There are three things to note about the analysis. First, it is focused on savings proposed in the preliminary budgets released in January or February. Thus, it captures savings proposed in the November modification to the budget, but not savings later proposed in the executive or adopted budgets.¹ It also does not account for subsequent action to alter or rescind any savings.

Second, savings are compared for the entire financial plan period, not the first one or two years. For example, the recent Preliminary Budget for Fiscal Year 2019 includes a financial plan that spans fiscal years 2018 to 2022. For simplicity, savings for the total five-year period proposed in this financial plan are referred to as the “Fiscal Year 2019 CSP.”

Third, the analysis relies on what mayoral administrations themselves identify as part of the savings plan.² For example, the Fiscal Year 2012 PEG includes an extraordinary $2.4 billion in anticipated State actions to increase revenues.³ While State actions may have been anticipated in other years, they were not identified as part of the PEG or CSP and would therefore be excluded from this analysis. Similarly, most debt service savings realized as part of the Preliminary Budget for Fiscal Year 2012 were not counted as part of the PEG, and so are excluded from this analysis.

This analysis finds three major differences between Mayor de Blasio’s CSPs and Mayor Bloomberg’s PEGs:

1. CSP savings tend be a smaller share of the city-funded budget than PEGs;⁴
2. Efficiency savings make up a smaller portion of CSPs than of PEGs; and
3. While most City agencies participate in the CSPs, fewer are contributing efficiency savings, and the size of savings is smaller than under PEGs.

Savings Plan Size and Share of Budget

The Fiscal Year 2019 CSP totals $3.3 billion in savings in fiscal years 2018 to 2022. This is less than the Fiscal Year 2018 CSP, which totaled $3.8 billion, and more than the Fiscal Year 2017 CSP, which totaled $1.8 billion. The dollar value of these plans is comparable to the Fiscal Year 2013 and Fiscal Year 2014 PEGs. The Fiscal Year 2012 PEG was particularly large due to State actions anticipated to increase resources available to the city in the amount of $2.4 billion.⁵(See Figure 1.)

Mayor de Blasio’s CSPs have been smaller as a share of the budget than Mayor Bloomberg’s. (See Figure 2.) The Fiscal Year 2012 PEG was 2.8 percent of city-funded expenditures. The Fiscal Year 2013 and 2014 PEGs were 1.2 percent and 1.1 percent of city-funded expenditures, respectively, while CSPs for fiscal years 2017 to 2019 have been 0.6 percent to 1.1 percent of city funds. The City’s budget has grown 22 percent since fiscal year 2014 and savings have not kept pace.⁶

Composition of Savings

Savings initiatives have been grouped by CBC staff into four broad categories:

1. Re-estimates and funding shifts are savings due to underspending, vacant positions, delays, changes in federal and state reimbursement, and shifting costs from city funds to state or federal sources;
2. Debt service savings come from refinancing high-interest rate bonds at lower rates and from savings on debt when interest rates are lower than anticipated;
3. Revenue raisers include fee increases, sale of city assets, and initiatives to increase enforcement;⁷ and
4. Efficiency savings come from changes in agency activities that lower the cost of operations.⁸

In each of the six savings plans examined, re-estimates and funding shifts consistently make up more than half the total savings, ranging from 53 percent in the Fiscal Year 2012 PEG to 65 percent in the Fiscal Year 2018 CSP. (See Figure 4.) These savings, which are often one-time, are substantial and exceeded $1.7 billion in all but the Fiscal Year 2017 savings program. (See Figure 3.)

Debt service savings are 24 percent of the Fiscal Year 2019 CSP and 26 percent of the Fiscal Year 2017 and 2018 CSPs. In fiscal years 2013 and 2014, debt service savings included in the PEGS were 11 percent and 8 percent of the total, respectively. In fiscal year 2012, the Bloomberg administration included only $8 million of $781 million in debt service savings in the PEG.⁹ Persistently low interest rates have provided opportunities to continually recognize large debt service savings and have bolstered the overall CSP totals.

Revenue and efficiency initiatives are smaller in dollar terms and as a share of total savings in the CSPs than in the PEGs. The PEGs for fiscal years 2012 to 2014 had revenue initiatives that ranged from 7 percent to 13 percent, while CSP revenue initiatives ranged from 0 percent to 8 percent of total savings.

Efficiency savings were 21 percent and 28 percent in the Fiscal Years 2013 and 2014 PEGs, respectively, compared to 7 percent to 15 percent of total savings in the CSPs.¹⁰

Agency Participation

While participation in the CSPs has been voluntary, most agencies contribute savings. There are 23 agencies with annual operating budgets greater than $150 million; six did not participate in the Fiscal Year 2017 CSP, NYC Health + Hospitals (H+H) did not participate in the Fiscal Year 2018 CSP, and H+H and the City University of New York (CUNY) did not participate in the Fiscal Year 2019 CSP. Participation of H+H and CUNY had also been sporadic in the PEGs.¹¹

Although agency participation has been similar, fewer agencies are contributing efficiency savings, and the magnitude of these savings is smaller in CSPs than in PEGs because there are no mandatory savings targets. Twenty agencies provided efficiency savings in the Fiscal Year 2012 PEG; 15 in the Fiscal Year 2013 PEG; 13 in the Fiscal Year 2014 PEG; 12 in the Fiscal Year 2017 CSP; 11 in the Fiscal Year 2018 CSP; and 8 in the Fiscal Year 2019 CSP.  Similarly, the value of efficiency savings declined from $394.9 million in the Fiscal Year 2012 PEG to $40.7 million in the Fiscal Year 2019 CSP. (See Tables 1 and 2.)

Tables 1 and 2 show agency efficiency savings in the CSPs are smaller in dollar terms and as a share of the agencies' city-funded budgets than in PEGs. Exceptions include the Department of Correction (DOC) in the Fiscal Year 2019 CSP and the Department of Homeless Services (DHS) in the Fiscal Year 2017 CSP, where the savings are related to policy changes.⁸ Figure 5 shows efficiency savings contributed by each group of agencies as a share of those agencies’ city-funded budgets. In each category, efficiency savings rates are lower in CSPs than in PEGs.

Mayor de Blasio established a Citywide Savings Unit within the Office of Management and Budget to find savings across agencies beginning in November 2016. Citywide initiatives first appeared in the November 2016 Financial Plan and included efforts to better manage procurement, space occupied by City agencies, and overtime. Citywide initiatives have supplemented agency endeavors and increased total efficiency savings significantly in the Fiscal Year 2018 CSP; however, the magnitude of savings is still significantly below the level and rate of efficiency savings in the PEGs.

Conclusion

The aim of the CSP should be not only to offset the cost of new needs, but also to balance the growing costs of personnel and bolster the City against possible risks to the budget. Going forward, the Mayor’s savings plans should focus more on efficiency savings across all agencies.

If the de Blasio administration had found efficiency savings equal to the minimum PEG level achieved, 0.3 percent of the city funds budget, an additional $2.0 billion in savings would have been achieved in CSPs for fiscal years 2017 to 2019. If these savings had also been made in the prior two years, when there was no CSP in the preliminary budget, an additional $1.7 billion could have been saved.

Mayor de Blasio has said the Executive Budget for Fiscal Year 2019 will contain an additional $500 million in savings over the first two years of the financial plan. This target should be raised and achieved with efficiency initiatives.