Tells Colleagues to Fight Mayor

Chief Leader - March 29, 2011


Councilman: VSF Attack Looks 'Dead in Water'

The Chairman of the City Council's Civil Service and Labor Committee has written his colleagues urging them to oppose Mayor Bloomberg's efforts to end Variable Supplements Fund payments by lobbying the State Legislature, but he said he is "getting indications that [Mr. Bloomberg's] attempt to go to Albany is dead in the water."

Councilman James Sanders of Queens said in an interview March 22 that the question for a lawmaker is "not simply sponsoring the bill, but having a reasonable chance to get it passed. Otherwise you're coming up with something dead on arrival, which hurts anyone who puts the thing forward."

No Bill in Albany

The Mayor's Office said March 24 that no bill has been introduced in the Legislature.

As far as the City Council goes, Mr. Sanders said he believed Mr. Bloomberg's bid to limit or eliminate the VSF had almost no support there either. He said he would like to sit down with the Office of Labor Relations to discuss the Mayor's proposal to end VSF payments, which are sent annually to retired and some active members of the Police and Fire Departments and eventually will be resumed for Correction Officers, paid from stock profits from their pension funds' investments

Mr. Bloomberg has called the payments a "Christmas bonus" that the city can no longer afford. He has given varying estimates, as high as $1 billion, of the amount the city would save each year if VSF payments were ended, and is hoping to gain at least $200 million in savings by limiting who is eligible to collect them. Currently they are received by former cops and firefighters with at least 20 years on the job who retired on standard service pensions.

The unions involved reacted with fury, saying the city made out like a bandit from the late 1980s deal that allowed it to take over the funds in return for a defined-benefit payment. They pointed out the city reaped an estimated $4 billion beyond the cost of the VSF checks from the funds' investment income during the stock-market boom of the late 1990s. They also noted the VSF issue was negotiated with two previous Mayors before legislation was passed.

'The City Has Profited'

Mr. Sanders said in his letter that he had researched the issue and concluded:

• "This is a contractual obligation at the request of past mayors."

• "The city has profited from this fund and has not paid into this fund since 1996."

• "All contract changes should be resolved at the negotiating table."

"After much deliberation, it has become clear to me the Mayor's effort to legislatively repeal the Variable Supplements Fund, collectively bargained with the city Police, Fire and Correction department unions, has crossed the threshold of equality and fairness," he wrote. "And I urge you to join with me and stand with the members of these unions, who have committed their lives to protect and serve, to hold the city to its commitment to them..."

"Clearly, the City of New York has benefited greatly from this agreement," the letter continues. "It does not make any fiscal sense to eliminate a benefit that has earned our city a substantial amount of money; nor is it equitable that the city would now seek to deprive the unions of the benefit of their bargain. The deal was born of negotiation between the city and our uniformed unions.

"It goes against our long history of solid labor relations with our municipal unions to seek to have the state pass legislation to eliminate this benefit. Any changes to the VSFs should be made at the negotiating table. We do not want to see our great city emulate Wisconsin and Ohio's contempt for public workers. We are better than that!"

Product of Clout, Not Talks

Actually, the VSF for correction employees was not the result of negotiations. Union leaders, particularly Correction Officers Benevolent Association President Norman Seabrook, in 1999 used their political influence with then-City Council Speaker Peter F. Vallone Sr. to get a home-rule message passed by the Council, and with Senate Majority Leader Joseph L. Bruno and Gov. George E. Pataki to secure the necessary state legislation. Throughout the process, the bill was strenuously opposed by the administration of Mayor Rudy Giuliani.

Largely because of his objections, the bill contained a provision under which payments could be--and eventually were--suspended if there was not sufficient money in the Correction Department fund to sustain payouts. (By the time of the police and fire VSF deal, large-enough reserves had accumulated in the funds for both departments to be able to assure no interruption of payments even if there was a downturn in stock-investment earnings.) Correction-fund payments will automatically resume, however, by 2019 if they haven't sooner.

Mayor Seeks Pension Pow-Wow

Mayoral spokesman Marc LaVorgna said in response: "The city is barred by state law from negotiating pension benefits with the unions, and pensions are set by the state. The Mayor wants to repeal that law so we can directly negotiate with the union on pensions. We hope Council Member Sanders will support the Mayor's proposal to increase bargaining and have direct negotiations on all pension benefits. As far as the math goes: the city's Independent Actuary--the person designated by law to set the amount the city has to pay each year on pension and VSF payments--charges city taxpayers $600 million every year to fund the payments. The costs couldn't be clearer."

The Chief Actuary, Robert C. North Jr., was out of town at the end of last week and unable to take questions.

Mr. Sanders said he shares the union's distaste for the way Mr. Bloomberg refers to the VSF payments. "Whether he realizes it or not, to call a contract agreement a Christmas bonus almost belittles the people who have received it," Mr. Sanders said. "If we call subsidies that the city gives to large corporations 'corporate welfare,' we should expect a certain reaction. It's not language that brings people together."