Joseph Krist

Publisher

SPLITTING THE BABY

Governor Hochul announced that she would not be taking steps at this time to remove Mayor Eric Adams from office. Instead, she will ask to legislature to enact a variety of changes to increase state “oversight” over the City’s operations. She said that she had spoken to leaders of the City Council and the State Legislature and made clear she intended for the special provisions to expire at the end of 2025, when Mr. Adams’s first term expires, with the potential for renewal.

The proposed changes included creating a new state deputy inspector general focused on New York City’s operations; establishing a fund for the city comptroller, public advocate and City Council speaker to hire outside counsel to sue the federal government if the mayor is unwilling to do so; and granting additional funds for the state’s comptroller to scrutinize city finances.

The announcement comes as proceedings to determine whether the DOJ will succeed in its efforts to drop their case against were continued. The judge has appointed his own investigator to review the arguments for and against dismissal. Lost in all of this is that the requested dismissal of charges would be with prejudice. That would allow the charges to be brought again at a later date.

HOSPITAL LAYOFFS

Mass General Brigham will eliminate many management and administrative positions within its hospital network. The layoffs are due to an anticipated budget shortfall of $250 million over the next two years that the hospital is attempting to close. The healthcare system has more than 82,000 employees. Massachusetts General Hospital and Brigham and Women’s are among the top seven largest employers in the state.

The budget gap of $250 million is around over 2% of the hospital system’s yearly employee compensation costs, according to MGB. The system reported a loss from operations of $72 million or a -0.4% operating margin in 2024. The prosed cuts – the number of which is as yet undetermined – are centered on managerial and administrative roles rather than clinical positions.

CONGESTION PRICING

Only 45 days in to its life, the process to end congestion pricing is being undertaken by the Trump administration. It’s not a surprise and people were fooling themselves if they thought the fees would be maintained. Now, there will be issues regarding what is done with the revenue collected to date, any refunding mechanism will have to be determined and how to fund the MTA’s capital program. The transportation secretary cited the cost to working-class motorists, the use of revenue from the tolls for transit upgrades rather than roads and the reach of the program compared with the plan approved by federal legislation.

There were 1.2 million fewer vehicles south of 60th street between Jan. 5 and Jan. 31, a 7.5% drop, according to the MTA. The end of congestion pricing would force the state to come up with another way to raise $1 billion a year to fund the M.T.A.’s capital plan, and would leave the state with little way to recoup the half-billion dollars spent to prepare the city for the program. 

In the immediate future, the MTA plans to keep collecting the fees until they are legally stopped from doing so. MTA filed suit immediately and there are several arguments to be made that would lead the court to find against the President. All this as the State faces a fairly contentious budget process with the 2026 state elections hanging over the process. 

SCHOOLS AND TEACHER COSTS

People often assume that people who work in NYC by definition make more than folks everywhere else for the same work. That hasn’t been true for some time in areas like education and law enforcement. The NYC Independent Budget Office recently developed data on teacher salaries in NYS to give us something objective to look at.

The median teacher salary for traditional public school teachers in New York City is higher in nominal terms than in many other districts in New York State, including Buffalo, Rochester, Syracuse, and Yonkers, and in neighboring districts in New Jersey. New York City’s nominal median salary is lower, however, than that in suburban districts in Hudson Valley and Long Island.

Charter school teachers in New York City earned the lowest median salary, in nominal terms, among the school districts IBO studied. Salary differences, however, are observed when IBO looked at teachers with Master’s degrees and less than 5 years of teaching, whom IBO classified as novice teachers. When adjusting for education and experience, median salaries in New York City traditional public and charter schools were higher than those in other groups, even including the neighboring suburban areas.

However, the higher median salaries of novice teachers with a Master’s degree disappeared when the nominal salaries were adjusted for variation in similar professional occupations and the cost of living. Adjusted salaries became similar across New York State, and the adjusted salaries in New York City were even lower than in the large cities.

