High pensions for retired school officials
The number of retired public school superintendents and other top administrators drawing $100,000-plus government pensions in New York State jumped 45 percent in the past year -- and more than three out of every five are from Long Island.
There were 1,743 retired school administrators with six-figure pensions across the state in 2011, compared with 1,202 in 2010.
Sixty-three percent of these highly compensated retirees were from Long Island, as identified by their former school districts and other workplaces. The region was home to nine of the top 10 recipients -- the majority of them former school superintendents -- whose maximum annual pensions ranged from about $214,000 to $316,500.
Statewide pensions for retired educators last year totaled $5.75 billion -- 8 percent higher than the previous year. The median pension was $40,180, the figures show.
Individuals' pension data was obtained from the New York State Teacher Retirement System through the state's Freedom of Information Law, and figures were compiled by Newsday's Information Technology Department. The teachers' system covers 140,000 school administrators, teachers and other professional educators statewide.
More than 350,000 additional government workers at the state, county and municipal levels are covered by two other pension funds under the New York State and Local Retirement System. Newsday reported in October that the number of that system's members drawing six-figure pensions from the state and local system spiked 20 percent last year. Long Islanders accounted for 45 percent of those recipients.
To fully fund those pensions, local taxpayers in 2012 and 2013 will pay $2.9 billion into the state's public pension systems, a 69 percent increase from the previous two years, Newsday has reported. By absorbing that extra cost, they are making up for the pension funds' hefty stock market losses during the economic downturn.
Calls for system reform
Gov. Andrew M. Cuomo said in his budget address this month that the explosive growth of public pensions is "unsustainable" and he urged overhaul of the retirement system.
The governor recommended creating a new tier that would give new state workers the option of a defined contribution plan and eliminate overtime from being used in pension calculations.
"We never said pensions were a lifetime legacy for future workers who aren't hired yet," Cuomo told applauding lawmakers.
State records list maximum pensions for which all retirees -- former administrators, teachers and others -- are eligible. Many opt for those maximums, though some recipients choose a smaller amount with the provision that spouses can continue to collect payments after their death.
Retired school administrators, recalling their own budget struggles with districts' rising pension costs, said change is needed.
"The pension system that existed in the past has served both employees and the state well," said Ronald Friedman, a former schools chief in the Great Neck and Long Beach districts and past president of Nassau's Council of School Superintendents. "Times have changed, though, and we need to be creative in fashioning systems that still protect good employees while being responsible to the taxpayers."
Friedman retired in 2009, after 44 years in public schools. His maximum allowable pension of $267,131 is third-highest among former educators statewide, records show.
'Risk' for workers
Another veteran administrator, Neil Lederer, agreed. But he questioned Cuomo's proposal that includes a defined contribution option for employees similar to 401(k) plans in private industry.
Lederer noted that defined contribution plans, which don't guarantee a specific pension amount, entail more risk for workers than defined benefit plans, which specify those amounts.
"I am concerned because you're dealing with people's financial security," Lederer said. "I do understand, though, that school districts have to get some relief, because this is a tremendous burden."
Lederer retired as Lindenhurst's superintendent in 2009, after 45 years in education. He then became interim superintendent in the Three Village district, based in Stony Brook, where he is to step down in June. His maximum allowable pension of $204,412 is 16th-highest among former educators, according to state records.
Cuomo's proposed overhaul would apply to all pension systems. The governor last year proposed more limited revisions that did not pass the legislature, but key lawmakers have suggested that parts of his latest plan could win approval.
One provision would raise pension-contribution rates for new employees from the current 3 percent of salary for non-school workers and 3.5 percent for teachers and other educators, to 4 percent to 6 percent for all government workers, with higher earners paying more. In addition, the retirement age would be raised from 62 to 65.
Still another change would give workers the defined contribution option, similar to one already used by many professors in the State University of New York system. This option would provide a minimum employer contribution equivalent to 4 percent of salary, along with another 3 percent when matched by the employee.
Moreover, the plan would be portable if the employee switched jobs.
Cuomo aides calculate that the proposed changes eventually would lower pensions for retirees with 30 years' service from the current minimum 60 percent of final average salary to 50 percent, and save state and local governments $113 billion over the next 30 years.
Criticism from unions
Public employee unions, including teacher representatives, have denounced the governor's proposal -- especially the call for a 401(k)-type option. Union officials also note that they already agreed to changes in retirement systems pushed two years ago by former Gov. David A. Paterson. Those revisions included a requirement that new employees contribute to plans throughout their careers, not just during the first 10 years as current workers do.
Defenders of the pension system -- including state Comptroller Thomas DiNapoli, who like Cuomo is a Democrat -- point out that New York's pension funds are relatively solid and well-financed compared with those in most states.
Jeff Rozran, president of Syosset's teachers union, said smaller pensions would force an increasing number of Long Island's future retirees to move to less expensive areas of the country, with a potential loss to the Island of billions of dollars in retirement spending.
"When you look at how one retires in an area as expensive as Long Island, you have to hope that retired public employees will be able to continue doing that with dignity," Rozran said. He sits on the governing board of New York State United Teachers, an umbrella labor group representing more than 600,000 school workers statewide.
Critics of the current pension system, including conservative think-tank analysts, contend that the greater security provided by traditional pensions for teachers and other public employees translates into greater risk for taxpayers.
Since the economy soured in 2008, for example, the state has required school districts to increase contributions to the teachers retirement system to make up for shortfalls in the system's investment income.
Higher bills possible
Contributions rose from 6.19 percent of payroll in the 2009-10 school year to 11.11 percent in 2011-12, and are projected to rise again in 2012-13 to between 11.5 percent and 12.5 percent. This can mean higher school-tax bills for homeowners.
"Proponents of the status quo argue, correctly, that it provides employees with the greater retirement security," said E.J. McMahon, senior fellow with the Empire Center, a conservative Albany-area research and advocacy center. "But it's time to recognize that security comes at a cost -- a cost borne by current and future taxpayers."