Bloomberg & Silver Op-Ed: New York Must Finally Raise the Minimum Wage

By Michael Bloomberg And Sheldon Silver
Thursday, February 2, 2012, 4:09 AM

It’s time to raise the minimum wage.

Over the past several years, the cost of living in New York — like nearly everywhere else — has gone up, but for New Yorkers at the bottom of the economic ladder, one thing has remained unchanged: the minimum wage.

Given today’s high cost of living, it is unrealistic to expect a working person, much less a family, to afford rent, groceries, clothing, heating, phone, transportation, child care — and be able to save for the future — on $290 a week. If the minimum wage does not allow someone to afford even the most minimal of expenses, the incentive to work is diminished.

Social safety net programs and policies — including the minimum wage — should always incentivize and reward work, because a job is the single most effective anti-poverty tool ever created. That’s why both Democrats and Republicans have strongly supported the Earned Income Tax Credit, which incentivizes work by giving low-wage workers a negative tax rate. That is, rather than paying income taxes, they receive a check from the IRS. That extra money encourages people to take low-wage jobs by increasing the financial rewards of working.

Like the EITC, the minimum wage helps those who are trying to help themselves. And it helps taxpayers by reducing the number of people who might otherwise have to rely on public assistance to survive. Taxpayers benefit when government dependency is low — and so does the economy.

Eighteen other states — including Connecticut, Massachusetts and Vermont — as well as Washington, D.C., have raised their minimum wages above the federal minimum of $7.25 an hour. In addition, 10 states index their minimum wages to inflation to ensure that their real values do not erode as the cost of living rises.

New York’s minimum wage has not kept pace with inflation over the past 40 years. And over the past five years, it has increased by only 10 cents. Raising the minimum wage will put much-needed cash in the pockets of more than 1.2 million New Yorkers, who will spend those extra dollars in local stores.

While we would prefer the federal government raise the minimum wage to keep us competitive with our neighbors, New Yorkers who are working minimum-wage jobs cannot afford to wait. As the purchasing power of the minimum wage continues to erode, it makes surviving on it that much harder.

The free market is the most powerful tool we have to reduce poverty and spread prosperity. And if the free market were perfect, we would not need any government regulations.

But it isn’t. That is why we have laws prohibiting child labor, ensuring workplace safety and guaranteeing access to emergency health care.

The minimum wage is a vital part of the social safety net. By raising it, we can help more people escape poverty and avoid government dependency — strengthening communities from Brooklyn to Buffalo.

Bloomberg is mayor of New York. Silver is speaker of the state Assembly.

Read more

DiNapoli: Replacing Defined Benefit Pension With 401(K)-Style Plan ‘Unacceptable’

State Comptroller Tom DiNapoli has issued an aggressive defense of the current pension system and – without getting into specifics – slammed Gov. Andrew Cuomo’s proposal to offer a 401(k)-style defined contribution plan as part of his Tier 6 proposal, calling the change “unacceptable” and “extreme.”

DiNapoli’s comments came at a forum sponsored by the National Public Pension Coalition at the National Press Club in Washington, D.C. on January 19, 2012.

According to a copy of the comptroller’s prepared remarks sent out by his press office, DiNapoli decried the “coordinated, sustained attacks by anti-pension advocates” that he says have “falsely cast public pensions as costly, unsustainable giveaways that are bankrupting states and localities.”

The following is the National Public Pension Coalition Press Briefing:

Happy to be here to set the record straight.

Coordinated, sustained attacks by anti‐pension advocates have falsely cast public pensions as costly, unsustainable giveaways that are bankrupting states and localities.

While some state and local plans have become significantly underfunded in recent years, this has been caused by the shortsighted past practices of their sponsoring governments.

Most state pension plans are sustainable for the long term.

The New York Common Retirement Fund is among the best‐funded and best run in America.

Annual return of 14.6% for our fiscal year 2010‐11 that ended March 31st. Fund now has fiscal year audited assets totaling $146.5 billion, the highest since the global meltdown of 2008‐09.

Even with extraordinary market volatility and the tepid recovery from the Great Recession, we remain more than ready to meet our current and future obligations.

A number of key institutional factors have buoyed our retirement system since its establishment.

Decade after decade, we have required state and local governments to make their payments to the Fund. Unlike some states that have skipped their annual payments ‐ sometimes for years – New York State has never missed a payment.

