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December 24, 2008
Happy Holidays!NY Public Payroll Watch will resume blog posts on January 5. In the meanwhile, check our News Clips section, which will be regularly updated.
Posted by Lise Bang-Jensen at 02:51 PM
December 22, 2008
The costs of arbitrationSuffolk County police officers receive as many as 100 days off a year (not counting weekends), perks that County Executive Steven Levy calls "ridiculous" and blames on the state's binding arbitration law.
If Suffolk County cops do not use all their sick and vacation time, they can "cash out" at retirement. Payouts in 2008 averaged $133,694 per retiree, according to Levy.
The average salary and benefit cost for a Suffolk County police officer is $178,754. The starting police salary is nearly $58,000 and climbs to almost $100,000 in base pay (without benefits and overtime) in five years.
"This type of excess has always been wrong, but it [is] most pronounced today when the economy is so bad and there is such a strain on our budgets," said Levy, who wants the state Legislature to amend the arbitration law. [Link available later.]
Newsday reports:
Jeff Flayer, the president of the county Police Benevolent Association, Friday accused Levy of exaggerating the county's fiscal situation to further his political career. He also said police pay and other perks are in line with other departments.
(snip)
The last police contract expired at the end of 2007. After unsuccessful negotiations, the contract went to an independent arbitrator in September. Both sides are now preparing briefs for the arbitrator. A decision is not expected until late spring.
Meanwhile, an independent arbitrator awarded the Civil Service Employees Association (CSEA) unit in Nassau County a contract that ties the county's hands until December 31, 2015. In a column entitled "Nassau CSEA employees' contract ignores reality,' Joye Brown writes:
While they will get no raises for 2008, and lost a no-layoff provision, they're guaranteed raises that will be compounded over the next seven years. They also keep something precious and increasingly rare - no contributions to their health-care insurance for the entire eight-year term of the award.
(snip)
Some of the terms:
No raises or lump sum payments for 2008, then raises for each of the following seven years as follows: Jan. 1, 2009, 3.65 percent; April 1, 2010, 3.65 percent; April 1, 2011, 3.75 percent; April 1, 2012, 3.75 percent; Jan. 1, 2013, 3.5 percent; Jan. 1, 2014, 3.5 percent; Jan. 1, 2015, 3.75 percent.
Union members do not have to contribute toward health care coverage.
Longevity pay increase beginning in 2010.
CSEA represents 10,000 Nassau County employees.
Posted by Lise Bang-Jensen at 02:49 PM
December 18, 2008
Bloomberg on "gold-plated" pensionsNew York City Mayor Michael Bloomberg, writing in an op-ed, endorses Governor Paterson's pension reform proposal, saying his city cannot afford to "continue to offer the next generation of workers gold-plated pension benefits that even the most successful companies can't afford today".
Mayors of Buffalo, Yonkers and other cities likely would agree. However, their police and firefighters are not included in Paterson's pension plan--unlike uniformed officers in New York City, who are in a different pension plan.
In a New York Post op-ed today, Bloomberg writes:
...New York City is spending so much money on pensions - $6.3 billion, a 10-fold increase from the $695 million we spent in 2000 - that we have far less to spend on core services, such as public safety, education, parks and senior centers. That defies common sense, and it's hurting our city.For instance, the city now has to spend more money on pensions and fringe benefits for firefighters than we pay in salaries for firefighters. That's one reason we've had to delay the hiring of a new class of firefighters.
Bloomberg endorses Paterson's plan to require newly hired New York City uniformed officers to work longer before collecting pensions.
Right now, uniformed city workers can retire after only 20 years of service. That means government is paying full pension benefits to many people whose retirements begin in their early 40s (although most continue working full-time in other jobs) and stretch for more than 40 years.I believe that - again, only for future hires - we should raise the number of years required for a full pension for uniformed workers from 20 to 25, and provide retirement benefits to these future employees only after they reach 50.
The proposed changes apply only to future hires. Nevertheless, the New York City Patrolman's Association opposes them (here and here).
Outside New York City, uniformed officers--police and firefighters--for local governments as well as the state are in the New York State and Local Police and Fire Retirement System, which includes a number of plans.