Median nominal salaries have consistently increased across school districts in New York State and New York City charter schools since the 2017-2018 school year. In New York City, traditional public school salaries were relatively flat in the 2021-2022 and 2022-2023 school years, after rising during the previous four years. This partly relates to contract negotiations between the City and the teachers’ union, as well as shifts in teacher composition.

The (nominal) median teaching salary in New York City traditional public schools ($98,699) was higher compared to the median salaries of other districts in New York State ($94,582), other four large urban school districts ($84,923), and neighboring New Jersey ($80,299). However, the median teacher pay in the City was smaller than those in school districts in Hudson Valley and Long Island ($112,182). Also, New York City’s charter schools had the lowest median teaching salary ($77,073) among the groups.

The City’s charter schools had the lowest median salary among all teachers studied but a salary among novice teachers similar to the City’s public schools. This suggests that charter school teachers generally have less education and teaching experience, which accounts for salary differences. About 51% of teachers in charter schools had less than five years of teaching experience and held either Bachelor’s or Master’s degrees.

It matters because the City faces stringent restrictions on class size. By definition, this will require more teachers. The City presents a number of daunting challenges not the least of which is housing. It will make it hard for the City to meet its needs in the classroom.

MEDICAID

Medicaid has long been a target of Republican lawmakers as well as President Trump. The goal has been to reduce both the cost of the program as well as limiting participation in the program. This is especially true in the light of the Medicaid expansion provisions associated with the Affordable Care Act. Throughout the first Trump administration, numerous attempts were made to allow states to impose work requirements through waivers granted by CMS (the agency overseeing Medicaid). Those programs were rejected in the courts.

Georgia is the only state implementing an 1115 Medicaid waiver that determines an individual’s eligibility for Medicaid coverage based, in part, on their ability to demonstrate participation in qualifying employment or educational activities. On October 15, 2020, the Centers for Medicare and Medicaid Services (CMS) approved the State of Georgia’s Section 1115 waiver demonstration project, “Georgia Pathways to Coverage.”

Georgia Pathways offers healthcare coverage to residents who meet program requirements and are not otherwise eligible for traditional Medicaid. Implementation of the demonstration was postponed, resulting in a demonstration period of July 1, 2023, through September 30, 2025. To be eligible for Pathways, applicants must satisfy, and continue to maintain, a qualifying hours and activities (QHA) requirement of 80 hours per month.

The qualifying activities include various types of employment, job training, vocational rehabilitation, community service, and education. During the first 13 months of implementation, approximately 26,000 individuals applied to Pathways. A majority of applicants (83%) were determined to be ineligible for Pathways, either due to general Medicaid requirements, or to the Pathways-specific QHA requirements.

How is all of this working out? In the original 2019 waiver application, the state projected enrollment of 25,000 individuals into Pathways in the first year of the
program; actual enrollment during the first year of implementation was approximately 4,300 individuals. QHA requirements also had a significant impact on program enrollment, particularly for older adults (aged 50-64). Older adults were less likely to be eligible for Pathways and more likely to be ineligible due to failure to meet QHA requirements compared to younger applicants. Of the nearly 6,000 individuals who met all requirements other than QHA, approximately 1,700 were ineligible only because of the QHA requirement.

So, what did researchers conclude? QHA requirements had a significant impact on Pathways enrollment. The QHA requirement had a particularly pronounced impact on older adults, who were less likely to be eligible for Pathways and more likely to be ineligible due to QHA requirements. Without the QHA requirement, enrollment for older adults would have increased by 65%. The Pathways program requires beneficiaries to report their QHA monthly. Allowing beneficiaries to report an annualized number of QHA hours (instead of 80 hours per month) would accommodate month-to-month fluctuations in QHAs such as seasonal work or academic calendar-based educational opportunities.

As of July 2024, fewer than 5,000 Georgians have received coverage through Pathways, indicating that the program is not currently serving as a significant avenue to health coverage in the state.

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.