New York City is financially accountable for numerous entities that are legally separate but can impact its budget. Today, State Comptroller Thomas P. DiNapoli released updated reports on three major city-supported agencies — the New York City Department of Education (DOE), the New York City Housing Authority (NYCHA) and New York City Health + Hospitals (H+H) — highlighting the major financial and other issues they are confronting.

DiNapoli also launched a new data tracker to monitor trends for New York City agencies’ performance data, staffing, and spending.

“We continue to shine a light on the financial challenges city agencies have to contend with amid economic and budget uncertainty,” DiNapoli said. “Education, affordable housing, and health care are essential needs for millions of city residents. Given recent budgetary difficulties, discussion over the issues facing these agencies is warranted. These reports and my new monitoring tool are meant to provide information and transparency to the public and policy makers alike.”

DiNapoli’s New York City Agency Services Monitoring Tool enables users to track agency-specific delivery of services, staffing levels, and spending to track trends affecting the agencies and help identify areas of potential risks to the city budget. The tool features data for more than 40 city agencies and departments and will be updated monthly.

New York City Department of Education

DOE is the largest public school system in the nation, serving roughly one million students in more than 1,800 schools (including charter schools) and child care centers. The DOE’s budget, which reached $38.4 billion in fiscal year (FY) 2024, accounts for 36% of the city’s total expenditures.

Issues facing DOE include:

• Asylum Seeker and Migrant Student Enrollment: The city estimates that approximately 30,000 children of migrants and asylum seekers are enrolled in city schools during the 2023-24 school year including 12,000 since June 30, 2023. DOE spent $22 million on initiatives related to these students in FY 2023, despite not having budgeted for such costs. There are no budgeted costs for spending on these students in FY 2024 either. Fair Student Funding allocations alone for these students are likely to exceed $125 million in FY 2024; however, additional per-pupil state aid would likely defray a portion of such costs.
• Enrollment: The number of K-12 students enrolled in New York City public schools fell nearly 9.2% between the 2019-20 and 2022-23 school years, with the pandemic exacerbating an existing downward trend. Some projections expect enrollment to continue declining. Most education aid is calculated on a per-pupil basis, meaning the city may also need to adjust its expectations of support from federal and state sources.
• Class Size Mandate: The state recently required the city to lower class sizes by FY 2028, which is expected to cost $1.3 billion annually in additional operating costs once fully phased in. If DOE fails to meet certain benchmarks, the state has the authority to withhold a portion of its aid until the city achieves compliance.
• Special Education Services: City spending on federally mandated special education services has more than quadrupled in the past decade, reaching $1.07 billion in FY 2023. DOE has reported that it does not expect either the demand for such services or their costs to decline, and that it is facing a significant backlog of cases.
• Charter School Per-Pupil Tuition: Even as enrollment in traditional public schools declined during the pandemic, enrollment in charter schools rose. Based on enrollment projections, the city’s preliminary estimates show that charter school tuition costs could increase by $47 million in FY 2024 and rise to $449 million by FY 2027 if not offset by additional aid.

New York City Housing Authority

NYCHA, the nation’s largest public housing authority, is also the city’s largest landlord (maintaining 7.1% of all rental apartments) and its greatest source of affordable housing, with 177,569 apartments. NYCHA’s adopted 2023 budget is expected to total $4.4 billion, with city funds comprising 5.3%, federal subsidies accounting for 65% and tenant rental revenue making up 19%.

Issues confronting NYCHA:

• Declining Rent Collections: Tenant rent revenue, which prior to 2016 made up about a third of NYCHA’s operating budget, has been on the decline and fell substantially during the pandemic. Collections have continued to decline even as the Public Health Emergency has ended. In 2023, rent collections are budgeted at $850 million — 17% less than what was collected in 2016. This has contributed to budget gaps that are projected to be as high as $56 million in 2027.
• Capital Needs: NYCHA’s facilities require $78.3 billion in physical repairs and upgrades to bring them into a state of good repair. Costs have grown due to rising construction prices and the ongoing physical deterioration of the properties. The 2023 physical needs assessment estimated that the authority’s capital needs had increased by 73% (or $33 billion) from 2017; two-thirds is attributed to market price escalation.
• Maintenance Issues: NYCHA’s backlog of open repair requests is significant and has grown in recent years, with 604,645 open work orders as of June 2023. NYCHA attributes a portion of this backlog to the pandemic when non-emergency work orders were put on hold. From FY 2022 to FY 2023, the average time to resolve both emergency and non-emergency repair requests rose by 27% and 33% respectively. NYCHA has suggested recently that its financial issues, including rental arrears, are making it more difficult to address these issues. Maintenance issues have also led to lower turnover of vacant apartments managed by NYCHA.

New York City Health + Hospitals

H+H is the largest municipal public health system in the country and the city’s largest provider of care to Medicaid patients, mental health patients, and uninsured patients. The system includes 11 acute care hospitals, five skilled nursing facilities and over 50 patient community health centers.

Issues challenging Health + Hospitals include:

• Operations after the Public Health Emergency: The city was the early epicenter of the pandemic and H+H was confronted with an influx of patients and assumed a significant role in planning for and responding to the City’s COVID-19 public health emergency. The federal Public Health Emergency ended in May and H+H has transitioned its citywide testing and immunization response to its hospitals and clinics. Inpatient and outpatient visits have returned to pre-pandemic levels and new programs initiated during the pandemic with city financial support continue.
• Asylum Seeker and Migrant Response: H+H is a lead agency in the city’s multi-agency response to the recent influx of asylum seekers and migrants, tasked with managing the vendors selected to operate the central intake center and 15 of the city’s Humanitarian Emergency Response and Relief Centers (HERRCs). These services could increase, signaled by H+H agreeing to a security contract which could serve up to 19 HERRCs. The city has an agreement with H+H to reimburse it for any costs incurred ($469 million in FY 2023) but the financial impact to the city’s budget resulted in another program to eliminate the gap for FYs 2024 through 2027, reducing other financial support provided by the city.
• Federal/State/City Funding: H+H’s financial condition depends on funding from government sources, but the timing of these funds can be inconsistent. H+H’s COVID-19 costs reached $3.2 billion through FY 2023 but H+H has yet to receive $1.2 billion from the Federal Emergency Management Agency.
• Nurse Staffing: The pandemic amplified the problem of nurse staffing shortages across the United States including at H+H, which resulted in increased reliance on temporary staff and higher labor costs. In August, the New York State Nurses Association approved a contract agreement that would award pay parity, higher than the pattern assumed by the city in its financial plan, and improved staffing ratios to about 8,000 nurses at H+H. It has yet to be determined if the city will pick up the higher costs as it has done previously.

Issues Facing New York City’s Agencies
New York City Department of Education
New York City Health + Hospitals
New York City Housing Authority

Fiscal Tracking Tools and Other Reports
MTA Financial Outlook
Fiscal Cliffs Dashboard
Industry Tracker
Asylum Seeker Spending Report
Review of the Financial Plan of the City of New York