Posted by Lise Bang-Jensen at 03:16 PM
December 17, 2008
Tier V: Back to the FutureGovernor David Paterson has proposed creating a Tier V pension system for newly hired employees, a tepid reform that basically mimics the state's early 1990's pension system--with one twist.
That twist is that overtime earnings would be excluded when calculating employee pensions. Oddly, the new tier would not include police and firefighters, whose overtime costs are a major driver in local government budgets.
The Division of the Budget estimates Tier V would save the state $10 million in 2009-10 and $30 million the following year.
Excluding police and fire pension costs, DOB says :
Employer pension contribution rates under Tier V are expected to be 29 percent lower for new teachers and 23 percent lower for most other new employees hired outside New York City. The Executive Budget also includes a proposal to implement a new tier of pension benefits for newly hired City of New York uniformed employees. This local option is being advanced at the request of the Mayor of the City of New York and will not be acted upon without the consent of the City Council.Below is a chart from the governor's budget presentation which shows how the proposed Tier V is a roll back to the Tier IV system prior to 1990's pension sweeteners.
In a recent NYPublicPayrollWatch post, Empire Center Director E.J. McMahon cites research suggesting current accounting rules have resulted in a significant underfunding of many public pension systems, including New York's. McMahon writes:
The basic problem here is the traditional defined-benefit pension system itself, which offers public employees a constitutionally guaranteed (and thus risk-free) array of benefits that are far more generous than anything available to workers in the private sector.The best way to curb expenses, balance financial risk, and eliminate the extensive gaming and manipulation inspired by the current system is to shift new hires to a savings-based defined contribution (DC) plan, or to a DB-DC hybrid featuring a limited traditional pension and a centrally managed savings account (like the federal Thrift Savings Plan).
Posted by Lise Bang-Jensen at 03:38 PM
December 16, 2008
Layoffs or givebacks?Governor David Paterson, who will propose his budget later today, wants to wrest concessions from state employee unions to avoid the need for layoffs, according to a published report.
The Times Union says Paterson would trim 3,000 employees from the workforce through attrition and layoffs.
One source familiar with the plan said as many as 600 layoffs will be necessary for Paterson to achieve his goal, about 100 of those from merging the Department of Economic Development and the New York State Office of Science, Technology & Academic Research with Empire State Development Corp.The story, quoting an unnamed source, says the governor also wants to create a new pension tier for newly hired state and local government employees. Details will be available later today.(snip)
But he will continue to urge public labor organizations to agree to concessions to avoid broad layoffs. The givebacks range from lagging a week's pay to forfeiting a negotiated raise, measures that union leaders assailed when they were brought up by Paterson a few weeks ago. The governor is expected to work to blunt the workforce reductions if the concessions are approved.
Posted by Lise Bang-Jensen at 03:01 PM
December 15, 2008
Stealth PERB nomineeFor the past two years, the Public Employment Relations Board has been unable to settle certain collective bargaining disputes, because of a vacancy on the three-member board. The state Senate may end the impasse this week by confirming Sheila S. Cole to the board.
Cole, a labor arbitrator and mediator with 30 years experience, was quietly nominated by Governor David Paterson on November 3. No press release heralded her nomination, which appears on today's Senate Labor Committee agenda.
PERB, a quasi-judicial body, settles collective bargaining disputes between public employee unions and the state and local governments. The Taylor Law is broadly written, which gives PERB considerable power to interpret it.
Jerome Lefkowitz, who was named PERB chairman by then-Governor Eliot Spitzer two years ago, is a former counsel to the Civil Service Employees Association. He has had to recuse himself from CSEA cases. Robert S. Hite, general counsel for Council 82 of the AFSCME between 1995 and 2002, removed himself from cases involving that union. Without a third member, those cases can't go forward.
