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  • Author’s Note To the Labor Union Affiliated Reader : Since I made this presentation in 2009, the subject of public employee pensions and defined benefit pensions have taken center stage for policy makers and academics. The recent years’ near collapse of the financial system has triggered efforts to cut pension benefits, reduce public employer pension contributions, and cut taxes. My view is certainly that this punishes unfairly the hard working citizens who did not cause the financial crisis. Unfortunately, sacrifice to repair the damage has not been shared between innocent victims and the financial malefactors who played fast and loose with other people’s money – particularly public pension funds in NYS that lost over $100 billion in asset value during the crisis. This power point is intended as guide to strategy and tactics when thinking about public pension legislation at the State or Local government level. The examples are from New York State, and therefore, all examples will not apply in every other state or locality in the United States. The author recommends no particular strategy or tactic as a blanket solution. Rather this is a box of tools to be used thoughtfully where appropriate. Finally, the presentation probably contains a pro public employee, pro defined pension benefit bias. Those are certainly my biases. I hope that public employer representatives particularly those who defend defined benefit pensions might also find it useful. I hope and expect that defined benefit pensions in the New York public sector will continue and be a bulwark against the erosion of the retirement security of all Americans. Richard Winsten, August 2011
  • DOCS_ALBANY-#29304-v1-RDW_Power_Point_from_Collective_Bargaining_in_Higher_Ed_at_Hunter_College_4_09

    1. 1. National Center for the Study of Collective Bargaining in Higher Education and the Professions – 36 th Annual Conference April, 2009 – Updated, August 2011 Panel on Legislative Strategies and Tactics Presentation by Richard Winsten, Esq. Meyer, Suozzi, English, Klein PC
    2. 2. State Constitution Protections for Benefits Reform options in New York, Illinois, Alaska, and Arizona are quite limited. The only option for reform would be to amend the retirement plan with respect to newly-hired employees. Employees who are already in the system could not be subject to any plan amendment that results in a lower benefit than that calculated under the terms of the plan at their date of enrollment. The only possibility for changing existing employees’ retirement benefits would be to have each such employee voluntarily agree to plan changes, or for changes to be made pursuant to the state’s inherent police power. Public Pension Plan Reform: The Legal Framework Amy B. Monahan, Legal Stud Res. Paper 10-13, Univ of Minnesota
    3. 3. Constitutional Protections cont: States generally protect public pensions under either a contract-based theory or a property-rights theory, while one state does so under principles of promissory estoppel. See Monahan Report Above Cited
    4. 4. State Constitution Guarantees Incumbent Employee Benefits <ul><li>Article 5 NYS Constitution </li></ul><ul><li>§ 7. After July first, nineteen hundred forty, membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired. </li></ul><ul><li>NYS Pension Tiers </li></ul><ul><li>  </li></ul><ul><li>Tier 1 pre 1973 </li></ul><ul><li>  </li></ul><ul><li>Tier 2 1973-76 </li></ul><ul><li>  </li></ul><ul><li>Tier 3 1976 - </li></ul><ul><li>  </li></ul><ul><li>Tier 4 Late 1980's to present </li></ul><ul><li>  </li></ul><ul><li>Tier 5 - ?????? </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>  </li></ul>
    5. 5. The 2007-08 Session of the Legislature The 2007-08 Session of the Legislature Over 300 retirement bills introduced in the Senate and Assembly at the request of public employers, unions, and others
    6. 6. Retirement Benefits That Aren’t Pension Benefits – The Variable Supplement Fund <ul><li>New York City Administrative Code </li></ul><ul><li>§ 13-194 Correction officers' variable supplements fund. 1. As used in this section, the following words and phrases shall have the following meanings, unless a different meaning is plainly required by the context. </li></ul><ul><li>( b) It is hereby declared by the legislature that the correction officers' variable supplements fund shall not be, and shall not be construed to constitute, a pension or retirement system or fund, and that it shall function as a means whereby payments, not constituting a pension or retirement allowance, may be made in accordance with the provisions of this section, to eligible beneficiaries as a supplement to benefits received by them pursuant to this title. The legislature hereby reserves to the state and itself the right and power to amend, modify or repeal any or all of the provisions of this section. </li></ul>
    7. 7. Changes in Retirement System Earnings Assumptions – Presto, Money
    8. 8. Statutory Prohibition on Negotiating Pension Benefits ?????? <ul><li>§ 470. Temporary suspension of retirement negotiations. Until July first, two thousand nine, changes negotiated between any public employer and public employee, as such terms are defined in section two hundred one of the civil service law, with respect to any benefit provided by or to be provided by a public retirement system, or payments to a fund or insurer to provide an income for retirees or payment to retirees or their beneficiaries, shall be prohibited. Thereafter, such changes shall be made only pursuant to negotiations between public employers and public employees conducted on a coalition basis pursuant to the provisions of this article; provided, however, any such changes not requiring approval by act of the legislature may be implemented prior to July first, two thousand nine, if negotiated as a result of collective bargaining authorized by section six of chapter six hundred twenty-five of the laws of nineteen hundred seventy-five. </li></ul>
