The June 15th Edition of City & State Magazine by City & State

June 15, 2015

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New York Association of Convenience Stores 130 Washington Avenue, Suite 300, Albany NY 12210 TELEPHONE: (800) 33-NYACS or (518) 432-1400 FAX: (518) 432-7400

Cigarette Tax Enforcement and Marketing Standards Reform

S.5701a by Senator Golden / A.8064a by Assemblyman Ortiz AN ACT to amend the tax law and the state finance law, in relation to the creation of the cigarette tax enforcement fund; and making an appropriation therefor The New York Association of Convenience Stores is a private, not-for-profit trade organization representing 8,000 neighborhood mini-marts and convenience stores that are registered with the State of New York to responsibly sell legal tobacco products to adult customers in accordance with the Tax Law, the Public Health Law, and the Cigarette Marketing Standards Act. As legitimate business owners who have been forced to suffer the ill effects of rampant cigarette tax evasion for the past 10 years or more, we commend Senator Golden and Assemblyman Ortiz for proposing a sensible, balanced plan to address it. We strongly support S.5701a/A.8064a and urge its passage, for the following reasons:

It provides New York State with a new source of revenue to fight illegal cigarette trafficking.

Pervasive cigarette tax evasion in New York is well documented. The Tax Foundation, the Mackinac Center for Public Policy, and even the U.S. Food and Drug Administration have issued reports showing that 60 percent of all cigarettes consumed in New York are purchased without collection of any New York State tax whatsoever. Based on FY 2014 taxable sales, the new Cigarette Tax Enforcement Fund created by this bill would generate $12 million in additional revenue to bolster cigarette tax enforcement and recapture lost tax receipts.

It increases the price of cigarettes in New York State by about 5 percent.

Public health advocates have long contended that higher prices make cigarettes less accessible to minors and provide added financial incentive to existing smokers to quit. Some parties have expressed concern that the increase in taxable retail price would actually drive more smokers to border states, Indian reservations, and the black market. But if the new 4-cent-per-pack Cigarette Tax Enforcement Fund is used wisely and with conviction, the opposite will occur – New York will finally reduce the cigarette bootlegging epidemic that is crippling small businesses, depriving the State of hundreds of millions of dollars in tax revenue, and thwarting anti-smoking initiatives.

It eliminates a long-standing competitive disadvantage for mom-and-pop retailers versus chain stores.

By reforming the minimum markup percentages under the Cigarette Marketing Standards Act, S.5701a/A.8064a would level the playing field between chain retailers (operating more 15 stores or more) and smaller independents. Under the current formula, both chains and independents must abide by the same state-minimum price, but the independents derive less minimum markup revenue. S.5701a/A.8064a would unify the minimum wholesale price paid by chains and independents to their suppliers.

It provides a long-overdue adjustment in the presumed cost of doing business for all levels of the supply chain.

Ostensibly to maintain stability and fair play in the marketplace, the CMSA imposes minimum markup percentages at each level of the supply chain to establish uniform minimum selling prices for each brand of cigarette sold in New York State. These markups, by definition, are intended to reflect the industry’s “presumed cost of doing business.” Costs have escalated dramatically for cigarette stamping agents and retailers since their markups were last adjusted in 2000 and 1990, respectively. Accordingly, the markup percentages need to be adjusted. S.1891d/A.8854a does so in a balanced and comprehensive manner. In the interest of curbing the cigarette tax evasion stampede and restoring fairness and balance for licensed wholesalers and retailers, we urge the Senate and Assembly to enact this bill into law.

James S. Calvin President, NYACS June 8, 2015

FROM THE EDITOR’S DESK

June 15, 2015

UNITED FEDERATION OF TEACHERS PHOTO COLLECTION, TAMIMENT LIBRARY/ ROBERT F. WAGNER LABOR ARCHIVES, NYU

CONTENTS

Michael Gareth Johnson Executive Editor

9.......

CITY

Ads call on de Blasio to provide NYPD security for parochial schools

13.......

14.......

aren’t public after all

BUFFALO

The ‘Fight for $15’ rages upstate By Shane Meyer

By Patrick Wall

16....... 12.......

Alexis Grenell names Dean Skelos the ultimate ‘Welfare Queen’

By Sarina Trangle The city says school leadership meetings

PERSPECTIVE

STATE

The Legislature may be open to compromise on ‘Raise the Age’

22.......

By Ashley Hupfl State lawmakers plan to tackle NYC property taxes

MAYORAL CONTROL

Why no one wants to take a closer look

HEALTH CARE

Officials and industry leaders on the future of health care

30......

SPOTLIGHT: INSURANCE

37.......

PERSPECTIVE

38.......

BACK & FORTH

By Jon Lentz

The likelihood of Scaffold Law changes after Silver’s fall … the battle over title insurance industry reforms … the potential replacements for Benjamin Lawsky at DFS … Q&As with James Seward and Kevin Cahill

June 15, 2015

CIT YANDSTATENY.COM

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@CIT YANDSTATENY

Cover: Photo composition by Guillaume Federighi

Nicole Gelinas argues that New York City simply can’t afford to pay new officers their predecessors’ pensions

A Q&A with actress Kathleen Turner

city & state — June 15, 2015

New York City teachers strike in 1968.

ew York City’s public school system serves more than 1.1 million students. It has a budget of roughly $25 billion. And, for all intents and purposes, just one person controls the whole thing—the mayor of New York City. Obviously the city Department of Education has a massive staff of administrators and teachers with decades of experience, but one person can set the direction and impact the future of more than a million young minds. With that fact in our minds, we set out to analyze whether mayoral control has been good for New York City. Not whether it worked or didn’t work under former Mayor Michael Bloomberg, or if it would be different under Mayor Bill de Blasio, but whether the system is the right fit for the city. For our cover story, Staff Reporter Sarina Trangle talked to dozens of experts and combed through the data available, both in New York and in other urban areas, and came to the conclusion that the seemingly overwhelming political support for the concept of mayoral control is really just based on anecdotal evidence and gut feelings. Simply, there is not enough data to support a blanket statement that mayoral control is better than a more decentralized system— or to argue the opposite, for that matter. This begged the question, how did it become inevitable that this system is going to be extended by the state Legislature? The answer seems to be that most politicians support the plan simply because it is simpler. It allows voters to hold one person accountable if schools do poorly. And, to be fair, there are not any widely supported alternatives. There is a danger inherit in centralizing control. If you have a system in which the only check on your power is the voting public, then your motivation when making policy decisions will naturally gravitate toward improving conditions for a majority so you get re-elected. The effect of this could be that education for a minority of the population gets significantly worse, because those people don’t have the numbers to vote you back into office. There is no hard evidence that the school system has been used this way, and I don’t presume to suggest that it has. But when the future of more than a million children is at stake, we should have a robust debate and we should have it often.

Letters to the

Editor

In an interview published online on June 6, Assemblyman Keith Wright spoke with City & State Editor-at-Large Gerson Borrero about his running for Rep. Charles Rangel’s congressional seat. We’ve seen this coming for a few months. As chair of the Assembly Housing Committee, Keith Wright has oversight over rent regulation, tax policy on new housing and a host of other issues. Right now Albany is in a flurry over the renewal of the rent laws and the 421-a tax abatement. In many ways these are two sides of the same coin, as the construction of luxury housing directly—and adversely—impacts tenant protections and the efficacy of the rent laws. Over the last two months, Wright has been somewhat coy, but still acknowledges that he wants the 421-a program renewed and perhaps changed. Many independent tenant groups (not the unioncontrolled neo-liberal groups) understand that even with any change to the 421-a program, it still is all about construction of luxury housing, not affordable housing. There is no way around that, and no way around the fact that Wright is supporting increased real estate pressure and the resulting evictions for both residential tenants and neighborhood retail businesses. Also in the last month, the debate over the 421-a program has been distracted by the construction unions who are demanding “prevailing wage” in new 421-a projects. Such prevailing wages can amount to near, or more than, $100 per hour per person when benefits are considered. For example, a carpenter on a commercial

building will be earning $93.98 per hour with benefits, according to the New York City Comptroller’s Office. The other view, being pushed by Mayor Bill de Blasio and the Real Estate Board, is couched in the euphemism that 421-a construction jobs must be available for “all New Yorkers,” in other words, non-union labor. De Blasio claims that his housing plan can succeed only with non-union labor, but in other statements he says his housing plan will succeed with or without the 421-a program. What cannot be distorted is that the new program will cost the city another $2.7 billion on top of the already $1.1 billion in lost revenue, according to the New York City Independent Budget Office. While jobs are good and unemployment is bad, both sides are pushing red herrings and the debate has been distracted by these two forces. Neither the press nor elected officials are considering the adverse impact of bad development that would occur, the destabilization of communities throughout the city and evictions of both residential and commercial tenants. Indeed, the press and politicians avoid the issue when they are reminded of it. Wright is not the only elected official to see campaign contributions coming from the real estate industry and the unions. Those who got arrested recently in Albany, those who label themselves “progressive” and those tied to neo-liberal groups like the Working Families Party and New York Communities for Change (aka ACORN) are all part of the charade. Those include New York City Council members Brad Lander, Jumaane Williams and Corey Johnson, Assemblyman Dick Gottfried and many more. We have watched all of these politicians push bad development under Bloomberg, and now during the de Blasio years. They don’t understand that things are at a breaking point. And if anything, the “debate” shows how moribund and controlled the tenant “movement” really is when its interests are put aside for the unions. Wright is throwing tenants under the bus for his own ambition. When it’s all over but the dust, we’ll be able to see the support he’ll get from labor groups and labor unions, and the real estate industry. Let’s remind him that not only we can’t breathe, but also we can’t live. John Fisher Director, Tenant.Net Manhattan

61 Broadway, Suite 2235 New York, NY 10006 Editorial (212) 894-5417 General (646) 517-2740 Advertising (212) 894-5422 info@cityandstateny.com

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PUBLISHING Publisher Andrew A. Holt aholt@cityandstateny.com Vice President of Advertising Jim Katocin jkatocin@cityandstateny.com Events Director Jasmin Freeman jfreeman@cityandstateny.com Director of Marketing Samantha Diliberti sdiliberti@cityandstateny.com Business Development Scott Augustine saugustine@cityandstateny.com

EDITORIAL Executive Editor Michael Johnson mjohnson@cityandstateny.com Senior Correspondent Jon Lentz jlentz@cityandstateny.com Web Editor/Reporter Wilder Fleming wfleming@cityandstateny.com Albany Reporter Ashley Hupfl ahupfl@cityandstateny.com Buffalo Reporter Justin Sondel jsondel@cityandstateny.com Staff Reporter Sarina Trangle strangle@cityandstateny.com Editor-at-Large Gerson Borrero gborrero@cityandstateny.com Copy Editor Ryan Somers rsomers@cityandstateny.com

PRODUCTION

city & state — June 15, 2015

Art Director Guillaume Federighi gfederighi@cityandstateny.com

View the interview with Assemblyman Keith Wright at www.cityandstateny.com.

Senior Designer Michelle Yang myang@cityandstateny.com Marketing Graphic Designer Charles Flores cflores@cityandstateny.com

To have your letter to the editor considered for publication, leave a comment at www.cityandstateny.com, tweet us @CityAndStateNY, email editor@cityandstateny.com or write to 61 Broadway, Suite 2825, New York, NY 10006. Letters may be edited for clarity or length.

Web Manager Lydia Eck leck@cityandstateny.com Illustrator Danilo Agutoli

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Reach elected officials Educate NYâ&#x20AC;&#x2122;s most engaged leaders Raise awareness and shape legislation For advertising information, please contact Jim Katocin at 212.284.9714 or JKatocin@CityandStateNY.com

UNDER FORTY

STARS UNDER THE STARS Each year, City & State honors 40 talented individuals under the age of 40 who work in state government, politics, and advocacy. This year’s Rising Stars were honored June 10 at City Beer Hall in Albany.

city & state — June 15, 2015

SHANNON DECELLE

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Assembly Speaker Carl Heastie, consultant Patrick Jenkins, Senate Minority Leader Andrea Stewart-Cousins, state Sens. Kevin Parker and Brad Hoylman, and Assemblyman Walter Mosley were among the notable officials who came out to congratulate this yearâ&#x20AC;&#x2122;s crop of Rising Stars at City Beer Hall in Albany.

cit yandstateny.com

city & state â&#x20AC;&#x201D; June 15, 2015

8 OVER 80 RISEN STARS

ach year, City & State puts the spotlight on up-and-coming talent in politics and government, most recently in the Albany 40 Under 40 Rising Stars list. But what about the more experienced New Yorkers who are still blazing a trail? To honor those dynamic senior citizens, City & State presents its first Eight Over 80 list.

city & state — June 15, 2015

HARRY BELAFONTE

HERMAN FARRELL JR.

WILLIAM LARKIN JR.

LEONARD LITWIN

Activist, Age: 88 Belafonte is known as a singer, but he also has a career as an activist dating back to the civil rights movement. He endorsed Bill de Blasio for mayor in 2013, and as relations between police and AfricanAmericans and other minorities dominate the headlines, Belafonte has continued to be an outspoken proponent of criminal justice reform.

Chairman, Assembly Ways and Means Committee, Age: 83 “Denny” Farrell is an Albany institution, having served in the Assembly since 1974 and as chairman of the Ways and Means Committee since 1994. The upper Manhattan lawmaker, a former county leader and mayoral candidate, kept his high-profile role in the state budget process under the new Assembly speaker, Carl Heastie.

State Senator, Age: 87 Larkin has spent 36 years representing the Hudson Valley, including 11 years in the Assembly and two and a half decades in the state Senate. A veteran of World War II and the Korean War, he has been recognized for his work on behalf of fellow military veterans. The Republican lawmaker now serves as an assistant majority leader in the Senate.

Principal, Glenwood Management Corp., Age: 100 The publicity-shy Litwin has made his presence felt as the largest campaign donor to the re-election bids of Gov. Andrew Cuomo, Attorney General Eric Schneiderman and Thomas DiNapoli. Despite his success as a developer, his firm was recently tied to corruption charges against former legislative leaders Sheldon Silver and Dean Skelos.

ROBERT MORGENTHAU

CHARLES RANGEL

RICHARD RAVITCH

LOUISE SLAUGHTER

Former Manhattan District Attorney, Age: 95 Morgenthau was Manhattan’s district attorney from 1975 to 2009, holding the office longer than anyone else. Now in private practice at Wachtell, Lipton, Rosen & Katz, the nonagenarian chairs the New York City Police Athletic League and regularly pens opinion pieces in the Daily News and other publications.

