Public Employee Press

A call for accountability
Congressional briefing at DC 37
U.S. representatives joined state and city politicians, union leaders and public policy experts to put the city's use of federal tax dollars and contracting out under the microscope.

By GREGORY N. HEIRES


A congressional briefing at DC 37 on Nov. 22 explored the city's possible misuse of federal tax dollars and its failure to monitor contracting out.

District Council 37 called for the possibly first-ever union-sponsored congressional inquiry into runaway contracting out and improper spending of federal funds, which continues without adequate oversight. The theft and waste of hundreds of millions of dollars has occurred as thousands of city employees have lost their jobs and the civil service system is under attack.

"There has been $800 million of fraud and misuse of funds," DC 37 Executive Director Lillian Roberts said. "It has to stop."

Four members of the New York City Congressional Delegation participated in the briefing along with 20 state and local politicians, public-policy experts and top union elected leaders and staffers.

The briefing took place as the Bloomberg administration continues to be tarnished by criminality and waste associated with city contracts, including the CityTime fiasco, which New York City Comptroller John C. Liu describes as perhaps the greatest instance of municipal corruption in the city's history. Over 12 years, the budget for the automated payroll project mushroomed from $68 million to more than $700 million, and more than 10 consultants face charges of stealing a total of $80 million.

Outraged about corruption

The Congress members expressed alarm over the endemic corruption, and pledged to conduct an inquiry and take steps, including setting up a contract caucus in the U.S. House of Representatives, to prevent the improper spending.

They praised the union for acting as a watchdog for taxpayers and fighting to protect the civil service system, which for decades has provided a pathway to the middle class. Congress member Jerrold Nadler called upon DC 37 to work with the delegation on legislation that would allow unions and individuals to sue the city if they uncovered improper and illegal contracting practices.

Chuck Loveless, director of legislation of DC 37's parent union, the American Federation of State, County and Municipal Employees, said a compelling case exists for the federal government to monitor the city because Washington allocates millions of dollars to New York City every year.

At the briefing, DC 37 Associate Director Henry Garrido, who has led the union's white paper investigation to expose contracting abuses and identify potential recurring revenue sources for city services, reported that the city apparently has used federal funds for social services and education to send municipal work overseas. Elected officials expressed alarm and disgust when Garrido informed them that a Dept. of Education contractor, Future Technology Associates, has diverted federal funds intended for child care to charter schools.

Roberts, Garrido and Sr. Assistant Director Moira Dolan of the DC 37 Research and Negotiations Dept. discussed how contracting out-beyond its waste of tax dollars-is undermining the civil service system and eroding solid unionized jobs.

In recent years, the union has lost 10,000 members as the Bloomberg administration spends more on contracts, which account for over $10 billion of the city's $66 billion budget. In October, the Dept. of Education laid off 642 mostly low-wage school support workers as the agency continued to pour billions of dollars into information technology and other contracts.

As the city recovers stolen funds, Roberts said that the union will push for the administration to use the money to rehire laid-off members. She has already made that demand in a letter to Mayor Michael R. Bloomberg.

"The CityTime scandal makes clear that fraud, inefficiency and waste can occur when there is not enough oversight," said U.S. Rep. Carolyn Maloney, who helped establish the City Council Contracts Committee and the city's Vendex contract when she served years ago in the Council. "As more and more federal dollars flow into the city, the need increases for federal oversight," she said.

Questioning whether contracting out saves money, Maloney asked if it is being done to avoid employing civil servants and unionized workers.

City Council members Darlene Mealy, who chairs the Council's Contracts Committee, and Letitia James, the former chair, described legislation to strengthen Local Law 35, which requires cost-benefit analysis of proposed contracts and provides protections against displacement for municipal employees. The City Council will likely override Bloomberg's veto of the amendment that strengthens the law, they said.

Congress member Edolphus Towns added a little levity to the discussion when he said "stupidity" should be added to the description of contracting out as "waste, fraud and abuse." More seriously, he pointed out that outsourcing undermines the economy by destroying local jobs.

"Capitalism does not work unless you have a big middle class," Towns said. "You need to have someone ready to buy." As mayors and governors turn to contracting out under the misguided belief that it helps save limited tax dollars, the progressive community should fight for recurring streams of revenue to support government services, according to participants.

The jobs crisis

James Parrott, deputy director and chief economist of the Fiscal Policy Institute, said taxing interest earnings of hedge fund managers at a higher rate could bring in $500 million and help address the sharp inequality that plagues the country. Nationally, a financial transaction tax would bring in $20 billion a year, he said.

Speakers endorsed that step along with additional spending for another economic stimulus and jobs creation. They expressed support for the extension of the state's millionaires' tax, which provides $5 billion in revenue each year.

"Our biggest problem right now is more federal stimulus is needed," Parrott said, noting that the current recovery is the weakest since World War II. New York State needs 500,000 more jobs to return to the level of employment before the recession, he said.

"The crisis is not the deficit, the crisis is unemployment," Nadler said. "We should not be doing anything about the deficit until unemployment returns to 5 percent." Today, the rate exceeds 9 percent and approaches 20 percent once "hidden unemployment" (people working part-time who want a full-time job and others who have checked out of the labor search market because they've lost hope) is included.

Garrido noted that 40 percent of the contractors do not come from the city. Work is even outsourced to India, Turkey and Bangladesh. Domenic M. Recchia Jr., chair of the City Council's Finance Committee, said such contracting could be limited by giving a preference to local businesses.

At the briefing, Local 372 President Santos Crespo Jr., Local 1549 President and DC 37 President Eddie Rodriguez and Local 371 President Anthony Wells discussed how the city is reducing its workforce in federally-funded social services and education.

DC 37 Retirees Association President Stuart Leibowitz discussed Social Security and Medicare, which many Republicans would like to see privatized and cut. He said politicians have promoted the false impression that Social Security faces a crisis in order to justify a reduction in benefits. He described the debate over the future of Medicare as more about ideology than finances.

Commenting on the briefing, Wanda Williams, the union's political action and legislation director, said the recommendations from the Congressional members and other participants provide a good foundation to work for jobs creation, government accountability and protecting civil service jobs from contracting out.

"The Congressional Delegation learned a lot from the briefing, and we learned how we can be more effective in opposing and fighting contracting out," said DC 37 Associate Director Oliver Gray, who chaired the briefing with Williams. "We want to prevent the loss of our members' jobs because of contracting out, which ultimately erodes the employment base of our city."