FPWA Analysis

New York City’s fiscal year 2023 adopted budget achieves gains for human services

Total funding remains below last year levels amid falling federal funding

On June 13, 2022, the New York City Council passed its budget for fiscal year 2023. The adopted budget commendably restores a significant portion of the funding that was cut from the city’s human services agencies in the Mayor’s fiscal year 2023 executive budget. Increased human services funding accounts for nearly two-thirds of the total change between the executive and adopted budgets. The New York City Council deserves credit for fighting to restore human services funding for fiscal year 2023. At the same time, federal fiscal cliffs and looming budget gaps have resulted in lower total funding for human services. The Administration and Council must be vigilant that human services, which supported the New Yorkers hit hardest by the pandemic, remain fully funded amid these mounting pressures.

Restored funding, new initiatives

The adopted budget added $938.9 million to the human services funding proposed in the executive budget, pushing fiscal year 2023 human services funding above the level adopted by the 2022 budget. All eight human services agencies monitored by FPWA’s Federal Funds Tracker saw funding increases from the fiscal year between the executive and adopted budgets, with the largest gains for the Department of Social Services (DSS), Department of Youth and Community Development (DYCD), and Department of Health and Mental Hygiene (DOHMH).

This funding will allow the city to expand human services initiatives, including:

  • Summer Rising: $277 million in funding for elementary and middle-school summer enrichment
  • Summer Youth Employment Program: $79.4 million for summer jobs for older youth
  • Cost of living adjustments: $60 million for human services workers and $46 million for special education and day care providers.

Federal retrenchment and fiscal cliffs

While the adopted budget increased human services funding from levels proposed in the executive budget, this level remains nearly $2 billion below the fiscal year 2022 actual budget levels that closed out the year. Budget actuals reflect adjustments to spending as revenue comes in through the fiscal year. The drop from last year’s actual is largely the result of an unprecedented—but temporary—inflow of Covid-19 relief funding appropriated by a series of federal legislation.

This emergency relief is already phasing out. Total federal funding to New York City fell by nearly $10 billion from fiscal year 2022 and will continue to shrink by an average of $770 million each of the next three years. This will contribute to annual budgets gaps that average nearly $4 billion through fiscal year 2026. Federal funding for human services fell by $938 million between the fiscal year 2022 budget actuals and the fiscal year 2023 adopted budget. This decrease accounts for nearly half of the total human service budget cuts. Further decreases in unrestricted federal aid to New York City also put pressure on human services funding.

While the adopted budget increased funding from the executive, six of the eight human services agencies are funded at lower levels than fiscal year 2022 actuals. DYCD will see an 8.2 percent increase while the Administration for Children’s Services (ACS) will get a 0.6 percent uptick. The largest funding cuts will accrue to Small Business Services (SBS), DOHMH, the Department of Homeless Services (DHS), and Housing Preservation and Development (HPD).

Total funding for human services ($ in millions)

These cuts largely align with falling federal funding. DOHMH and DHS saw enormous influxes of federal funding that are now ebbing. SBS saw a city funded expansion in services related to Covid-19 that are now winding down. Expanded city-funded initiatives at DYCD have allowed the agency to experience funding growth despite a 31.5 percent drop federal funding. Conversely, HPD’s 14.5 percent budget cut is worse than would be predicted by its 4.5 percent hit to federal funding.

Rising inflation will compound this problem. Focused in the basic necessities of food and energy, high inflation will simultaneously hit the lowest income families hardest, and weaken the buying power of public programs. While inflation is likely to push the city’s tax receipts—and capacity to fund services—up, data from the Federal Funds Tracker shows this relationship may not exist at federal level, as many federal block grants do not adjust with inflation.

Taken together, eroding federal funding, the city’s looming budget gaps, and high inflation signal mounting strain on human services. These services were vital in averting the worst effects of the pandemic and will remain equally important in supporting an equitable economic recovery. As these conditions unfold, it is critical that the Mayor and City Council remain vigilant in safeguarding critical human services funding.