Our conservative actuarial method continues to ensure that we will always be well‐funded. Importantly, we follow this method scrupulously rather than take short cuts in difficult times.

A recurring theme in the attacks on public pension systems is that they’re “unaffordable” and that rising pension bills are eating up state and local budgets.
While contribution rates are rising, we need to put this into perspective.

According to The Center for Retirement Research at Boston College, pension contributions from state employers amount to 3.8% of state and local spending, on average. New York, the number is 2.4% of state operating funds.

The vast majority of benefits are paid by investments. Over the past 20 years, 83 cents of every dollar in benefits paid to New York retirees have come from investment returns, not employee or employer contributions (national average: 68%)

One of the myths promoted in recent attacks on public pension funds is that they are bloated with retirees making six figure pensions. Here are the facts for New York State:

Less than one‐half of 1% of our 385,000 retirees receive pensions exceeding $100,000.
The average annual New York State pension, excluding police and fire, is $19,151.
76% of our retirees receive less than $30,000 a year.

Efforts to reform or restructure state pension funds continue across the country. 39 states have made significant revisions to their pension plans in the past 18 months, including New York.

Items like the level of pension contributions and how to control overtime abuse are acceptable areas for discussion and debate. What I think is unacceptable is promoting the more extreme change of replacing DB plans with 401k’s.

401k’s were never intended to take the place of pensions. They were designed to be savings vehicles to supplement pensions and social security income. And overall, in their relatively short history, they have proven to be woefully inadequate for those who rely on them for their primary retirement income.
According to Boston College’s Center for Retirement Research, 401k plans lost a collective $1 trillion during the Great Recession.

We’ve all heard the desperate stories over the past three years of retirees whose 401k nosedived and were forced to find minimum wage jobs just to survive ‐ and who now will have to continue to work indefinitely.

If the human cost isn’t enough of a reason to be wary of moving to 401k’s here’s some more:

DB plans cost 46% less than individual 401k style savings accounts, for several reasons:

Individuals investing their own 401k pay significantly higher fees, and earn significantly lower rates of return.

Individuals must base their asset allocation on their age and whether they are nearing or in retirement, while a defined benefit plan bases its allocation on market conditions.

Individuals must save at a rate that ensures that their funds will last well into their nineties. In contrast, large institutional plans like ours have assets based on the average mortality of its members.

Moving from DB’s to 401K savings accounts would be bad for our economy as well.

The money spent by retirees collecting pensions has a stabilizing impact on the economy.

For instance, 77% of New York retirees continue to live in New York State – and the retirement benefits we pay out to them continue to be recycled into our state’s economy, constituting an estimated $6.5 billion in spending, $9.5 billion in economic activity, and $1.3 billion in property taxes paid. We can extrapolate the New York experience across the nation.

As Executive Director of the National Institute on Retirement Security (NIRS) Diane Oakley said in her July testimony before the Senate Health, Education, Labor & Pensions Committee:

“Pensions are a ‘high five’ for the U.S economy: investing $5.35 trillion in assets for the future, keeping some 5 million retired Americans out of poverty, supporting 5.3 million American jobs, and delivering retirement income at nearly 50% lower cost than individual defined contribution retirement accounts.”
Moving from DB’s to 401K’s would undermine retirement security for even more Americans and add even more uncertainty to our economy.
For all the focus on the current cost of public pensions, the erosion of basic retirement security for working Americans has the potential to be a far more significant long term problem for our nation.

Retirement security is becoming a thing of the past for too many in America.

The number of private sector employees in large and medium sized businesses who have a defined pension benefit has declined from 84% in 1980 to 30% in 2010.

As a result of this erosion in pensions, a growing number of Americans risk retiring with a substantially lower standard of living – or not retiring at all.
This year, the first of 79 million baby boomers turned 65, and the Center for Retirement Research at Boston College reports that up to 45% of them ‐ about 34 million men and women – are at risk of not being able to maintain their living standards in retirement.
The problem will only grow in the future. A recent study found that the number of Americans living past 90 will grow from 1.9 million today to more than 9 million by 2050.

We can’t afford to walk away from this problem or leave it for someone else to deal with.

In his speech in Kansas last month, President Obama gave voice to the urgency of advancing national policy to preserve the middle class – the backbone of American society.