U.S. Representative, Age: 85 The Democratic congressman has represented Harlem since 1971, making him one of the longest-serving members of Congress. In recent years Rangel faced ethics inquiries and stepped aside as chairman of the House Ways and Means Committee, but he beat back tough challenges the past two election cycles and is poised to retire in 2016 on his own terms.

Former Lieutenant Governor, Age: 81 The title of Ravitch’s autobiography—“So Much to Do: A Full Life of Business, Politics, and Confronting Fiscal Crises”— sums up the life of one of New York’s longserving public servants. In recent years he has been a leading voice raising the alarm about the severe budget challenges facing municipal and state governments.

U.S. Representative, Age: 85 Slaughter is poised to become the oldest member of New York’s congressional delegation, assuming the Rochester Democrat is re-elected in 2016 after a surprisingly close race in 2014. The former chairwoman of the House Rules Committee has made her mark as a trailblazer for women and as a pivotal figure in passing President Barack Obama’s health care reform legislation. cit yandstateny.com

CIT Y

PRAYING FOR POLICE ADS CALL ON DE BLASIO TO PROVIDE NYPD SECURITY AGENTS FOR PAROCHIAL SCHOOLS By SARINA TRANGLE

cit yandstateny.com

The Coalition on School Safety began running these ads in religious publications.

of every community on how we can achieve that together.” Greenfield and City Council Jewish Caucus Chairman Mark Levine note that the bill has more co-sponsors than any other pending measure and that it has made its way into the council’s formal budget request. They say it builds on other services the city already provides for private school pupils, such as transportation to and from class, crossing guards and nurses. The bill has garnered widespread support, according to the lawmakers, because it seeks to provide protection

for all students, regardless of background, at a time when hate crimes are on the rise. Levine said hate crimes targeting Jews were up 29 percent this year, while those targeting Muslims increased from two instances to five. Given the city’s $3 billion projected surplus, the councilmen say the $50 million annual price tag for providing security agents seems viable. And Levine says that figure could be negotiated down, for instance, by limiting the service to schools with a certain number of students. “The hope is that we can work

out some sort of agreement with the administration on the budget before putting it to a vote,” Levine said. “The speaker is listening to members and running an analysis at this point. And I think the mayor and the administration are certainly considering the bill and running an analysis as well.” Despite the bill’s wide support in the council, at least one lawmaker, City Councilman Daniel Dromm, has publicly come out against the measure, arguing that increasing the number of NYPD safety agents in schools actually does more harm than good.

city & state — June 15, 2015

ew York City parochial school leaders aren’t waiting on prayers when it comes to budget requests this year. A $100,000 advertising campaign that began running in the pages of major Jewish and Catholic publications last week urges Mayor Bill de Blasio to finance NYPD security agents for private schools. One ad features a group of children under the banner, “Don’t our children deserve to be safe?” A second features two young boys wearing kippot with the same message. Both promote a bill backed by 46 of 51 City Council members that would allow private schools to request that safety agents be posted on their campuses. City Councilman David Greenfield, who sponsored the bill, says the ad push emerged from some religious groups’ displeasure with the administration’s publicly ambivalent attitude toward the legislation. Several Jewish and Catholic philanthropists financed the advertisements, but a source familiar with the campaign said they wish to remain anonymous. “Especially around ethnic communities and Jewish communities, there has been disappointment that the mayor has not come out in support of this,” Greenfield said. “To move the issue forward, we really need to see the mayor more engaged.” The mayor’s office did not directly respond to a question about whether de Blasio backs the bill. “Protecting all of New York City’s children, regardless of which school they attend, is a mission the NYPD takes on each and every day. And it’s a job the department does exceptionally well,” de Blasio’s spokesman Wiley Norvell said in a statement. “We constantly seek out new ways to deepen that protection, and will gladly continue our dialogue with members

CIT Y AFTER JUDGE SAYS SCHOOL LEADERSHIP MEETINGS ARE OPEN TO ALL, CITY TELLS PRINCIPALS TO BAR THE PUBLIC By PATRICK WALL from CHALKBEAT NEW YORK

ew York City is advising principals that members of the public and the press are not permitted at school leadership meetings while it appeals a recent court ruling that said those meetings must be open to the public. State law requires every city school to have a leadership team composed of the principal, parent association president, teachers union representative, and an equal number of parents and staff members. The teams craft an annual list of goals and strategies for their schools and weigh in on major decisions, like the hiring of new principals and the placement of other schools in their buildings. Manhattan Supreme Court Justice Peter Moulton ruled in April that those teams’ meetings are subject to open meetings laws. In the ruling, the judge said that the parent-educator teams “touch on the core functions of a public school,” which he called a public matter, “not a private concern limited to the families who attend a given public school.” Schools Chancellor Carmen Fariña told principals in an email last week that the city is appealing that decision, which the email said went “against a long-standing NYCDOE policy.” The message adds, “Please note that, at this time, SLT meetings are not open to the general public (i.e., people who are not members of the school community) or the press.” Education Department spokeswoman Devora Kaye said in a statement Wednesday that the city’s appeal “protected school communities.” Subjecting the leadership teams to open meetings laws, she said, “would impede discussions on private schoolbased matters such as personnel issues, individual student progress and school safety plans.” The judge’s decision stemmed from a lawsuit filed last year by a retired cit yandstateny.com

Manhattan teacher who had been blocked from attending a leadership team meeting. Public Advocate Letitia James and the nonprofit Class Size Matters both joined that lawsuit against the city. Their lawyers said Wednesday that they plan to take legal action to make sure the judge’s ruling is enforced while the city appeals it. They also rejected the department’s arguments for limiting access to the school leadership meetings, saying they are not the proper venue for discussing private student matters or safety plans, which are technically the responsibility of mandated school safety committees. The teams could still hold private “executive sessions” if they need to discuss confidential student or personnel issues, they noted. Class Size Matters Executive Director Leonie Haimson said she was “very distressed and disappointed” by the city’s decision to appeal the ruling and by the guidance to principals to close the meetings to the public. “This email really does conflict with a lot of their supposed interest in collaborating with parents and the community and being more transparent,” she said. Haimson disputed the idea that barring the public from school leadership meetings is a “longstanding policy” by pointing to a 2011 Education Department slideshow that says the meetings are open to the public. The department spokeswoman said that part of the presentation was “incorrect” and had been updated. James’ office declined to comment on the city’s decision to appeal. In a separate lawsuit in 2013, a Staten Island teacher sued the city after he was barred from the leadership team meeting at his school. In that case, the judge ruled that the teams are not subject to open meetings rules.

HORSE SENSE By Alan Cumming

As a U.K. native who has spent a lot of my acting career bouncing back and forth between Manhattan and London, I’ve been fascinated and saddened by the debate over New York’s horse-drawn carriages. London issued the last horsedrawn carriage license in 1947, when rebuilding the city after World War II, reasoning that easily skittish large animals don’t mix with the chaos of a modern metropolis (of 1947!!!). Transport officials declared that all taxis “must be wheelchair accessible … and … fitted with anti-lock braking” to ensure public safety, conditions “not capable of being satisfied by a horse drawn carriage.” Horse-drawn carriages can be rented for special occasions in certain parts of London, but they’ve been pulled from traffic, and there are similar restrictions in Paris and Toronto, which banned the trade from the city center in 1998. Last year in Salt Lake City, after a horse dropped dead on the street, the city council voted unanimously to ban horse-drawn carriages completely. This spring, San Juan, the capital of Puerto Rico, outlawed the carriage trade, and just last week, an Indian high court banished the dangerous horse-drawn carriage trade from the streets of Mumbai, India’s most populous city. This decision was made out of concern for both public safety and cruelty to animals. Mayor Bill de Blasio’s initiative to rid Manhattan’s frantic streets of horse-drawn carriages isn’t controversial to anyone who sees this clear global trend toward making cities safer and more humane. Over the past few years, dozens of tragic Midtown accidents involving spooked horses have resulted in critically injured people and dead horses. I urge the New York City Council to vote for Intro 573, the bill sponsored by Council Members Daniel Dromm and Ydanis Rodriguez to retire the horses from the carriage trade and help find work for the drivers in safer modes of transportation or tourism. It’s a matter of public safety and common sense as much as cruelty to animals. Actor and bestselling author Alan Cumming, OBE, has won Tony awards for his performance in Broadway’s Cabaret and currently stars on CBS’ The Good Wife.

city & state — June 15, 2015

THINK AGAIN

STATE

HOPE FOR ‘RAISE THE AGE’ SENATE AND ASSEMBLY MAY BE OPEN TO COMPROMISE By ASHLEY HUPFL

legislative session looms with many controversial issues still remaining on the docket, legislators in both houses said Tuesday that they are open to a compromise on “Raise the Age,” a proposal to up the age of criminal responsibility in New York State. New York is just one of two states that treat all 16- and 17- year-old suspects as adults. In his State of the State address this year, Gov. Andrew Cuomo said he would raise the age of criminal responsibility to 18. Recently, the Assembly’s Raise the Age bill passed through the Rules Committee and will be voted on sometime this next week. “It’s more of a negotiating tool with the Senate. It shows them we

mean business—that we want to pass the bill,” Assemblyman Joe Lentol told City & State. “We’re willing to compromise if we get a Raise the Age bill. We’re not going to compromise so far as to gut a bill, but we’re looking at what they put forward.” State Sen. Jack Martins introduced a new Senate Raise the Age bill on June 1. Lentol said he had not yet read Martins’ version, but hoped it would be a “vehicle on which to compromise” with the Senate. Martins told City & State that Raise the Age should be a priority, but that the details—such as what types of cases would be adjudicated in family court— still need to be negotiated. He also said he remains hopeful the issue will be tackled before the end of session. “It’s the details that matter and

that’s what makes it so difficult,” Martins said. “Thankfully, we have people in the Assembly side who have been reasonable. The governor has been part of these discussions. Frankly,

at the end of the day, reasonable minds will prevail and we’ll reach a consensus because the people want to see a Raise the Age bill that reflects the views of our state.”

PJCROSS/SHUTTERSTOCK

s the end of the state

SEEKING SIMPLICITY

LAWMAKERS PLAN HEARING ON NYC’S CONFOUDING PROPERTY TAXES By JON LENTZ

city & state — June 15, 2015

ith widespread agreement that New

York City’s complex and inconsistent property tax system needs to be overhauled but little movement to do so, state lawmakers are looking to jump-start the process with at least one public hearing in the fall. Assemblyman Dan Quart, a Manhattanite who has introduced a number of bills addressing the city’s property tax code, is behind the push to bring the issue to the forefront after promised reform efforts by the New York City Council and the de Blasio administration fell by the wayside. New York City has a welldocumented history of charging widely varying tax rates depending on where a property is situated, which City & State highlighted in a cover story in

March. New York City’s four property tax classes—residential homes; cooperatives and condominiums; utilities; and commercial buildings— also have very different rates. “There’s a lack of uniformity, there’s a lack of predictability, and the city has accepted that the system needs reform,” Quart told City & State. “They refer to it as comprehensive reform, and I agree with them. That’s why I think it really calls out for a hearing. The state Legislature has an obligation—I believe a responsibility—to have the city come forth and talk about the ways they want to reform the system. A hearing would be the perfect opportunity to do so.” In a letter sent recently to Assemblywoman Sandy Galef,

chairwoman of the Assembly Committee on Real Property Taxation, Quart requested a hearing “to examine the current state of the New York City property tax system and solicit feedback from the New York City Department of Finance and other stakeholders on how to improve the system.” In addition to Quart, 41 Assembly colleagues from New York City have signed on so far. “Property tax reform has been on every mayor’s agenda, and is something we in Albany are constantly trying to effect,” Quart wrote in the letter. “Now that New York City is finally guided by an administration with an interest in addressing critical questions of equity and fairness in our property tax system, it is essential that we ensure the State Legislature is

included in the conversation.” Galef said she expects to hold a hearing or perhaps a roundtable discussion, likely in the early fall. She said her Real Property Taxation Committee has a lot of bills before it deals with New York City property taxes, and that many of her colleagues are anxious to advance them. Although the city hasn’t made property taxes a top priority, Galef said Mayor Bill de Blasio understood the importance of reform. “I had a chance to query the mayor, for just a short question while he was up here, about the taxing policies and I think he is also aware that it is a very big issue,” Galef said. “It’s also a very tough issue when you’re looking at classifications and changing things— there’s a lot of major impacts.” cit yandstateny.com

ALEXIS GRENELL

he federal case against state Sen. Dean Skelos and his son Adam on charges of extortion, bribery and abuse of office seems to be another example of egregious public corruption. But aside from the sordid details of their allegedly wideranging malfeasance, the indictment reveals something equally offensive: hypocrisy. A few months prior to his arrest, Skelos defended a tax credit for yachts and private planes, under the premise of workforce development. The credits would unburden a wealthy few from various luxury taxes to produce jobs in two small sectors. Meanwhile, Senate Republicans refused to raise the minimum wage, a move that would’ve increased the purchasing power of millions of workers and theoretically spurred a demand-pulled expansion of the economy. Skelos wasn’t worried, because according to him, the state already lavishes low- and moderateincome families with the earned income tax credit. The EITC lowers the tax liability of eligible filers, allowing them to keep more of their earnings. In order to even qualify for the EITC, a family with one child must make below $38,511. Anyone earning minimum wage easily makes the cut at $25,480. Nevertheless, in a not-so-subtle reference to the freeloading “Welfare Queen,” Skelos reasoned as follows: “They’re not making just minimum wage. They get a check from the government. They’re not paying taxes. It’s about $1 billion a year that’s going to them above the minimum wage.” First, that $1 billion is distributed among about 1.5 million workers. On average, filers receive a $608 refund, though it can range into the thousands depending on household composition and income. Second, although filers may not pay income tax, the data show that poor families recirculate their savings into the economy, cit yandstateny.com

Alexis Grenell (@grenell on Twitter) is a Democratic communications strategist based in New York. She handles nonprofit and political clients.

