Archive for the ‘The Nassau County Mangano-Kaiman Watch’ category

The Nassau County Mangano-Kaiman Watch, March 29, 2014 – By George J. Marlin

March 29, 2014

The Bogus Kaiman Union Deal:

Collapsing Under Its Own Weight

As “The Watch” predicted, the plan to railroad approval of the bogus Kaiman Union Deal through the County Legislature and the NIFA board—without proper vetting and financial analysis—on Monday, March 31, 2014 has collapsed. The NIFA meeting schedule for that night has been canceled.

The plot failed for several reasons:

  • Many County Legislators made it clear that they would not act until they received from Maurice Chalmers at the Office of Legislative Budget Review (OLBR) an analysis of the proposal;
  • Kaiman finally relented and NIFA consulted qualified outside labor lawyers. The lawyers had problems with the pension clause that “would require that new employees go to a Tier 6 pension level that would require increased employee contributions.” Apparently, it may not be legal to negotiate pension contributions in an existing contract. In Kaiman’s desperate rush to get a deal done to promote his languishing political career, he agreed to concessions that union lawyers had to know were bogus. (Union lawyers, who took Kaiman to the cleaners, must have had trouble keeping straight faces during the Kaiman negotiations. It’s easy to see how this would have unfolded, with a new employee suing—and winning—perhaps a year from now, and unraveling the savings from the pension system.)  It’s also important to note that the savings from lower pension costs are a key and significant component of the deal—a deal which already falls at least $150 million short of the mark even if everything in it works out.

Word is that the outside labor lawyers have pointed out that there are a number other financial and legal flaws in the Kaiman Union Deal.

Kaiman’s failure to do his homework before announcing an agreement nearly a month ago reminds one of Nancy Pelosi’s comment on Obamacare: “We have to pass the bill so that you can find out what is in it.” Fortunately, unlike Obamacare, we are learning bit by bit what a disaster the Kaiman Union Deal is before passage.

Also predicted by “The Watch,” Kaiman’s board approval deadline date of March 31, 2014 proved to be a false one. A state judge has extended for two weeks the start of a new police class, and it has been revealed that the County could seek the judge’s permission to continue using the expired police test results.

As of today, the OLBR has not received the backup information needed to properly analyze the financial impact of the Kaiman Union Deal. Why so? Because a genuine analysis would reveal that the Kaiman Union Deal is not cost neutral but will be $150 million or more short of that goal. This may explain why it is rumored that Nassau County’s Chief Financial Officer refuses to testify that the Kaiman Union Deal is cost neutral before the County Legislature.

This is precisely what happens when the chairman of a financial control board which is supposed to be impartial becomes the chief negotiator. All objectivity is lost, the details don’t matter and getting any deal done becomes more important than getting a good deal done.  It becomes not the County’s deal but “NIFA’s deal”—and NIFA’s board members should be wary of being associated with such a disaster-in-the-making. Hopefully those NIFA board members who were prepared to approve the Kaiman Union Deal have realized they have been had—and decide not to let it happen again.

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The Nassau County Mangano-Kaiman Watch, March 17, 2014 – By George J. Marlin

March 17, 2014

The Bogus Kaiman Deal

 Will NIFA Discard Its Fiduciary Obligations And Squander Its Integrity By Approving An Incredulous Deal That Lifts The Wage Freeze?

This past week will go down in NIFA annals as an extraordinary one.  Extraordinary in terms of deceitful tactics and illusory pronouncements employed to procure a bogus deal to lift a wage freeze in a way that puts County finances in further peril.

Let’s review:

Monday, March 10, 2014

The primary reason Chairman Kaiman called a board meeting was to force a vote on a “sense of the board” symbolic resolution that laid out conditions to lift a wage freeze (a wage freeze that nevertheless needed to be renewed that same day due to an impending deadline later in the week).  That resolution was based on verbal representations of what parties said would be in the agreements—not on documented evidence supporting a cost neutral or revenue-funded deal, on the fear of losing the suit challenging the legality of the wage freeze that was pending in the State Supreme Court and other intangibles.  Another reason for the Monday resolution:  Kaiman wanted a public pat on the head at Mangano’s State of the County address on Tuesday.

