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Explanation of labor reserve reductions and future funding
1:09:46
ยท
119 sec
Council Member Brannan questions OMB officials about the $400 million reduction in the city's labor reserve for FY25 and the implications for future labor settlements. First Deputy Budget Director Kenneth Godiner explains the reasoning behind the reduction and addresses concerns about future funding.
- The reduction is due to lower city headcount and adjustments in contract structures
- The cut is only applied to FY25, with no changes to the reserve in FY26 and beyond
- Godiner assures that there is sufficient money in the labor reserve to cover upcoming contract obligations
Justin Brannan
1:09:46
So I wanna talk about the labor reserves now.
1:09:49
Yes.
1:09:49
In the preliminary plan, the city's labor reserve was slashed by $400,000,000 for FY '25.
1:09:56
We are concerned about how the administration plans to fund future labor settlements.
1:10:02
How exactly did OMB arrive at that $400,000,000 reduction?
1:10:08
Ken, you want take it?
Kenneth Godiner
1:10:10
Yeah.
1:10:11
The $400,000,000 reduction in in the current year is based on two things.
1:10:17
One is that, as we've noted, the city headcount is lower than when we funded the labor reserve.
1:10:24
And so the cost of the settlement was a little bit less.
1:10:27
In addition, as you know, in pattern bargaining, we first have an initial settlement.
1:10:33
We allow people, the unions that subsequently settle, to settle within the cost parameters of the pattern settlement.
1:10:40
But they're allowed to make adjustments and movements in terms of of how they structure their contracts.
1:10:48
And the way it worked out, expenses in '25 were less than they would have been under the pattern.
1:10:55
Those those extra expenses wind up being made up either we already paid them in in previous periods or we'll pay more in the in the out years.
Justin Brannan
1:11:03
And this cut is only applied to f y twenty five.
1:11:06
It's owned That's correct.
1:11:07
Are you planning to restore the reserve in f y twenty six and beyond?
Kenneth Godiner
1:11:11
We hadn't cut the reserve in in in '26 and beyond.
1:11:16
It's a one it's a one time
Justin Brannan
1:11:18
So it's just for it's just being applied to FY '25?
Kenneth Godiner
1:11:20
That's correct.
Justin Brannan
1:11:22
And can OMB guarantee that the remaining labor reserve is enough to cover the upcoming contract obligations?
Kenneth Godiner
1:11:30
There's sufficient money in the labor reserve to cover the application of the pattern to the rest of the two or 3% of the workforce that's still unsettled and to pay the contracts that are settled, if that's your question.
1:11:44
Okay.