Paterson Seeks Sharp Cut in Pension Rights For Future Workers; 25-Year, Age-50 Minimum For Uniformed, 30/62 For Civilian Staff

Chief Leader - December 23, 2008


Governor Paterson Dec. 16 proposed downgrading pensions for new employees, which among other things would force future police officers and firefighters to work 25 years and reach age 50 before collecting a full pension, compared to the current right after 20 years' service regardless of age.

He did so amidst a host of proposed increased taxes and state layoffs as part of a budget plan to close an estimated $15.4 billion deficit for the next 15 months.

Wouldn't Affect Current Staff

The Governor, who called the changes "innovative," proposed raising the minimum retirement age for state and city civilian employees to 62 from 55, and requiring 30 years' service, one of a series of rollbacks of pension gains made by the unions over the past two decades, although they would not affect current workers. Employees would also be required to contribute to the pension fund after their 10th year of service, and the proposal would restore the minimum years of service required to draw a pension to 10 rather than the current five.

The new plan excludes overtime compensation from calculating pension benefits to prevent "salary spiking" in the final year of service. "These reforms are a first step toward fundamentally re-evaluating the way we do business, which will mean significantly lower costs for taxpayers over the long term," Mr. Paterson said in a statement.

Patrolmen's Benevolent Association President Patrick J. Lynch blasted the proposal, saying, "This proposed change to the pension for future police officers will undo any progress made on compensation issues. Giving with one hand while taking away with the other simply makes no sense. The New York City PBA strongly opposes any reduction in pension benefits for future members."

Uniformed Firefighters Association President Steve Cassidy said the proposed changes to the pension system for uniformed employees would create a safety risk because the ability to run up the stairs carrying a hose diminishes with age. "The current system benefits both the public and the city and is fair to Firefighters," Mr. Cassidy said, before noting the increases in pension costs were largely due to the deaths of 343 firefighters on 9/11 and the early retirement of many others because of health reasons tied to the aftermath of the terrorist attacks. "Right now the city and state are facing tough times and they are looking to take a shot at us, and it doesn't make any sense," he said.

Municipal Labor Committee Chair Harry Nespoli also derided the changes, asserting, "A massive restructuring of existing pension benefits for new employees is not necessary and will not happen. It has taken a generation to restore some of the lost benefits - worth today more than $1.8 billion. In many cases the restoration was paid for by the workers."

Would Cancel Gains for Unborn

A deal in 2000 between the MLC and the city, which funneled $850 million into the city budget instead of the pension systems, brought many of the pension gains that Mr. Paterson is proposing to eliminate for future workers. Uniformed officers saw a roughly 3-percent hike in take-home pay from the deal when their contributions to the retirement system were cut from 5 to 2 percent, with the city covering the difference. The deal also allowed cops and firefighters under Tier 2 (all those hired from mid-1973 forward) to calculate their retirement benefits based on their final year's earnings, rather than the average of their last three years.

Mr. Paterson's proposed cuts, Mr. Lynch noted, comes at a time when Police Officers, now starting above $40,000, are just beginning to reap the benefits of competitive pay even if they long enjoyed competitive benefits. "Research studies have demonstrated that the unparalleled stresses of police work result in a significantly higher rate of illnesses and suicide than in the general population," Mr. Lynch said. "The existing pension benefits recognize the added danger, pressures and responsibilities of the police job."

Newly hired workers would also have to contribute three percent of their pay to the pension system for their whole career, where current city civilian employees - also as a result of that 2000 deal - stop paying in after 10 years of service.

Plan 521 State Layoffs

In addition to the pension changes, the state workforce would decrease by more than 3,000 employees next year through at least 521 layoffs the Governor announced in his Executive Budget, which forecasts shortfalls of $1.7 billion this year and $13.7 billion next year.

The drop in state employees will come from agency consolidations, facility closures and program eliminations. Mr. Paterson reiterated his plan to defer five days of state salary payments, defer the scheduled three-percent general salary increases for 2009-2010, and require state employees to contribute greater amounts to their health-care coverage.

"We are going to have to change the culture of New York as we know it," the Governor said, addressing members of the Legislature in Albany. "It's nobody's fault, but it is all of our responsibilities. We are going to have to take action now."

The state unions, however, vehemently objected to a primary action the Governor chose to cut the deficit: re-opening labor contracts.

PEF: Don't Go There

"Make no mistake, re-opening our contract is not an option," said Public Employees Federation President Kenneth Brynien. "We will not ask our members to give up a hard-earned 3-percent raise when spending on consultants increased during the first seven months of this year by 13.5 percent. Now, more than ever, the state needs to rely less on costly consultants and more on state workers who can do the work for less, even when you take into consideration the cost of the benefits."

Mr. Paterson indicated during a press conference that day that the union's suggestions thus far were "good ideas but did not generate the amount of savings necessary." He has indicated in the past that if the unions do not accept wage freezes, there will be increased layoffs. "They're not favorable at all right now," the Governor said of the unions, "but they might be more understanding when they see everyone's contributions."

The deficit reduction plan has $1.7 billion in savings initiatives to close this year's budget shortfall, including $500 million in health-care savings; a $75 million reduction in Environmental Protection Fund spending and funding; an expansion of the 5-cent deposit to non-carbonated beverages; a $620 increase in SUNY annual undergraduate tuition; and a 10-percent reduction in Community College Base Aid.

Looking to Streamline

Mr. Paterson also proposed to streamline state government by eliminating duplicative services, consolidating overlapping state agencies, closing underutilized facilities, lowering the cost and size of the state workforce, and consolidating back-office operations. Seven state agencies would be eliminated, merged or integrated with existing agencies.

Civil Service Employees Association President Danny Donohue called the Governor's tactics "blackmail of the first order" by threatening layoffs if the unions didn't re-open contracts. "Some of our members are two to three paychecks away from needing the services they provide," Mr. Donohue said, noting the average CSEA member makes $37,000 a year. He suggested tapping the state's "rainy day fund," which is reserved for emergencies. "Governor, it's raining - you should be building an arc instead of building the Titanic," Mr. Donohue quipped.

Mr. Donohue objected to the Governor choosing not to implement a tax on the wealthiest New Yorkers. Mr. Paterson, who has not ruled out the idea, said that revenue would not be enough to close the deficit and would not address structural budget problems. Mr. Donohue said, "For whatever reason the Governor seems fixated on the idea of not raising taxes on the wealthiest New Yorkers. Yet his proposals for cuts in aid to health care, schools and local governments will only lead to job loss and drastic reductions in services in those areas, along with local property-tax increases that will hurt real people in real places."

New York City is one of those places that will be most hurt, according to Mayor Bloomberg, who said the city would lose $328 million this year and next in discretionary aid when other municipalities would not face the same cut. "It does appear, unfortunately, that some of these cuts are falling disproportionately on the city," he told reporters at One Police Plaza.

City Comptroller William C. Thompson said this and other cuts - including major reductions in scheduled aid to education - could increase the city's deficit to $1.9 billion next year. "As a city, we unfortunately will not be able to elude the pain," he said. "We must explore measures that will minimize the impact of the state's cuts, and endeavor to avoid the crippling cuts to the classroom and vital city services."