Legislators made a deal with Gov. Andrew Cuomo that helped assure their re-election while offering up pension reform that down the line will hurt the children currently suffering under policies that birthed the Great Recession, says Roderick Sherman.
“That is who they have attacked,” said the president of the Plattsburgh Teachers Association. “They have attacked our children on two fronts.”
On the other hand, some welcome reform of a system that most recently has been costing local governments more in the form of rising contribution rates.
“This legislation brings long-term financial relief to all local governments,” said Plattsburgh City Mayor Donald Kasprzak.
State lawmakers approved pension reform they say will save more than $80 billion over 30 years.
This would be accomplished largely by reducing benefits for newly-hired state and local public workers, something union officials say is a direct assault on the middle class.
The law creates a sixth tier of smaller pension benefits for future state and local public workers and raises contributions to retirement plans with a sliding scale, ranging from 3 percent to 6 percent. It further raises the minimum retirement age for state workers from 62 to 63.
Pension costs for New York’s municipalities have risen more than 650 percent since 2002, to $12.2 billion in 2012, according to information released by Cuomo.
The National Institute on Retirement Security reported that, in 2009, 768,392 residents received a total of $20.5 billion from state and local plans for an average of $2,200 monthly.
“By putting the interests of the people of New York first, we overcame the obstacles that for so long have stood in the way of real reform and delivered one of the most critical, widespread reforms the state has seen in years,” Cuomo said in a press release.
Cuomo in fact sought more drastic changes as state and local governments nationwide work to reduce retirement costs.
In fact, from 2009 to 2011, 43 states changed retirement plans for public employees and teachers, according to the National Conference of State Legislatures.
But Cuomo didn’t gain his pension reforms without more Albany deal-making.
Specifically, the governor had said while campaigning for governor that he would not approve redistricting maps unless they were drawn by an independent body. But he approved the Legislature’s districts, making court revisions more difficult and paving the way for what many see as unfair elections for the next 10 years.
“Legislators made a deal with the governor,” Sherman said. “He wanted pension reform, and they wanted district lines to assure their re-election. They traded with the governor, basically by saying we will give you the pensions of future workers of the state of New York and you give us our election district lines so we can get re-elected.
“They are hurting the very same children they are hurting right now.”
Sherman said there are misunderstandings between the pensions public workers have and the 401k that some in the private sector have.
“They have to move all their money into a low-risk percentage return pool of money managed by somebody, and the kind of money you get on return is low on that,” he said. “You have to plan to live to be 99.”
Last year, he explained, the New York state teacher retirement system earned more than 20 percent on its investments. More than 80 percent of what the state retirement pays out comes from investment earnings.
“The pension system that has been run by the state of New York is a very efficient system and a low cost system.”
He understands that local governments have been complaining because the amount they put into the system has increased, but what they forget is that it has been as low as .3 percent. It’s easy to cherry-pick the year contributions went up the most to bolster your argument that the system is costly, Sherman said, adding that he could pick out dates where there was hardly any contribution.
These so-called pension reforms will not impact teachers and law enforcement currently on the job, Sherman pointed out, but they will affect the children of Plattsburgh and New York state who might decide to devote their lives to public service one day.
“It is hurting the same children the state is not coming up with the funds needed to give them what they need today,” he said. “They have attacked our children on two fronts.”
Other union leaders said the reforms were about politicians once again climbing into bed with the wealthy 1 percent at the expense of teachers, secretaries, laborers, bus drivers and nurses.
“Speaking today for the 54,000 members of the New York State Public Employees Federation, we are appalled that state legislators finally broke and gave in to the governor’s relentless demand for a new pension tier that will do nothing to help the state or local governments deal with their current budget demands,” federation President Ken Brynien said in a statement.
Kasprzak sees it differently, saying Plattsburgh’s retirement costs in 2000 were roughly $18,000 and in 2012 estimated to be $2.8 million. Such numbers are unaffordable, he said, and the passage of “historic” pension reform addresses the “unsustainable retirement costs affecting every local government in New York state.”
The reforms address long-term pension costs, raise the retirement age, increase employee contributions fairly and consistently, and take steps to eliminate pension abuse padding and payment of unused sick and vacation time, Kasprzak said.
“I applaud the efforts of Governor Cuomo in addressing pension reform.”