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November 22, 2013
In 2011, Suffolk County passed a local law (Article I, Section 77-4) barring county elected officials from collecting two public-sector salaries. Now, however, County Executive Steve Bellone wants to change the law to make an exception for Monica Martinez, a newly elected county legislator who also is an assistant principal at the Brentwood School District’s East Middle School.
Ms. Martinez is the sister of the Babylon deputy town supervisor, who is close to Bellone, and she won a primary challenge against another Democrat who was not a loyal soldier. Local political considerations aside, the situation raises interesting questions about the nature of public employment and elective office.
October 10, 2013
Shocked by spiking?
Working added overtime to increase retirement benefits—i.e., pension padding or “spiking”—is an old tradition in the public sector, especially among police officers, firefighters and other employees working under contracts that provide them with ample overtime opportunities. This practice has been a major factor in the recent growth of six-figure pensions.
Here’s the thing: it’s perfectly legal. If you belonged to a retirement system that counted overtime and other forms of extra pay in your pensionable “final average salary” base, you’d have to be either lazy or crazy not to spike your pension as much as possible in the years before you retired (which could be after as few as 20 years). It’s no use blaming employees for doing something the system encourages them to do.
When he was running for governor in 2010, then-Attorney General Andrew Cuomo issued a preliminary report citing widespread pension padding. But he uncovered no evidence of widespread illegal activity or systematic administrative oversights by the state’s public pension funds.
Now Cuomo’s commissioner financial services, Ben Lawsky, reportedly is jumping on the same issue, saying he will focus on pension spiking in his forthcoming audits of city and state pension funds. (more…)
September 18, 2013
The Tier 6 pension “reform” enacted by New York last year applies to all state and local employees who join the state Employee Retirement System or the Police and Fire Retirement System after April 1, 2012. However, the law included a big loophole for police and firefighters, in particular—as is only now becoming publicly apparent, thanks to a detail of the proposed contract extension for Nassau County cops.
The loophole in question is Section 80 of the Tier 6 law (Chapter 18 of the Laws of 2012), which reads as follows:
Notwithstanding any provision of law to the contrary, nothing in this act shall limit the rights accruing to employees pursuant to a collective bargaining agreement for the unexpired term of such agreement or the eligibility of any member of an employee organization to join a special retirement plan open to him or her pursuant to a collectively negotiated agreement with any state or local government employer, where such agreement is in effect on the effective date of this act [April 1, 2012] and so long as such agreement remains in effect thereafter …
September 3, 2013
A new national study estimates that New York’s two largest state-level pension systems have unfunded liabilities of at least $260 billion, using an alternative calculation method that estimates pension liabilities using more conservative interest rate assumptions. The Empire State’s number is part of a 50-state shortfall estimated by State Budget Solutions, a Virginia-based nonprofit research group, at $4.1 trillion.
The study pegs the funded ratio of the New York State and Local Retirement System (NYSLRS) and New York State Teachers’ Retirement System (NYSTRS) at a combined 48 percent — meaning the “actuarial value of assets” in the two systems is slightly less than half of what would be required to back up current pension promises with a truly risk-free financial guarantee.
By contrast, using government accounting standards that allow pension systems to assume they will achieve ambitious long-term investment return targets, NYSLRS officially estimated its funded status at 90 to 92 percent and NYSTRS estimated its ratio at 97 percent as of fiscal 2011.
July 2, 2013
Effective July 1, some newly hired non-union employees of state and local government in New York will be able to opt into the same defined-contribution retirement plan that’s been available for nearly 50 years to faculty and staff of the State University of New York.
The DC alternative, limited to those earning at least $75,000 a year, was the most significant change included in Governor Andrew Cuomo’s Tier 6 pension plan. Adopted last March, the pension “reform” otherwise extended a same-but-less version of the existing defined-benefit pension plan as the sole retirement option for state and local workers in positions represented by labor unions (whether or not the employees themselves choose to actually join a union).
June 17, 2013
The New York State Professional Firefighters Association (PFFA) was not at all pleased by the Empire Center’s news release last week highlighting the generous pensions of recently retired local police and firefighters. The union has responded by posting this “warning to legislators” accusing of us of clinging to “statistical sleight of hand rather than legitimate analysis.”
Specifically, PFFA President Michael McManus claims the Empire Center (and this writer, in particular) “unfairly attacked” the pensions of police and firefighters when we reported that one out of six cops and firefighters retiring in 2012 had qualified for maximum pension benefits of more than $100,000.
May 29, 2013
Leveraging his clout as sole trustee of New York State’s $160 billion Common Retirement Fund, Comptroller Thomas DiNapoli is making increased use of corporate shareholder resolutions to push political and social agendas that have little or nothing to do with corporate performance, according to a Proxy Monitor special report released today by the Manhattan Institute’s Center for Legal Policy (CLP).
DiNapoli, a Democrat, has been pushing proposals that, as described in the report, neatly intersect with the policy priorities of key Democratic and progressive constituencies. In fact, under this leadership, the state comptroller has begun rival the longtime shareholder activism of the New York City comptroller’s office, the report says. The CLP notes:
May 17, 2013
Financial disclosure filings made public yesterday have revealed that Governor Andrew Cuomo has a net worth of at least $1.75 million. But in one sense, that doesn’t actually make him unusual among New York government employees at his level of education and experience.
Imagine an alternative career history for the governor, in which Cuomo decided not to pursue a career in law and politics. Instead, after graduating from Fordham in 1979, he went straight to work as a public school teacher in, let’s say, the city of Yonkers. Today, after 34 years in the classroom, he’d be a Tier 3 retirement system member making a salary of $118,709.* And, having turned 55, he’d be eligible to immediately retire with a pension of $78,384, which has a net present value equivalent of nearly $1.6 million — i.e., it would cost a man Cuomo’s age $1.6 million to purchase an annuity worth $78,384 a year for the rest of his life.**
May 13, 2013
The state pension fund gained about 10.4 percent on its investments during the recently ended 2012-13 fiscal year, Comptroller Thomas DiNapoli announced today. The latest gain is comfortably above the pension fund’s 7.5 percent target rate of return.
So happy days are here again in public pension land, right? Um, no—not quite. A couple of points: (more…)
April 9, 2013
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New York’s new “stable option” pension gimmick for local governments and school districts is “a stopgap with long-term risks,” Moody’s Investor Service warned this week.
The pension funding changes, approved as part of the 2013-14 state budget as alternatives to an even more questionable proposal by Governor Andrew Cuomo, were the focus of a two-page analysis in Moody’s latest biweekly Credit Outlook report (subscription-only).
“The deferral of pension contributions would increase the unfunded pension liabilities of participating local governments, a credit negative,” Moody’s said [emphasis added].