He was right in his emphasis. We must include “retirement security” as an earned right for middle class Americans.

That’s why I am calling on President Obama to convene a National Commission to address the decline of retirement security.

First, we must do no harm. The Commission must develop strategies to assure the continued viability of solid, well‐funded defined benefit plans and identify strategies to restore the finances of plans that have fallen into disrepair.

Second, the Commission must focus on the longer‐term problem of the erosion of retirement security. And it must start its work from the simple premise that we need to ensure that people are able to support themselves when they’re no longer able to work.

The Commission’s membership should draw from representatives from labor, business, government employers, the fiduciary community, accountants and actuaries, and academia.

We must change the perception of pensions being viewed primarily as a liability and a cost to taxpayers – to what they really are: a pre‐funding of a legitimate, looming government liability and societal obligation.

If people can’t support themselves in retirement and in old age, taxpayers will foot 100% of these future costs. From a fiscal standpoint, the responsible thing to do is to prefund these costs now.

And as we tackle this issue, we need to remember that much of what we’re confronting today is the continued fallout from the market losses of 08‐09. While there was a policy decision made to pump trillions of dollars into the financial system to shore it up, there was not a policy decision made to shore up and rescue pension plans in the same way.

If that had happened, we might not be having this discussion today.

With the gridlock in Washington and the lack of resources, this type of federal intervention for pensions today is unlikely. However, at the very least, instead of joining the race to the bottom to dismantle pension systems, this is the time to preserve pension plans that are proven to work, help those that need fixing, and tackle the larger question of what can be done for those not covered by pensions.

This must become a national discussion and a national priority.

Americans’ retirement security is eroding by the day. Solutions will need years to take hold. Failure to act now will make the problem worse for future retirees, and will leave the full financial burden to future taxpayers.

Some will argue that we can’t afford to deal with this challenge. I would argue that we can’t afford not to.

Without a long term public policy strategy on pensions, we risk condemning an increasing percentage of future generations of hardworking Americans to poverty in their senior years.

We can’t allow that to happen.

UFT Ad Slams Bloomberg’s Record on Education

UFT Blasts Bloomberg On Teacher Evaluations

BY Celeste Katz

The city teachers union is blasting Mayor Bloomberg’s education record in a television attack ad that’s airing amid the tense standoff over teacher evaluations.

(Click HERE for the Ad)

Our Ben Chapman reports:

More than eight million viewers are expected to see the union’s 30-second spot, which pulls no punches in its critique of the mayor’s education reforms.

“Ten years as Mayor, and Mike Bloomberg still doesn’t get it,” begins the narrator’s criticism of Bloomberg’s record on schools, starting with his appointment of Cathie Black as schools chancellor.

“Fudged education test scores, closing schools, parents shut out of the process,” the somber voice continues, over a montage of photos of city students.

The ad — which doesn’t specifically mention the evaluation controversy — finishes with a harsh message to the mayor, who hasn’t been on speaking terms with the teachers union since Dec. 30, when city officials walked away from talks on instructor evaluations.

“If you really want to do right by our kids, you’ll work with teachers and parents and stop playing politics with our schools,” the voice says.

City officials hit back at the union’s $1 million ad, calling it a “political stunt” that distracts the public from the real issue of teacher evaluations.

“The Mayor, Governor, and State Education Department are working collaboratively to implement a rigorous teacher evaluation system,” said Bloomberg spokeswoman Lauren Passalacqua, adding: “It’s a shame that the UFT continues to block accountability measures that will help students.”

The city stands to lose nearly $60 million in federal aid for 33 failing schools because city officials and the union were unable to reach a deal on instructor evaluations.

At the state level, the lack of a comprehensive evaluation system for teachers and principals threatens nearly $1 billion in federal education money.

Despite signs of a thaw at Monday’s legislative hearing on Gov. Cuomo’s education budget, on Tuesday city union and education officials said they still had not met to discuss the issue.

Public Pensions Are Not the Enemy by NYAFL-CIO President Mario Cilento

Public pensions are not the enemy
So why does Gov. Cuomo’s plan vilify middle class retirement security?

By Mario Cilento / NEW YORK DAILY NEWS
Published: Wednesday, January 25 2012, 4:24 AM

We hear all the time about exorbitant public-sector pensions, which leads many to believe mistakenly that retired nurses, firefighters, teachers and others are wealthy. We don’t hear that the average benefit for a member in the largest plan in New York — the New York State and Local Retirement System — is $19,000 a year, or that 76% of these pensions are less than $30,000 a year.

