Public pensions are never far removed these days from the problems of New York State: unsustainable benefits, taxpayers on the hook for investment losses, a pay-to-play brokerage scandal and now pension padding. Reform is overdue.
Late last year, Gov. David A. Paterson pressured the legislature to tighten eligibility requirements for new hires, but it will take decades before this slight change benefits taxpayers. In September, however, local governments and school districts expect to get hit with a double-digit increase in contributions to make up for losses from the economic downturn.
Attorney General Andrew Cuomo has pulled back the curtain to reveal the sordid schemes brokers used to snare investments from the state's $129-billion pension fund. Recently, the sixth guilty plea was entered, when the fund's former chief investment officer admitted decisions were made on the basis of kickbacks and favors.
But using the pension fund as piggy bank isn't just for the well-connected. An initial investigation by Cuomo has found that former employees of Nassau and Suffolk counties get some of the state's biggest pensions. Higher salaries can't account for all of it - but pension padding could. That's the legal but fiscally criminal manipulation of overtime in the last years of employment to inflate payouts. It's a significant driver of New York's pension costs, the highest in the nation.
The public pensions should be honest, well-earned benefits, not the root of the state's fiscal distress. hN