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FY 2020-21 Will Be Critical; If Budgeted Federal BUFFALO FISCAL STABILITY AUTHORITY Annual Report of the Buffalo Fiscal Stability Authority Fiscal Year Ended June 30, 2020 November 23, 2020 Buffalo Fiscal Stability Authority Authority Directors and Staff as of June 30, 2020 Directors R. Nils Olsen, Jr., Chair Jeanette T. Jurasek, Interim Vice-Chair George K. Arthur, Secretary Frederick G. Floss Byron W. Brown (ex officio) Mark C. Poloncarz (ex officio) Vacant Vacant Vacant Staff Jeanette M. Robe, CPA Executive Director Nikita M. Fortune, BA Administrative Assistant Bryce E. Link, MPA Principal Analyst/Media Contact/Treasurer Nathan D. Miller, BS Senior Analyst II/Manager of Technology Claire A. Waldron, CPA Comptroller Contact Market Arcade Building 617 Main Street, Suite 400 Buffalo, New York 14203 Phone: 716.853.0907 ii Fax: 716.853.9052 Email: [email protected] Web: https://bfsa.ny.gov Annual Report of the Buffalo Fiscal Stability Authority Table of Contents Introduction ......................................................................................................................... 1 Financial Impact and Uncertainty Related to Coronavirus COVID-19…………...………1 Background ......................................................................................................................... 2 Mission Statement…………………………………………………………………………4 BFSA Governance and Administration .............................................................................. 5 Summary of Accomplishments in 2019-20 ........................................................................ 6 Progress Towards Fiscal Stability.............................................................................. 7 Multi-Year Financial Planning .................................................................................. 9 Monitoring Fiscal Health ......................................................................................... 13 Reports and Recommendations Issued by the BFSA during 2019-20 .................... 14 Workforce Summary and Trends ............................................................................. 24 Providing a More Cost-Effective Financing Framework ........................................ 27 Structural Reform and Savings Opportunities ......................................................... 33 Collective Bargaining Agreements .......................................................................... 34 Additional BFSA Operational Information: ............................................................ 34 Legal Matters…………...………………………………………………………..34 Annual Internal Controls Review/Governance…………………………………..34 Financial Statements ............................................................................................. 39 Budget ................................................................................................................... 39 Health Insurance Plans......................................................................................... 39 Leases .................................................................................................................... 39 Cumulative Financial Impact of Actions Taken by the BFSA ......................................... 40 BFSA Reports on the 2020-21 Budgets and 2021-2024 Financial Plans of the City of Buffalo and the Covered Organizations ............................................................................ 43 Overview .................................................................................................................. 43 City of Buffalo ......................................................................................................... 44 Buffalo City School District .................................................................................... 77 Buffalo Municipal Housing Authority ................................................................... 112 Buffalo Urban Renewal Agency ............................................................................ 127 Appendix: A. BFSA Authorizing Statute..............................................................................A1-A41 iii This page was intentionally left blank. iv Introduction This annual report summarizes the actions, accomplishments and progress of the Buffalo Fiscal Stability Authority (the “BFSA”) since its inception in 2003. This is the seventeenth such annual report. The focus of this report is the period from July 1, 2019 through June 30, 2020 and complements the information reported in prior annual reports. Since 2003, the City of Buffalo (the “City”) and its non-exempt Covered Organizations, including the Buffalo City School District (the “District”), the Buffalo Urban Renewal Agency (“BURA”), the Buffalo Municipal Housing Authority (the “BMHA”), and the Joint Schools Construction Board (the “JSCB”), collectively, (the “Covered Organizations”), have operated under the requirements of the Buffalo Fiscal Stability Authority Act. The information presented within this annual report is historical in nature and is not intended to project the BFSA’s expectations of future events. Please note that within the section titled “BFSA Reports on the 2020-21 Budgets and 2021-2024 Financial Plans of the City of Buffalo and the Covered Organizations,” information related to future projections over the next four fiscal years as made by management of the City and Covered Organizations are discussed. BFSA examined and reported on the reasonableness of these forecasts. The Joint Schools Construction Board is no longer operational as the program has been completed; therefore, there is no report on this Covered Organization. The results of BFSA’s analyses, reviews and recommendations to the City and Covered Organizations are provided in the individual reports included within the aforementioned section and should be read as part of this annual report to fully understand the financial condition of the various organizations. Since the BFSA was created in 2003, the cumulative financial impact of BFSA’s actions to the City of Buffalo and its Covered Organizations has totaled approximately $458.6 million. Of this amount, $240.4 million is attributed directly to savings achieved through the wage freeze which was implemented on April 21, 2004 and lifted on July 1, 2007. The financial impact and related savings were created through the exercise of extraordinary powers granted to the BFSA by New York State (the “State” or “NYS”), and through the cooperation of the City of Buffalo and its Covered Organizations. For details of the BFSA’s actions and related savings, please see Tables 1-3 beginning on page 40 of this report. This report has been prepared pursuant to the requirements of New York State’s Public Authorities Accountability Act of 2005 and the Public Authorities Reform Act of 2009. Financial Impact and Uncertainty Related to Coronavirus COVID-19 On January 31, 2020, the United States Secretary of Health and Human Services (HHS) declared a public health emergency related to the global spread of coronavirus COVID-19 (“COVID-19”), and a pandemic was declared by the World Health Organization in February 2020. On March 22, 2020, the Governor of the State of New York issued the “New York State on PAUSE” executive order which closed all non-essential business statewide. The NYS on PAUSE order was lifted for the County of Erie in four phases, with each phase allowing different industries to reopen and resume operations. Phase I began on May 19th, Phase II on June 2nd, Phase III on June 16th, and Phase IV on June 30th. 1 The financial impact to the State and the City has been significant and has had a negative impact on the 2019-20 fourth quarter of the City, and such impact has continued into the 2020-21 fiscal year. Key underlying assumptions related to the financial impact from COVID-19 have been reflected in the budgets and financial plans of each organization and are discussed in the individual reports on each organization included herein beginning on page 43. The final financial impact as it relates to the 2019-20 fiscal year for the City and Covered Organizations will be reported with the audited financial statements; the BFSA Act requires the City to submit audited financial statements within 120 days after the close of the fiscal year. Both the City of Buffalo and the State of New York have requested and are waiting on federal stimulus relief; it is unknown when or if this stimulus will be provided. The City budgeted anticipated federal stimulus funding in the amount of $65.1 million, which has not yet been approved by the Federal government. Various stimulus bills have been proposed with no action taken. Most recently, on October 1, 2020, the House of Representatives passed a stimulus bill that totaled $2.2 trillion. Within the bill there is $436.0 billion of funding to state and local governments facing revenue shortfalls due to the impact from the pandemic. Negotiations are ongoing and both the Senate and the White House have proposed stimulus packages, with the White House proposal valued at $1.8 trillion. The Senate Republicans recently advanced two separate relief bills valued at $500 billion a piece and neither bill was approved. The inclusion of this revenue is considered speculative. The enacted New York State budget included reductions for all local aid and grants. In June 2020, the State withheld 20 percent of State Aid and Incentives to Municipalities (“State AIM") payments to various local governments, including the City of Buffalo. Currently, the State has indicated this payment is delayed from its original
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