There is no doubt that state and local governments face difficult budgetary decisions, which has fairly brought all spending under greater scrutiny. But some corporations and their messengers have tried to capitalize on the pressure created by the short-term economic crisis to advocate for the permanent decimation of benefits in the public sector. They seek to complete the rollback of pensions and the shift to insufficient 401(k)s that has already taken place in the private sector — driving a stake in the heart of the defined benefit pension as we know it.

This is audacious, considering that corporate greed and misconduct caused the collapse of the economy, the budget crisis and billions in pension losses in the first place.

Now, even though it will not produce any savings to help address the current budget deficit, Gov. Cuomo’s executive budget includes a new pension tier with an “optional” 401(k).

In reality, there is no option in this plan, as the new tier would obliterate the defined benefit plan, slashing payouts and making employee contributions unaffordable. The new defined benefit “option” would require employees to work longer, pay up to double in base employee contributions and pay even more if the stock market declines — all to get less in their pension. What sense does that make?

The 90 years that the state has been providing pension benefits demonstrate that the system works. Pensions are long-term vehicles that should not be overhauled with every change in the political wind.

It’s not as though public employee unions are resisting any and all change. They did their part and agreed to a new pension tier just two years ago that is projected to save $35 billion over 30 years. This is on top of wage freezes, furloughs, increased health contributions and layoffs.

But where they draw the line — as well they should — is in eviscerating retirement security entirely.

Far too many workers have learned the hard way that a 401(k) is not the answer to long-term economic security. Such retirement plans place all the risk on the shoulders of workers. If Wall Street collapses when they retire, they’re simply out of luck.

There’s another problem: cost. I don’t doubt the ability of working men and women to decide how to successfully invest their retirement savings — provided they can afford professional assistance. They’ll have to add that burden to the cost of rent, utilities and prescriptions.

A financially secure retirement is slipping away from the American worker. According to the National Retirement Risk Index, a project of the Center for Retirement Research at Boston College, more than half of American workers are at risk of not being able to maintain their standard of living in retirement. This retirement insecurity comes at a time when the number of people with pensions has declined, particularly in the private sector, with 401(k)s becoming many workers’ sole retirement savings vehicle.

Yet, although data from multiple sources indicate that 401(k)s are inadequate, their stranglehold continues in the private sector — and that dominance is used as the rationale for reducing public-sector pensions. It’s a race to the bottom that’s inappropriate and unconscionable.

Cilento is president of the New York State AFL-CIO, the largest state labor movement in the country, representing 2.5 million workers in 3,000 union affiliates throughout the state.

Read more: http://www.nydailynews.com/opinion/public-pensions-enemy-article-1.1011290#ixzz1kV7jn7pL

RWDSU Living Wage Gets Support From Business

Wage Heat on Quinn

By SALLY GOLDENBERG (NY POST)

Pressure is mounting on City Council Speaker Christine Quinn — a 2013 mayoral hopeful — to take a stand on a living-wage bill that would mandate higher pay for employees of companies receiving major city subsidies.

A politically connected small-business owner with close ties to Mayor Bloomberg plans to announce his support for the bill today, while operatives working on the measure are engineering a ramped-up campaign to begin after Martin Luther King Day.

Steve Hindy, president of Brooklyn Brewery, will endorse a bill before the council that requires developers receiving at least $1 million in city subsidies to pay retail employees $11.50 an hour, or $10 with benefits. State minimum wage is $7.25 per hour.

Quinn has not allowed the contentious legislation to come before the council for a vote since its introduction in May 2010 and refuses to state her position.

She fears angering business owners and allies of Bloomberg, a staunch opponent of the measure. She also wants to maintain a good relationship with union leaders, who support it.

Read more: http://www.nypost.com/p/news/local/wage_heat_on_quinn_jkwONLW4sscheguu1DzXmK#ixzz1iiBfmxLZ

Final Report on Mandate Relief

Originally posted on December 26, 2011 by Jimmy Vielkind

Jim Odato devoted his column this morning to the final report of the Mandate Relief Redesign Team, which issued its 70-page document, it seems, without all of the team members even knowing it was coming out.