Director Chris Wright rightly opposed the Kaiman resolution citing the likely double counting of most or all of the “savings” from attrition.  Director Dermond Thomas opposed it, as well, citing his discomfort with the County’s continuation of the freeze without making progress on balancing the budget.

Attrition, while expressly not named in the budget, is what the County uses to cover excessive overtime and other unbudgeted costs such as those associated with harsh winter storms.  Stripped bare of that cushion, which is a commonly used budgetary technique to keep governments liquid in the face of surprises which always seem to occur, the County could run out of cash.

Double counting means that the estimates of $129 million of net costs from these deals which require funding in order to lift the freeze are more likely in the range of at least $250 million, and as much as $285 million.

Even at $129 million, the County proposes (without yet documenting its proposal), and NIFA appears ready to accept inflated projected revenues from anticipated Albany approval of additional speed cameras, that are treated as “new” revenues to help pay for the deal even though a portion are already included in the multi-year plan.  More double counting.

Tuesday, March 11, 2014

At Ed Mangano’s State of the County Address, Kaiman gets his public recognition.

In his speech, Mangano made this ridiculous comment:  “In 2012, the County reported a $27.5 million dollar surplus on a GAAP basis and continues to show improvement with respect to the NIFA statute test, which is even more conservative than the GAAP reporting standard.”

After 4 years in office, Mangano has not learned there is only one “GAAP” and those accounting principles applied to the County determined it incurred, in 2012, an $85.5 million deficit (triple the NIFA threshold for a control period).

The County’s audit, based on the County’s chosen “budgetary basis” of accounting, came up with a “surplus” due to the fact that it failed to pay some current bills in 2012 and paid others by borrowing money.  For example, $88 million in tax cert refunds were not paid in 2012 but were pushed into fiscal 2013.  Also, there was an unbudgeted use of $10 million in reserves in 2012 and the use of $67.8 million in long-term borrowing to pay current bills such as termination payments.  The County considers such borrowings to be “revenue” in its results, despite the fact that such treatment is at odds with both GAAP and specific provisions of the NIFA statute.

These practices are like using one’s credit card to make current mortgage payments on one’s home and then making minimum payments on the credit card balance for the next thirty years.  And then declaring the household budget “balanced.”

The County Executive’s other absurd boast is the “fund balance has increased 28% to $82 million.”  The fund balance did not increase because the County incurred a surplus; rather, it increased solely because it borrowed money.

Wednesday, March 12, 2014

Supreme Court Justice Arthur Diamond hands down an impeccably correct decision ruling that NIFA “did not exceed its authority to impose wage freezes in 2011, 2012, 2013.”  This decision is a major blow to the unions’ bargaining position.  This is one of the lawsuits of which the NIFA board was advised to believe it would lose.  Advised by those looking to make a deal—any deal—with the unions.  On the same day, the unions and the County filed agreements with the County Legislature which were at odds with what NIFA had been promised leading up to its Monday vote—the vote they took without the benefit of any documentation.  Thank heavens Monday’s vote wasn’t binding.

Thursday, March 13, 2014

Knowing the finance numbers don’t work, Kaiman attends a series of meetings with County and union officials where he acts as both a negotiator and a supplicant, acting as if he had no leverage and did not win a court case.  NIFA gives ground on a number of points, despite its court win.

Friday, March 14, 2014

More meetings.  It appeared as though Kaiman was headed toward appeasement and dereliction of duty.  What was a bad deal on Monday is a marginally worse deal on Friday, as more ground is given by the “winner”—something you wouldn’t see in any rational business deal.