In 2007, Spitzer's nomination of Eric J. Schmertz was withdrawn because of opposition from New York City police unions (here). They were happier with Spitzer's second choice Rosemary Queenan, who served as an in-house lawyer for the Patrolman's Benevolent Association until 2007. When Spitzer left office, she was re-nominated by Paterson. However, Mayor Michael Bloomberg and editorial writers objected, because PERB would be composed entirely of former union attorneys. As the New York Post wrote:
Members with ties to unions already hold two PERB seats; Queenan would make it unanimous. How fair is that?Cole, a professional neutral, is the governor's answer to that question.Couldn't Paterson give at least one seat to someone who'd look out for Joe and Jane Taxpayer? After all, labor would still have a 2-1 edge - enough to prevail in majority-wins rulings.
For background on the Taylor Law, see here.
Posted by Lise Bang-Jensen at 02:56 PM
December 12, 2008
Tale of Two School DistrictsThe Buffalo Teachers Federation wants a judge to fine the city school district as much as $40 million for unilaterally switching to a single health insurance carrier. But if the union wins, will it cost some teachers their jobs?
Buffalo teachers only need to look at the nearby Niagara Falls school district, where the recession has worsened the budget woes. On Thursday, the school board there voted to eliminate seven teaching positions in the middle of the school year.
The Niagara Falls Gazette reports:
The layoffs are the first mid-year cuts in 16 years and are the first part of a five-year plan to pull the district out of a massive deficit. The district is currently $1.2 million in the hole with the deficit expected to swell by $4.7 million next year.Back in Buffalo, the teachers union is seeking a contempt-of-court ruling against the school district in the latest stage of a three-year battle to force the district to switch back to multi-carrier insurance carriers.Kristen Grandinetti, a fourth-grade teacher at Abate Elementary, told the board she understood cuts would have to be made to confront the deficit, but they should wait until next year because it would be "devastating on the students" to disrupt their routine mid-year.
The city has saved $40 million since unilaterally switching to a single carrier. However, an arbitrator and three separate court rulings ordered the city to restore the multi-carrier insurance, because the city failed to negotiate changes with the union.
According to the Buffalo News, "BTF President Philip Rumore said Thursday that the union is willing to negotiate a single-carrier plan but will continue to fight a unilateral change by the district."
The lawsuit asks that the $40 million fine be paid to teachers "whose right of choice was taken away".
Of course, if the cash-starved city of Buffalo must pay up, the city may not have enough money to pay the salaries of some of those teachers.
Posted by Lise Bang-Jensen at 02:52 PM
December 11, 2008
Katonah school administrators take pay freezeAdministrators in the Katonah-Lewisboro school district have agreed to forgo pay raises in the coming school year.
Tonight the Board of Education is expected to approve a revision of its existing contract with the Katonah-Lewisboro Association of Administrators & Supervisors. The move comes as many residents of the northern Westchester community have been affected by the Wall Street meltdown and a state audit criticized the district for being top-heavy with administrators.
As described on the district's web site, the pay freeze would affect administrator's salaries for one year and would "provide limited job protection for administrators in the 2009-2010 school year."
Schools Superintendent, Dr. Robert J. Roelle praised the Association for coming forward with the offer. "Leadership stands out during difficult times and through personal sacrifice" said Dr. Roelle.In November, state Comptroller Thomas DiNapoli issued an audit saying Katonah-Lewisboro administrative costs were out-of-line when compared to comparable districts in Westchester County. Press release (here). Audit (here).Dr. Roelle noted that the administrators' salary freeze coupled with projected additional administrative cost reductions for the 2009-2010 school year will yield a projected administrative cost reduction of approximately $450,000. The administrative cost reduction for the current school year was $400,000, bringing the projected administrative cost reduction over two years to approximately $850,000.
Katonah-Lewisboro spent $1,072 per student on administrative salaries while the other six districts on average spent $779 per student to pay for an average of 22.3 administrative positions. Auditors found the district had 28 administrative positions.
(Journal News story on audit, here).
So far, the union representing Katonah-Lewisboro teachers has not offered to freeze its salaries. Its contract is available on www.seethroughny.com. In the coming school year, starting pay for teachers with bachelor's degrees is $52,588 while starting pay for those with master's is $59,731. The pay grid tops out at $138,258 for teachers with master's degrees plus 90 credits. (The contract calls for a 3.5 percent pay increase over the current year, excluding step raises.)