Business and local government groups, in part bubbling through the regional economic development councils, will be making a major push on the subject this year. Lawmakers enacted a property tax cap last year without a corresponding mandate relief package, and it’s thought to be at the top of the list come January.

CLICK HERE FOR THE REPORT

Democrats May Say No Dice to New York Casinos, Sheldon Silver Warns

Democrats may say no dice to New York casinos, Sheldon Silver warns
Assembly Speaker supports idea, but can’t guarantee bill will fly with Dems

BY Kenneth Lovett

ALBANY — The push to legalize casinos in New York is no sure bet to pass in the Assembly, the Daily News has learned.

Assembly Speaker Sheldon Silver (D-Manhattan) supports the idea, but he told the Daily News on Monday that he can’t guarantee such a bill would fly with his Democratic conference, which holds a majority in the chamber.

“I just don’t know,” Silver said.

Gov. Cuomo has said he will call on the Legislature in 2012 to make the first of two needed approvals of a constitutional amendment to legalize casino gambling, which would then require a referendum, no earlier than 2013, before it becomes law.

“The last time it came up in the late 1990s, it was a close vote in the conference,” Silver recalled.

In particular, the speaker said he does not know if there is support in his New York City-dominated conference for a casino specifically within the five boroughs.

The News reported in Monday’s editions that Cuomo opposes a casino in densely populated parts of the city, but is open to one at a place like Aqueduct Racetrack in Queens, which already has a virtual casino. Silver’s views are the same on both points.

But much has changed since the Legislature took up the issue in the 1990s, Silver acknowledged.

Not only is the deficit-plagued state desperately in need of new revenue and job creation, but casinos have sprouted up in surrounding states and even on Indian reservations within New York.

“There may be an attitude of ‘Let’s take some of the revenue and keep it [at\] home,’” Silver said.

In addition, there are now nine virtual casinos at New York racetracks, including at Aqueduct, and their existence may help generate support for full-blown casinos.

Senate Republican Majority Leader Dean Skelos, of Nassau County, has said he supports a constitutional amendment to legalize casinos. But a Skelos spokesman said Monday that the chamber has not taken a position on where casinos should be located.

Assemblyman Karim Camara, a Brooklyn Democrat who chairs the Black, Puerto Rican, Hispanic and Asian Legislative Caucus, says the group has not taken an official position on casinos. But while Camara opposes the idea of casinos in areas with high concentrations of poverty, he is open to legalizing them at existing racetrack “racinos” like Aqueduct.

Silver and Skelos recently promised Cuomo that they would pursue within their respective chambers the first of two needed legislative votes on the constitutional amendment.

Some insiders took that to mean the approvals would be automatic. But Silver and Cuomo both told The News that the speaker promised the governor he would raise the issue with his members, but couldn’t ensure the measure would meet with success.

Cuomo wants the constitutional amendment to legalize casinos in the state, but not necessarily spell out how many casinos would be allowed or where they would be located. Those matters would be decided later on by the governor and Legislature before the needed public referendum.

Silver said it is possible that his members will want the constitutional amendment to be more specifically defined than the one Cuomo has talked about.

klovett@nydailynews.com

A Living Wage, Long Overdue (NYT Editorial)

A Living Wage, Long Overdue

New York City provides hundreds of millions of dollars a year in taxpayer-financed subsidies to private developers. It is only right that the jobs created by those projects pay a decent wage. The Fair Wages for New Yorkers Act, widely known as the living-wage bill, would nudge these employers in the right direction.

The bill now before the City Council would require future development projects that receive $1 million or more in discretionary financial assistance from the city to pay $10 an hour plus benefits for full-time workers and $11.50 an hour without benefits for at least 10 years. That may not be much, but it is an improvement over the minimum wage of $7. 25 an hour.

Mayor Michael Bloomberg is fighting this change, arguing that a wage increase might scare off new developments and cost the city thousands of lower-paying jobs. That has not been the experience elsewhere.

A similar law enacted in 2003 in Los Angeles requires companies receiving city subsidies to pay workers $10.42 an hour or $11.67 without benefits. Despite warnings that the city would lose projects, Donald Spivack, a development official in Los Angeles, said at a Council hearing last month that those predictions were wrong and that he was unaware of any project that was canceled because of the wage requirement. The Center for American Progress found that 15 cities with living wage laws, including Los Angeles, Philadelphia, Cleveland and San Francisco, “had the same levels of employment growth” as other similar cities without the requirements.