Saturday, March 15, 2014

Kaiman, Mangano and union leaders announce a deal based on bogus numbers that if approved by the County Legislature, union members and NIFA will lift the Wage Freeze on thousands of unionized government workers.  The means to pay for these deals?  Nobody’s yet sure—they’re taking the County’s word for it for now.

* * * * *

Don’t expect the Bogus Deal to get to a NIFA vote until early April.  There is a false deadline of March 31 for the start of a new police class under the new arrangements, but this can be extended.  The Legislature will have to mull things over for a few weeks and, since it meets on Mondays, will likely consider the deals on March 31.  Many members—likely all nineteen—have asked Maurice Chalmers at the Office of Legislative Budget Review (OLBR) for analysis of the proposal.  (Chalmers is known as a first rate numbers guy who calls them as he sees them.)  Don’t be surprised if the OLBR determines that the negotiating parties will have to come up with $275 million or more—not $129 million.

At some point during this interim period, the NIFA board will realize that it’s not in on the joke—it is the joke.  It’s been said that a mind is a terrible thing to waste.  Well, a reputation—and NIFA had a good reputation, as did its individual members—is a terrible thing to waste, as well.  NIFA’s credibility is one of its prime assets.  Recent shenanigans represent a spend down of that asset.  That’s not good for NIFA or control boards around the State.

The Nassau County Mangano-Kaiman Watch, March 11, 2014 – By George J. Marlin

March 11, 2014

A PARODY…OF SORTS

From: Oyster Bay Republican Club

Re: Year End Wrap Up

Well, it was a mixed year.  We couldn’t take the luxury box at Giants Stadium paid for by our rich donors and so the Club didn’t have a place to hang out during the Super Bowl.

On the positive side, we did win the elections and no indictments have been issued.

NIFA’s Kaiman is one of us, a hack, sure, a Democratic hack, but one who recognizes how this game works.  Plus, he wants to be somebody and will stay in line.

The Club is worried about the County unions, especially the PBA.  I don’t know how much longer the PBA leadership will buy “Ed’s a nice guy and wants to help you.”   Even Carver will at some point say no mas.  This PBA forgot that police and other public employees need tax increases to get their steps, pay increases, etc.

Ed’s a Forrest Gump financial genius. He fought NIFA based on Ciampoli’s advice (Ciampoli was wrong on every legal case he touched). The County lost, an humiliating NIFA takeover was imposed on Ed and it’s the best thing that ever happened to Ed.

This wage freeze scheme saves the County hundreds of millions of dollars and avoids the need for a property tax increase maybe ever.  Ed’s dream of a third terms looks “100 percent.”

Ed “fights” the wage freeze but if it were lifted the required County property tax increase would make Suozzi (remember him?) look like a piker and we would beg to have it re-imposed.  Plus, Kaiman writes an essay on NIFA on the math section of the County SAT without a single number.  This thing will blow up some time but we’ll all be on OTB payroll by then trying to get a piece of VLT vendor action.

Some of the young cops will some day figure out that Mangano has played them but until then let’s keep Sandy funding coming in.

See you all at the Castle for poker and some extra-curriculars on Thursday.

The Nassau County Mangano-Kaiman Watch, February 25, 2014 – By George J. Marlin

February 25, 2014

The Jon Kaiman “Plan to Modify Wage Freeze”:

 A Review

Nassau County wage freezes imposed by NIFA, at the request of County Executive Mangano in 2011, 2012 and 2013, have saved the County approximately $230 million and has saved the County from financial insolvency.

In other words, instead of making additional spending cuts or renegotiating union contracts or raising property taxes, the County has saved its fiscal skin by taking $230 million from Nassau workers.

Because the County has not adequately addressed its projected operating deficit for 2014, it will have to request NIFA to impose another wage freeze in March 2014.

