Comptroller Lander Talks NYPD OT, the City's Economy and More

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Brian Lehrer: It's The Brian Lehrer Show on WNYC. Good morning again, everyone. Now, New York City comptroller, Brad Lander, joins us, one of the three citywide elected officials, along with Mayor Eric Adams and public advocate, Jamani Williams. Comptroller means he's the city's chief financial officer, and as the officer's website states, it's to be an independently elected official, and the job is also to safeguard the city's fiscal health, root out waste, fraud and abuse in local government, and ensure that municipal agencies serve the needs of all New Yorkers.

One way the comptroller made news this week was his announcement that the NYPD spent more than $2 billion in overtime last year, which was 93% more than was budgeted. Another thing he could shed light on is the effect of inflation and the banking crisis on the government and the people of New York. When the Fed raises interest rates, does that protect or hurt New York families? The comptroller is the investment advisor for the city's pension funds. Retirement money is very much in the news this week with the city government retirees in revolt over the plan to force them into a Medicare-managed care plan, we talked about that yesterday, and President Biden's first veto, which ensures that pension funds can continue to take environmental and social justice concerns into account when deciding what to invest in. There's lots to talk about with Brad Lander.

Mr. Comptroller, always good to have you. Welcome back to WNYC.

Brad Lander: Good morning, Brian. Thanks so much.

Brian Lehrer: Let's start with your audit of NYPD spending. What exactly did you find about overtime?

Brad Lander: Let me just focus on one little thing. You said the city's total overtime costs last year, fiscal year '22, were over $2 billion. The biggest single source of that was NYPD uniform overtime, which was $671 million, which was nearly double what the Council and the mayor had budgeted for it, and that's what we found. It's just year after year, NYPD over time, blows through the budget that the Council and the mayor have adopted. That's been true almost every year for the last decade. When head counted NYPD was rising, when it was falling, when crime was up, when crime was down, the one constant is overtime dramatically over budget.

Brian Lehrer: A line from your report says if New York said he had unlimited cash, it would be lovely to allow teachers unlimited overtime to stay after school, to help every kid learn to read, or pay social workers unlimited overtime to help counsel New Yorkers struggling with mental illness, but other agencies aren't allowed to show total disregard for their overtime budget, and we can't afford for the NYPD to do so year after year. I guess my question is, how do they get away with it?

Brad Lander: The other agencies know City Hall, and the Office of Management and Budget won't let them continue to spend wantonly on overtime. There is budget discipline where City Hall wants it, and that is what has not happened here.

Brian Lehrer: One of the enduring criticisms of police culture is that it's a culture of entitlement. Entitlement in the most extreme cases to beat people mercilessly or literally squeeze the life out of them, as we saw in the Tyre Nichols, George Floyd and Eric Garner cases and others, and your report frames this as a lack of regard for what's in the budget agreed upon by the mayor and the City Council with, your words, no accountability for overspending. Where does the money actually come from for unauthorized overtime?

Brad Lander: That's a great question. We budget each year. The mayor and the Council reach a budget, that's what they plan to have in revenues and spend in expenses, and when the PD blows through its overtime budget, that means it's taking some additional tax dollars that came in, usually there's some tax revenue above what was projected, and just putting it to this overtime rather than having any conversation about what's needed. One example I found striking in the report, it's one thing to need overtime for unplanned events.

In 2020, there were a lot of extra protests, and you understand why they hadn't planned for those, but one of the largest categories of overtime is planned events, things like street festivals and fairs, and parades, which are scheduled a year in advance. You could definitely have people who are on their normal shift being paid straight time instead of time and a half, but you would just need the accountability to do so. If we did, this year the budget was $374 million. The NYPD is on track to spend $740 million on overtime. That's several hundred million dollars that could have been used for a wide array of other wiser investments.

Brian Lehrer: Listeners, and I'll tell you, Mr. Comptroller, and I'll tell all the listeners, this is one of those segments where I think, just by mentioning in the intro a number of these important things that you're involved with right now, almost all our lines filled up. I was going to throw out, and I'll do it anyway for our remaining few lines, an idea that maybe some of you want to take the comptroller's hypothetical and run with it for a little dreams of public service fun. If you work for a government agency other than the police, what would you do with an unlimited overtime budget?