Mayor Bloomberg’s arguments against this modest wage increase contrast with his endorsement of a 2002 city law that now sets a minimum of $10 an hour for about 60,000 workers employed by service contractors hired by the city, many of them home health care workers. Home care workers got a similar increase as part of Gov. Andrew Cuomo’s Medicaid redesign this year.

The City Council has revised the bill after earlier criticisms that it was confusing and too restrictive. It now has clear exemptions for manufacturers and smaller businesses with revenues of less than $5 million. The bill’s sponsors should also consider exempting grocery stores in areas that need fresh food markets. That said, this bill makes sense. A wage of $10 an hour would help lift thousands of New Yorkers above the poverty line.

Gov. Cuomo Puts Full-tilt Casino in City on Table

Gov. Cuomo puts full-tilt casino in city on table

EXCLUSIVE: In wide-ranging interview, Andy reflects on successes in his first year, and the “eye-catching” moves he wants to make in 2012

BY Kenneth Lovett

Updated: Monday, December 26 2011, 2:00 AM

ALBANY — Looking back on a successful first year in office, Gov. Cuomo vowed to make “eye-catching” moves in 2012 — and for the first time said he is open to rolling the dice on a casino in New York City.

“Do I support casino gaming at a New York City location? . . . Yes,” the governor told the Daily News in a year-end chat.

Like Assembly Speaker Sheldon Silver, Cuomo said he doesn’t want to see a casino in a densely populated part of the city, but would be open to putting one at a place like Aqueduct Racetrack in Queens, which already has a virtual casino.

Cuomo expects to call on the Legislature in his Jan. 4 State of the State address to give the first of two needed votes to a state constitutional amendment to legalize casino gambling in the state.

He stressed he is not “preselecting” New York City or any other area for possible casinos.

“I’m not excluding any locations at this time,” he said, adding that establishing a casino in a part of the city “certainly can” make sense because the operation would capitalize on the massive population.

“New York City is a real location,” he said. “Albany is a real location. Buffalo is a real location.”

Cuomo wants the Legislature in 2012 to pass the amendment without specifying how many casinos would be authorized or where they would be located.

He would spend the year coming up with a casino plan, then finalize details in 2013 — the earliest the issue could go before the voters for a required public referendum.

He argued that the economic boost from casino gambling far outweighs the increase in crime and compulsive gambling and other social ills that critics say the industry fosters.

During the wide-ranging interview, Cuomo reflected proudly on his accomplishments in his freshman year as governor — legalization of gay marriage, the creation of the state’s first property tax cap, a new ethics reform law and an on-time budget that cut state spending.

And while he went back on a no-new-taxes pledge earlier this month by supporting a hike on the rich, he coupled it with a modest tax cut for the middle class.

The freshman Democrat spoke of a newfound spirit of bipartisanship in the Legislature, something he has repeatedly contrasted with the gridlock in Washington. His powerful performance this past year has fueled speculation of a 2016 White House campaign, but Cuomo insisted he never even thinks about running for President.

“Not at all,” he said. “I’ve been around too long. I’ve heard too much talk. I’ve seen the movie too many times.”

Of course, his father, former Gov. Mario Cuomo, was dubbed Hamlet on the Hudson for agonizing about a waging a presidential run — and keeping a plane waiting on the tarmac as he mulled over a last-minute entry into the 1992 New Hampshire primary.

Brushing off his clashes with Mayor Bloomberg, most recently over a compromise on a bill to approve street hails for livery cabs, Cuomo described the flareups as normal “stressors in the relationship” between a governor and New York City mayor.

“We get along well; we communicate well; we communicate often,” he said.

But Cuomo warned that Hizzoner may have trouble getting one of his major priorities done in Albany next year: pension reform.

While the governor has listed it is a priority, he said its fate will ultimately come down to whether the Legislature wants to buck the powerful labor unions in an election year.

“I don’t think the unions are ever going to agree to pension reform,” he said.

And with the state having reached multiyear contracts this year with the two largest unions of state government workers, Cuomo admitted he has very little leverage to get them on board with a pension reform plan.

In his upcoming State of the State address, Cuomo is expected to focus on the need for job creation and the importance of rebuilding the state’s roads and bridges and of reorganizing state agencies and public authorities.

