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Bill to freeze public retirees health benefits

May 12, 2008

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The State Senate is preparing to vote today on a Trojan Horse of a bill that would freeze retirement health benefits for all New York public employees. Senators are playing innocent about the true effects of this bill, claiming that it simply authorizes a study. But in fact, this is election-year pandering at its worst, and it should stop.

The bill would create a task force to look into protecting retiree health benefits. Civil service and other public employee unions are worried about a new federal accounting rule, GASB 45, that requires governments to list the cost of retirement health benefits as an unfunded liability. New York State accountants this year posted $50 billion for state employees alone - a cost, like Social Security, that will be borne by future workers. Nassau County will post $4 billion on its books.

But the Senate bill would also preserve current benefits, when there may, in fact, be some reasonable savings to be had. Public health coverage overlaps with Medicare in some areas, and taxpayers pay the Medicare Part B premiums for public retirees - effectively double-covering them.

Public employees are right to be concerned about erosion of retirement benefits - they need only look to the private sector to observe the possible damage. But there may be a middle ground that allows local governments to save money without cutting off retirees.

As reformers work to discover that middle ground, we recommend that any changes be enacted so that retirees receive some warning. New provisions could take effect for those retiring several years from now.

School system employees already have their retirement health benefits frozen in place, which is one reason school lawyers want to be included in that retirement system. Now civil servants are saying, "Me, too." Let's not allow "me too" thinking to yoke our grandchildren to untenable costs.

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