New Law Brings Order and Oversight Order and Oversight to Car Wash Industry to Car Wash Industry

PERSPEC TIVES

Our Perspective Our New Perspective Law Brings

By Stuart Appelbaum, President, Retail, Wholesale and Department Store Union, By Stuart Appelbaum, President, RWDSU, UFCW Retail, Wholesale and Department Store Union, RWDSU, UFCW

N N

ew York City’s car wash industry has long operated like it has been doing business in the ew City’s wash industry wildYork west, withcar a history of wage has and long hour operated like it has been doing business the violations and exploiting workers. For years, the in city’s wild west, with a history of wage and hour car washes have handled millions of dollars of violations exploiting workers. For years,ofthe city’s consumer and property annually and disposed car washes have handled millions dollars of with potentially harmful chemicals and of wastewater consumer property annually andadisposed of less government oversight than neighborhood potentially harmful chemicals and wastewater with laundromat. less government oversight than a neighborhood Finally, that’s about to change. laundromat. On Wednesday, June 10, the New York City that’s about to change. Council passed the Car WashFinally, Accountability Act, which for the first time On Wednesday, June 10, theThe Newlaw York City gives the city regulatory power over the car was industry. requires Council passed the Car Wash Accountability Act, which for the first time car washes in NYC to obtain a license to do business, obey environmental gives the city regulatory over the car was industry. The law requires guidelines, and obtain a power bond to protect workers and consumers. car washes in NYC to obtain a license to do business, obey environmental For car wash workers in New York – including the hundreds of guidelines, and obtain a bond tohave protect workers consumers. courageous “carwasheros” who won a unionand voice with the RWDSU Forpast car three wash years workers New York – including hundreds of will over the – itinmarks a historic reform.the The legislation courageous “carwasheros” whothat havetheir wonemployers a union voice thethat RWDSU protect employees by requiring holdwith bonds ensure over the past years it marks a historic reform. legislation they can repaythree workers in–the event of wage and hour The violations, and will it will protect byand requiring their employers hold to bonds that ensure protect employees communities make that workplaces safer thanks environmental they can repay in the of wage and hour violations, and get it will guidelines. Theworkers bonds will alsoevent protect consumers by ensuring they’ll protect communities and make workplaces safer thanks to environmental paid in the event of damages to their vehicles. guidelines. willwashes also protect consumers by ensuring they’ll get UnderThe thebonds law, car with an effective worksite monitoring paid in the event of damages to their vehicles. system to prevent the theft of workers’ wages can purchase a cheaper bond Underwithout the law, carThe washes an them effective worksite monitoring than those one. best with way for to do this is through union system to prevent the theft of workers’ wages can purchase cheaper bond representation. A union provides monitoring and a grievanceaprocedure and than those workers without providing one. The best way for them to do this is through union empowers oversight and protecting them from wage theft. monitoring and atreated grievance procedure and representation. A union With a union in place to provides ensure workers are being – and that wage empowers workers providing oversight and protecting them from wage theft. and hour settlements and fines are unlikely – a cheaper bond makes sense. With a The union in place to ensure arethe being treated – and that wage New York City Council,workers including bill’s sponsor, Council and hour settlements and fines are unlikely – a cheaper bond makes sense. Speaker Melissa Mark-Viverito, are standing up for workers, communities, The New York City Council, bill’s sponsor, Council and consumers in passing the bill.including And, we the thank Mayor de Blasio for Speaker Melissa are standing upindustry. for workers, communities, supporting reformMark-Viverito, of New York City’s car wash and consumers inCouncil passinghearings, the bill. And, we thank Mayor de Blasio for During City car wash workers described their supporting of New York City’s wash industry. experiencesreform of stolen wages and poorcar working conditions, and spoke about During City Council hearings, wash described their the harsh chemicals they work with.car They citedworkers instances where untreated experiencesmay of stolen and poor and spoke about wastewater have wages been allowed to working enter cityconditions, streets and sewers. the harsh chemicals they work with. cited untreated Consumers have also been putThey at risk byinstances the lack ofwhere oversight. wastewater mayregulations have been or allowed enter customers city streetshave and sewers. Without proper suretytobonds, had no means Consumers alsowere beendamaged put at risk the lack of oversight. of recourse if their have vehicles – by or even stolen – while on the Without proper regulations or surety bonds, customers have had no means premises. of recourse if their vehicles – or evenfor stolen – while the Working together withwere Newdamaged York Communities Change andon Make premises. the Road New York, the RWDSU has succeeded in bringing union contracts Working together withCity Newcar York Communities for Change and Make to workers at nine New York washes and proven that low-wage jobs the Road New York, the RWDSU has succeeded in bringing union contracts can be made better. And with the passage of the Car Wash Accountability to at nine New York Cityaction car washes and Act,workers we’ve seen how grassroots like the carproven wash that low-wage jobs can be made better. And with the passage of the Car campaign do more than help workers at unionized Wash Accountability Act, we’veWe seen grassroots action like the facilities. canhow reform an entire industry andcar wash campaign do more than help workers at unionized improve the lives of thousands of workers. facilities. We can reform an entire industry and improve the lives of thousands of workers.

For more information, visit For more information, visit www.rwdsu.org

www.rwdsu.org

city & state — June 15, 2015

SKELOS THE WELFARE QUEEN

and spend their income on repairs, groceries and retail, plus the sales tax that goes with it. Lastly, the federal EITC is considered one of the most successful labor market innovations because it produces an income effect that encourages people to work more. Single mothers and their children benefit the most, experiencing an increase in employment, health and educational outcomes. Incidentally, Senate Republicans are also cool to paid parental leave, another policy proven to increase women’s employment. Paid leave allows parents, mostly mothers, to have a baby without going broke, and return to work. The high retention rate is actually a cost savings for companies. The United States is the last developed economy in the world without such a policy, yet despite proposals from the Independent Democratic Conference and the Assembly there isn’t an “appetite” for it in the Legislature according to Gov. Andrew Cuomo, who initially scoffed at the idea. Both paid leave and the EITC are designed to reward the hard work of honest people, something Skelos and his son know nothing about. At 32 years old, lazy and greedy from a steady diet of nepotism, Adam Skelos eagerly accepted handouts from his father to subsidize his entire livelihood. The U.S. attorney alleges that Adam received a $20,000 payment for title insurance work he did not do. On another occasion, he demanded a bribe from an environmental technology company for work he was unqualified to do (admitting that he “literally knew nothing about water or, you know, any of that stuff,” according to the indictment). Threatening to obstruct a $12 million contract if the company didn’t increase his “compensation,” he allegedly demanded to be paid as much as the engineers actually working on the project. When he couldn’t hack it in the title insurance business on his own, he turned to dad to extort clients for him. In total, Dean Skelos’ entitlement-addicted son allegedly “earned” $200,000 in governmentsubsidized bribery. Together they are accused of engaging in rent-seeking behavior to maximize the benefits of public office for private gain. That’s not work, that’s political welfare.

BUFFALO

FAST FOOD, SLOW CHANGE THE ‘FIGHT FOR $15’ RAGES UPSTATE By SHANE MEYER from THE PUBLIC

city & state — June 15, 2015

HARPER SE BISHOP

he first formal meeting of the state Wage Board, empaneled by the state Labor Department at the request of Gov. Andrew Cuomo, convened June 5 at City Hall in Buffalo. More than 100 individuals—fast food workers, union leaders, economists, lawyers, community advocates and religious leaders—registered to address the board, comprising Mayor Byron Brown, Web entrepreneur Kevin Ryan, and Service Employees International Union Secretary-Treasurer Mike Fishman. By far, the largest and loudest contingent was the fast food workers—a representative slice of the nearly 200,000 such workers across the state, who make about $9 an hour. They said they are unable to rely on a steady supply of hours each week, and that, even when they get full-time hours, the resulting check is insufficient to cover life’s basic necessities. Lauren Schmidt, an employee of Arby’s and a nursing student, told the board that “some weeks I get four hours and some weeks I get 40 hours.” Some of those attending college said that they had seen an entire week’s check spent on one book; others said they’d had to go without books in order to fulfill more pressing needs. Going without medical care (just 13 percent of frontline fast food workers have health insurance, according to one study), decent meals and a personal sense of security were common themes. Crescenzo Scipione, an employee of Burger King who left college after two years because he was unable to meet the costs, said, “I almost never know how I’m going to pay bills until a few days before they’re due.” The testimonies refute the solutions proposed by armchair critics, who like to suggest that fast food workers

Advocates rally for a $15 minimum wage for fast-food workers. The state Wage Board held its first meeting at Buffalo City Hall on the issue. should simply learn a skilled trade or go to college; indeed, many of those testifying said the $15 figure would help them continue their schooling in order to move on to a career and escape the cycle of poverty and debt. Zaire Doyle, an employee of Wendy’s, wept during her testimony, making much of it incomprehensible. At one point she said: “I don’t have anything.” One concern from the mayor stemmed from the imbalance in the

cost of living across the state; he asked whether the $15 figure ought to be higher for fast food employees in New York City. “It should be based on locality,” responded CSEA’s Region 6 President Flo Tripi, while Scott Phillipson, president of SEIU Local 200, cited a study that pegged $15.08 as a “subsistence” wage in Syracuse. In upstate New York, $15 is barely a sufficient wage; downstate, it is insufficient. For now, however,

$15 remains the cry of organized fast food workers across the state and the nation. There is skepticism that the figure represents an achievable goal, and Cuomo has avoided yoking himself to it; instead, he is pushing for $11.50 in the city and $10.50 in the rest of the state. James Parrott with the Fiscal Policy Institute contrasted the general statewide trend of wage stagnation and declination with the robust growth in the fast food sector. He suggested cit yandstateny.com

“Taxpayers subsidize the fast food industry’s subhuman treatment of its employees.” -Tara Melish, director of the Center for Human Rights at the University at Buffalo Law School

has barely moved—increasing 0.3 percent since 2000 (adjusting for inflation). By comparison, earnings for the average fast food CEO have more than quadrupled since 2000 (adjusting for inflation), to an average of $23.8 million in 2013.” Effectively, Parrott added, the current minimum wage functions as a subsidy to large corporations, which push costs (e.g., food stamps, health care, etc.) on to taxpayers, at an estimated cost of $700 million to $900 million per year. Tara Melish, director of the Center for Human Rights at the University at Buffalo Law School, added that 60 percent of fast food workers rely on public assistance: “Taxpayers subsidize the fast food industry’s subhuman treatment of its employees.” Irene Tung of the National Employment Law Project agreed that the rapidly growing profits of the fast food sector have “not been shared (and) wages have declined, factoring in inflation.” She cited a University of Massachusetts study, which found that savings from decreasing turnover—in an industry in which it’s abnormally high—along with cit yandstateny.com

been opposed to the previous hike. “Businesses have not had time to absorb (those) increases.” More boos. The Wage Board’s Fishman asked Loomis to respond to research on a minimum wage increase that found effects for businesses would be negligible. “I’m not here to debate,” Loomis said. “I’m here to share what members’ concerns are.” Taunting, groans and a lone call of “bullshit” reverberated in the cavernous council chamber, prompting a request for quiet from the mayor. After a couple more questions, Loomis stood from his chair, looking shaken and wan, and disappeared into the gallery. The Wage Board will hold another meeting in New York City before making its recommendation to the state’s labor commissioner. “The board’s final recommendation is expected by July,” according to the governor’s press office. “The commissioner will then have 45 days from its receipt to issue an order.” The commissioner’s order does not require the input or consent of the state Legislature.

BUFFALO

a modest price increase (12 cents on the Big Mac) would cover the proposed wage hike “without cutting into profits.” It’s not just a legal, economic and political matter—there is, too, a moral aspect, said the Rev. Kirk Laubenstein of the Coalition for Economic Justice, who remarked that “Moses organized workers in Egypt.” Enter stage left Grant Loomis, vice president of government affairs for the Buffalo Niagara Partnership, to a smattering of boos. “The Chamber of Commerce is opposed” to the proposed increase, he said, remarking that it had also

Support Safe Staffing Ratios, Universal Healthcare Program and Ending Healthcare Disparities NYSNA nurses are strongly supporting the Safe Staffing for Quality Care Act, a bill that would set safe minimum nurse staffing levels in all New York hospitals. This legislation has been supported by the New York State Nurses Association (NYSNA) and other labor, community and patient advocate groups. However, multi-million dollar lobby groups such as the Greater New York Hospital Association (GNYHA) and the Healthcare Association of New York State (HANYS) have strongly opposed this legislation. NYSNA calls for the immediate passage of the New York Health Act, which would create a statewide universal healthcare program. It would provide comprehensive health coverage for all New Yorkers with full choices of doctors and other providers. The program would be publicly funded based on ability to pay and would eliminate the “local share” of Medicaid, saving local governments billions of dollars. Since 2004, several states have pursued legislation addressing safe-staffing concerns in nursing. As of last December, many states have either enacted legislation or adopted regulations addressing nurse staffing ratios. Seven states have required hospitals to have staffing committees responsible for plans and staffing policy (CT, IL, NV, OH, OR, TX, WA). However, California is the only state that stipulates that a required minimum nurse-topatient ratio to be maintained at all times by unit. While some critics of safer staffing ratios claim that mandatory nurse-to-patient ratios burden hospitals with higher operational costs, research shows that safe staffing is, actually, more cost-effective. Safe staffing improves nurse performance and patient-mortality rates, reduces turnover rates, staffing costs and liability.

Listen to New York nurses tell their stories: “Right now, in our state, nurses in some facilities are being forced to care for 10, 15, even 20 patients at once. That’s dangerous! Lives are placed in jeopardy when there are not enough nurses at the bedside,” said Judy Sheridan-Gonzalez, a registered nurse at Montefiore Medical Center and NYSNA President. “That’s why we’re fighting for safe staffing ratios in all of our hospitals. We have no choice -- our patients’ lives depend on it!”