Cuomo said years of budget cuts and neglect have left the agencies in far worse shape than he imagined before taking office.

“The economy is not going to come rebounding back in a way that you can buy your way out of this problem,” he said. “And by the way, you shouldn’t buy your way out of the problem — you’re going to have to manage your way out of the problem.”

That said, Cuomo said not to bet on him having a sophomore slump.

“There are going to be eye-catching things next year,” he vowed, playing his cards close to his vest.

klovett@nydailynews.com

Seeking a Cure for Troubled Hospitals in Brooklyn

by Nina Bernstein

When the pain in his groin was too great to bear, Ralph Hutchins, who works as a mover, headed to the crowded emergency room at the nearest hospital one recent Tuesday, his life at risk. Tanya Boynton, a mother of four who works 12-hour shifts, hobbled into another emergency room from a homeless shelter, afraid illness would end her job.

They needed care in the heart of Brooklyn, not far from the world’s richest concentration of premier hospitals. Only a few private hospitals have survived in neighborhoods like Bedford-Stuyvesant, Brownsville and Bushwick to serve poor patients like them. Now all are in such dire financial shape that a small group of veteran health care planners appointed by Gov. Andrew M. Cuomo is debating last-ditch measures to save them.

For decades, the fallback solution in American cities has been to close such hospitals.

But one of the actions being considered by the group may be even more radical: expunge the hospitals’ debt of more than $1 billion, partly at taxpayer expense, and then let large for-profit companies take over the facilities and restructure patients’ care. Experts say what ultimately becomes of the hospitals could make them a model, or a disastrous experiment, in the delivery of health care to the poor.

The proposals are still being drafted but are already generating concern among public health advocates, who worry that the changes would shred a frayed medical safety net and send the poorest and uninsured patients to other overwhelmed hospitals, especially to three public hospitals that are at capacity and facing new budget cuts.

Proponents say this fear is unfounded. But it runs deep in New York State, which added a right to health care to its constitution during the Great Depression, and is the only state that still prevents large companies and their stockholders from owning hospitals.

“If we don’t figure out a way to redesign the system, we’re going to have free-fall bankruptcies not only in Brooklyn, but all over the state,” said Stephen Berger, chairman of Mr. Cuomo’s Brooklyn Work Group. Its recommendations are due this month.

Brooklyn shows the acute stage of a problem that has vexed the nation for years: how to sustain delivery of major medical care to the poor. After the crack and H.I.V. epidemics of the 1980s, either shrinking hospitals with empty beds or letting them fail was seen as a way to make the system more efficient. But as big cities lost more than half their hospitals, closings were concentrated in places like central Brooklyn, where the bed-to-population ratio is now below state and national averages and busy hospitals are struggling financially despite high occupancy rates.

Kings County Hospital Center, Woodhull Medical and Mental Health Center and the State University of New York Downstate Medical Center, the three public hospitals in the area, could shoot up to as much as 130 percent of capacity and face a third more emergency room visits if even one or two of the most vulnerable private hospitals closed, according to a study submitted to the Berger group by the union representing interns and residents at public and private hospitals.

Alan Aviles, the president of New York City’s public hospital system, said it was making contingency plans for such a flood but could not go it alone, particularly since the collapse of the city’s Roman Catholic hospital network.

“We have to make sure that we still have voluntary safety net hospitals that are capable of sharing in that effort,” he said, noting that city hospitals already provided 75 percent of all outpatient care to the uninsured.

To stay healthy, experts say, even nonprofit private hospitals need a 3 percent profit margin. Only two of Brooklyn’s 10 private hospitals are doing that well, and of the five considered endangered — Interfaith Medical Center, Wyckoff Heights Medical Center, Brookdale University Hospital and Medical Center, Kingsbrook Jewish Medical Center and Brooklyn Hospital Center — some are hemorrhaging money.

Questions about mismanagement hang over some of these institutions, but analysts agree on the basic problem: Most of their patients rely on Medicaid, the government insurance program for the needy, which has been repeatedly cut as eligibility expanded.

There is no confidence that the national health care overhaul will help. Indeed, federal cuts expected through 2013 will disproportionately hurt the same hospitals. In neighborhoods with mainly black and Latino residents, in a borough of 2.5 million where more than one in five residents live below the poverty line and two in five receive Medicaid, the five endangered hospitals account for 83,000 admissions, 325,000 emergency room visits and 760,000 clinic visits a year.

