Tag Archives: pension

Playing politics with NY pension funds

Manhattan Institute's Center for Legal ResearchJames R. Copland of the Manhattan Institute’s Center for Legal Policy argues that State Comptroller Tom DiNapoli and New York Comptroller John Liu are using public pension investments to “advance positions favored by labor unions and other political special interests.”

He forcefully backs up his position that politics should not interfere “with the interests of the taxpayer.” Read more.

James R. Copland directs the Manhattan Institute’s Center for Legal Policy, which sponsors ProxyMonitor.org, a public database of shareholder proposals at the 250 largest US companies.

 

High court limits Triborough Amendment

E.J. McMahon’s latest blog post outlines how The New York State Court of Appeals upheld an Appellate Division ruling that public employee unions can’t preserve old pension plans under the Triborough Amendment.  The ruling found in favor of  the cities of Yonkers and Oswego where firefighter unions wanted to “preserve non-contributory pension benefits for employees hired after their contracts expired in 2009.”  McMahon states this decision was a solid win for taxpayers.

Read E.J.’s full blog post on NYTorch.

Outside report praises DiNapoli’s pension management

Tom DiNapoliThis report comes to us from Jimmy Vielkind of the Times Union… a righting of the pension ship after a scandal that ended with former Comptroller Alan Hevesi in prison. Here’s Vielkind’s report:

After a pay-to-play scandal sent top managers of the state’s common retirement fund to prison, an outside report commissioned by Comptroller Tom DiNapoli found the fund “has a strong and effective framework for operations and decision-making processes.”

The report, by Funston Advisory Services, examined how the $150 billion pension fund makes investment decisions and meets its fiduciary responsibility to the tens of thousands of employees it serves.

“Funston’s independent analysis confirms that the New York State Common Retirement Fund is a leader among public pension funds in this country and is setting a standard for transparency and ethics,” DiNapoli said in a statement. “Since becoming Comptroller, I have improved policies and procedures, strengthened internal controls and standards, and increased public disclosure. This review is a validation that we are on the right path and should reassure the people of New York the Fund is being managed properly and ethically.”

In 2010, former Comptroller Alan Hevesi and David Loglisci, who served as his chief investment officer, pleaded guilty to charges that they steered fund investments in response to cash, campaign contributions and other perks. Then-Attorney General Andrew Cuomo prosecuted the case starting in 2009.

Cuomo eventually issued a statement, just before the 2010 election, absolving DiNapoli, who was elevated from the Assembly after Hevesi was ousted for another felony conviction in 2006.

But for over a year, Cuomo pointed to continuing problems at the fund, and DiNapoli took several steps to remove the specter of Hevesi’s corruption. This included banning placement agents who had previously pushed fund managers to invest on behalf of outside clients and banning the fund from doing business with any investment adviser that has contributed to a candidate for comptroller.

NYSCRF Fiduciary and Conflict of Interest Review by JimmyVielkind

NY Senator Marchione donates her pension

Kathy MarchioneKathy Marchione, the freshman state senator from Halfmoon, is donating the income from her state pension to charity while she is in the Legislature.

Many lawmakers in Albany collect more than one paycheck from public jobs they held before they were election. The practice is known as double dipping. The Times Union reports on how Marchione, a Republican, followed up on a campaign promise.

Syracuse Mayor Stephanie Miner intends to keep her job as co-chair of NYS Democrats

Quoting unidentified sources, Ken Lovett of the Daily News wrote Monday that Mayor Miner would be stepping down as co-chair of the New York State Democratic Party. Mayor Miner says she has no plans to resign. Michelle Breidenbach of Stephanie MinerSyracuse.com breaks it all down with links to stories that give the background of what looks like a growing breach between Miner and the Governor Cuomo. It all started with what many call an ill-advised opinion piece The New York Times published last week. In it, Mayor Miner criticized Governor Cuomo for his “pension smoothing” proposal, calling it s a “budget gimmick.”  She has little support from fellow mayors around the state. Neither the New York State Conference of Mayors or the Association of Counties have not endorsed Miners op-ed.  Here’s Breidenbach’s story:

A New York Daily News story Monday quoted anonymous sources close to Gov. Andrew Cuomo, who said they thought the end could be near for Miner’s statewide political leadership role. They used the phrase “taken down at the knees” to describe Cuomo’s wrath.

The story said there is no plan to force Miner out, but that she would step down and say she wants to focus on her re-election campaign.

“I have no plans on resigning,” Miner said Monday afternoon.

Miner said she has not had any conversations with Cuomo’s staff since last week, when she called to give the governor’s staff a heads up that she would be criticizing him in The New York Times.

Last week, Miner wrote an op-ed piece that called Cuomo’s pension proposal an accounting gimmick and said the state lacks leadership.

Miner said that she does intend to support the governor when he runs for re-election and she believes he will be a strong candidate.

She said the statewide attention to her letter is a good thing. Over the weekend, she has had more phone calls, text messages, notes stuck in her mailbox and even messages given to her mother to relay to her.

She characterizes it as a healthy debate about fiscal issues.

She quoted Arthur Miller, in ‘Death of a Salesman.:’ “Attention must be paid” to the plight of our cities.

“I think that is one of the roles that I have as mayor of this city,” she said.

See previous coverage:

New York Daily News: Clock is ticking on Miner’s leadership

Republican consultant to Mayor Stephanie Miner: ‘I’m in love’

Standing alone, Syracuse mayor confronts the governor

Syracuse councilor to Cuomo: Sorry about our mayor

Mayor Miner risks Cuomo’s wrath with letter

What they’re saying about Miner’s shot at the governor: Guts or unhelpful?

Pensions? Retiree health care is a burden, too

The following was posted by Greg David, reporter for Crain’s New York.