Teachers, social workers, anyone else with a public sector management or service job, you're welcome to call in. 212-433-WNYC. We'll take some of the other calls that are coming on these various topics, too, about the city's financial health with the banking crisis and inflation and interest rates and the NYPD's overtime, but how about this, folks? 212-433-WNYC. The comptroller's public service hypothetical there in his report was, it would be lovely to allow teachers unlimited overtime to stay after school to help every kid learn to read, or pay social workers unlimited overtime to help counsel New Yorkers struggling with mental illness.

What if you were allowed to, listeners who have worked in public sector jobs, what would you spend unlimited tax dollar overtime on if you had the same entitlement as the NYPD? 212-433-WNYC. 433-9692. Before we get off the NYPD overtime, we talked about your report on the show on Tuesday with City Council Speaker Adrian Adams, who also said the city should rein in overtime spending that no other agency could get away with, and then the mayor pushed back on Wednesday. He said he's, "Not compromising on public safety. Public safety is the foundation of the city. That's what taxpayers say. That's what my businesses are saying. That's what everyone is saying. We want to be safe, and I'm not compromising on that." From the mayor. Is there anything you would say back to the mayor and continue the conversation?

Brad Lander: Well, first, mayoral candidate Eric Adams pledged to cut NYPD over time by 50%, and said that that would be part of more strategic spending by the NYPD. We want the dollars we're spending there to be thoughtful, to be planned. Of course, you want to look at where are crimes taking place and how are we deploying our folks, but when you've got this unlimited overtime with really no regard or strategy for where it's going, I don't think you're getting the wisest spending. This is not a call for not making a strategic effort to be thoughtful about how to confront crime.

It's just the opposite. Let's have a real budget. Let's know where it's going to go. Let's plan to spend it. Let's not forget, overtime is time and a half. If you plan for people, and they're doing it during their straight time hours, you could actually have more cops on the street with the same dollars. That's why the mayor made that pledge in the campaign, and I hope he'll look at going back to it.

Brian Lehrer: Well, you say there was no strategy, but there was an actual policy decision, at least one here that could have been the reason for some of the overtime. You tell me, the decision to increase the police presence in the subways. How much of the overtime was to accomplish that with existing staff rather than, let's say, a more abusive type of overtime, like purposely arresting someone at the end of your shift so you can get a few more hours of paperwork on your timesheet?

Brad Lander: It's a fair point that some things are strategic. For example, for the UN general assembly, that's federally reimbursed, so that $12 million. That makes some sense. As you say, there was a decision made to add NYPD officers working together with the governor. The state is picking up some of the tab of that money, but even there, having people do it during their scheduled shifts means your money goes 50% farther than if you have them do it as overtime. This is not a question about what the deployment should be. It's an appropriate decision for the mayor to make in consultation with the commissioner. That's what the debate with the Council. You debate the budget and vote on the budget. If you decide you want some time with officers in the subways, great, schedule it. It'll go 50% further than if you do it with overtime.

Brain Lehrer: Mike in Florida calling about this topic. Mike, you're on WNYC with New York City Comptroller Brad Lander. Hi.

Mike: Hi. There was always this practice in the NYPD where your pension for the rest of your life was based on the last three years of your salary. A lot of guys would bump up their salary by doing tons of overtime. Then that formula would then determine their salary for the rest of their lives. If a bunch of cops are retiring, it only makes sense that these guys are trying to get in as much overtime as possible. For example, in the teachers union or something, your pension is based on how many years of service, and maybe your last year, but you weren't able to bump up your salary by doing overtime. If you were getting paid $60,000, and now you do tons of overtime, and you made $80,000 this year, that $80,000 would be used to determine your pension for life.

Brain Lehrer: Mike, thank you for raising that point. He's got that right, doesn't he, comptroller?

Brad Lander: He does.

Brain Lehrer: Is there anything you can do about that, or the city can do about that as a matter of policy? Again, if the overtime is legitimate, fine, but if people are crafting ways to get overtime just before they retire, and as Mike points out, there have been a lot of NYPD retirements in the last few years, then that's a systemic issue.