The case of Mr. Hutchins, who showed up at Wyckoff, illustrates the strain. It was the third time in two months he sought help, he said. This time, at his insistence, the hospital admitted him.

Surgery revealed a strangulated hernia so far gone that cutting out life-threatening infected tissue left an open wound, he said.

Cost efficiency demanded speedy discharge; last year, Medicaid cut by 31 percent what it would pay for a case like his. But before Mr. Hutchins could be released, the hospital had to get him a portable wound pump.

At hospitals that pay suppliers promptly, administrators say, the device typically gets same-day delivery. At Wyckoff, it took a week.

Wyckoff’s general counsel, David Hoffman, said the hospital was like a homeowner with an underwater mortgage. Its buildings are worth a fraction of the $88 million it owes on a $140 million state loan, used in 1994 to rebuild. Its reserves are gone.

Such hospitals have not benefited from recent gentrification in Brooklyn. Affluent newcomers typically keep ties with their Manhattan doctors, who send them to hospitals there with the prestige to get top dollar from private insurance plans.

In 1980, Brooklyn had 26 hospitals; now it has 15, and 41 percent fewer acute-care beds — 2.3 beds per 1,000 residents, compared with Manhattan’s 4.7, the state’s 3.1 and the nation’s 2.6.

That pattern has played out nationwide, said Alan Sager, a professor of health policy and management at Boston University who has analyzed decades of hospital closings in 52 cities.

Professor Sager found that what best predicted that a hospital would be closed was not inefficiency, but location in a minority neighborhood, and for-profit hospitals were likeliest to close.

Proposals to save the Brooklyn survivors include a federal waiver that could redirect state Medicaid savings to so-called safety net hospitals, and a push for additional mergers. Another idea is making one or more of the hospitals a free-standing emergency department, a concept being tried at the defunct St. Vincent’s Hospital in Greenwich Village.

The proposal requiring the most salesmanship, and possibly a change in law, would leave taxpayers, bondholders and other creditors to absorb the hospitals’ net debt and then invite investors into a reformulated health care network.

Steven Moore, an executive with PricewaterhouseCoopers, the consultants invited by Mr. Berger to sketch out this proposal, likened Brooklyn’s indebted hospitals to banks with toxic assets, and suggested a bailout first. “Our premise is you have to design a system that will attract private capital,” Mr. Moore said. “Private capital is more efficient, it demands productivity, it demands creativity, it demands innovation.”

It also demands profits. Many experts doubted the proposal’s contention that 20 percent to 30 percent waste could be safely carved from Medicaid spending in Brooklyn to yield a reliable return of about 7 percent.

At the Greater New York Hospital Association, the lobbying group for hospitals, board members worried about people without insurance, particularly the city’s many illegal immigrants. Getting rid of toxic assets — hospitals’ debt — would not solve the problem of patient mix and revenue, said Kathleen Shure, an association executive, and “the board fears that it will end up in for-profit entities getting rid of ‘toxic populations.’ ”

Mr. Berger, an investment banker and veteran of health commissions, is impatient with such objections. “Health care is not hospitals,” he said. “Health care is an integrated system, a network,” one that requires new patterns of investment.

By law, hospitals must provide emergency care. But it is unclear what that might mean in a reformulated for-profit system, particularly for people in pain who damage the bottom line, like Ms. Boynton, 40, who limped into Interfaith with what turned out to be an acute attack of gout the same day Mr. Hutchins went to Wyckoff.

She would have preferred the Bronx clinic in her Medicaid managed-care plan, but her family had been evicted from its Bronx apartment after the landlord failed to make repairs required for a housing subsidy. At Interfaith, she got a three-day prescription that put her back on her feet and commuting, from a Brooklyn homeless shelter to her $300-a-week job at a home goods store on the Upper West Side of Manhattan.

Mr. Hutchins, 50, now discharged, is also on the mend. The hospital’s prognosis is more guarded.

“We stay open at the grace and generosity of our vendors,” said Mr. Hoffman, Wyckoff’s general counsel. “They know it will eventually get better, because we have to have hospitals. Otherwise, we’ll have sick and dying people lying in the streets, and nobody wants that.”