    9. 9. Governors Maintain that Benefits Should Be Negotiated Though Illegal? <ul><ul><li> VETO MESSAGE - No. 265 TO THE ASSEMBLY: I am returning herewith, without my approval, the following bill: Assembly Bill Number 10224, entitled: &quot;AN ACT to amend the general municipal law, in relation to certain lung disabilities incurred by bridge and tunnel officers, sergeants and lieutenants in certain cases and providing for the repeal of such provisions upon expiration thereof&quot; NOT APPROVED This bill would amend the General Municipal Law to provide bridge and tunnel officers, employed in cities where such officers are drawn from competitive civil service lists, with the benefit of a presumption that any disease of the lung contracted by such officer that results in total or partial disability was incurred in the performance of duty. </li></ul></ul><ul><ul><li>The MTA once again opposes this bill on the grounds that the air quality in the bridge and tunnel work environment is within acceptable limits and that the bill would: </li></ul></ul><ul><ul><li>(i) circumvent the collective bargaining process; </li></ul></ul>
    10. 10. Another Example of the “Illegal” Cited As the Law in a Governor’s Veto <ul><li>TO THE SENATE: I am returning herewith, without my approval, the following bill: Senate Bill Number 3927, entitled: &quot;AN ACT to amend the retirement and social security law, in relation to providing county correction officers with a special optional twenty year retirement plan&quot; NOT APPROVED </li></ul><ul><li>Further, in a 2005 decision, Public Employment Relations Board held that an employer's participation in an optional retirement plan is a mandatory subject for bargaining. At the very least, these factors constrict any employer's decision ability to decline participation in the new pension plan. </li></ul>
    11. 11. OPPOSE UNILATERAL IMPOSITION OF TIER 5 The New York State AFL-CIO, representing over 2 million union members, their families, our retirees and their families, strongly opposes the unilateral imposition of Tier 5 or any other reduced pension structure on any public employees or bargaining units that have not reached agreement with the Governor and Legislature. It has always been the unified position of the affiliates of the NYS AFL-CIO that until all affected unions have reached agreement with the Governor and Legislature, that Tier 5 should not be unilaterally imposed on any union. Although several unions have been able to reach agreement on terms for implementing Tier 5, to date, many representatives of employees in state service, school districts, and local governments whose needs have not been met are still attempting to negotiate an agreement. There are many different plans based on the unique employment needs of both the affected public employees as well as the employer. These various plans have different benefit and contribution structures that have evolved over a long period of time and are in place for good reason. Placing a universal template of Tier 5 over many of these plans ignores both the unique job requirements of many public employees and worse, is a disservice to the hard working, dedicated public workforce that provides public protection, health and safety, education, transportation, law enforcement infrastructure and various other vital public services. The NYS AFL-CIO strongly urges the Legislature and Governor to negotiate the entire Tier 5 structure out with every affected public employee organization representative and until all issues have been resolved, limit any immediate legislation to those unions that request to be included. For further information contact the Legislative Department at 518-436-8516. Memo #22/2009 opeiu-153
    12. 12. Local Government Option <ul><li>§ 89-f. Retirement of county correction officers in Suffolk county. a. Any member who is employed in Suffolk county as a correction officer shall be eligible to retire pursuant to the provisions of this section. Such eligibility shall be an alternative to the eligibility provisions available under any other plan of this article to which such member is subject. The sheriff shall certify to the comptroller, periodically and at such intervals of time as may be required of him and in such fashion as may be prescribed, the identity of the eligible correction officers in his employ. b. Such member shall be entitled to retire upon the completion of twenty-five years of total creditable service by filing an application therefor in the manner provided for in section seventy of this article. c. Upon completion of twenty-five years of such service and upon retirement, each such member shall receive a pension which, together with an annuity which shall be the actuarial equivalent of his accumulated contributions at the time of his retirement and an additional pension which is the actuarial equivalent of the reserved-for-increased-take-home-pay to which he may then be entitled shall be sufficient to provide him with a retirement allowance equal to one-half of his final average salary. d. As used in this section &quot;creditable service&quot; shall include any and all services performed as a correction officer of Suffolk county. e. As used in this section, &quot;correction officer&quot; means a correction officer, warden, deputy warden or chief of staff. f. Credit