With New York City Facing Historic Budget Crunch Schumer, Rangel, Bloomberg Announce Obama Stimulus Package to Send NYC Nearly $3.4 Billion in Direct Federal Aid to Help Close Budget Gap

Press Release

WITH NEW YORK CITY FACING HISTORIC BUDGET CRUNCH SCHUMER, RANGEL, BLOOMBERG ANNOUNCE OBAMA STIMULUS PACKAGE TO SEND NYC NEARLY $3.4 BILLION IN DIRECT FEDERAL AID TO HELP CLOSE BUDGET GAP

At Least $1.8 Billion Expected Just for NYC in Direct Budget Aid, $1.6 Billion in New Education Funding

Senator, Congressman, Mayor Said Billions in Aid Will Help Close the Budget Gap, , and Be a Boon for NYC Schools and Hospitals and the New Yorkers they Serve

Schumer Fought to Include a Provision in the Stimulus that Sends Billions in Budget Aid to Cities, Not Through States - Ensures NYC Gets Its Fair Share

With New York City facing an historic budget deficit as the national economy continues to decline, U.S. Senator Charles E. Schumer, Congressman Charles Rangel, and New York City Mayor Michael R. Bloomberg today announced that the new economic stimulus package, The American Recovery and Reinvestment Plan, will send nearly $3.4 billion over the next two years to New York City in direct budget and education funding. Right now, the stimulus is expected to include $1.8 billion in federal Medicaid savings for New York City to help ease pressure on the overall budget, as well as a minimum of $1.6 billion in education aid. The City's Independent Budget Office estimates that the city's deficit will sink to $11.3 billion over the next two and a half years because of falling revenues and rising expenses. Schumer, Rangel, and Bloomberg said that though the stimulus package will certainly help alleviate the city's budget crunch, it won't eliminate the problems and tough choices city and state officials are going to have to make.

"The stimulus package is going to be a shot in the arm for New York City. There is an overwhelming consensus that we should give aid to states and localities. The reason for it is very simple. For federal government to be pumping money in to the economy to reduce severity of the recession, while the states are taking money out of the economy by either laying people off or raising taxes, simply makes no sense," Senator Schumer said.

"This package delivers real and practical relief to the hard working families of the city and the hundreds of small business that are the backbone of our economy. Thanks to the hard work of not just the NY delegation but also to the leadership of Mayor Bloomberg and the Conference of Mayors, it's a package that puts more money in the hands of not just everyday Americans but also local cities and counties to maintain vital services. Money for long-needed improvements in our schools and public housing buildings. .Funding for education, including the kind of career assistance and job training that we ensure that everyone reaches their full potential, especially our disconnected youth and veterans. It is a package that we hope moves us one step closer to restoring economic confidence and security that is needed at home and abroad," Congressman Rangel said.

"The new Federal stimulus bill is shaping up to include some much needed relief for New York City, thanks to Chuck Schumer, Charlie Rangel, and the rest of our Congressional delegation, who deserve our thanks for their hard work and effective leadership. Later this week, I am going to present the City's budget for the next fiscal year, and it should surprise no one that things are going to get worse for us before they better. We can't expect to discover silver bullet solutions, just like we can't expect Washington to solve all our problems. But while this package won't solve all of our New York City's budget problems, it certainly will help a lot," Mayor Michael R. Bloomberg said.

Schumer, Rangel and Bloomberg said today that the economic stimulus package, now being drawn up by both houses of Congress and expected to be as large as $825 billion, will include at least $3.4 billion in direct federal aid to help New York City close its budget gap and boost the city's schools and hospitals. The bulk of the aid will come from two different programs - a temporary increase in the city's FMAP allocation and significant increases to education aid programs.

FMAP
Under both the Senate and House proposals, the economic stimulus package is expected to include $86.6 billionboost in Federal Medical Assistance Percentage (FMAP) over the next nine quarters with New York City slated to save at least $1.8 billion. FMAP is a matching rate that determines the federal funding share for state Medicaid programs. The federal government matches state funds spent on Medicaid, based on the state's FMAP. The FMAP varies from state to state; and New York's FMAP is 50%.

However, Schumer, Rangel, and Bloomberg said the $1.8 billion in savings would ease pressure on the entire budget, not just Medicaid. The significant savings to the overall state budget that result from an FMAP increase could be used for a variety of purposes that are not limited to Medicaid.

Schumer and Rangel fought to include a legislative provision (the "county-local share") that ensures that New York City receive its fair share of the FMAP relief for their Medicaid programs. Since the enactment of the Medicaid program in 1966, New York City has been required to share in the costs of services. New York is one of seventeen states where local governments share with the state in Medicaid participation. Counties are mandated by the state to contribute approximately $7 billion annually or about 32 percent of the non-federal share of the State's Medicaid Program.

Recognizing that New York State counties and the New York City locality are in dire need of direct fiscal aid and are forced to share the cost of Medicaid, Schumer - a member of the Senate Leadership and the Finance Committee which has jurisdiction over Medicaid - fought to ensure that a "local share" provision was included in the stimulus to ensure that New York State counties and localities received the billions in direct aid from FMAP as part of the economic stimulus plan.

In 2003, Congress approved a boost in FMAP for states during an economic downturn, of $10 billion in fiscal relief through a temporary FMAP increase of 2.95 percentage points for each state for five fiscal quarters. According to the Congressional Budget Office, more than half of the states reported that the 2003 increased matching rates enabled them either to avoid or delay making cuts or to make smaller cuts to their Medicaid program.

Education Aid
The Senate economic stimulus package is also going to include a minimum of $26 billion in direct education aid through the Title I and Special Education/IDEA federal formulas and $12.5 billion for public school repair and construction, with New York City estimated to receive a total of at least $1.6 billion. The House economic stimulus package includes $26 billion in direct education aid and $14 billion for school renovation and modernization, with New York City estimated to receive at least 1.7 billion. Congress is using several different formulas to deliver these critical funds to schools. These funds will be distributed using existing federal education funding formulas, such as the one used for Title I, No Child Left Behind and the Individuals with Disabilities Education Act (IDEA) and will be given in a way that gives states and districts the flexibility and tools they need to keep serving our children.

Schumer and Rangel have pushed for a robust amount of funding in the infrastructure portion of the package to be dedicated to school repair and construction to jump start school modernization programs. These dollars will fund 21st Century classrooms that are energy efficient and provide the information technology and cyber infrastructure that will increase America's competitiveness and give our students greater advantages in a global economy.

In addition, both the Senate and House bills include a $79 billion in additional state fiscal relief funding, with $39 billion designated for local school districts, $15 billion to states as incentive performance grants, and $25 billion for other high priority needs such as public safety and education.

The stimulus package is going to be taken up by the Senate this week, and is expected to be signed by the President by the middle of February. The Senate Finance Committee, of which Senator Schumer is a member, has released its draft and will mark up the economic stimulus package on Tuesday. The House Committees, Ways and Means led by Chairman Rangel and Energy and Commerce, and Appropriations have passed their Stimulus proposals.

Source