Superintendent Roelle's contract also is posted on www.seethroughny.com. His base salary for the current school year is $265,00. He is retired superintendent of the Ossining school district.
Posted by Lise Bang-Jensen at 03:45 PM
December 10, 2008
Pension revoltIn what could be a wave of the future nationwide, Orange County, California, voters--by a whopping 75 percent majority--approved a ballot measure requiring that all future county pension increases be approved by them.
Could this happen in New York? Here pension enhancements are determined by the state Legislature, not by local governments, but New York legislators can't ignore that taxpayers in Suffolk and Erie counties as well as Orange County, NY, share the frustrations of taxpayers in Orange County, CA.
In Governing magazine, Gerald Miller writes the California county's ballot measure "reflects a backlash against previously approved retroactive pension increases that have created massive unfunded liabilities on the county's books."
Miller raises the possibility that such measures might "catch fire in future elections," suggesting "another twist".
Instead of being the sole focus of the pension reform ballot initiative, these pension-cap proposals might just be a single component of broader pension and benefits "reform" proposals that local officials could propose to voters. In such a context, the voter approval requirement for benefits increases could be a safeguard against future abuses, while the overall proposal cleans up a mess in retirement plan funding that is now nationwide.For starters, the average public pension plan is now grossly underfunded as a result of investment losses in the global bear markets in 2008. As a result, most pension funds need to raise the contributions required of employers, which puts a squeeze on local officials who must either raise taxes or cut services in order to make the higher pension payments. To that, you can add the new costs of properly funding retiree medical plans that were never properly structured until the recent Governmental Accounting Standards Board statement 45, which now requires disclosure of actuarial contribution requirements.
To do things right, public officials must start putting aside much more money into retirement plans than they have previously. And most don't have the revenues and never will under current tax rates. They will just keep digging a deeper hole rather than establishing a sustainable funding plan.
Posted by Lise Bang-Jensen at 02:24 PM
December 09, 2008
Warrensburg seeks to re-open teachers' contractIn a rare move that may inspire cash-strapped school districts elsewhere in New York, the Warrensburg Central School District in the Adirondacks has asked its teachers union to renegotiate a contract which does not expire until 2011.
School board member Richelene Morey explains:
"I feel that if the teachers can agree to reduce their increases over the next two years of the contract, and increase what they pay for health insurance, we would be able to save positions and programs."Surprisingly, union representatives in Albany and Warrensburg did not rule out reopening talks. Carl Korn of New York State United Teachers told the Glens Falls Post-Star that such requests are unusual, noting:
"Frankly, we have not had the kind of economic crisis in the last two decades that we have today, so there wouldn't be a reason for school boards to ask to reopen negotiations on contracts."
In 2005, the teachers union asked the district to reopen its existing four-year contract. The subsequent contract, which extends through June 30, 2011, is available on seethroughny.net. It provides a starting salary of $37,186 in the current school year. A teacher on the 26th step earns $73,660 plus extra pay for graduate credits.
Warrensburg teachers currently pay 9 percent toward their health insurance premiums (10 percent next year). The contract offers a retirement incentive to eligible teachers who are at least 55.
NY Payroll Watch is unaware of any other New York school districts seeking to reopen contracts as the recession deepens.
However, last week, teachers in Montgomery County, Md. agreed to forgo a negotiated 5 percent pay raise to save $89 million (here). Teachers, however, will continue to receive step raises.
Posted by Lise Bang-Jensen at 04:49 AM
December 08, 2008
Buffalo to post payroll on webAmid data on property assessments and paying parking tickets, the City of Buffalo's web site will soon include the city's entire payroll.
One question is: Will the city name names? Or just job titles as the towns of Orchard Park and Amherst have done on their web sites?
SeeThroughNY.net , Empire Center's transparency web site, posts the entire state payroll with names of 263,000 full and part-time employees. It also lists employees of public authorities, including the Thruway Authority, the Port Authority of NY-NJ, state Power Authority and Long Island Power Authority.
