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TESTIMONY
Testimony by Louisa Chafee, Director of the New York City Independent Budget Office, on fiscal responsibility and transparency
0:05:28
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6 min
Louisa Chafee, Director of the New York City Independent Budget Office (IBO), presents IBO's top priorities for charter revision. She focuses on strengthening the city's fiscal framework, reforming procurement processes, and enhancing budget transparency.
- Chafee advocates for tighter rules on reserve funds and the rainy day fund.
- She proposes mandating automatic contract extensions for nonprofits when RFPs are delayed and requiring partial payment of undisputed invoice portions.
- Chafee recommends elevating the Mayor's Office of Contract Services (MOCS) to charter status and limiting emergency contracts to two years without mayoral/controller renewal.
- She calls for refining Units of Appropriation (UAs) to increase budget transparency and oversight, citing examples from DFTA, DYCD, DOE, and NYPD where large portions of budgets are grouped into single, opaque UAs.
Louisa Chafee
0:05:28
Good evening, chair, chair, Greenberger, executive chair, members mentioned by Louise Chaffey.
0:05:35
I'm the director of New York City and by Jeff Poppas.
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I'm joined by my colleague, Serena Subramanian, the chief research and strategy officer.
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IBO is an independent government agency mandated by the New York City charter.
0:05:49
I'm pleased to testify on our three top priorities.
0:05:52
I might proceed testimony to senate.
0:05:55
The first thing I'd like to talk about are rules on the rainy day.
0:06:00
So given the federal landscape, I I believe it was just strengthening the city's budgetary framework by moving more protections for the state's financial emergency end into the charter and by tightening charter provisions concerning reserve events.
0:06:15
IBO supports charter language requiring more details on transparency, usage, and implementation of all of the city's reserve accounts.
0:06:24
And IBO also encourages ensuring that all relevant information is made available to enable city monitors including to analyze the city's budget.
0:06:37
The second area I'd like to talk about is procurement.
0:06:40
In fiscal twenty twenty four, contract based spending exceeded 34,000,000,000 out of the total budget of a hundred 11,000,000,000.
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Most government services for vulnerable New Yorkers are provided by nonprofit providers whose financial stability depends on timely payments on their contracts.
0:06:58
As any household knows, some fiscal management means paying one's bills on time, and yet the city often does not.
0:07:05
So why are the bills not paid on time?
0:07:08
One reason is that the contract with the nonprofit provider ends, and the city agency does not complete the new RFP and or contract on time.
0:07:19
Meanwhile, the city agency expects services to continue uninterrupted even if though it knows the payment will stop until the new contract is in place.
0:07:29
Now city data shows that RFPs post award take between ninety and a hundred and fifty days to complete, whereas contract extensions take thirty four days.
0:07:41
Therefore, IBO suggests that the commission consider mandating that the procurement policy board, that's the charter created regulatory body overseeing procurement, make an automatic rule requiring agencies to process extension contracts for their existing vendors whenever agencies are unable to begin that final step of the RFP processing at least six months prior to the end of the existing contract.
0:08:09
And here, I'd just like to give a shout out to the fund for the city of New York that is one of the few entities that actually provides assistance to nonprofits while they are on the predicament of waiting for their contracts to be registered.
0:08:22
Next, I'd like to talk about delayed invoicing because even once the contracts are registered, late payments often occur.
0:08:29
Generally, the city agency holds up the entire payment even though the bulk of the invoice is undisputed.
0:08:36
Again, the PPB has authority, though not a mandate, to address the timeliness of invoicing payments.
0:08:42
This commission could mandate the PPB to establish rules that require city agencies to pay at a defined time a certain percentage for each each invoice from a human service contractor in good standing.
0:08:56
City agencies could then resolve the disputed portions of invoices within a longer mandated time frame without putting the fiscal stability of their nonprofit partners at risk.
0:09:07
Other contracting changes.
0:09:09
To ensure real accountability, the mayor's office of contract services should be established in the charter similar to the office management and budget and operations.
0:09:20
And, IVO strongly encourages limiting the use of emergency contracting by requiring that the mayor and the controller renew their joint determination that the emergency procurement remains appropriate once such contract has been in place for two years.
0:09:35
That is an issue that was highly during the asylum seek research.
0:09:40
And and lastly, I'd like to talk about enhancing the city's budget structure to promote transparency.
0:09:46
When the city council adopts the budget, it authorizes spending in categories, term, and units of appropriation, UAs.
0:09:53
The UA is chartered defined and intended to reflect the budget for a particular program, purpose, activity, or institution, quote.
0:10:00
In practice, this is not working.
0:10:02
For example, DFTA has home delivered meals, home care, and older adult centers in a single UA.
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DYCD has, after school adult literacy and assistance to immigrants in one UA.
0:10:15
The Department of Education places 23% of the agency's $33,000,000,000 budget.
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That's 8,000,000,000 in a single UA entitled general education instruction school leadership.
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And my favorite, NYPD, places a 23 police precincts, all of them.
0:10:32
Borrowed wide offices, detective works, forensic investigation, narcotics, and strategic response in a single UA with a budget of 1,600,000,000.0.
0:10:40
That's 25% of the 6,400,000,000.0 agency budget with fiscal year twenty twenty five as the example.
0:10:48
So what's the issue?
0:10:50
City council can't do oversight because the UAs don't give enough granularity, and anyone trying to understand the budget cannot separate out the program.
0:10:59
So new a new UAs may be added each year as part of the budget negotiations, but there has not been a systematic approach to the dual challenges of ensuring transparency and managerial flexibility.
0:11:12
Thus, IBO falls upon the commission to refine the description of units of appropriation.
0:11:18
UA should be distinct when an agency's programs are different kinds of New Yorkers or to provide different kinds of services, and there should be a percentage limit on the UA in relationship to the budget.
0:11:29
Such changes will truly enable the budget, the public to identify how each program is funded, give transparency, and improved effective oversight.
0:11:39
In conclusion, IBO welcomes the opportunity to work with you and your staff around these other exciting issues addressing financial responsibility and increasing transparency.
0:11:49
I'm available for questions or I'm happy to meet in the following.
0:11:53
Thank you.