“Putting lives at risk by forcing nurses to take care of additional patients to increase the bottom line is not appropriate,” said Julisa Saud, an RN at Elmhurst Hospital in New York City. “Standards of care are needed, and that’s why I support the Safe Staffing for Quality Care Act. It is legislation that will save lives and allow New Yorkers to hold hospitals accountable for the care they provide.” “The staffing problem in our hospitals has gotten worse lately,” said Kathy Santoiemma, an RN who works at Montefiore Medical Center’s New Rochelle Hospital. “The hospital practice of understaffing is almost a daily problem for us and it must be addressed.” “There’s a public health crisis rooted in the costs of insurance. That’s why state lawmakers need to pass New York Health, for the sake of our patients, their families and communities across the state,” said Marva Wade, a RN at Mount Sinai Hospital in New York City and a member of NYSNA’s Board of Directors. “Because of the rising cost of health insurance and rising copayments and deductibles, growing numbers of New Yorkers are prevented from receiving needed health care. We must put in place a healthcare system that gives priority to patient need.” “Our patients deserve a nurse at their bedside to care to their healthcare needs, and right now… there just aren’t enough nurses to provide the care that they so desperately need,” said Michael Healy, a 13-year critical care ICU RN at St. Charles Hospital on Long Island. “New York state needs a safe staffing law that will ensure that all hospitals – from Buffalo to Brooklyn – have safe nurse-to-patient ratios that not only will protect us, but will protect our patients.” “In study after study, unsafe staffing levels lead to worse health outcomes, including shock, cardiac arrest, and hospital-acquired pneumonia,” said Martha Wilcox, an RN at Sullivan County Public Health. “We know that a safe and reliable healthcare system of the future cannot be created unless we empower our frontline providers of care, and give them what they need to get the job done. We need hospital management to take safe staffing seriously.”

city & state — June 15, 2015

that—given the limited number of chains in operation, and the uniformity of wage price across the sector— the balance had tipped too far in the industry’s favor. Fast food chains— either by collusion or circumstance— have rigged the labor market to their advantage. Sam Magavern, co-director of the Partnership for the Public Good, told the board that the fast food sector was the “most unequal” of any sector in terms of pay for executives and pay for frontline employees. A fact sheet from the governor’s office notes that “the minimum wage for fast food workers across the nation

NY’s Largest Nurses Union Asks Albany to Push for Support on Vital Healthcare Issues Affecting NY Patients

Why no one wants to take a closer look By Sarina Trangle

city & state — June 15, 2015

ith three weeks left in the state legislative session, New York City Mayor Bill de Blasio convened Real Estate Board of New York Chairman Rob Speyer, Association for a Better New York Chairman Bill Rudin and other business leaders in City Hall. He beckoned the head of the Partnership for New York City, a consortium of corporate executives, and the former CEO of Time Warner up to a podium

to make the case for his continued control of the city’s public schools. The speeches subsided. The mayor’s face reddened as the Blue Room began to buzz with questions about what alliances were shaping the future governance of city schools: Did he have any leverage with the Republican-led state Senate? Had business executives called the governor and pressured him on this? Wasn’t it a reflection of the GOP’s disdain for the downstate

progressive? The mayor fielded one question about what academic indicators or other barometers led him to deem mayoral control a success—or at least an improvement over the decentralized school system it replaced in 2002, in which a Board of Education composed of two mayoral appointees and five borough president picks made pedagogical choices and managed high schools while local school boards

oversaw administrative and budget moves for elementary and middle schools. De Blasio mentioned that test scores had risen. He described his universal prekindergarten rollout as evidence that education initiatives could be rapidly implemented. But mostly, de Blasio said mayoral control has helped the city dodge the pitfalls that dogged the decentralized system. “It’s very fair in public policy, sometimes, to say you know when cit yandstateny.com

ROB BENNETT FOR THE OFFICE OF MAYOR BILL DE BLASIO / EDWARD REED / SPENCER T. TUCKER / UNITED FEDERATION OF TEACHERS PHOTO COLLECTION, TAMIMENT LIBRARY, ROBERT F. WAGNER LABOR ARCHIVES, NYU

MAYORAL CONTROL

something is working because it’s not the other thing. The other thing did not work,” de Blasio said. “We had corruption. We had nepotism. We had an extraordinary inability to move reform. We’re not going back.” Academic performance was not discussed much more when city Schools Chancellor Carmen Fariña and the mayor traveled to Albany to request that the Legislature and Democratic Gov. Andrew Cuomo permanently renew mayoral control. State Sen. John Flanagan, then the chairman of the Education Committee, asked whether Fariña sought any adjustments to the system’s structure. A few legislators posed similar queries to the mayor. And state Sen. Simcha Felder of Brooklyn said he would keep his remarks brief because his committee was going to hold a hearing on the matter. Felder’s hearing never happened. Rather, politicians simply extolled the model’s clear line of accountability. The GOP-led state Senate backed a bill continuing mayoral control for one year, while the Democrat-dominated Assembly ditched its initial call for seven more years in favor of Cuomo’s proposed three-year extension. But when it comes to accountability, legislators and city officials do not appear to be too concerned with evaluating how successful schools may be in terms of the emerging research on mayoral control. It is as if they view mayoral control as inevitable. “You can never guarantee anything in life, but we will have mayoral control next year and the year after and the year after that,” said state Sen. Andrew Lanza, a Republican from Staten Island. “At what interval are we going to review and revisit the efficacy of whatever system is in place? I wont speak to that, but we are going to have mayoral control. … It’s the best chance we have to ensure that there is accountability and transparency.” Despite his push for permanent control of the school system, de Blasio’s inequality-vanquishing, citizen-steered progressive agenda does not inherently mesh with mayoral control. Although New York City schools improved in many ways under mayoral control and the stewardship of Mayor Michael Bloomberg, the achievement gap did not retreat. And it is unclear whether de Blasio can expect it to—national research suggests that achievement tends to rise in executive-led districts, but the distance between their poorest and cit yandstateny.com

best-performing schools does, too. De Blasio can argue mayoral control replaced a system stewing with corruption and patronage, yet critics argue malfeasance continues, just concentrated in the hands of a cadre of consultants and executives rather than community school boards. Parents are clamoring for more influence. And polls suggest the black and Latino base de Blasio depends on has not yet forgotten what inspired the push for community control of schools during the civil rights movement. But when de Blasio and his peers see only two options—maintaining mayoral control or returning to what he described as “the bad old days”—there appears to be little pressure to undertake a more rigorous review.

GAPS PERSIST

eneath a towering image of Martin Luther King Jr. at the Urban League’s January 2003 symposium, Bloomberg outlined his education vision at the Schomburg Center for Research in Black Culture in Harlem. He noted that more than three-quarters of the elementary and middle school students enrolled in the Central and West Harlem district could not read, write or do math at grade level. Bloomberg then pledged to liberate youth from the consequences of a failed education system. “The right to a quality education is just as much a God-given and American right as the right to vote or be treated equally,” he said. “This movement to fix our public school system is another link on the civil rights railroad to equality.” Academic experts say schools advanced under Bloomberg. But no evidence suggests the achievement gap narrowed between black and Latino students and their white and Asian peers. National studies show mayoral control can be effective in improving education. However, it may also widen disparities between the poorest and highest-performing schools. Any demographic divergence is relevant in New York City, where the public school body is 68 percent black and Latino—and it is particularly pertinent for de Blasio, who was propelled into City Hall in part by minority support. Under Bloomberg, the city’s average scores improved on all Trial Urban District Assessments, a national exam often considered the best measure of educational progress because it is given to randomly selected

MATH GRADE 4 City

Average Score 2003

Average Score 2013

Change in Average Score

District of Columbia

205

229

Atlanta

216

233

Boston

220

237

Chicago

214

231

San Diego

226

241

Los Angeles

216

228

New York City

226

236

Houston

227

236

Charlotte

242

247

Cleveland

215

216

MATH GRADE 8 City Atlanta

Average Score 2003 244

Average Score 2013 267

Change in Average Score 23

Boston

262

283

Los Angeles

245

264

District of Columbia

243

260

Houston

264

280

Chicago

254

269

San Diego

264

277

Charlotte

279

289

New York City

266

274

Cleveland

253

READING GRADE 4 City

Average Score 2003

Average Score 2013

Change in Average Score

District of Columbia

188

206

Atlanta

197

214

Los Angeles

194

205

San Diego

208

218

Boston

206

214

Chicago

198

206

New York City

210

216

Houston

207

208

Cleveland

195

190

-5

READING GRADE 8 City

Average Score 2003

Average Score 2013

Change in Average Score

Los Angeles

234

250

Atlanta

240

255

San Diego

250

260

District of Columbia

239

245

Houston

246

252

Boston

252

257

Chicago

248

253

Charlotte

262

266

New York City

252

256

Cleveland

240

239

-1

city & state — June 15, 2015

SOURCE: NATIONAL CENTER FOR EDUCATION STATISTICS

NAEP TEST SCORE CHANGES (2003-2013)

NEW YORK CIT Y HAS SEEN ITS NATIONAL TEST SCORES IMPROVE, BUT IT L AGS BEHIND OTHER MA JOR U.S. CITIES.

to 66 percent by 2013. The rate rose another 2.4 percent to 68.4 percent in de Blasio’s first year. Still, some have questioned the quality of a city public school diploma, particularly after the City University of New York noted that 77.6 percent of its community college pupils matriculating from public schools required remediation in reading, writing or math in fall 2013. State statistics confirm this concern. In 2014, 26 percent of public school pupils graduated within four years and scored high enough to have met “aspirational performance measures,” a term the state uses to indicate students are prepared for college or careers. That proportion jumped to 55 percent for Asian students and 43 percent for white students, but dropped to 16 percent for black students and 14 percent for Latino students. Disparities persist when studying national and state exam scores. Comparing how much progress the city’s black and Latino students made on the national TUDA tests with gains made by their counterparts in other urban districts between 2003 and 2013 shows New York City beat out other districts by a statistically significant amount only four out of 80 times. And those gains—blacks’ progress on fourth- and eighth-grade reading and math—only surpassed two districts also under the purview of their mayor: Cleveland and Washington, D.C. Although Bloomberg and de Blasio have attempted to grapple with New York City’s education inequities, recent research suggests mayoral control may

DECENTRALIZED DISARRAY

s counsel to the Board of Education in the 1990s, David Bloomfield said he watched Rudy Giuliani use the board to pave the way for a comeback from his 1989 mayoral loss to David Dinkins. The Staten Island borough president appointed Giuliani’s old campaign manager, Michael Petrides, to the board. And Petrides proceeded to get other borough president appointees— Carol Gresser from Queens, Irene Impellizzeri from Brooklyn, and Ninfa Segarra from the Bronx—to align with him. This gave the so-called gang of four the numbers needed to vote down Dinkins’ three nominees—one as borough president and two as mayor— and doom his policy priorities. Not that the talk tended to focus on education policy, according to Bloomfield, now a professor of education leadership, law and policy at Brooklyn College and the CUNY Graduate Center. Petrides’ tactics appealed to more conservative board members, Bloomfield said, such as approaching the Brooklyn representative, a white Catholic, and attacking the Dinkins administration’s policy of handing out condoms in schools. Petrides also built support by criticizing a curriculum meant to teach tolerance that contained books with lesbian and gay

JOSEPH MEHLING ‘69

city & state — June 15, 2015

students and has remained relatively stable over the years. The city’s progress, however, looks uninspiring when compared with the nine other city districts that have been taking the tests since 2003. All of the cities except Cleveland saw their average eighthgrade reading and math scores rise more than New York City’s between 2003 and 2013. Every district except Cleveland and Houston had more growth on their average fourth-grade reading score. And all but Cleveland, Houston and Charlotte posted larger increases on their average fourth-grade math score during that period. Mayors controlled at least half of those urban districts for all or part of the decade in question, according to a Center for American Progress report. New York City’s relative mediocrity does not amount to a convincing argument for or against mayoral control, according to Norm Fruchter, principal associate at the Annenberg Institute for School Reform at Brown University. “We have very small gains, and a number of districts have much more significant gains,” said Fruchter, whom de Blasio appointed to the New York City Panel for Educational Policy. “Aside from a rise in graduation rates—which I think is less than the previous regime has trumpeted, but it is still real—I think the system has not moved significantly under mayoral control.” Bloomberg made a production of announcing annual spurts in fouryear graduation rates, which went from 46.5 percent of pupils in 2005

don’t want to talk about these places that never moved away from mayoral control going back into the early 20th century because they are not happy success stories.”

SOURCE: NEW YORK STATE EDUCATION DEPARTMENT

In addition to graduation rates, New York City uses Aspirational Performance Measures to assess college readiness in math and English language arts. In 2014, the percentage of students meeting the thresholds varied widely by race.

not be the best route to reducing rifts in the school system. Kenneth Wong, chairman of Brown University’s education policy, and Francis Shen, an associate professor at the University of Minnesota Law School, have studied mayoral control over the past two decades and determined it can improve academic achievement and encourage strategic allocation of resources. But in their 2013 Center for American Progress report, they found mayoral control appears “ineffective” in narrowing the achievement gap between schools in the highest and lowest 25th percentiles. What’s more, Columbia University Teachers College education policy chairman Jeffrey Henig said Wong and Shen found evidence that mayoral control is associated with an expansion of the divide between the worst- and best-performing schools. They hypothesized this may occur when mayors face competition from suburban districts and private schools, and consequently prioritize investing in high-performing schools to prevent a “brain drain.” “The story, I would say, is complicated and mixed,” Henig said. “Governance systems alone don’t have the kinds of impacts that people imagine.” He believes the transition to mayoral control may be effective because it tends to be accompanied by various officials, unions, charter school organizations and other constituencies lining up behind one agenda. “They want to talk about New York, they want to talk about Chicago, they want to talk about Boston,” he said. “They don’t want to talk about Trenton; they don’t want to talk about Yonkers; they

Rudy Giuliani was able to stage a political comeback through the Board of Ed. in 1989. cit yandstateny.com

cit yandstateny.com

The city Independent Budget Office reported funds committed to the city Department of Education went from $18.76 million to $24.24 million under mayoral control, with all figures adjusted to reflect the 2014 value of a dollar.

