School Construction Authority faces $140M insurance debt

December 09, 2013 08:02AM

The city’s School Construction Authority is set to lose $140 million from its budget by the end of the year due to rising costs related to the so-called scaffold law, which requires the agency to carry hefty accident insurance.

The SCA is required to cover the costs of workers’ possible injuries, the estimated price of which has spiked in recent years. Under the roughly 100-year-old Labor Law 240, often deemed the scaffold law, developers are responsible for all liability for accidents on a building site. And similar budget shortfalls could affect other city agencies that deal with construction costs.

Two years from now, the SCA will shoulder a $260 million cut, bringing the three-year total loss to $400 million, which officials told Crain’s is on par with the cost of building 10 new schools.

The SCA is allotting $650 million for insurance coverage through 2016 – almost three times what it currently pays, Crain’s said. Its current insurance policy expires later this month. The Port Authority of New York and New Jersey and the Metropolitan Transportation Authority are also expected to be hit with similar cuts.

Contractors and developers have protested the law in Albany over the past few months, but to no avail.

“To see these insurance costs for the SCA is alarming, and it shows that we have really hit the breaking point,” Lou Coletti, chief executive of contractors’ group the Building Trades Employers’ Association, told Crain’s. “Now that this is a crisis that hits home for everyone, and we’re literally not going to be able to build classrooms for our children, we are more hopeful [about changing the law].” [Crain’s]Mark Maurer