Brad Lander: Overtime, in general, is supposed to be decided upon by supervisors, by precinct commanders, not by individuals deciding I'd like to work a few extra hours this week. I like your thought experiment saying, teachers and social workers. What could you do with it? Of course, that's not how we decide to spend what is scarce city tax dollars. There needs to be accountability. Precinct commanders have to be held accountable. The commissioner's got to be held accountable. You've got to budget. That's what you have to spend. Again, at every other agency or most other agencies, where City Hall and OMB require accountability and don't allow unlimited overtime, that's what happens. It can happen at the NYPD as well.

Brain Lehrer: On the bank failures and implications for New York, Georgina in Manhattan, you're on WNYC. Hi, Georgina.

Georgina: Hi. I'm actually calling because I read that you saw that Gothamist reported that Signature Bank is one of the banks that holds city money, and so that's why I'm calling. I don't know if there's a bit of confusion here, but I would like to talk to you about the public bank issue.

Brad Lander: That's a good eye, Georgina. You're correct, that New York City had about $60 million of its cash on deposit. We hold our cash in an array of banks. That's a pretty small percentage. I think last week, the cash balance of the city was about $12 billion, so $60 million is a pretty modest percent. That's what we're using to pay our teachers and cops and firefighters.

We can't afford to lose any penny of it, so we make sure that all the city's cash deposits in the banks that we deposit it in are fully collateralized. Even if the federal government hadn't stepped in to ensure everyone's deposits is over $250,000, our money still would have been secure, but the public banking you refer to is a really intriguing idea. There's a bit of legislation in Albany that would allow municipalities in New York State to have some of their deposits potentially in a public bank so that we could say, "All right, while we're holding these deposits, what would be the opportunity to use some of them for investments in affordable housing or small business or expanding access to financial services?" I support that legislation up in Albany.

Brain Lehrer: Which do you see as more of a threat to New Yorkers in general and to the city government's finances, problems in the banking system, or continued high inflation? Because it seems like we're in a choose-one situation with how the Fed sets interest rates.

Brad Lander: This is really the dilemma. There are big strengths and big challenges in the economy. It's great that the job numbers continue to grow. We're back to 99% of jobs in New York City, but that inflation means that the cost of housing, the cost of living for New Yorkers is really challenging. You're correct, it's in part the Feds raising interest rates in an effort to control inflation that contributed to these two bank failures.

Now, look, had those banks had good risk management, that would not have failed even with rising interest rates, so better bank regulation and better risk management would have kept those banks where they needed to be, even with the Fed's efforts to control inflation. I am nervous because these bank failures, I think make it a little more likely that we'll have an economic downturn or recession. We do want to control inflation because the cost of living is too high for people is really painful, but we don't want to see a higher unemployment rate and more people out of work, and that's the real challenge the Fed has.

Brain Lehrer: Georgina, the caller, raised the concern about some of New York City's money being held in Signature Bank, which went down, and I have a different question. As chief custodian of the city's pension funds, is some of that money invested in US government treasuries, which have been going down as a result of the Feds' moves?

Brad Lander: Well, we manage about $248 billion, I think, at last count, which is the pension funds, the retirement security of all our public sector workers. Look, the last year has been challenging all across the investment community. Wall Street's been down. You're right, that with what's been happening, government paper bonds are down as well. We're lucky to have a broadly diversified portfolio. We've got money in public equities and stocks, in bonds, and in private markets as well, and infrastructure and private credit. Our pension funds, despite the losses on Wall Street, and the economic concerns that are here, are well funded. Every retiree can know that their retirement security is strong, and that we're working hard every day to make sure it's there for them.

Brain Lehrer: Roberta in Harlem, you're on WNYC with Comptroller Brad Lander. Hi, Roberta.

Roberta: Good morning. I'm calling actually about public safety, because public safety includes health, and health includes the health of retirees, the cost of which is six-tenths of 1% of the city budget, and yet, the previous mayor and the current mayor have tried or are trying to put us into a privatized plan that is going to cost us as taxpayers more even though it may save the city as a whole money. We are not happy. Many people do not even know that they're being dumped into this privatized plan. I'd like to know what the comptroller can do to save us from being maltreated by an insurance company. As a corollary, I'd like to know whether the city has any holdings in Aetna.