tion. Schools were perpetually underfunded because the mayor was responsible for the education budget but had no operational control over it, Bloomfield said. Executives were reluctant to surrender money to boards beleaguered by patronage and corruption. Board members, in turn, blamed City Hall, saying they could not improve schools with such slim budgets. The situation was so dire in 1990 that Dinkins got the United Federation of Teachers to defer money from teachers’ paychecks and agreed to pay it back with interest. In exchange, the union won extra vacation days, which are now permanently on the calendar as mid-winter recess. Education funding increased with Bloomberg at the helm of schools. The city Independent Budget Office reported funds committed to the city Department of Education went from $18.76 million in 2002 to $24.24 million in 2014, with all figures adjusted to reflect the 2014 value of a dollar. During that period, the city took on a larger share of the department’s budget, committing 45.4 percent to the state’s 43.6 percent in 2002, and 57.2 percent to the state’s 35.2 percent in 2014, according to the IBO. Critics, however, say the budget’s growth has not been accompanied by

an increase in measures to curb corruption. The Panel for Educational Policy is not subject to all of the city procurement policies that apply to other agencies because it remains fundamentally a state entity. When the Legislature renewed Bloomberg’s control over schools in 2009, lawmakers added a provision requiring the city Department of Education to subject contracts costing $1 million or more annually to a PEP vote. The move came after an audit by the state comptroller found that the city awarded $342.5 million in non-competitively bid contracts between 2005 and 2008. Nearly 60 percent of these agreements listed start dates prior to the committee meetings during which they were approved. The comptroller’s team said that in several circumstances, education officials were unable to provide the costprice analyses that must be prepared to prove that not putting a contract out for bid was fiscally prudent. Some advocates, such as Leonie Haimson, executive director of Class Size Matters, said the mayor’s PEP majority rubber-stamps contracts and has failed to filter out wrongdoing and waste. “Corruption on the school boards did exist … but it’s Little League corruption compared to the Major League corruption,” she said. “I’ve seen hundreds of millions of dollars

literally thrown down the drain.” Shortly after the new rules were enacted in 2009, the PEP authorized a $54 million, four-year contract extension with Future Technology Associates, an arrangement that had been questioned in the press. Two years later, the special commissioner of investigation for city schools announced that the co-owner of Future Technology Associates and a department financial division executive had bilked the Department of Education out of $6.5 million. The PEP has approved deals with businesses previously found to have fleeced city schools, too. This February, the department proposed a contract with Custom Computer Specialists for up to nine years that could have cost up to $1.14 billion. The tech firm was named in a 2011 report by the special investigator that determined a consultant skimmed $3.6 million from the department by using pass-through companies to mask the fact that he hired five consultants employed by his private business. As part of the arrangement, Verizon agreed to subcontract with Custom Computer Specialists in order to receive a multimillion-dollar contract with the department. This time around, the Department of Education encountered backlash after the PEP vote, rescinded

city & state — June 15, 2015

SOURCE: NEW YORK CITY INDEPENDENT BUDGET OFFICE

characters. “If you Google ‘Heather has Two Mommies,’ you’re going to see article after article about how David Dinkins was going to foist lesbianism on our children,” Bloomfield said. “This guy (Petrides) proceeded to make trouble so that the board fell into disarray, benefitting Giuliani. Next time, he (Giuliani) could say, ‘Look at the Board of Ed. It’s in disarray.’ ” Before the current incarnation of mayoral control, the seven-member Board of Education selected a chancellor, set policy, oversaw high schools and signed off on fiscal and capital plans. Roughly 30 neighborhood school boards, staffed with elected members, hired superintendents, played a role in administrative picks and approved budgets for primary and middle schools. But many say Board of Education factions stalled policy moves and that limited oversight of community school boards invited patronage and embezzlement. When the state granted Bloomberg control of the schools in 2002, he assumed the power to install a majority of the members of the Board of Education—which he renamed the Panel for Educational Policy—and to appoint a chancellor. Community education councils with predominately advisory roles replaced the school boards. Under this centralized system, few question whether the mayor has the muscle to test out his ideas and back them up with funding. The latitude community school boards used to enjoy did prove problematic. For instance, William Rogers, the superintendent of Williamsburg and Greenpoint schools for nearly 20 years, schemed to deliver some $6 million in government funding to a girls yeshiva by creating nearly 60 no-show jobs, according to The New York Times. The ploy helped Rogers earn support from three Hasidic members of the local school board and, consequently, cling to his position in a district divided by ethnic loyalties. Political affiliation became a prerequisite for administrative positions in some districts, where voter turnout was so low political clubs could dominate school boards and select loyal principals. Dueling Democratic clubs doled out administrative positions in School District 10, The Riverdale Press reported in 1986. The Bronx newspaper also reported that 25 of 48 principals and assistant principals appointed between 1982 and 1986 had an affiliation with one of the clubs or was related to a politician. The mismanagement also created hurdles at the central Board of Educa-

THE PARENTAL PARTICIPATION PROBLEM

hen the Rev. C. Herbert Oliver moved with his family from Birmingham to New York City in 1966, his youngest son went from taking math courses three grade levels above his own to flunking the subject. Oliver sought help from his child’s homeroom teacher, and said the instructor reported the boy was doing “great.” Convinced that the problem was a lack of minority educators concerned about

black students, Oliver joined those campaigning for community control of schools. Mounting pressure led then-Mayor John Lindsay and the city Board of Education to authorize an “experiment” in Ocean Hill-Brownsville, a Brooklyn neighborhood where residents elected a board headed by Oliver to run the local schools. Attendance at parent-teacher association meetings mushroomed from two or three adults to hundreds, according to Oliver. He said the Brooklyn district instituted a more Afro-centric curriculum, which UFT boss Albert Shanker opposed. When Ocean Hill-Brownsville teachers did not embrace the changes, Oliver said several were sent

to the central Department of Education office for reassignment. Shanker railed against the move and characterized it as anti-Semitic because many of the reassigned teachers were Jewish. The union contended the district had violated educators’ due process rights. And Shanker spurred the teachers union to strike in September 1968. Schools were paralyzed until midNovember, when the state education commissioner assumed control of the Brooklyn district and reinstated the original staff. With tensions still seething, Oliver attended a school board meeting and was arrested. “I had never been arrested before in my life, not even down in Birmingham. But here I was put in a paddy wagon

When parents assumed more control in Ocean Hill-Brownsville during the civil rights movement, it ultimately led to a strike by the teachers union, paralyzing the schools.

city & state — June 15, 2015

by a black man,” Oliver said. “It still lingers in the mind for many. But we do not see the improvements that we had tried to make.” Parents across the socioeconomic spectrum have remained vocal about their discontent with how infrequently community feedback guides Department of Education decisions. Historically, polls show that mayoral control has rarely received the backing of a large majority of New Yorkers. Blacks and Latinos have consistently expressed more dissatisfaction with it in polls. And while the de Blasio administration has stressed its commitment to collaborating with parents, some observers say the system of mayoral control can give communities only so much input before it devolves into something else entirely. Centralized authority is a tough sell for many parents, who are envious of their counterparts across the country who can elect representatives to school boards, Class Size Matters’ Haimson said. Because New York City parents lack this ability, Haimson argued they should have that right funneled through their City Council representative—and the Council should be permitted to set education policy. “The City Council can make laws and policy when it comes to police, when it comes to housing, when it comes to all sorts of different areas, but not when it comes to schools,” she said. “Do we want kings? Do we say kings and autocrats and dictators are more accountable? It’s an argument that makes no sense.” The criticism is not isolated. Quinnipiac University released a poll this month showing 48 percent of city residents thought mayoral control should continue, while 44 percent thought it should end. The breakdown did not come with demographic specifics. But Quinnipiac’s prior polls demonstrated stronger opposition to the centralized structure among blacks and Latinos. When asked in July 2007, 35 percent of whites, 19 percent of blacks and 26 percent of Hispanics indicated they believed Bloomberg’s successor should have complete control of schools. Nearly five years later, 22 percent of whites, 20 percent of blacks and 26 percent of Hispanics agreed. Despite that 2012 poll showing stronger support among Hispanics, the National Institute for Latino Policy President Angelo Falcón said a recent poll of those who subscribe to an NILP publication indicated just 21.6 percent believe the mayor should remain at the helm of city schools. The sentiment cit yandstateny.com

UNITED FEDERATION OF TEACHERS PHOTO COLLECTION, TAMIMENT LIBRARY/ROBERT F. WAGNER LABOR ARCHIVES, NYU

the agreement and said it would issue new requests for proposals.

control structure for one year and provide Albany with more oversight of the city Department of Education budget. Even Democratic Assemblyman Charles Barron, one of the more independent-minded lawmakers in his chamber, did not suggest a substitute for the system. Rather, he submitted a bill that would empanel a commission and give it a year to study and craft a new school governance system for implementation in September 2016. The Legislature proceeded without such a commission, a public hearing or any acknowledgement that research was inconclusive on mayoral control’s impact on academics, financial efficiency and community support. Rather, Democrats lined up behind Cuomo’s proposal to extend the arrangement another three years. And Republicans, who once wrestled Democrats into delivering control of schools to Bloomberg, signed on to a one-year extension. Legisla-

tors were quick to say the importance of education trumped partisan politics. But they were equally eager to tiptoe around questions about why they sought the authority to revisit mayoral control while not exercising that review power to discuss potential reforms. For now, legislators seem comfortable clinging to mayoral control as a buffer between them and constituents’ concerns. Multiple state lawmakers said they were convinced voters cared enough about education to oust any mayor who failed the city’s students. But they were not confident enough to commit to permanently granting City Hall control over schools. And some, including GOP state Sen. Martin Golden, said too many parents feel relatively powerless when it comes to their children’s education. But when asked if he had suggestions for improving parent involvement, Golden said that’s for de Blasio to decide: “That’s why we gave him mayoral control.”

A series of Quinnipiac polls between 2007 and 2013 asked voters whether then-Mayor Michael Bloomberg’s successor should retain complete control of public schools, share control with an independent school board or give up control.

cit yandstateny.com

that’s what we changed in 2002.” This argument resonated with Bertha Lewis, president of The Black Institute, who described Albany’s strategy of requiring periodic renewal of mayoral control as “racist” because she contends it destabilizes a system that educates mostly minority children. Lewis prefers mayoral control because she says it provides her and other advocates with a “clear target.” Debates aside, there have been few alternatives for school governance put forward. After a series of public forums in each of the five boroughs over the past year, New York City Public Advocate Letitia James suggested the PEP expand to 17 members, and the mayor’s share of appointees drop to seven. She also called for the community education councils to be endowed with approval power over co-locations, school closures and new campus locations within their districts. Her plan did not gain traction in the Capitol. In Albany, state Senate Independent Democratic Conference Leader Jeffrey Klein unveiled a five-year extension plan that would add two members to the PEP, mandate that one representative be a charter school parent and require a community education council for every community board. His chamber ultimately backed a bill that would extend the current mayoral

Bloomberg’s Schools Chancellor Dennis Walcott (top) and current Chancellor Carmen Fariña.

city & state — June 15, 2015

that drove some Latino communities to push for community control of schools decades ago lingers, since 41 percent of the public school body is Latino, but Latinos constitute about 14 percent of teaching staff, according to Falcón. He said de Blasio did not appoint any Latinos to the PEP until pressured to do so. “The so-called progressive mayor, who is supposedly representing grass roots in these communities, just basically took a top-down approach in asking for permanent control without any real discussion,” Falcón said. “I just find a tremendous disconnect between what the mayor is proposing and what the public wants.” Fariña and her predecessor, Bloomberg’s Schools Chancellor Dennis Walcott, said the Department of Education was diligent about discussing education with parents. Walcott said the earlier, decentralized school system failed to fully engage parents, noting that for several years school board members were elected by 3 percent or less of eligible voters. “People, in a very sad way, voiced their displeasure with the old system by not participating at all and walked away from it because they didn’t know who was responsible,” Walcott said. “They didn’t know who was accountable. And the performance wasn’t there. And again, that should not be, and

HEALTH CARE

ARMAN DZIDZOVIC

city & state â&#x20AC;&#x201D; June 15, 2015

ew Yorkers may not realize this, but they live in a state where more money is spent on health care per resident than pretty much anywhere else in the world. Total spending on health care is only matched or exceeded in a few other places in the United States. By 2020, the industry could reach $300 billion when factoring in all money spent, according to some reports. The commitment to investing in health care has led to the emergence of world-class hospitals that earn constant praise, a vast network of facilities and a legion of nurses and doctors. Despite the vast wealth invested, the medical field is finding itself forced to pinch pennies and make the system more efficient, while also making sure it serves more people and serves them better. The struggles to achieve this were discussed at length with pre-eminent industry leaders at the Future of Health Care forum on May 27 hosted by City & State at the BNY Mellon building at 101 Barclay St. in Manhattan. Health and Hospitals Corporation President and CEO Dr. Ramanathan Raju discussed his ambitious goals to increase the number of patients served. A panel including state Medicaid Director Jason Helgerson discussed the next steps for the Medicaid Redesign Team. New York City Health and Mental Hygiene Commissioner Dr. Mary Travis Bassett spoke about bridging the inequality gap, and newly confirmed state Health Commissioner Dr. Howard Zucker outlined his priorities for the job and discussed some of the tough decisions made in the past year, including on the implementation of medical marijuana and the ban on hydrofracking. The event was sponsored by NMI Health, Maimonides Medical Center, MetroPlus Health Plan, Manatt, Parker Jewish Institute and the Hebrew Home at Riverdale. cit yandstateny.com

HEALTH CARE

A TOUGH SELL

HHC CEO PLANS TO INCREASE REVENUE THROUGH BETTER SERVICE By MICHAEL GARETH JOHNSON

Dr. Ramanathan Raju, president and CEO of the New York City Health and Hospitals Corporation.

he New York City Health and Hospitals Corporation has a projected budget gap of $618 million for the next fiscal year. Independent analysis by the Citizens Budget Commission suggests that will grow to $1.5 billion by 2019. You’d think that dire-sounding picture would have Dr. Ramanathan Raju, president and CEO of HHC, depressed. But speaking at City & State’s Future of Health Care forum, Raju was upbeat about his plan to turn around the financial situation, which hinges on an agencywide improvement of services, allowing the corporation to compete with private hospitals for more patients. “I can lament about how bad it is or I can keep crying and nothing is going to happen,” Raju said.

But Raju has instead chosen to focus his efforts on making the hospital experience better so that more patients come through their doors. This plan has been met with criticism, specifically in the City Council, but Raju points to his previous job at Cook County Health and Hospitals System in Chicago as a guide of how setting optimistic goals can help turn a facility’s deficit into a surplus. “We need to give our employees a goal, a vision, a direction, and to move towards that,” Raju said. “I hope we all get there.” The goal that Raju has laid out is to have HHC facilities treat 1 in 4 New Yorkers by the year 2020. Right now the system provides services to about 1 in 6 city residents.

One of the reasons for this positive vision was the passage of the Affordable Care Act. Raju said the ACA has opened the door for many more Americans to get access to health insurance, which has in turn created a more competitive market for hospitals. It has also created an opportunity for HHC. “The ACA actually opened up a lot of opportunities for us. One is our MetroPlus (health plan) that allows us to compete on the exchange level. The health plan gives us an opportunity to get more patients in the system.” Raju said he would like to see enrollment in the MetroPlus health plan increase from just under 500,000 members to 625,000 by next year— with a goal of reaching 1 million insured by 2020.

Informed. Focused. Effective. Manatt, Phelps & Phillips, llp

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ARMAN DZIDZOVIC

city & state — June 15, 2015

Manatt is proud to be a part of the city and state of New York: as government advisors, as neighbors, as citizens.