for service as a member or officer of the state police or as a paid fireman, policeman or officer of any organized fire department or police force or department of any county, city, village, town, fire district or police district, or as a criminal investigator in the office of a district attorney, provided that service as such investigator shall have been rendered prior to January first, nineteen hundred sixty and that credit therefor shall not exceed five years, shall also be deemed to be creditable service and shall be included in computing years of total service for retirement pursuant to this section, provided such service was performed by the member while contributing to the retirement system pursuant to the provisions of this article or article eight of this chapter. g. A member contributing on the basis of this section at the time of retirement, shall retire after the completion of twenty-five years of total creditable service. Application therefor may be filed in a manner similar to that provided in section seventy of this article. Upon completion of twenty-five years of such service and upon retirement, each such member shall receive a pension which, together with an annuity which shall be the actuarial equivalent of his accumulated contributions at the time of his retirement and an additional pension which is the actuarial equivalent of the reserve-for-increased-take-home-pay to which he may then be entitled shall be sufficient to provide him with a retirement allowance equal to one-half of his final average salary. h. In computing the twenty-five years of total service of a member pursuant to this section full credit shall be given and full allowance shall be made for service of such member in time of war after World War I as defined in section two of this chapter, provided such member at the time of his entrance into the armed forces was in the service of the county of Suffolk. i. Nothing herein shall be construed to prevent a member, who does not retire pursuant to the provisions of this section, from utilizing service which is creditable service pursuant to the provisions of this section for service credit pursuant to the provisions of any other plan of this article to which such member is subject. </li></ul><ul><li>j. The provisions of this section shall be controlling notwithstanding any other provision in this article to the contrary. </li></ul>
    13. 13. Employees Pay for New Benefit
    14. 14. Fiscal Notes – NYS Legislative Law <ul><li>§ 50. Fiscal note in retirement bills. A bill which enacts or amends any provision of law relating to a retirement system or plan of the state of New York or of any of its political subdivisions shall contain a fiscal note stating the estimated annual cost to the employer affected and the source of such estimate. </li></ul><ul><li>FISCAL NOTE.--Pursuant to Legislative Law, Section 50: If this bill were to be enacted in the 2006 Legislative Session, there would be no cost to the City in fiscal year 2006-07 or in any subsequent fiscal year. </li></ul><ul><li>This estimate, dated April 26, 2006, was prepared by Jonathan Schwartz, consulting actuary. </li></ul><ul><li>“ and the source of such estimate” </li></ul><ul><li>PROVISIONS OF PROPOSED LEGISLATION: With respect to the New York C ity Retirement Systems (&quot;NYCRS&quot;), this proposed legislation would amend Retirement and Social Security Law (&quot;RSSL&quot;) Section 177.9(a) to permit an increase to 25% the percentage of assets that could be invested in &quot;Basket Clause&quot; investments. This 25% limit compares with a limit of 15% under current law. FINANCIAL IMPACT - EMPLOYER CONTRIBUTIONS: With respect to the NYCRS, the enactment of this proposed legislation would not, in and of itself, result in any change in employer contributions. The ultimate cost of a Retirement Program is the benefits it pays. The financing of that ultimate cost is provided by contributions and invest- ment income. Investment income depends upon the amount of assets of the Fund and the rate of return received on those assets. The rate of return depends primarily upon the asset allocation policy of the Fund. To the extent that the NYCRS increase their investments in the securi- ties authorized by this proposed legislation and those securities produce greater (lesser) rates of return than the rates of return that the NYCRS would otherwise have achieved, then employer contributions will be lesser (use only during the 2006 Legislation Session . It is Fiscal Note 2006-04, dated March 2, 2006, prepared by the Chief Actuary for the New York City Retirement Systems. greater). </li></ul>.
    15. 15. Fiscal Note Controversy <ul><li>  </li></ul><ul><li>New York Times </li></ul><ul><li>By DANNY HAKIM </li></ul><ul><li>Published: May 17, 2008 </li></ul><ul><li>Assembly Halts Bills With Analysis by Union-Paid Actuary </li></ul>
    16. 16. Controversy continued. <ul><li>Why aren’t they using the New York City pension system’s actuary for these fiscal notes?” said John J. Faso, who was the Republican nominee for governor in 2006 and a former minority leader of the Assembly. “To me, it’s a real conflict of interest to use anything but the pension system itself as the actuary.” </li></ul><ul><li>“ What people call actuarial science is at least as much as an art as a science,” said Mr. Schwartz, a former actuary for New York City. </li></ul><ul><li>“ Back in my days as city actuary, I would go to that part of the range that would make things look as expensive as possible,” he added. “As consultant for the unions, I go to the part of the range that makes things as cheap as possible, but I never knowingly go out of the range.” </li></ul>