Unshackle Upstate: Legislature Misses Mark on Tier V Pension Reform

ALBANY, NY (12/03/2009)(readMedia)-- For the past year, Unshackle Upstate has worked to shine a light on the high cost of New York's pension system, calling for a new tier of pension benefits that is more in line with what New York can afford in the long term.

But the newly enacted Tier V reform does not go far enough to protect New Yorkers from rising pension system costs. The new system should have raised the minimum retirement age to 62 for all employees within the pension system, and included a defined contribution plan similar to the SUNY and CUNY models, where participants control where their pension contributions are invested. The reform also makes permanent a once temporary provision that needed annual legislative approval; the result is guaranteed lifelong health benefits for all current and future retired teachers.

"Tier V will certainly save money for the state, but this is another missed opportunity to bring about more sustainable reform," Sampson said. "It was very clear that the state's current pension system was unsustainable, but this new pension structure for incoming state employees is inadequate and panders to the state's powerful public employee unions. It is a watered-down version of what the governor first proposed and falls short of what New York needs to reduce the out-of-control costs of maintaining a quality workforce."

Maintaining a pension system places major burdens on taxpayers, especially during periods of declining investment income. New York's contribution to the state pension system increased from $991 million in 2000 to $10.1 billion in 2009, according to the state comptroller's office. Over the next six years, local governments outside of New York City will be forced to triple their contributions to public pensions, according to the comptroller.

"We call on the Legislature to immediately repeal the Taylor Law and Triborough Amendments," Sampson added. "Repealing these laws will give the power to school districts and municipalities to negotiate appropriate and affordable wages and benefits, just as private employers have been able to do with non-public employee unions."

The Taylor Law of 1967 makes the salaries and fringe benefits "mandatorily negotiable," meaning changes can't be made unless labor and management agree. The 1982 Triborough Amendment preserves contract terms after the contract expires, including step increases and benefits, even if the employees refuse to negotiate.

In a special report, New York's Double Standard, Unshackle Upstate demonstrated how public pay, benefits and pension systems are far more generous than the private sector, and ultimately drive people and business from the state.

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