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ARMAN DZIDZOVIC

we need to recapture public health’s commitment to childhood. And we need to focus on the vast inequality in health by neighborhoods. As a public health doctor I don’t see health as simply an outcome of health care services. Health is a much broader social outcome than that.

Dr. Mary Travis Bassett is commissioner of the city Department of Health and Mental Hygiene.

here are few people with as much experience in the New York City health community as Dr. Mary Travis Bassett. Appointed commissioner in 2014, she has more than a decade of experience working for the Department of Health and Mental Hygiene, helping to improve access to quality care in the city’s underserved neighborhoods. At City & State’s recent Future of Health Care forum she talked about how she is continuing that effort by focusing on children and—working closely with other city agencies—taking a more holistic approachto the city’s health problems. Below is an edited transcript of the conversation she had with City & State Executive Editor Michael Johnson. City & State: How is the department tackling the issue of social justice? Mary Travis Bassett: When New Yorkers picked Bill de Blasio to be mayor we all elevated the conversation about income inequality on a national level and began talking about the ways in which the divisions in our city were making all of us pay a price. For me as health commissioner this means talking about the vast differences in health outcomes and survival itself by neighborhood. I think I, and many of us here, would agree that it is unjust that (residents of) Brownsville (in Brooklyn) have a life expectancy that is 11 years shorter than in Murray Hill (in Manhattan). I start out by putting a focus on children, our youngest and most vulnerable New Yorkers, and talking about ways

C&S: Approaching the problem neighborhood by neighborhood can be seen as divisive. How do you respond to that charge? MTB: New York City is a very segregated city. This is something I say based on the data, obviously in public health but really all the work we do in city government, we have to begin with the data. By numbers of measures New York is among the most racially segregated (cities) in the United States. And by the measure of income inequality New York is more unequal than other cities in the nation. This is something we have to confront. The fact that we can go neighborhood by neighborhood is because we are a segregated city. And the fact that we need to raise up some neighborhoods should not be taken as we want to push down others. We want every neighborhood in this city to be a healthy neighborhood.

The plan of choice for nearly half a million New Yorkers. MetroPlus Health Plan is a proud sponsor of the City & State Future of Healthcare forum.

C&S: The de Blasio administration has been actively tackling homelessness through multiple agencies, including the Health Department. What specifically is your department doing? MTB: Eighteen hundred babies are born in shelters each year, so recently in our new budget—the executive budget contains funding for a newborn home visiting program. Our agency has conducted these for years in East and Central Harlem, the Bronx and central Brooklyn and we are adding to that a newborn home visiting program that specifically targets shelters. We use it to ensure that that mom is connected to services. That they know certain facts about sleeping, having the child in a safe environment, and I think it is a way that we will make sure these kids in very difficult circumstances get all the benefits they are entitled to.

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HEALTH CARE

A Q&A WITH DR. MARY TRAVIS BASSETT

6/8/15 4:43 PM

city & state — June 15, 2015

A BROADER VIEW OF HEALTH

HEALTH CARE

THE DOCTOR IS IN A Q&A WITH DR. HOWARD ZUCKER

Dr. Howard Zucker is the state health commissioner.

r. Howard Zucker was confirmed by the state Senate as the health commissioner last month after overseeing several major decisions as acting commissioner. At City & State’s Future

C&S: But some lawmakers want to allow access earlier on an emergency basis, for children with severe epilepsy or people with lifethreatening illnesses. HZ: One has to look at these things from a standpoint of two parts. One is obviously the clinical component to this, to do whatever we can to help people who may benefit from this. There is also a legal component to this. The last thing that we would want to have happen is that this program

were slowed down because of some challenge that occurred either legally or any other fashion. What we are doing is moving as quickly as possible to implement it, to make sure as many people who could benefit will. C&S: The state recently finalized its review of hydrofracking with input from your department, paving the way for a ban. Does it address hydrofracking waste? HZ: The whole focus here is obviously for the safety of those who are in New York. We will continue to look at whatever needs to be done to ensure that anyone in any community where there is any risk would be taken care of. When the governor charged the department with what we felt was the right recommendation, that was the center point and it will always be the center point for us.

Your Center for Customized Health Care

city & state — June 15, 2015

City & State: Is there any area you’d like to focus on? Howard Zucker: There are some things that I really do want to focus on. One of them is the issue of aging. We all recognize how much this is a focus in health care today. As of 2009, there were about 13 million Americans who were over 65, and by 2030 there will be 19 million Americans that are over the age of 65. We need to look at this from the standpoint of health care. And it’s not like they are 65 and they only have five or 10 years to live. We have people who are 95 or 100 years of age and are vibrant, and others who require a lot of assistance. So we’re going to tackle that.

C&S: Medical marijuana was enacted when you were acting commissioner. Will the program be up and running by 2016? HZ: Absolutely. The governor has asked us to get this moving as fast as we can. We are on target to move this forward and have it operational by the beginning of the next calendar year.

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of Health Care event, Zucker spoke with Senior Correspondent Jon Lentz about the state’s aging population, medical marijuana and hydrofracking.

HEALTH CARE

WEDNESDAY, MAY 2 7TH

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city & state — June 15, 2015

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here is little disagreement that New York is taking steps in the right direction with its ambitious initiative to improve health care, reduce unnecessary hospital visits and shift payments to reward actual results instead of volume of medical services. But even though the state has already achieved substantial cost savings since launching the initiative through the formation of the Medicaid Redesign Team in 2011, there is still plenty to do—and major question marks and issues to be worked out. “It’s going to be a bumpy ride, there’s no question about that,” said Jason Helgerson, the state Medicaid director. “What it’s going to mean is there is going to be consolidation, there’s going to have to be closure of certain services, and those services are going to have to be replaced with other services that better meet the needs of the community.” Helgerson, who spoke at City & State’s Future of Health Care in New York conference Wednesday morning, noted that the state has already cut costs since he launched the MRT process four years ago, recently bringing perrecipient Medicaid spending back to 2003 levels. As a result, New York secured a Medicaid waiver from the federal government that will allow some of the savings to be used to promote a statelevel shift to value-based payments.

Driving the initiative is the $6.4 billion Delivery System Reform Incentive Payment program, which rewards health care providers for improved care. New York officially launched its DSRIP program in April, and awards will be announced shortly for Performing Provider Systems, the groups of hospitals, doctors, health centers and others that have banded together to cut costs. The state’s goal is for 80 to 90 percent of Medicaid payments to be value-based arrangements by the end of the fiveyear DSRIP period, and for reforms to ultimately expand beyond the public sector. “We need to start reimbursing providers when they collectively are successful,” Helgerson said. “The problem with the majority of how health care is paid for today is that the more you do, the more you get paid, whether or not the patient got better, whether or not there were good outcomes, whether the service was effective or not. Really very little of our total payment in health care is actually tied to performance, and we need to change that.” Yet there are a number of unanswered questions surrounding the process, from defining “value” to dealing with the financial risks of failing to meet performance goals in a new era of accountability. The chance to take advantage of shared savings or grants aimed at cit yandstateny.com

HEALTH CARE Jason Helgerson, the state Medicaid director, said that reforming the payment system for medical care is essential, even if the transition will be difficult.

cit yandstateny.com

city & state — June 15, 2015

the definitions will be across the entire health care system. As insurers and others define quality differently, a doctor or hospital dealing with multiple plans might have a hodgepodge of goals to meet and keep track of. Helgerson said that uniformity versus flexibility is one of “the most challenging tradeoffs that we’re dealing with.” The argument for uniformity is that having a single system is appealing to health clinics dealing with a wide array of insurance companies. More flexibility, however, allows larger or more sophisticated providers to tailor their plans to their own needs. What’s more, different communities have different needs, bolstering the case for flexibility. Federally qualified health centers, as a group, are trying to develop a standardized approach to value-based payment, and others could follow suit. In New York, the current plan is to offer a menu of choices that people can pick from. “We’re trying to set the right balance between those two very reasonable perspectives,” Helgerson said. “I think at the end of the day, and in certain settings, we’re going to end up with more uniformity.”

ARMAN DZIDZOVIC

spurring reform is welcomed by many in the health care industry, but some observers say providers are wary of agreeing to get paid less if they fail to control costs or improve care. Helgerson said the next step is to spur the wholesale adoption of valuebased payments. Initially, a PPS can keep about half of the money it saves through various reforms. Later, it could choose to accept greater risk— such as losing payments if it fails to meet benchmarks—but enjoy greater potential rewards, perhaps up to 90 percent of future cost savings. “You have the risk associated with if you don’t perform, so we don’t want people to get there too quickly,” Helgerson said. “But I suspect that once people begin to make the investments in the strategies, they begin to change how they’re behaving and the way they’re treating patients, and the way they’re addressing population health, that they will want to get from level one to level two pretty quickly, because they won’t want to see savings generated by their efforts going out of their institutions, out of their provider groupings.” Another question is how quality care will be defined, and how uniform

SPOTLIGHT: INSURANCE

city & state — June 15, 2015

nsurance engulfs almost every aspect of a New Yorker’s life. Cars, homes, your own health all have to be insured now— or you face fines. And then there are other things that must be insured that you probably don’t think much about: the bus you take to work, the company you work for, the building you work in, or the restaurant where you grab lunch. It is hard to find a place in our daily lives where insurance isn’t a factor. On top of that, there is practically no industry as dependent on the laws laid out by city and state government than insurance. Pretty much every aspect is regulated, and while it is not nearly as sexy as many of the other issues debated each year, lawmakers’ decisions on insurance have an underlying impact on the cost of everything. In our Insurance Spotlight section we look at issues that are hot topics in the news right now. The ongoing debate over reforming the state’s Scaffold Law has stalled in the Legislature in past years, but with the turnover in leadership we take a look at whether its chances of passing have changed. We also tackle the issue of title insurance, which protects against financial loss from defects in a title on property; New York is one of the last states to require agents be licensed in the field following legislation passed this year, and we look at how implementation of the regulations are progressing. And we also single out some of the favorites to replace outgoing Department of Financial Services Superintendent Benjamin Lawsky—the state’s top watchdog on the insurance industry.

CONTENTS: 32... The likelihood of Scaffold Law reforms after Silver’s fall By Justin Sondel

34...

How far will reforms to the title insurance industry go? By Wilder Fleming

36...

Meet some of the potential replacements for Benjamin Lawsky at DFS By Jon Lentz

cit yandstateny.com

INSURANCE

THE SCAFFOLD LAW AFTER SILVER’S FALL By JUSTIN SONDEL

cit yandstateny.com

Gallivan said he has seen no indications that his reform bill—or anybody else’s—is on the leadership’s radar during a busy end of session. “This, unfortunately, has not appeared on any of the leaders’ priority lists,” Gallivan said. The battle over the law has seen interests line up on opposite sides to argue their case. Insurance companies, which have to pay out any time a worker falls, regardless of the employee’s actions, and developers, who have to pay for the insurance, want to see the law amended to give workers some responsibility for their own safety. They argue that the law makes construction work too expensive, dissuading some builders from doing business in the state, and can encourage recklessness on job sites. Several of the bills proposed, including Gallivan’s, suggest splitting liability between the insurer and the employee. Gallivan has a strong ally in the

Assembly on his bill, with Majority Leader Joseph Morelle sponsoring a sister bill in his chamber. On the other side of the argument are the workers, unions, trial attorneys groups and trade councils who say the law is the only thing protecting workers. They assert that workers take the greatest amount of risk without seeing any of the profits reaped from construction sites by the developers and insurers. They, too, have allies in the Legislature, among them Democratic Assemblyman Francisco Moya of Queens. Moya says that the law doesn’t punish responsible construction companies, but rather ensures that less scrupulous contractors follow the rules. He has sponsored a bill several years in a row that would require insurance companies to disclose financial data associated with claims related to the Scaffold Law. Moya said that the numbers the

Observers say Scaffold Law reforms are unlikely to pass before the end of the session.

insurance companies have produced are incomplete and don’t shed light on how premiums are calculated. He says a more complete data set should be discussed before any changes are made to the law. “Before we can talk about reform, repeal, anything along those lines, we need to get to the very heart of it,” Moya said. Gallivan views the opposition’s push for specific data on Scaffold Law claims as a “distraction” from the central issue. “I don’t know anywhere in our system where we require private business to release information that may or may not be proprietary,” Gallivan said. But Moya maintains that the data is necessary to fully assess the true cost of the Scaffold Law. He says that without the data, there can’t be an informed discussion on the effects the Scaffold Law is having on New York construction contracts. “Until then I don’t know why we’re even having this discussion,” he said. Moya would not speculate on whether he felt there was any chance reform laws would come up this session, but did say he felt momentum shifting toward his side. In any case, Scaffold Law reform may not grab the attention of leadership before session ends next week, but it’s clear that the debate is far from over. “I think we’re going to continue to fight until we get the answers we’re asking for,” Moya said. Gallivan, too, sees the debate as heating up again in the near future. “I think everybody should have an interest in talking about it,” Gallivan said. “I’ll continue to talk about it and I hope that we make progress at some point.”

city & state — June 15, 2015

LISA S./SHUTTERSTOCK

hile the battle over the state’s controversial Scaffold Law has been in a stalemate for years, a new landscape is emerging in the Legislature. Both chambers have new leadership, and the fall of Assemblyman Sheldon Silver, who resigned as speaker this year after being indicted on corruption charges, makes for a particularly interesting twist. It was no secret in Albany that Silver was one of the biggest advocates for the trial lawyers, who have been some of the fiercest opponents to reforming the Scaffold Law. In addition, Silver had long worked at a law firm that represented injured construction workers, and the firm reaped huge profits from those cases. He repeatedly killed Scaffold Law reform bills during his tenure as speaker. But with Silver effectively out of the picture, advocates on both sides wonder what that could mean for the contentious law. State Sen. Patrick Gallivan, a Western New York Republican who has sponsored a Scaffold Law reform bill four years running, could not say how receptive Silver’s replacement, new Assembly Speaker Carl Heastie, might be to his bill or Scaffold Law reform in general, though he did say the change in leadership made him optimistic. “There’s a new leader who seems open to the input of others,” Gallivan said. The 130-year-old law—which holds property owners and contractors liable if construction workers are injured in a fall—has not been listed as a priority by any of the major players in the rush toward the end of the session, making any bill dealing with the matter a long shot in the final weeks of the legislative calendar.