It is interesting to note, however, that ever since Nassau County PBA boss, Jim Carver, met with the Executive Deputy Secretary to Governor Cuomo in October 2013, NIFA Chairman Jon Kaiman has been desperately trying to get a deal done that would lift the wage freeze on police personnel in 2014.

Kaiman’s “Hail Mary” effort was described in a memorandum he distributed to NIFA board members titled “Plan to Modify Wage Freeze” dated February 4, 2014.

What was most remarkable about Kaiman’s rambling memo was that it did not contain any financial numbers.  That’s probably because PBA proposals do not meet the goal of being cost neutral.

Time and again the PBA has put on the table proposals that have been rejected because its rosy financial assumptions do not hold up when analyzed by NIFA staff.  For instance, in October 2013, a NIFA analysis of a PBA proposed Memo of Agreement revealed that the document was not cost neutral but would cost the County “approximately $240 during the term of the Multi-Year Plan with additional expenses continuing during an extensive period.”

In addition, PBA proposals always insist on counting police force attrition which is already included in the County’s operating budget.  Attrition savings cannot be counted twice!

Proposals work if the projected savings are equal to or more than the wage freeze in real dollars during the life of the proposal.  A proposal fails if it costs even a dollar more than the wage freeze saves.

Time and again when the math did not work, the PBA threw down intangibles on the table—like morale.  And that’s exactly what Kaiman resorted to in his numberless memo.  Given police minimum manning and the extraordinarily high overtime, and that median police compensation is higher than the median compensation of Nassau taxpayers, it seems unlikely that the police are depressed.

Furthermore, to suggest that the wage freeze “has had a serious affect on morale and is leading to a crisis scenario”, does not speak well of the policies of Kaiman’s boss, Governor Andrew Cuomo.  Lest one forget the Governor has supported a “0, 0, 0” position on wage increases for state employees.

For Kaiman to argue that his numberless proposal, if implemented, could lead to a “permanent lifting of the wage freeze” is ridiculous and legally impossible.  NIFA under its statute cannot commit not to impose a wage freeze.

Then there is the issue of the union lawsuits against NFA that argue the wage freeze is unlawful.  The PBA’s offer to withdraw its lawsuit and waive future litigation if a deal is struck is equivalent to giving sleeves off a vest.  The unions know the case law on wage freezes side with NIFA.

Finally, Kaiman’s latest “Hail Mary” pass—counting $8 million of very rosy projected fines from additional red light cameras—just doesn’t cut it.  In the unlikely event fines reach projected amounts, it would not be enough to fund the PBA proposal.

The Kaiman memo is ultimately all gibberish without numbers.  To get headlines and his photograph in the press, Kaiman is willing to capitulate and to destroy the public integrity of NIFA.

The Nassau County Mangano-Kaiman Watch, February 24, 2014 – By George J. Marlin

February 24, 2014

PREAMBLE

I had the privilege of serving the people of Nassau County as a Director of the Nassau Interim Finance Authority (NIFA), a New York State financial oversight and control board, for four years.  During most of my tenure as a NIFA Director, Nassau was in a control period because the County had failed to adequately address its fiscal deficit.

Since the NIFA control period began on January 26, 2011, the County has failed to stop illusory budget practices and to stop juggling money to keep on the budgetary lid.  Instead of managing fiscal realities, County officials have governed by finger-pointing, issuing rosy press releases and attending ribbon-cutting events.

As a result of the County’s incompetence, negligence and indifference, the NFIA staff projects operating deficits of $157 million in fiscal year 2015, $190 million in 2016 and $255 million in 2017.

A control period is a Draconian measure that a locality should wish to avoid and if it occurs, to climb out of as quickly as possible.  But not Nassau.  It prefers to defer tough decisions and blithely go along la de da, tomorrow is another day.

The Nassau County Mangano-Kaiman Watch is dedicated to exposing fiscal and political shenanigans of County and NIFA officials and to waging a genuine reform campaign to prevent fiscal catastrophe and to restore taxpayer confidences.