December 16, 2008
CONTACT: Jeffrey Gordon


Proposals Would Eliminate Redundancies, Lower Taxpayer Costs

Governor David A. Paterson’s Executive Budget includes a number of proposals to streamline State government by eliminating duplicative services, consolidating overlapping State agencies, lowering the cost and size of the State workforce, and closing underutilized State facilities.

“With the State facing a fiscal emergency, we need to look for innovative ways to improve the operations of our government and deliver services more effectively,” said Governor Paterson. “These reforms are a first step toward fundamentally reevaluating the way we do business, which will mean significantly lower costs for taxpayers over the long term.”

Agency Consolidations

The Executive Budget recommends that seven State agencies merge or integrate with existing agencies, as a first step toward future consolidations. Two additional agencies would have their operations hosted by other agencies. In total, these actions would provide savings of more than $16.5 million in 2009-10.

  • To streamline and improve the delivery of economic development services, the New York State Foundation for Science, Technology and Innovation (NYSTAR) would merge with the Empire State Development Corporation (ESDC). Further efficiencies and coordination will be achieved through enhanced integration of activities between the Department of Economic Development and ESDC ($13.3 million in 2009-10 savings).
  • The State Employment Relations Board is eliminated and its functions absorbed by the Public Employment Relations Board ($1.4 million in 2009-10 savings).
  • The Northeastern Queens Nature and Historical Preserve Commission and the Hudson River Valley Greenway Communities Council and Conservancy would merge into the Department of State ($1.1 million in 2009-10 savings).
  • The New York State Theatre Institute would merge with the Empire State Plaza Performing Arts Center Corporation (“The Egg”) and the Office of the Welfare Inspector General would merge with the Office of the Medicaid Inspector General. While neither of these actions would produce General Fund savings, they would create efficiencies within these organizations to strengthen their long-term operational and fiscal health.

Additionally, the Department of Taxation and Finance would host the operations of the Office of Real Property Services ($500,000 in 2009-10 savings) and the Division of the Lottery would host the operations of the Racing and Wagering Board ($225,000 in 2009-10 savings).

Pension Reform/Workforce

The Executive Budget creates a new tier of pension benefits (Tier V) for public employees. Many of the requirements for Tier V would remove pension enhancements added in recent years to Tier IV, including restoring the minimum retirement age from 55 to 62, requiring employees to contribute to the pension fund after their tenth year of service, restoring the minimum years of service required to draw a pension from five to ten, and others. New requirements for Tier V include excluding overtime compensation when calculating pension benefits, which will prevent “salary spiking” in an employee’s final years of service.

The Executive Budget reduces the size of the State workforce by 3,108 positions in 2009-10. This will be accomplished through a combination of specific programmatic actions, such as agency consolidations and facility closures, as well as the continued implementation of a hard hiring freeze. Layoffs are primarily limited to the impact of agency consolidations or facility closures.

Facility Closures

The Executive Budget recommends that several underutilized State facilities would be eliminated or downsized.

The Budget recommends the closure of four minimum-security camps – Pharsalia (located in Chenango County), Gabriels (located in Franklin County), Georgetown (located in Madison County), and Mt. McGregor (located in Saratoga County). These facilities are currently at less than 47 percent of capacity, reflecting a decline in the prison population of 10,500 (15 percent) since 1999. In addition, DOCS will close several annexes to further consolidate the system. These closures would provide savings of $26 million in 2009-10 and $29 million in 2010-11.

The Executive Budget also recommends closing six underutilized OCFS youth facilities (the Adirondack Residential Center in Clinton County, the Cattaraugus Residential Center and Great Valley Residential Center in Cattaraugus County, the Pyramid Reception Center in the Bronx, the Rochester Community Residential Home in Monroe County, and the Syracuse Community Residential Home in Onondaga County), downsizing two other youth facilities (the Allen Residential Center in Delaware County and the Tryon Residential Center in Fulton County) and closing three evening reporting centers (the Capital District Evening Reporting Center in Albany County, the Buffalo Evening Reporting Center in Erie County, and the Syracuse Evening Reporting Center in Onondaga County). The affected youth facilities have a vacancy rate of 63 percent. These actions will provide savings of $12 million in 2009-10 and $14 million in 2010-11.

Additionally, the Office of Mental Health would eliminate 450 beds (11 percent) from its inpatient psychiatric system, moving those patients to more appropriate settings, at a savings of $6.1 million in 2009-10 and $12.3 million in 2010-11. The Office of Alcohol and Substance Abuse Services would close its 52-bed Manhattan Addiction Treatment Center (ATC), providing savings of $4.6 million in 2009-10 and 2010-11.

Council on Shared State Operations (CSSO)

To build toward future efficiencies, the Executive Budget would also establish a new Council on Shared State Operations to oversee the development of a “shared services” model in New York, co-chaired by the Director of State Operations and the Director of the Budget. A shared services approach seeks to centralize back-office operations, thereby creating cost-savings while simultaneously improving the services offered – an approach that has been supported by private sector firms for years and has been increasingly adopted in the public sector. Consolidating administrative functions shared by multiple agencies will free agencies to focus on their core missions of providing essential services to New Yorkers, rather than administrative tasks.

Over the next several years, state agencies will work together to create shared service centers with expertise in six distinct operational areas. These centers would gradually become responsible for administering the following consolidated lines of business across state government:

  • Financial Management System (FMS). The Division of the Budget, in partnership with the Office of the State Comptroller, will launch development of a system to support the delivery of statewide financial services including budgeting, procurement, accounts payable, and travel expense reporting.
  • Procurement. A new Office of Procurement Services will evaluate and improve the State’s procurement policies, coordinate purchasing among State agencies, develop new approaches to leverage the buying power of the State, and assist in the development of an e-procurement system as part of the statewide Financial Management System. The new Office will be led by a Chief Procurement Officer (CPO) following a model used by the private sector and other states to capture savings through an ongoing identification of strategic opportunities to partner with sellers of goods and services.
  • Human Resources. The Office of Civil Service and the Office of Employee Relations will explore how the State can better integrate its existing human resource systems and coordinate employee benefits, training, recruiting, and time and attendance.
  • Technology. The Office for Technology will focus on the delivery of disaster recovery services, consolidation of servers into a statewide data center, required security, and improvements to telecommunications.
  • Asset Management. The Office of General Services will focus on managing State-owned and leased real property, and explore fleet and surplus property initiatives.
  • Customer Service. A consortium of agencies will also become responsible for developing statewide customer service activities, including a statewide web-based portal for “one-stop” applications for licensing and permits, and potentially a statewide call center.