INSURANCE

JAMES SEWARD Chairman, State Senate Insurance Committee

city & state — June 15, 2015

CS: What are some insurancerelated issues that need to be addressed due to the rollout of the Affordable Care Act in New York? JS: The word “affordable” may be in the title of the federal insurance program, but that is a bit of a misnomer. I have concentrated my efforts on ensuring that health care is truly affordable for small businesses and individuals through several key initiatives. The governor’s 2015-16 budget proposed a health insurance exchange tax of $68.5 million—a hit people just cannot afford to take. I led the charge to ensure this tax assessment was soundly rejected and not part of the final state budget. Moving forward, the question remains, who will fund the exchange? By definition the exchange is supposed to be self-sustaining not supplemented by higher taxes. With federal funding expiring this year, we will need to stay vigilant and make sure the promise of affordable health coverage is a promise that is kept. Small businesses that self-insure are faced with an even bigger dilemma. When the 2013-14 state budget sought to conform the New York law to the federal ACA, one provision expanded the definition of “small group” from the current law, which is two to 50 employees to two to 100 employees beginning Jan. 1, 2016. Since 1993, self-insured groups of 51 or more employees have been able to purchase what is known as stop-loss coverage. Unfortunately, beginning next year, the expanded definition of “small group” will take this popular, cost-effective option off of the table for many who need it the most. It is estimated that at least 1,500 mid-sized businesses (about 12 percent of businesses in New York with 51100 employees) as well as 80 school districts and municipalities in the state currently self-insure their health benefit plans and will be adversely affected should a legislative fix not be enacted. In many cases, people will

lose benefits or be forced to pay a great deal more to receive lesser coverage. Small businesses in particular face significant financial challenges in providing quality health benefits to their employees. I have legislation (Senate bill 2366) which has passed in the Senate to address this problem and would allow small businesses and municipalities who wish to continue to self-insure to be able to do so. I have been in talks with the assembly and DFS on this issue and am hopeful that a final solution is near. CS: What are your thoughts on state Senate Health Committee Chairman Kemp Hannon’s bill that would add pregnancy to the list of “qualifying events” that allow individuals to purchase health insurance outside of the enrollment period? Do you believe it will be passed before the end of session? JS: I am advancing similar legislation (Senate bill 5686-A) which both Senator Hannon and Senator (Liz) Krueger (who had introduced a similar bill) have signed on to as cosponsors. My bill will allow a pregnant individual, upon certification of a health care practitioner, to enroll in any health plan at any time, regardless of the open enrollment period on the exchange or any other restrictions in seeking coverage off the exchange. This legislation is on the fast track and I believe it will be passed before the end of session. This important initiative protects and promotes the health and well-being of pregnant women and their newborns, and in doing so, offers preventative care which will provide long-term cost savings to the state’s health care system. CS: Assemblyman Kevin Cahill introduced legislation this year to allow ride-sharing services outside of New York City. Do you foresee an expansion of ride-sharing services in upstate New York within the next year? JS: There are a number of economic and environmental benefits to ridesharing and other offshoots of the so-called sharing economy and I want to help bring these budding ideas to upstate New York. After working with people on all sides of the issue, I just advanced my legislation (Senate bill 4108) out of the insurance committee. My bill amends the New York State Insurance Law to define transportation network companies and establish relative insurance provisions and requirements to help allow this innovative new transportation option to be made available upstate.

KEVIN CAHILL Chairman, Assembly Insurance Committee CS: What are some insurancerelated issues that need to be addressed due to the rollout of the Affordable Care Act in New York? KC: The Affordable Care Act, and New York’s strict adherence to its provisions, had the unintended consequence of freezing the coverage and delivery of health care in an outdated model. Due to the Essential Health Benefit Cap, we have effectively stalled the progress of health care in the name of saving a few dollars. My hope is that we can find a mechanism to deal with modernizing benefits through a cost-effective means so that policyholders get the coverage they need when they need it most. CS: What are your thoughts on the recently introduced bills that would add pregnancy to the list of “qualifying events” that allow individuals to purchase health insurance outside of the enrollment period? Do you believe the measure will be passed before the end of session? KC: I fully support Assemblywoman Aravella Simotas’ bill (A7836) that would provide instant coverage for pregnant mothers, and I am confident in the Assembly and Senate to arrive at satisfactory means by which this important measure will be advanced. CS: You introduced legislation this year to allow ride-sharing services outside of New York City. Do you foresee an expansion of ridesharing services in upstate New York within the next year? KC: Ride- and car-sharing services— transportation network companies— are undoubtedly the way of the future, as many other states and New York City have already shown. There are, however, substantial social, economic and other tangential issues that need to be worked out before we adopt these businesses wholesale in New York.

CS: Federal flood insurance rates have risen, hurting many New Yorkers in Long Island and elsewhere. Is there anything the state is doing to help give them relief? KC: Coastal homeowners are hurting because they are hard-pressed to find adequate and affordable coverage for their residences. It is my hope that the state can continue to work with private carriers to ensure the stability and expansion of the market so that consumers can be provided with real choices going forward. We are also continuing our appeal to the federal government to reconsider exorbitant, unaffordable rates and treat New Yorkers like those in other parts of the country have been treated after their natural disasters. CS: Anything else you’d like to add? KC: The Assembly fought hard during this budget cycle to ensure that the Hospital Excess Liability Pool was extended in its current form for another year. It was imperative for doctors to continue to have access to additional layers of affordable medical liability protection in order to deliver the highest quantity and quality of health services to every New Yorker. That is why we championed provisions to safeguard medical malpractice insurers against unworkable riskbased capital requirements, while we opposed measures that would have attached inappropriate and extraneous tax conditions to physicians being able to secure this vital coverage. Further, we heeded the concerns of the everyday, financially strapped consumer by successfully keeping costs necessary to run the New York State of Health from being tacked on to premiums and ultimately being passed down to policyholders by funding the marketplace with state dollars. After budget, we focused again on policies designed to address coverage gaps and the skyrocketing cost of auto insurance, unacceptable limitations for individuals in need of prosthetic devices, and consumer awareness and protection in the event of natural and man-made disasters. We acted on industry concerns relating to more aptly defining what it means to do business within the state to prevent future lawsuits, by allowing new blanket accident and group policies to be offered to more groups, and other provisions that would modernize the sector as a whole. I look forward to many of these policies being turned into law, as well as addressing the issues that next year’s legislative session will bring. cit yandstateny.com

LIFE INSURER CONTRIBUTIONS TO NEW YORK AND THE NATION The Life Insurance Council of New York, Inc. (LICONY) is the principal voice speaking on behalf of the life insurance industry in New York. Here are just some of the facts and figures that detail the contributions the industry has made to the economy of New York and the nation: LIFE INSURANCE COMPANIES IN NEW YORK  Curr ent ly , ther e are 13 5 l ife ins urer s li ce ns ed to do bus ine ss in N ew Yor k S tate . Of t hat , 80 are comp an ie s wi th th eir h o me off ic e s i n Ne w Y ork and 55 are co mpa nie s th at are d omi ci led i n o ther s tat es an d li cen sed t o do bu s ine ss here .  T here were a ppro xi mat el y 30, 990 Ne w Yo rk res id ent s who were e mp loy ed d ire ctl y by lif e in sura nce co mpan ie s in 20 13. Ap prox im ate ly 4 3,10 0 Ne w Yor k r es ide nt s are li cen sed to s el l lif e ins ura nce in N ew Yor k.  T he lif e in sur anc e in du st ry gen erat es t hou san ds of add iti ona l jo bs b y th e g ood s and se rv ice s it pu rc has es or lea se s from o ther bu sin es se s in the sta te, su ch as la w, ac co unt ing , ac tuar ia l a nd co ns ult in g fir ms, comp ute rs an d bu si nes s mach in es , furn itu re an d equ ipme nt , prin ti ng and del iv ery s erv ic es , off ic e sup pl ies , cl ean in g, mai nt enan ce , r epa ir, s ec uri ty serv ic es and oth er ne eds . LIFE INSURER INVESTMENTS IN THE NEW YORK ECONOMY  In 201 3, l ife ins ura nce comp an ie s in ves ted ap pr oxi mat el y $409 b il lio n of th eir a ss ets i n Ne w Y ork ’s e con o my.  Of th at, t he la rge st pr o port ion , $33 5 bi ll ion , wa s inv es ted i n st oc ks a nd bond s th at he lpe d f in an c e sta te and mu ni ci pal infr as truc t ure, ut il it ies , pub li c an d priv ate con stru ct io n, gen erat in g t hou san ds of job s an d inn umer abl e ser vi ces in Ne w Y ork .  Lif e i ns urer s pr ov ide d $ 31 bi ll ion i n m ortg age l oan s on f arm, resi den ti al an d c omm erc ia l pr oper ti es and o wne d $ 1 bil li on in r eal pr oper ty in N ew Yo rk. NEW YORK STATE RESIDENTS COVERED  Ne w Y ork re si den ts o wn ed 8 mi ll ion ind iv idu al l i fe ins uran ce p ol ic ie s in 20 13, w it h co vera ge av erag ing $188 ,00 0 per p ol ic yho lde r.  Ind iv idu a l li fe in sur anc e c over age pur ch ase d in 201 3 to ta led $133 b il lio n.  In 2 013 , Ne w Yor k r es ide n ts had $2 .2 tri ll ion i n l if e ins uran ce pro te cti on .  Grou p li fe i nsur an ce c ov erage a mou nte d to $67 3 bi ll ion in N ew Yor k S tat e in 20 13.

BENEFITS TO NEW YORK POLICYHOLDERS  In 201 3, N ew Yor ker s r ece iv ed ap pro xim ate ly $3 5 b il li on from l ife ins urer s in t he for m of dea th be nef it s, matur ed en do wme nt s, po li cy di vi den ds, surr end er va lue s, and an nu ity p ay men ts, t he sec ond h ig hes t of a n y sta te in the n ati on. INVESTMENTS IN THE COMMUNITY  As r esp on sib le c orp orat e c it ize ns , li fe i nsur ers h ave proa cti ve ly inv es ted i n l ow an d mod erat e - i nc ome hou sin g in u nder ser ve d area s a nd a cti vi ti es th at pro vid e bene fi t to our loc al c om muni ti es . A nu mber o f o ur comp an ie s h ave d ed ica te d comm un ity inv es tme nt progr ams t hat u nder ta ke si gn ifi ca nt in ve stm ent s i n affor dab le h ou sin g, s upp orti ng com mun it y de vel op ment ent iti es a nd en gag in g i n dir ect char it abl e gi vi ng to ini ti ati ve s t hro ugh out Ne w Y ork a nd th e U. S. LIFE INSURANCE IN THE NATION  Wi th $5 .6 tr il li on in ve ste d in th e U. S. e con omy , lif e ins urer s are o ne of t he lar ges t sour ce s of i nv es tmen t cap ita l in the n at ion :  Lif e in surer s pro vi de be nef it pa yme nt s in ex ce ss of $544 b il li on ea ch year i n t he U ni ted St ate s, he l pin g fami li es g uara nte e lo ng - t erm fi nan ci al s ec urit y —n ow an d in ret irem en t.  T he li fe i ns uran ce i ndu s try’ s ret ire men t s ec uri ty and fin anc ia l pro tec ti on pro d uct s co v er 7 5 m i ll ion A meri can fami li es .  Lif e i ns urer s ar e t he lar ge st sour ce of bo nd fi nan ci n g for corp orat e Am eri ca, ho ld in g 20 % of a ll U .S . corp orat e bo nd s.

How much does the life insurance industry contribute to the economy of New York and the nation?

We are proud to say: It’s a lot.

Life Insurance Council of New York, Inc. 551 Fifth Avenue, New York NY 10176

David J. Walsh President & Chief Executive Officer Amalgamated Life Insurance Company Chairman, LICONY Board of Directors

Thomas E. Workman President & Chief Executive Officer Life Insurance Council of New York, Inc.

INSURANCE

TITLE TEMPTATION

REFORMS ARE COMING TO THE TITLE INSURANCE INDUSTRY, BUT HOW FAR WILL THEY GO?

city & state — June 15, 2015

t isn’t just big banks that have had to clean up their act as a result of a crusade by the state Department of Financial Services over the past several years. The insurance industry has also had to contend with enhanced scrutiny and new rules and regulations. For the title insurance industry in particular, this has meant a slew of changes, some of which have yet to be finalized. It’s been widely acknowledged that the price of title insurance, which you have to get when you buy or refinance your home, is often over-inflated. In 2004, then-Attorney General Eliot Spitzer opened an investigation into the industry, and found that rates in New York were among the highest in the nation. Yet while some actions were taken in the early 2000s against individual companies to reduce their rates, it was not until last year that the DFS, which Gov. Andrew Cuomo created in 2011 by merging the state insurance and banking departments, began to take comprehensive action to reform the industry. “The broader DFS investigation across the industry began in 2012,” spokesman Matt Anderson said. “This area was a focus well before 2014.” Title insurance amounts to a onetime fee for homebuyers and lenders, who are in turn protected should ownership of the property ever come under dispute. In most cases, title insurance is purchased from an agent who has been referred by someone else involved in the homebuying transaction—a loan officer, say. It’s a cozy system in which shopping around for lower prices isn’t common. According to the governor’s office, it has been commonplace in the industry for companies and agents to spend lavishly on food, entertainment and travel as an inducement for business—and to pass those costs along to the consumer. Need for