Brain Lehrer: Which is the manage care company that would take that contract and take over--

Roberta: Which is the private insurance company that would take over this. They are supposed to take over my health care.

Brain Lehrer: Mr. Comptroller?

Brad Lander: It's a good question. I actually don't know whether the pension funds, which is not exactly the city, have investments in Aetna, which is the contractor the city is considering for Medicare Advantage. I'll have to find out and get back to you, Brian. I'll see if my folks can look it up while we're on. If not, I'll get back to you. Look, and you've covered this issue a lot, I totally understand why city retirees who worked all their lives for the city of New York are anxious about Medicare Advantage. You don't want to lose the doctor or the practice or the specialist that you rely on and get shifted into a Medicare Advantage plan.

The city, of course, is considering it because the federal government provides significant incentives to municipalities. That $600 million the city is projected to save is not so much because Medicare Advantage actually controls costs, but because the federal government provides a big incentive to the city to do it. I've noticed even on Capitol Hill, the winds are changing, the White House and Congress seem to be concerned about growing allegations of fraud in the Medicare Advantage Program broadly, as well as concerns for beneficiaries. These are real concerns. That's what the city's got to be looking at. We'll certainly look at the contract when it reaches our office, which I think is still several months down the line. A lot of retirees went to the contracts hearing this week to express these concerns, and it is definitely something the city has to give a real good hard look to.

Brain Lehrer: It's not something you can do an advance audit of to find any holes in it. You have to wait until the contract is actually signed, which I think for callers like Roberta, would be too late, before you can audit it?

Brad Lander: Well, two separate issues. What we do on each contract, and that's true whether a big contract like this one that's being considered or a new construction contract or a service contract, those go through the process, and when they reach our office, we're making sure that the procurement process was appropriate. We don't get to decide, it's the mayor and the Council that decide how to spend the money, and particular agencies that pick a vendor. We make sure that the bidding process was appropriate, that responsibility was determined. We'll look at that on this contract like we do on others. I will say, last year, when this contract came to us the first time, we rejected it, we sent it back. I think of the first 20,000 contracts we registered, we only sent back 2, and this was one of them, because at the time, the judge had just ruled that that contract was impermissible, and so even though the administration submitted it to us, we sent it back. There may be additional litigation, so we'll have to look at that as well, but yes, we have to wait till the contract gets here to registration to evaluate it.

Then for auditing, which is after something goes into effect, is the money being spent appropriately, are adequate procedures and safeguards in place? That, you have to wait until something starts to actually do an audit to see how it's going. If this moves through in the ways that have been described, we would surely do that as well.

Brad Lander: Oh, now Janette in Manhattan, who's calling in, has a creative thought, I think, tying the $600 million that the city would save with the Medicare Advantage Plan to our first topic today, which is how much money you think the city is wasting unnecessarily on NYPD overtime. Janette, you're on WNYC. Hello.

Janette: Good morning. Good morning, Brian. Yes, you got it. Is there any way we can save the-- I'm just repeating what the previous caller was asking for, but to save the senior plan the way we have it with this extra money around? I think it's $50 million a year that we need.

Brian Lehrer: Janette, thank you. What was the number you gave at the beginning of the segment for how much the NYPD exceeded its overtime budget?

Brad Lander: This year, the budget for fiscal year '23, which will end in June, was $374 million, where only through February, the NYPD had already overspent that by $98 million, and we think they're on path to spend about $740 million. Next year, they're budgeting $372 million, I think. The problem here is, to save money, the budget, we'll say that they're going to spend $372 million again, and it would take a big change in practice just to keep them to that, which wouldn't produce any budgeted savings, it would just keep us on budget. Look, this is the debate that the Council is having. I would urge people to go to the City Council preliminary and executive budget hearings. This is the conversation that the Council has. I know you had the speaker on, and they're trying to figure out, "How do we reign in NYPD overtime, and then what are the best uses?"

