlier discussions about linking the Mayor’s Management Report (MMR) to the budgetary framework. And instead of auditing the government to root out misuse or ineffective use of funds, it would work to define how current fiscal decisions will play out more broadly.
It would expand upon the forecasting over a five-year period that the IBO already does for the proposed budget by offering alternative scenarios, with defined assumptions about either additional social investment or lack thereof. It could also offer analysis for more extended time periods.
The idea is a clearer focus on making the best choices and investments to do the most good, while expanding the city’s economy, over time.
There are many issues where the city’s budget is short-sighted, missing the opportunity to create economic benefits, as well as often-intertwined social gains. Although these issues are complicated on many levels, a few are provided for context. Being able to capture them in a more collective socio-economic picture would be the overarching goal.
One is the exorbitant amount New York City spends to incarcerate people. In fiscal year 2021, the annual cost per detainee in city jails exceeded $550,000 per year, approximately 34 times what the city directly spends annually per public school pupil. With an average daily detainee population of about 5,500 people at Rikers, that’s over $3 billion spent per year. Since employment — in and of itself — is connected to a lower likelihood of incarceration, it can help reduce the number of at-risk individuals that wind up in the criminal justice system in the first place, and should thus be made more of a focus for investment.
For example, shifting more of this funding toward vocational training programs at a two-year cost of somewhere between $3,500 (public) and $15,000 (private/non-profit) per person seems to be a much better investment. The clean energy sector specifically is an area in need of trained workers for economic growth. At the statewide level, this sector rebounded faster than nearly all others from 2020 to 2021, and about 90% of employers who were hiring in 2021 found the process to be either ‘somewhat difficult’ or ‘difficult.’
The housing crisis is another area where such return-on-investment calculations arise. The primary cause of homelessness is lack of affordable housing, particularly among families. For example, in fiscal year 2022, stays in the city Department of Homeless Services (DHS) shelter system stays were, on average, 509 days (single adults), 534 days (families with children), and 855 days (adult families). Among many negative outcomes, being homeless makes it harder to find and maintain employment and complete one’s education. The city spends billions of dollars per year on the shelter system.
While the city’s fiscal year 2022 budget did include about $5 billion more over ten years ($22 billion total) for affordable and public housing, that falls short of the city’s affordable housing needs. It is also less than the $4 billion per year ($40 billion over ten years) Mayor Adams pledged to spend during his campaign, which is based in part on estimates of what’s needed by pro-housing and anti-homelessness advocates.
Sufficient funding for education is critical to the overall health of the New York City economy. In the upcoming fiscal year, Mayor Adams is proposing to halt an expansion of preschool for 3-year-olds (3-K). There are many benefits for children who attend public 3-K. Some include a 6% increased likelihood of graduating from high school compared to peers who do not attend, as well as increased rates of taking the SAT and college enrollment. The administration is citing decreased enrollment, but should more closely evaluate outreach efforts.
Reduced city funding for CUNY is also on the table. This is again short-sightedly tied to decreased enrollment, which the city should work to reverse through outreach and investment. A 2020 study found that six out of seven of CUNY’s community colleges (which receive half of their capital funds through the city) are among the top 10 nationwide in promoting social mobility, and its accompanying economic benefits. A separate study found that those with bachelor’s degrees contribute on average $278,000 more to their local economies than high school-only graduates through direct spending over the course of their lifetime.
Conversations about how to better include ‘social value’ in our efforts to address these kinds of issues have picked up steam in recent years. With respect to affordable housing, for example, bills are currently under discussion in the City Council under the social housing model, where housing could be built ‘for public good’ rather than profit. New Yorkers should be able to see — quantitatively and qualitatively — how this kind of outlook could work across a variety of issues. Such information can help shift the broader dialogue on how we currently make budgetary decisions, as well as shed light on those that all-too-often profit from maintaining the status quo.
Our current, short-sighted process often leads us to false choices and no easy way to evaluate their impacts. Providing the public with socially-responsible analyses would be in line with what many investors are now using to make financial decisions. After all, people who live, work, or just spend time and money in New York City are literally investing in the city itself.
It’s actually cheaper across many of our biggest city issues to help than to harm — but the fiscal analysis of these decisions must be done and shown far more robustly. In a town as financially-minded as New York City, we should be able to find a way to make better economic and social decisions. A good deal never hurts either.
Nancy Holt, PhD, leads Science for New York (Sci4NY), an effort that aims to have policymakers and scientists work more closely together through project-based interaction in New York City. On Twitter @Sci4NY.
* Originally appeared in the Gotham Gazette on 5/31/23