Gov. Andrew Cuomo wants to help out local governments by reducing their pension contributions in the next several years. The scheme is increasingly controversial. (Check out yesterday’s post New York slipping pension fund and watch for my Monday column on the A, Bs and Cs of this proposal).

No one should forget that retiree health insurance is also a big problem, in some ways a bigger one. The cost of this benefit (available only to government retirees in practice) is soaring, up 44% for New York City in the past five years to $1.6 billion and 33% for the state to $1.2 billion, according to a 2012 Citizens Budget Commission analysis. The total unfunded liability could be $205 billion.

Unfunded is the key word. New York pays the cost of retiree health insurance out of the annual budget rather than set aside the money and invest it as the state does for pensions. Fifteen other states follow the same approach, which means that the rest are much more fiscally prudent.

If the governor wants to help localities, he could tackle retiree health care. Unlike pensions, retiree health costs are not protected by the state constitution and they could be made less expensive or even eliminated.

New York’s slipping pension fund

Greg David, reporter for Crain’s New York Business, posted the following story:

Okay, the headline is a bit alarmist, but as Gov. Andrew Cuomo pushes his plan to reduce costs for local governments by slashing their required payments to the state pension funds, it is important to understand exactly how solid the state’s pension system is.

This is a big and complicated issue and I’ll be writing about for the next couple of days, including Monday’s print and online column.

Below are the best funded state pension systems as calculated by the Pew Center on the States, the best source of comparative data.

New York’s Pension Fund Compared
% of pension liabilities funded

NY Slipping Pension Chart
 

 

 

 

 

 

So, in just one year New York slipped from the No. 1, a position it had held for sometime, to No.  5.

The governor’s rationale is that the new, lower-cost pension benefits for new workers he pushed through the Legislature will cut required contributions later in the decade. So he wants to take the benefits now to deal with the fiscal crises faced by many upstate cities, towns and school districts.

True, we are still a long way from Illinois and California, which are at the bottom of the Pew ranking with less than 1% of their liability set aside. However, the governor’s plan will push New York way down this list.

Is that really a good thing?

E.J. McMahon: A threat to pension solvency

E.J. McMahon is a senior fellow at the Manhattan Institute for Policy Research and the Empire Center for NYS Policy. The following commentary appeared in this morning’s edition of the Times Union:

The state’s largest public union is right. Gov. Andrew Cuomo’s proposal to “smooth” pensions for local governments and school districts is “a bait-and-switch scheme … that will allow public employers to underfund their pension obligations,” as the Civil Service Employees Association described it last week.

In lieu of fundamental mandate relief, Cuomo wants to give counties, municipalities and school districts the ability to immediately reduce pension contributions by up to 43 percent, and “lock in” a “stable” pension contribution rates for a 25-year period.

This would be accomplished by significantly underfunding the pension systems over the next few years, based on the expectation that the cheaper benefits offered to newly hired workers under Cuomo’s Tier VI pension plan will ultimately yield more than enough savings to make up the difference later in the 25-year period.

There are three problems with the idea:

Even under ideal economic and financial market conditions, it’s likely to be a losing bet for employers — saving them less in the short-term than it would cost them in the long run.

It weakens and increases the financial vulnerability of the pension funds at a time when they have yet to fully recover from their massive losses during the recession, and in the long-term poses greater financial risks for both the funds’ beneficiaries and the funds’ ultimate underwriters, New York’s taxpayers.

It may violate the state constitution’s prohibition on impairment of public retirement benefits.

Fortunately, Cuomo’s plan cannot be implemented without the approval and cooperation of state Comptroller Thomas DiNapoli, who is sole trustee of the New York State and Local Retirement System, and the board of trustees of the separately administered New York State Teachers’ Retirement System.

It’s hard to see how DiNapoli or the teachers’ fund trustees could find this proposal consistent with their fiduciary responsibilities.

Click here to read more.

Governor Cuomo says he will hold firm against requests for increased aid by upstate cities

Times Union: Governor Cuomo pitches fiscal control board as one way to retool cash-strapped upstate

This report comes to us from Jimmy Vielkind of the Times Union:

ALBANY — If the old economic model for upstate cities is strained to the breaking point, they should “restructure” under a fiscal control board, Gov. Andrew Cuomo said Monday.

In a meeting with the Times Union editorial board, Cuomo said he was holding firm against requests for increased aid by several upstate cities, whose mayors pleaded their case the same day at a legislative budget hearing.

“The answer is not an additional, ongoing subsidy on a fundamental economic model that doesn’t work,” Cuomo said. “The Rochester problem, or an upstate cities problem — if it was a corporation in a private-sector setting, you would be talking about restructuring. If the corporation does not restructure quickly enough, it goes bankrupt, and it goes to bankruptcy court. You need a restructuring here. The answer is not an additional, ongoing subsidy on a fundamental economic model that doesn’t work.”

Cuomo pointed to a new group of expert advisers that will be created under his proposed state budget to examine the problems facing cities like Rochester, Syracuse and Yonkers. It could recommend a formal fiscal control board, which in turn could have broader authority to freeze or renegotiate expired contracts with unionized municipal employees.

Municipal officials say the legacy costs of those contracts, including required pension contributions for retirees, have ballooned their budgets. That stress — combined with a long decline in population, the flight of large industrial taxpayers and a concentration of poorer residents within urban cores — has made the financial model of these cities “broken,” according to Rochester Mayor Tom Richards.

“Quite frankly, it’s an 18th-century model for a 21st-century reality. Our city is permanently out of balance,” he said during the hearing. “The wealth in our society today is generated through income, not real estate property tax. … We have concentrated these obligations without the capacity to pay for them, and they’re obligations that should be borne on a broad base. … That’s the state of New York.”