The whole budget is $102.6 billion. The biggest categories are public schools or public safety or human services. I will say, the Medicare Advantage, [unintelligible 00:23:12] a big debate about this, but it's projected to save the city about $600 million a year. Again, that's largely because of federal incentives, not because of actual cost containment or health care savings. It is a big dollar item.

Brian Lehrer: As a footnote, they do say in Washington that the subsidies to Medicare Advantage wind up with the federal government paying more for Medicare Advantage Plans for people on Medicare than for traditional Medicare, even though the plans more limit the choice of doctors, but that's another show, one we did yesterday, actually, and one we will do again. [laughs]

Brad Lander: Indeed. I listened with interest.

Brian Lehrer: One more caller for you. Allen in Brooklyn, you're on WNYC with the comptroller. Hi.

Allen: Good morning. You may be aware of the fact that state legislatures controlled by Republicans and many Republicans in the House and some business interests have been pushing back against the right of governments and business to consider ESG, environmental, social, and governance issues, along with profit when deciding what to invest in, saying, in effect, you must choose the thing that's going to give you the highest yield in the next quarter, even if it's not better for the country long term. Do you see much possibility that the city's more progressive policies on this have a chance of being compromised by the efforts nationally, or do you think we're pretty autonomous in our ability to set that policy ourselves?

Brian Lehrer: Yes, and that was Biden's veto this week, not allowing Congress to restrict how you can invest New York City pension funds, for example, with social guardrails in mind, climate, and other, not just investment returns.

Brad Lander: That's right. This was President Biden's first veto of this just cynical, nonsense bill. Let's be clear, what's happening mostly, Mitch McConnell and Kevin McCarthy and Ron DeSantis get big political contributions from oil and gas and fossil fuel interests, and they're waging a distracting culture war at the behest of their fossil fuel donors. I guess they were when attacking gas stoves last month, this month, it's ESG investing. We just think of it as responsible fiduciary investing. When you have a big portfolio, you are looking for the best returns, and you have to be mindful of the risks you're facing in the economy. That might be rising interest rates, that also, though, could be rising temperatures and seas because that has an impact not only on the city and on the planet, but on our portfolio. We take a broad view of these environmental, social, and governance risks. We bring shareholder resolutions.

Last year, some of them were about insider trading to make sure that management isn't stealing the money of our retirees. That's an ESG issue. Yesterday, we had a resolution at Starbucks, calling for a third-party assessment of their labor practices so the company can succeed in partnership with its workers. That's an ESG issue. Absolutely, climate risk is financial risk, and it's outrageous that Republicans in Congress would try to tell people, "You can't manage your portfolio with an eye toward the risks as you see them." Very cynical, but again, I really just think they're doing the bidding of their fossil fuel donors, and people should cut through the culture war and see that's what's going on.

Brian Lehrer: I know you've got to go in a minute, but on that point, the critics' argument is, pension funds have a fiduciary responsibility to maximize returns now, and compromising that for social priorities, even if you project that sometime down the road, climate change is going to cost us, is a breach of that responsibility. How would you [crosstalk]?

Brad Lander: We don't compromise returns for social priorities. We take a broad fiduciary responsibility looking at risks, but it has to be long-term as well as short-term. The obligations these pension funds have-- Look, if a firefighter or a first-year teacher or a rookie cop start today, we're now on the hook for their pension in 50 years, so we have to take a thoughtful, long-term look at our portfolio and make investments that are strong in the long run. That's how I understand fiduciary duty, is to meet the actual obligations that we have. If I'm going to have to pay out pension returns 50 years from now, we've got to be making wise investment decisions over the time horizon that matches our obligations. That's what the risk analysis is.

We've got a great team here in our Bureau of Asset Management. I mentioned before, they're looking across a broad range of asset classes, but yes, environmental, social, and governance risks are just a basic part of responsible fiduciary investing. If the Republicans blow that up with this legislation, I think it'll be very difficult for money managers of every sort, whether you're a public pension fund officer, like I am, or a private money manager, to actually meet your client's needs in the short and long-term.

Brian Lehrer: New York City Comptroller, Brad Lander. Thanks as always. Appreciate the time.

Brad Lander: Great to be with you, Brian. Thanks so much.

 

 

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