Category: News and Opinion

Non-Profits in An Era of Institutional Collapse

|

Things sure seem to have changed at the New York Times. After a couple of decades of being the veritable mouthpiece of the non-profiteers, the Times has recently been raising questions about how much New York City and State pay them, much of it under the Medicaid program, and how little is received in return. In the latest article, the Times examined at-home services for the disabled, for which the city state and federal governments pay $45 to $67 per hour to non-profit organizations that dispatch aides paid $9 to $15 per hour. The huge profit margin allows the non-profits to pay big salaries to those who run them.

This is just one example of what has happened in the city’s “non-profit” “charities” over the years. They have become a big part of the reason that New Yorkers pay so much in taxes, and receive so little in return. What is particularly disturbing is that this problem has infected a type of organization that was thought of as the solution 40 to 50 years ago, due the failures and ripoffs of public employee unions, government bureaucracies, and government contractors.

Education in an Era of Institutional Collapse II

|

It’s happening, just as I predicted in this post after the 25/55 pension deal passed for New York City teachers. The New York Times reports that desperate middle class parents are responding to the financial degradation of the public schools by forming underground education co-ops. Providing for themselves, outside the formal structure and at risk of persecution from it, the education they pay taxes for after those taxes were diverted to the early retired. According to the article, the underground is in pre-K, which was supposed to become “universal” but never has been. “For parents like us, options are limited. Private pre-K can run more than $30,000 a year at the fanciest schools. Depending on the neighborhood, spaces with community-based organizations — private preschools that partner with the state and accept state subsidies but handle their own applications — can be as elusive as public pre-K spots. If home schooling is daunting, and if not schooling feels wrong, the only other choice, it seems, is to join the legions of parents who have taken matters into their own hands and formed co-ops.”

Today pre-K, tomorrow grade school and more. Not because it is better or even good, not because teachers aren’t needed or wanted, but because that is what will be left in the aftermath of Generation Greed. With the benefit of information technology and unemployed would-be teachers with no choice but to help out and work for peanuts, it might work for children with educated parents. For the rest, forget it, and kiss equal opportunity goodbye.

New York City’s Last GASB?

|

Confirming its prior analysis, and the analysis of independent actuary John Bury, the Center for Retirement Research at Boston College has once again found New York City’s pension plans to be among the most dangerously underfunded in the United States, this time in light of the new rules proposed by the Government Accounting Standards Board (GASB). The New York State pension plans, which also cover local government workers in the portion of the state outside New York City, are once again found to be among the best funded.

Noted actuary Girard Miller who writes for Governing Magazine, for those plans scheduled to run out of money in less than 25 years “without causing a panic, it's clear that the time has come for stakeholders, trustees and plan sponsors in these systems to ask penetrating questions and get to work on solutions — pronto. That includes the unions whose members must contribute to the solutions and stop playing the ‘not me’ entitlement game.” He lists 28 plans among those in desperate shape, including the New York City Teachers and New York City Employees, but the Boston College report only included larger plans. Other analyses have shown the NYC Police and Fire pension plans to be worse off than the NYC Employees retirement plan, though not as bad off as the Teachers. “This abyss,” said Miller, “is the result of a decade or more of benign neglect by all parties at the table.” Actually in New York, there have been additional retroactive pension enhancements in the past decade, and deals to borrow money from the pension plans to pay pension contributions, which is much worse than benign neglect.

A Difference Between San Francisco and New York

|

In New York City, politicians continue to argue over extending policies that provide higher wages for workers with privileged connections to government money (or employees of firms with privileged connections to government money). One of the goals is to prevent the city from reducing costs and providing better public services for its people by contracting with private companies, by comparing the cost of the contracts with the cost of public workers excluding their greatest cost – the many years they get in retirement.

In San Francisco, on the other hand, there is a higher minimum wage for everyone – now $10.20 per hour. Not just for those with a special relationship with the government, who are then made better off than those with no such relationship. Now San Francisco is not the equivalent of New York City. It is the equivalent of Manhattan. So I wouldn’t argue that all of New York City should have a higher minimum wage. But perhaps Manhattan and the downstate suburban towns that zone out the working poor should. To offset the cost of getting to work on a transit system that New York’s political class is sending back to the 1970s. Or the risk of long bicycle rides on suburban roads where the Lexus SUVs might just cement your low status by running you over. The political class and the executive class do pretty well in SF also, but I guess they have some money left over for the serfs.

© Room Eight