DFS plans to ban lavish spending in the title industry that hikes rates for homeowners. reform was further highlighted by the corruption case against former state Senate Majority Leader Dean Skelos and his son, Adam, who stands accused of receiving tens of thousands of dollars from a title company in exchange for no work. Last year, DFS for the first time began requiring that title insurance agents meet certain standards, register with the state and undergo regular training for a new licensing process. But the latest proposed reforms, socalled anti-inducement regulations, were rolled out at the end of April and seek to ban the activities that the state sees as having led to the inflated premiums in the first place. “Our investigation uncovered that title insurance companies paid for lavish meals and entertainment on the dime of consumers, which inflated premiums,” said state Financial Superintendent Benjamin Lawsky in an April 29 press release. “These new reforms will help significantly reduce costs for homeowners by trimming the fat and making sure that New Yorkers get what they pay for in the title insurance industry.” According to the proposed rules, which have yet to be finalized, title

insurance companies and agents and their associates will no longer be allowed to “offer or make, directly or indirectly, any rebate, or pay or give any consideration or valuable thing as an inducement for title insurance business. This prohibition shall include payment of any consideration or valuable thing targeted to current or prospective customers.” An extensive list of banned items and actions includes “meals,” “entertainment,” “travel,” “parties,” “sponsorships,” “gifts” and so forth. The rules would also place caps on so-called ancillary charges—fees associated with searches and services performed in addition to the standard background check into a property’s history. The governor claims that when enacted, the rule will reduce title insurance costs by up to 20 percent for homebuyers and up to 65 percent for those seeking to refinance their homes. Costs vary, but as an example, title insurance on a $300,000 home in New York City with a $240,000 mortgage in 2011 would have cost a little over $1,100. The title insurance industry, understandably, is none too pleased

with the proposal. “The way it’s currently drafted, there is no distinction between a normal business expense, like a business lunch or sponsoring a Little League team, and what would be an illegal inducement,” said Robert Treuber, executive director of the New York State Land Title Association. “Holiday parties are prohibited. It doesn’t matter if it’s just you and a couple of employees or you’ve rented out a ballroom. So there is obviously a lack of definition and detail in there.” DFS is soliciting public comments on its proposal through June 22. While this input is not currently open to scrutiny, Treuber says opposition from the industry has been “broad.” “That goes for the independent contractor, closers, title agents, underwriters, real estate attorneys across the board,” Treuber said. “There has been a large volume of comments to the DFS, although I can’t quantify it. And I think they have received a lot of comments pointing out the deficiencies in the regulations.” Still, Treuber says his organization has been meeting with DFS officials in person and that they maintain a respectful relationship. “I feel pretty confident, based on our year-plus of working with people in the DFS, that they value the Land Trust Association as an honest broker,” Treuber said. On May 12, the DFS announced the newly approved title insurance rates for mortgage refinancing transactions. “These lower title insurance rates will provide real, significant savings to homeowners in New York,” Lawsky said at the time. “We are pleased the title insurance industry is doing the right thing here and appreciate their cooperation with us to cut these rates. Moving forward, it is critical that we continue our efforts to clean up the title insurance industry and protect consumers.” cit yandstateny.com

SEAN LOCKE PHOTOGRAPHY/SHUTTERSTOCK

By WILDER FLEMING

BRIEF: Building on the successful feedback received following our special State of NY Veterans issue from July 2014, City&State will publish the second annual print & digital publication dedicated to NY’s veterans and active service members. This issue will feature special coverage on policy issues affecting NY’s vets and service members, higher education opportunities, programs for vets, and more! State of NY Veterans will launch at a special afternoon event highlighting career, education opportunities, and special services, offered to Veterans. Top government officials will discuss what New York City and New York State government are doing for veterans and veteran-owned businesses. The day will be rounded out with an Award Ceremony honoring 10 Above & Beyond, outstanding Veterans & Military service members.

PRINT FEATURES

Publishing: July 30th , 2015 Deadline: July 24th • • •

Profiles of 10 Above & Beyond honorees Roundtable with relevant New York government officials on veteran/military affairs Spotlight on Colleges & Universities with Veteran & Military Initiatives

EVENT FEATURES

July 30th , 2015 Pace University, New York, NY • •

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Career, job and services fair for organizations with veteran programs Outdoor BBQ featuring live music, food and drink and remarks from prominent elected oﬃcials Award Ceremony to honor our 10 Above & Beyond honorees

Promote your organization’s veteran programs and incentives to New York’s elected oﬃcials and power players.

INSURANCE

AFTER LAWSKY

WHO’S THE NEXT SUPERINTENDENT OF FINANCIAL SERVICES? By JON LENTZ

enjamin Lawsky has set the bar high. Named New York’s first state superintendent of financial services in 2011, Lawksy was tasked with overseeing a new agency formed through the merger of the state insurance and banking departments. In his four years heading the newly created Department of Financial Services, he quickly raised its profile—and his own. Lawsky moved aggressively on a number of fronts, from mortgage servicing and money laundering to cybersecurity and insurance companies’ response to Superstorm Sandy. Most notably, he secured a string of bank fines and settlements that have added more than $6 billion to the state’s coffers. With Lawsky set to step down this month, his successor will be watched closely to see how he or she measures up. But before that can happen, the Cuomo administration will have to pick the next superintendent. Sources in the administration say there have been over a dozen applicants, and they don’t expect to hire anyone for at least another couple months, choosing to let the agency’s No. 2 Anthony Albanese take over temporarily. Here’s a closer look at several of the names that have been floated as candidates.

JONATHAN SCHWARTZ

HECTOR GONZALEZ

Acting principal deputy assistant attorney general and chief of staff, U.S. Department of Justice, Criminal Division

MICHELE HIRSHMAN

city & state — June 15, 2015

MARSHALL MILLER

BRIDGET HEALY

Like Lawsky, Schwartz spent several years as a federal prosecutor in the U.S. Attorney’s Office for the Southern District in Manhattan. Schwartz, who finished first in his class at Stanford Law School, also clerked for U.S. Supreme Court Justice Thurgood Marshall and at the U.S. Court of Appeals. The Long Island native held senior positions in the U.S. Justice Department as well, under Attorney General Janet Reno and Deputy Attorney General Eric Holder. Unlike Lawsky, and more than some other potential replacements, he would also come into the role with substantial private-sector experience. Schwartz, who is in his early 50s, has held high-ranking roles at Cablevision Systems, JPMorgan’s investment bank, Time Warner and Napster. He currently oversees federal, state and local government relations as general counsel and executive vice president at Univision Communications Inc., a media empire headquartered in New York City and headlined by the popular Spanish-language Univision networks.

Gonzalez has prosecutorial experience as the former chief of the narcotics unit in the U.S. Attorney’s Office for the Southern District, an office that was also a stepping stone for Lawsky and several other potential successors. He graduated from the University of Pennsylvania Law School in 1988. Gonzalez now is a partner at Dechert LLP, where he specializes in white-collar criminal defense and often represents clients facing charges under the Foreign Corrupt Practices Act and the Racketeer Influenced and Corrupt Organizations Act, or RICO. Among the many clients he has represented are Bank of New York Mellon, Fannie Mae’s former chief risk officer and a Big Four accounting firm. Gonzalez has also had a hand in local issues. He chaired the New York City Civilian Complaint Review Board from 2002 to 2006, and in 2012 was appointed a special master overseeing claims in a discrimination case against the New York City Fire Department over its hiring exams.

Hirshman served as New York’s first deputy attorney general under Eliot Spitzer, a position she held for eight years. Spitzer, an aggressive prosecutor to whom Lawsky is sometimes compared, made national news for his investigations into securities analysts and big banks, and Hirshman played a big role as his No. 2. When Spitzer was elected governor and took office in 2007, she left for the private sector, becoming a partner at Paul, Weiss. She now specializes in white-collar defense, regulatory enforcement and internal investigations, and her clients include pharmaceutical companies, banks and corporate executives—and Spitzer himself. Like Lawsky—and several other candidates—Hirshman served in the U.S. Attorney’s Office for the Southern District, spending 11 years as deputy chief appellate attorney and chief of the general crimes and public corruption units.

Executive vice president and chief legal officer, ING U.S.

DAVID MEISTER

Partner, Skadden, Arps Former enforcement director, U.S. Commodity Futures Trading Commission

cit yandstateny.com

NICOLE GELINAS

ewer police officers and firefighters want the same disability benefits that their older colleagues and predecessors get—and Gov. Andrew Cuomo wants the mayor to cave in to their request. The governor’s way will be expensive—$400 million over five years, the mayor says. No matter what the city and state do, though, it’s going to cost us all a lot, because it’s increasingly hard to get out of the pension mess we’ve created over the decades. Some background: Back in 2009,

then-Gov. David Paterson inherited a budget disaster—precipitated by the 2008 financial meltdown, but caused by governors from both parties giving away more in pension promises than their successors could afford. To fix a tiny portion of the problem, Paterson enacted a pension reform that pared back New York City cops’ and firefighters’ disability benefits. Instead of getting 75 percent of their final-year salaries, plus Social Security, new firefighters get 50 percent of their average salary over the previous five years. They also have to deduct half their Social Security benefit from that pension. Since the city didn’t hire any new firefighters between 2008 and 2012, nobody cared much. But with the economy doing well again, with a governor who is done with the budget-reform phase of his tenure, and with a new mayor who has been free with the taxpayers’ money, the unions figure it’s a good time to win the old benefits back. De Blasio is pushing a cheaper compromise. No matter who “wins”, though, the city won’t emerge fiscally unscathed. Even with this modest reform, the city already can’t afford its police and fire pensions. The proof? We’re not affording

them. The city will spend $1.1 billion this year on firefighter pensions, getting close to the $1.6 billion we’ll spend on salaries for current firefighters. We’ll spend $2.5 billion on police pensions, more than half what we spend on staff. Still, though, our police and fire pension funds had an $18.3 billion shortfall as of last year. That means, even if the city were to stop giving out new benefits altogether, we can’t afford what we’ve already promised. It’s hard for the city to make up for that shortfall; last year, the two pension funds took in $3.3 billion in contributions from taxpayers—and sent out $3.9 billion to retirees and their survivors. Further proof is in the Paterson reform itself. The only reason a liberal government would slash benefits for new workers in such a draconian fashion is because we cannot pay what we’ve already promised to older workers and retirees. It is immoral to leave a truly disabled firefighter or cop without a middle-class income—but the city simply cannot afford to be moral and fair. With the average firefighter making a $107,734 salary and then retiring on three-quarters of that for life starting in his late 40s or early 50s—with free health care, too—we have given

away too much already. (And as my colleague E.J. McMahon points out, most firefighters were retiring on disability even before 9/11.) We may not have much of a choice, though. The city didn’t hire any firefighters between 2008 and 2012, partly because it was in the middle of a court fight over discrimination— that is, whether the test to become a firefighter discriminated against black and Hispanic applicants. The judge found that the test was discriminatory—and so now the city has a new test, and more black and Hispanic firefighters. That means, though, that black and Hispanic firefighters are getting the shaft so that the city can afford to pay its white retirees their much more generous benefits. If the state and city don’t restore benefits, it’s quite likely that a court would. This isn’t a fight the city and state want to engage in—because its outcome could imperil any future attempts at pension reform.

PERSPEC TIVES

DISABILITY DISASTER

Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal. Twitter: @nicolegelinas

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REELS ON WHEELS

city & state — June 15, 2015

career took off in the 1980s, with leading roles in “Body Heat,” “Romancing the Stone” and “Peggy Sue Got Married.” During the 1990s and the 2000s she continued to act in movies (“The Virgin Suicides,” “Marley & Me,” “Dumb and Dumber To”) and TV shows (“Friends,” “Californication,” “King of the Hill”) while also delivering well-received performances on Broadway. Less well known is the actress’ advocacy work. In addition to working with Planned Parenthood and Amnesty International, she is a board member of Citymeals-on-Wheels, an organization that provides meals to 18,000 elderly New Yorkers. Turner recently joined Citymealson-Wheels outside New York City Hall to call on the City Council to appropriate an additional $1 million to cover weekend and holiday meals as part of an expected 5 percent increase in the number of people served. After meeting with council members, Turner spoke with City & State Senior Correspondent Jon Lentz about the needs of the growing elderly population in New York City, how Citymeals-on-Wheels is helping to meet those needs, and what her favorite film role was. The following is an edited transcript. City & State: Why are you out here today? Why is Citymeals-onWheels important? Kathleen Turner: I have served on the board of Citymeals-on-Wheels for some time. I think it’s extraordinary what we do. We feed over 17,000 people 2 million meals a year. We raise all the money ourselves. At the moment the city has approved a 5 percent raise on subsidized meals, which is an addition of a lot of people, but they’ve only been able to feed them on weekdays. So we need to fill that gap to fill in on the weekends. I mean, otherwise we’re going to have them cutting their meals during the week in half to save for the weekends. In any case, we need some more money in order to extend our programs.

to move to someplace easier because of the rent control. They’re in fourthfloor walk-ups, and they can’t go up or down stairs. So somebody has to come to them. C&S: Is this a growing problem, with the elderly population projected to grow as a share of the total population? KT: It is growing. Our population is aging. It’s not getting better, and we need more awareness about that. C&S: You’ve been a well-known actress for a long time— KT: A long time, honey. C&S: You’ve been in films like “Body Heat,” “Romancing the Stone” and “Who Framed Roger Rabbit,” as the voice of Jessica Rabbit. Is there any role that was your favorite? KT: I had a ball doing “Romancing” because it was set in Mexico, and I grew up in South America. So it was a little bit like going home for me. And I always have such fun with Michael Douglas and Danny DeVito. So just for fun, “Romancing.”

A Q&A WITH

KATHLEEN TURNER C&S: You’re specifically asking for an additional $1 million in the budget, right? KT: Yes, we are. But in fact, we’re not going to cost the city. The money comes back. But we need it to launch the program. C&S: But the organization also raises money privately? KT: Absolutely. Every dollar goes to food in our organization. C&S: How did you get involved with this issue? KT: It was years ago. I believe very

much in service and stepping up, and years ago I went on a meal delivery and met some of the elderly that we serve, and thought, well of course, this is what we should do. C&S: You were diagnosed with a severe case of rheumatoid arthritis in the early 1990s. Did it ever get so bad that you had to rely on programs like Citymeals-onWheels? KT: No, I’m not old enough or in need enough. These people usually have no family, no ability to get out of their living spaces, and no ability

C&S: You grew up overseas, including in Cuba, where your father was a diplomat. What do you think about the thaw in relations between the island nation and the United States? KT: I think it’s great. I think the whole thing was getting really silly. It’s absolutely the right thing to do. C&S: What are you up to now, professionally? KT: I do a great deal of theater. Last year I did 289 performances. I had a season on the West End in London. Now, at the moment, I’m doing some teaching, which I’m finding very exciting. C&S: Acting classes? KT: Yeah, yeah, yeah. Next week I start at the NYU campus in Florence, as in Italy. I think that’s rather nice, don’t you? cit yandstateny.com

JAGUAR PS/SHUTTERSTOCK

athleen Turner’s film

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Governor Cuomo and Mayor de Blasio agree. Democrats and Republicans agree. New Yorkers agree. Victims of preventable medical mistakes shouldn’t be punished twice.

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Andrew Cuomo backs Lavern’s Law to toughen rights of medical malpractice victims June 7, 2015

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De Blasio lends support to ‘Lavern’s Law’ to give more rights to medical malpractice victims June 10, 2015

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State Assembly approves Lavern’s Law to help medical malpractice victims; Senate must now act on bill….The Assembly, with overwhelming bipartisan support, approved the legislation. June 10, 2015

Pass Lavern’s Law, and Close this Cruel Loophole PASS S.911 (Libous) / A.285 (Weinstein)

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