According to the Buffalo News (here):
Mayor Byron W. Brown directed city attorneys today to look into various options for posting salary data."We don't want to violate anyone's privacy, but it is public information," Brown said
Yes, Mayor Brown, it's public information. Putting the payroll online without names frustrates taxpayers' ability to understand how much they are paying for city services. Employers (i.e.taxpayers) should know how much they are paying their employees.
Also yet to be determined, the News says, is whether the city will post base salaries or gross wages.
But if the city starts posting employees' gross pay -- not just base salaries -- it will show that hundreds of workers make substantial sums in overtime and other forms of compensation. For example, 70 police and 30 firefighters earned more than $100,000 in 2007.More than 200 officers and firefighters earned more than $90,000, and more than 300 made more than $80,000.
Posted by Lise Bang-Jensen at 02:41 PM
December 05, 2008
Teachers forgo raises--in MarylandTeachers in Montgomery County, Md., have agreed to forgo their 5 percent raise to save Maryland's largest school district $89 million.
As the Washington Post reports:
Leaders of four employee associations, representing more than 22,000 workers, agreed Tuesday to forgo the raise all workers would have received in the fiscal year that begins in July....However, about two-thirds of the teachers will continue to receive annual step raises based on longevity. The school district has 139,000 students.School officials said it was the first time since the early 1990s that Montgomery school employees had given up a contractual pay raise, a sign of the magnitude of the economic challenge.
Employee groups reluctantly agreed to renegotiate their contracts, which were approved in more prosperous times and called for three consecutive increases of about 5 percent each. The contracts have become a symbol of overspending to some of the county's fiscal critics.Meanwhile, Maryland Governor Martin O'Malley is weighing a plan to require 67,000 state employees to take two to five days of unpaid leave by June. Union leaders are being asked to react to a proposal requiring employees to take at least two days of unpaid leave, including the Fridays after Christmas and New Year's Day.
Back in New York, taxpayers are objecting to large pay raises given to Long Island school superintendents, including a 7 percent raise for Oyster Bay-East Norwich School Superintendent Phyllis Harrington, which was approved in November.
Posted by Lise Bang-Jensen at 02:30 PM
December 04, 2008
Mayors seek to tweak pensionsThe Conference of Mayors is calling for an overhaul in the state pension system, including creating a new pension "tier" for employees hired in the future. Unfortunately, while it would marginally curb rising expenses in the future, NYCOM's agenda is not particularly ambitious and does not represent fundamental change.
The new pension structure recommended by the Mayors would:
1) require an employee contribution; 2) increase the minimum retirement age at which an individual can begin to draw down even a partial pension benefit; and 3) revise the way the final average salary (FAS) is determined by considering more than three years and taking into account only base pay.These are steps in the right direction -- but very small ones, possibly inspired by similar changes recently enacted in New Jersey, where public employee unions enjoy a similar degree of political domination.
NYCOM certainly makes a stronger case for doing more. Pension costs for villages and cities outside New York City increased tenfold between 2003 and 2005, the Conference says, and city pension expenses rose another 17 percent between 2006 and 2007. Moreover, while NYCOM doesn't mention it, the recent 20 percent drop in the value of the state retirement system investments points to a surge in employer (i.e., taxpayer-funded) pension contributions starting in 2010.
In a bid to minimize future increases, NYCOM also wants state officials to "reevaluate the overall funding methodology -- specifically the factors that determine contribution rates -- to ensure that local governments are not paying any more than is absolutely necessary to properly fund the system."
But manipulating assumptions or stretching payment schedules to take some of the sting out of pension cost increases" as was done after investment values dropped earlier in this decade -- is the last thing the state ought to be doing in this financial environment.
In fact, recent research suggests that current accounting rules have resulted in a significant under-funding of public pension systems throughout the country -- even those, like New York's, that technically consider themselves "fully funded." As a result, the next generation of taxpayers may be saddled with massive unfunded liabilities that are now almost completely acknowledged by government officials.
The basic problem here is the traditional defined-benefit pension system itself, which offers public employees a constitutionally guaranteed (and thus risk-free) array of benefits that are far more generous than anything available to workers in the private sector.
The best way to curb expenses, balance financial risk, and eliminate the extensive gaming and manipulation inspired by the current system is to shift new hires to a savings-based defined contribution (DC) plan, or to a DB-DC hybrid featuring a limited traditional pension and a centrally managed savings account (like the federal Thrift Savings Plan).
Posted by E.J. McMahon at 03:15 PM
December 03, 2008
Governor rejects retirement sweetenerGovernor David Paterson has thrown cold water (at least for now) on state employees' dreams of a pre-Christmas retirement incentive.
Asked about reports that legislators are discussing a retirement sweetener, Paterson, said Tuesday (here):
"I think the early retirement program is actually more expensive if we do it right now," Paterson told The Associated Press at an event in Washington. "First of all, one of the problems is nobody's retiring because nobody wants to be out of work in this environment, so no, we're really not....It's just not something we think is feasible right now."In Albany, Budget Director Laura Anglin issued a statement (here).
The Governor has no intention of offering a retirement incentive at this time. He believes that such incentives are not effective in reducing our state's long-term expenses, and past experience has shown that, in most cases, retirement incentives produce greater costs than benefits to the state.The state last offered a retirement incentive in 2002 when it allowed employees over 55 with at least 25 years of service to retire with up to three additional years of pension credits, which cost the state an additional $250 million.
In November, Paterson offered a novel retirement incentive. He proposed that state workers who retire prior to December 31 would pay less for post-retirement health insurance than those who retired later.
Under the plan, retiree contributions to health benefits would be based on the number of years they worked for the state. Now all retirees--even those on the payroll for as little as 10 years--pay only 10 percent for lifetime health insurance.
For a description of Paterson's proposal, see here.
Posted by Lise Bang-Jensen at 02:24 PM
December 02, 2008
Not so fast, JoeFormer Senate Majority Leader Joe Bruno seems to think he pulled a fast one on taxpayers with his one big concession to "openness" in government.
Today's New York Times profile of the ex-leader (here) highlights the irony that Bruno, who had to be sued before he would release details of pork-barrel expenditures during his last term, is now "preaching the virtues of smaller, leaner, more accountable government" in his new role as chief executive of an infotech and software consulting firm. And it recounts the following:
Mr. Bruno, for example, was the first Senate leader to require the release of every internal expenditure made by the Senate.Well, here at the Empire Center, we sure noticed. To penetrate the Legislature's deliberate opacity, we translated all the Senate and Assembly expenditure reports into searchable databases at www.SeeThroughNY.net.But those reports are published only every six months, in a book format that makes it extremely difficult to examine the spending in any systematic way. (Asked about it, Mr. Bruno joked, "You noticed that, huh?")
Memo to Times reporter Nick Confessore: you'll find those reports at this page.
Memo to former Senator Bruno: nice try.
Posted by E.J. McMahon at 01:56 PM
December 01, 2008
107 Massachusetts workers lose carsMassachusetts Governor Deval Patrick is yanking car keys from 107 state workers, about 20 percent of those assigned government vehicles they can take home at night.
So far, New York Governor David Paterson, who also is tackling huge budget gaps, has not announced a similar plan.
According to the Boston Herald (here),
Starting Jan. 1, employees will have to use their vehicles for a minimum of 15,000 miles a year on state business in order to justify taking home a car....The administration is also considering charging workers 45 cents per mile on their drive between work and home, because other state employees pay for their own commute.
In August the Herald reported that more than 500 workers--including elevator inspectors, a tree climber and a bridge painter--could take home state-owned vehicles.
In an editorial, the Worcester Telegram here called Patrick's move "a welcome start," but it doesn't go far enough.
Given that the state maintains a fleet of some 10,000 vehicles, it's unclear whether the move qualifies as a crackdown. Allowing those employees who are called upon regularly to respond to emergencies outside of normal working hours to take home state vehicles is reasonable, even commendable management. Assigning take-home home vehicles that, in effect, are a taxpayer subsidy of the employee's commuting costs is not.
Posted by Lise Bang-Jensen at 02:06 PM
